Exlservice Annual Report 2017

Plain-text annual report

EXLSERVICE HOLDINGS, INC. FORM 10-K (Annual Report) Filed 02/27/18 for the Period Ending 12/31/17 Telephone (212) 277-7100 CIK 0001297989 Symbol EXLS SIC Code 7389 - Services-Business Services, Not Elsewhere Classified Industry Business Support Services Sector Fiscal Year Industrials 12/31 http://www.edgar-online.com © Copyright 2018, EDGAR Online, a division of Donnelley Financial Solutions. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, a division of Donnelley Financial Solutions, Terms of Use. Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549_________________________________________________________FORM 10-K_________________________________________________________(Mark One)ýANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE FISCAL YEAR ENDED DECEMBER 31, 2017OR¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 001-33089_________________________________________________________EXLSERVICE HOLDINGS, INC.(Exact name of registrant as specified in its charter)_________________________________________________________DELAWARE 82-0572194(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.) 280 PARK AVENUE, 38 TH FLOOR,NEW YORK, NEW YORK 10017(Address of principal executive offices) (Zip code)(212) 277-7100(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of Each Class: Name of Each Exchange on Which Registered:Common Stock, par value $0.001 per share NASDAQ Global Select MarketSecurities 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 ýIndicate 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 ýIndicate 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 (orfor 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 ý No ¨Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and postedpursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles). Yes ý No ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant’sknowledge, 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. ýIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer ý Accelerated filer ¨ Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting 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 accountingstandards 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 ýAs of June 30, 2017, the aggregate market value of common stock held by non-affiliates was approximately $1,816,029,590.As of February 21, 2018 , there were 34,198,252 shares of the registrant’s common stock outstanding, par value $0.001 per share.DOCUMENTS INCORPORATED BY REFERENCEPart 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 yearend of December 31, 2017 . Table of ContentsTABLE OF CONTENTS PagePART I. ITEM 1. Business1ITEM 1A. Risk Factors10ITEM 1B. Unresolved Staff Comments26ITEM 2. Properties27ITEM 3. Legal Proceedings27ITEM 4. Mine Safety Disclosures27PART II. ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities28ITEM 6. Selected Financial Data31ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations32ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk53ITEM 8. Financial Statements and Supplementary Data55ITEM 9. Changes in and Disagreement with Accountants on Accounting and Financial Disclosure55ITEM 9A. Controls and Procedures55ITEM 9B. Other Information56PART III. ITEM 10. Directors, Executive Officers and Corporate Governance57ITEM 11. Executive Compensation57ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters57ITEM 13. Certain Relationships and Related Transactions, and Director Independence57ITEM 14. Principal Accountant Fees and Services57PART IV. ITEM 15. Exhibits and Financial Statement Schedules58 SIGNATURES59 EXHIBIT INDEX60 INDEX TO CONSOLIDATED FINANCIAL STATEMENTSF-1Table of ContentsITEM 1. BusinessExlService Holdings, Inc. (“EXL”, “we”, “us", "our" or the "Company"), incorporated in Delaware in 2002, is an operations management and analyticscompany that helps businesses enhance revenue growth and improve profitability. Using proprietary platforms, methodologies, and our full range of digitalcapabilities, we look deeper to help companies transform their businesses, functions and operations, to help them deliver better customer experience and businessoutcomes, while managing risk and compliance. We serve our customers in the insurance, healthcare, travel, transportation and logistics, banking and financialservices and utilities industries, among others. Headquartered in New York, we have approximately 27,800 professionals in locations throughout the United States,Europe, Asia (primarily India and the Philippines), Latin America, Australia and South Africa.We operate in the business process management (“BPM”) industry, and we provide operations management and analytics services. Our eight operatingsegments are strategic business units that align our products and services with how we manage our business, approach our key markets and interact with our clients.Six of those operating segments provide BPM or “operations management” services, which we organize into industry-focused operating segments (Insurance,Healthcare, Travel, Transportation and Logistics, Banking and Financial Services, and Utilities) and one “capability” operating segment (Finance and Accounting)that provides services to clients in our industry-focused segments as well as clients across other industries. In each of these six operating segments we provideoperations management services, which typically involve transfer to the Company of business operations of a client, after which we administer and manage thoseoperations for our client on an ongoing basis. Our remaining two operating segments are Consulting, which provides industry-specific digital transformationalservices related to operations management services, and our Analytics operating segment, which provides services that focus on driving improved businessoutcomes for clients by generating data-driven insights across all parts of their business.We present information for the following reportable segments:•Insurance,•Healthcare,•Travel, Transportation and Logistics,•Finance and Accounting,•Analytics, and•All Other (consisting of our remaining operating segments including our Banking and Financial services, Utilities and Consulting operating segments).For the year ended December 31, 2015, we reported and presented two reportable segments: Operations Management (which included our Insurance,Healthcare, Travel, Transportation and Logistics, Finance and Accounting, Banking and Financial services, Utilities and Consulting operating segments) andAnalytics.Segment information for all prior periods presented herein have been changed to conform to the current presentation. This change in segment presentationdoes not affect our consolidated statements of income and comprehensive income, balance sheets or statements of cash flows. We do not allocate assets byoperating segment, although our operating segments do manage and control certain assets. For further descriptions of our segments, including financial informationand revenues and cost of revenues, see Note 3 to our consolidated financial statements.The December 2017 acquisition of substantially all of the assets, and assumption of certain liabilities related thereto, of Health Integrated, Inc. (“HealthIntegrated”) is included in the Healthcare reportable segment.Operations Management ServicesOur operations management services, which we provide from our Insurance, Healthcare, Travel, Transportation and Logistics, Finance and Accounting,Banking and Financial Services, Utilities and Consulting operating segments, typically involve the transfer to EXL business operations of a client such as claimsprocessing, clinical operations, or financial transaction processing, after which we administer and manage those operations for our client on an ongoing basis, or incase of consulting, consulting services related to transformation services. We use a focused industry vertical approach to manage our business and to provide asuite of integrated BPM services to organizations in the insurance, healthcare, travel transportation and logistics, banking and financial services and utilitiesindustries in addition to providing finance and accounting and consulting services across these industries as well as to clients in other industries like manufacturingand media among others. 1Table of ContentsThe key differentiators and salient features of our BPM services include our agile operating and delivery model utilizing domain expertise and processexcellence, the Business EXLerator Framework TM , our ability to deploy a Business Process-as-a-Service (“BPaaS”) delivery model, business process automation(including robotics), consulting-driven digital transformation and our industry vertical focused approach. The Business EXLerator Framework TM is our integratedapproach to operations management which enables us to drive better customer outcomes by using advanced automation (such as robotics), lean six-sigma,workflow management, data visualization and embedded analytics.While the majority of our operations management services are provided to clients using client-owned or licensed technology platforms, we also deliver ourservices across clients and industries using a BPaaS delivery model. The BPaaS delivery model includes the provision of a technology platform along with processmanagement services. The service offering typically requires lower capital outlay, is faster to implement and is priced based on the number of transactions or usageby the client. These services may use standardized and shared technology and operational delivery infrastructure enabling us to leverage technology andinfrastructure investments across multiple clients.The operating segments providing operations management services are described below:Our Insurance operating segment serves property and casualty insurance, life insurance, disability insurance, annuity and retirement services companies.We provide BPM services related to business processes in the insurance industry such as claims processing, subrogation, premium and benefit administration,agency management, account reconciliation, policy research, underwriting support, new business processing, policy servicing, premium audit, surveys, billing andcollection, commercial and residential survey, and customer service using the Business EXLerator Framework TM , robotics and advanced automation. We provideinsurance policy administration & digital customer acquisition services using a BPaaS delivery model through our LifePRO ® and Liss platforms in order to helpclients administer life insurance, health insurance, annuities and credit life and disability insurance policies. We also provide subrogation services to property andcasualty insurers using a BPaaS delivery model and our proprietary Subrosource ® software platform, the largest commercial end-to-end subrogation platform.Subrosource ® integrates with client systems, manages recovery workflow, increases recoveries and reduces costs.Our Healthcare operating segment primarily serves U.S.-based healthcare payers and providers. We provide BPM services related to Care Management andpopulation health, multi-chronic case management (“MCCM”), dual eligible special needs plans (D-SNP), payment integrity, revenue optimization and customerengagement directly addressing the market need for improved healthcare outcomes, reduced claims and administrative costs, and improved access to the healthcaresystem in the healthcare market. We offer BPaaS, SaaS and platform BPM services designed to serve the healthcare industry as well as proprietary technologyplatforms, robotics and advanced analytics. EXL’s CareRadius® and MaxMC® applications connect payors, providers and members with critical clinicalinformation, and automates a payor's operations to increase efficiencies across all aspects of care management including behavioral health.O n December 22, 2017, we acquired substantially all of the assets, and assumed certain liabilities related thereto, of Health Integrated, a Florida basedcare management company that provides end-to-end analytics- and behavioral IP-enabled care management services including case management, utilizationmanagement, disease management, special needs programs, and MCCM on behalf of health plans. Health Integrated serves millions of lives in the Medicaid,Medicare, and dual eligible populations.Our Healthcare business also provides Program Integrity services to payors. Our current work is mainly in special investigations and claims overpayment.In addition, we provide Customer Experience solutions for both customer acquisition and customer service.Our Travel, Transportation and Logistics operating segment primarily serves clients in the travel & leisure and transportation and logistics industries,including less-than-truckload (LTL), truckload and intermodal logistics sectors. We provide BPM services related to business processes in corporate and leisuretravel such as reservations, customer service, fulfillment and finance and accounting. In addition, we have expertise in processing transportation and logisticstransactions, including supply chain management, warehousing, transportation management and international logistics services using advanced automationincluding robotics process automation. For companies in the transportation and logistics sector, we provide sales, billing, collection, claims management, revenuemanagement, accounting freight audit and payment and logistics engineering services.Our Finance and Accounting (“F&A”) operating segment provides finance and accounting BPM services across an array of F&A processes includingprocure-to-pay, order-to-cash, hire-to-retire, record-to-report, regulatory reporting, financial planning and analysis, audit and assurance, treasury and taxprocesses. This operating segment provides services across the five industry verticals within operations management as well as to clients in other industries likemanufacturing, media and retail among others. We also provide “Operations-as-a-Service” offerings in the procure to pay, order to cash and2Table of Contentsrecord to report areas by integrating proprietary analytics, advanced automation including robotics process automation, and F&A technology platforms, bothproprietary as well as those from leading third party technology platform providers.Our Banking and Financial Services operating segment offers a comprehensive range of BPM services across the spectrum of the banking and financialservices industry including residential mortgage lending, retail banking and credit cards, commercial banking and investment management. We have also assistedglobal banking and financial institutions with improving their operations by enabling clients to identify regulatory and compliance gaps, develop remediation plansand services, and track ongoing performance. EXL uses robotics process automation and proprietary business intelligence tools to innovate workflow management,transaction monitoring, and management information and reporting to enhance transparency in regulatory and management reporting.Our Utilities operating segment services offers BPM services related to enhancing operating models, improving customer experience, reducing costs,shortening turnaround time and simplifying compliance for our clients. By leveraging our “Operations-as-a-Service” model, we combine domain expertise,customer-centric operations management practices, robotics and advanced analytics capabilities with cloud-based billing and customer relationship managementplatform, digital services (Customer and Field Mobility Solutions), industry-specific products, business process automation and robotics.Our Consulting operating segment provides industry-specific digital transformational services, targeting select industries and functions (primarilyInsurance, Healthcare, Travel, Transportation and Logistics, Banking and Financial Services and Finance and Accounting), where we have developed broad anddeep core competencies. Our services are designed to address contemporary problems across the aforementioned domains, embracing the digital and analyticsrevolution, to deliver business models that help our clients realize their business and innovation goals and improve their strategic competitive position. Our digitalconsulting offerings include leveraging design thinking to help improve customer experience, using lean models to drive process excellence and using agiledelivery models to implement digital technologies and interventions like advanced automation and robotics. We also offer a full range of finance transformationservices to the CFO suite, including finance platform modernization and implementation, finance process transformation and digitization as well as governance,risk and compliance support.3Table of ContentsAnalyticsOur Analytics services focus on driving improved business outcomes for our customers by generating data-driven insights across all parts of our customers’businesses. Our teams deliver predictive and prescriptive analytics in the areas of customer acquisition and lifecycle management, risk underwriting and pricing,operational effectiveness, credit and operational risk monitoring and governance, regulatory reporting, and data management. Our Analytics team comprises over3,000 professionals.We help our customers leverage internal and external data sources, enhance their data assets, identify and visualize data patterns, and utilize data-driveninsights to improve their effectiveness. Our Analytics services for our customers include:• Identification, cleansing, matching and use of structured, semi-structured and unstructured data available both internally to our customer’s organizationand externally;• Deployment of analytics professionals and data scientists who utilize analytics tools, cutting edge statistical techniques and methodologies in waysdesigned to help customers better understand their data to generate actionable business insights;• Design and implementation of services enabling data visualization and management reporting enabling business users to segment, drill-down, and filterdata; and• Integration of data insights and predictive models in the real-time decision making processes to drive measurable business impact.Our Analytics engagements span both project work and longer-term arrangements where EXL provides ongoing analytics modeling and services for a year ormore. We utilize domain and industry knowledge related to the business problem being considered to support these Analytics engagements.Our Analytics services support: (1) retail banking, commercial banking and investment banking and management for the banking and financial servicesindustry; (2) actuarial, claims, informatics, CRM and marketing analysis, medical cost and care management, payment integrity and operational effectiveness in thehealthcare industry; (3) marketing and agency management, actuarial, servicing and operations, customer management, and claims and money movement in theinsurance industry; and (4) marketing analytics in the retail and media industries.Geographic and Segment InformationPlease see the disclosures in Note 3 to our consolidated financial statements for segment and geographic information regarding our business.Business StrategyWe are a business process management company providing operations management and analytics services that help businesses enhance revenue growth andenhance profitability. Specific elements of our strategy include:Deploying our Business EXLerator Framework TM in Operations ManagementIn servicing our operations management clients, we differentiate ourselves by using our proprietary Business EXLerator Framework TM , described above.Business EXLerator TM has helped EXL win new clients as well as increase satisfaction with existing clients. Advanced automation is another key element wherewe leverage proprietary and partner technologies to drive operational efficiencies and provide a step-change in the degrees of automation (such as robotics)embedded within the process.Developing Business Process-as-a-Service (“BPaaS”) Solutions to distinguish our BPM SolutionsWe continue to invest and focus in developing BPaaS and technology-enabled product solutions including updated and enhanced LifePRO®, Auditstream andExpress Survey products. We are shifting part of our servicing model in niche operations management services from our current model to a BPaaS servicing modelthat offers an integrated technology platform with operations management services. BPaaS services are typically delivered using a transaction-based or outcome-based pricing model and can minimize a client’s initial capital investment on technology. In addition to existing solutions, we intend to enter into additionalpartnerships to develop and take-to-market new BPaaS solutions.Building Additional Analytics Capabilities and Solution OfferingsWe continue to invest in our Analytics capabilities by expanding our digital solution offerings, enhancing the skill sets and training of our team, anddeveloping reusable intellectual property that can be incorporated into our analytics services. We intend to further increase our investment in our proprietarymethodologies and algorithms that help us improve our ability to predict outcomes for our clients to help them capture data signals in a more efficient manner. Inorder to optimize the way in which we deliver analytics services to clients and source the highest quality global talent, we intend to continue expanding4Table of Contentsour multi-shore delivery capabilities by adding to our team of professionals in the United States, United Kingdom, Europe, India, Singapore, the Philippines, SouthAfrica and Colombia. In addition to hiring directly from educational institutions, we actively look to hire additional experienced senior team members in order todeepen our industry expertise and thought leadership.Extending Our Industry ExpertiseWe intend to further extend our knowledge and capabilities in the industry verticals we serve in order to enhance our reputation as a provider of businessprocess services. By focusing on transitioning, managing and digitizing more complex and value-enhancing services, we augment our capability to serve ourclients, including helping our clients evolve their digital transformation efforts. In order to market our base of experience externally, we intend to continue toproduce additional primary research and technical papers in order to enhance our reputation as industry thought leaders.Recruiting, Training, and Retaining the Most Talented ProfessionalsWe have instituted an integrated talent management framework through active collaboration between our recruitment, capability development and businesshuman resource functions. We deploy innovative methods to recruit, train and retain our skilled employees. We intend to focus on recruiting the right talent anddevelop them further on relevant competencies through our learning academies, rigorous promotion standards, client and industry specific training and competitivecompensation packages that include incentive-based compensation. We are able to leverage shared resources across our services, particularly those in operationsmanagement, including as a result of our personnel having skillsets applicable to a wide variety of BPM services. We supplement our scope of operationsexperience with several industry-specific domain academies to enhance the specialization quotient of our employees.Cultivating Long-term Relationships and Expanding our Client BaseWe continue to maintain our focus on cultivating long-term client relationships as well as attracting new clients. We believe there are significant opportunitiesfor additional growth within our existing clients, and we seek to expand these relationships by:•Increasing the depth and breadth of the services we provide across new client business, functions and geographies;•Offering the full suite of EXL services that includes operations management (including consulting; digital transformation) and analytics; and•Supporting our clients’ geographic expansion leveraging our global footprint.We intend to continue building a portfolio of Fortune 500 and Global 2000 companies in our focus industries that have the most complex and diverseprocesses and, accordingly, stand to benefit significantly from our services. We also intend to cultivate long-term relationships with medium-sized companies inour focus industries leveraging our BPaaS and technology offerings.Expanding our Global Delivery Footprint and Operational InfrastructureWe intend to further expand and invest in our network of delivery centers to service our clients. In 2017, we expanded our operations centers in India and inthe United States. In 2017, our acquisition of the Health Integrated business added an operating facility in Tampa, Florida.Pursuing Strategic Relationships and AcquisitionsWe intend to continue making selective acquisitions in our focus industry verticals as well as to add to our capabilities. We consider selective strategicrelationships with industry leaders that add new long-term client relationships, enhance the depth and breadth of our services and complement our businessstrategy. We also pursue select partnerships, alliances or investments that will expand the scope and effectiveness of our services by adding proprietary technologyassets and intellectual property, adding new clients or allowing us to enter new geographic markets.5Table of ContentsOur IndustryOperations ManagementBPM service providers work with clients to transfer their key business processes to reduce costs, improve process quality, handle increased transactionvolumes and reduce redundancy. BPM providers can enable organizations to enhance profitability and increase efficiency and reliability, permitting them toconcentrate on their core areas of competence. BPM is a long-term strategic commitment for a company that, once implemented, is generally not subject to cyclicalspending or information technology budget fluctuations. Increased global demand, cost improvements in international communications and the automation of manybusiness services have created a significant opportunity for BPM providers with offshore delivery capabilities, and many companies are moving select officeprocesses to providers with the capacity to perform these functions from overseas locations. We believe the demand for BPM services will be primarily led byindustries that are transaction-driven and that require significant customer interactions.According to India’s National Association of Software and Service Companies, an industry trade organization, exports from India in the informationtechnology and BPM industry are expected to grow 7%-8% year over year in the fiscal year ending March 31, 2018.AnalyticsCompanies are increasingly looking to BPM service providers to provide a suite of analytics services including statistical tools, models and techniques toclean, organize and examine structured and unstructured corporate data. This data is then used by companies to generate specific business-related analysis andinsights into their business and prospects. The enhanced generation of business data across multiple formats, substantial reduction in data storage costs, growingenterprise demand for data-driven and real-time decision making and availability of sophisticated analytics tools have enabled companies to overcome a localshortage of specialized analytics talent and benefit from global labor markets. BPM service providers who can develop industry-specific analytics expertise areespecially well poised to benefit from this global trend.Sales, Marketing and Client ManagementWe market our services to our existing and prospective clients through our sales and client management teams, which are aligned by industry verticals andcross-industry domains such as finance and accounting and consulting. Our sales and client management teams operate from the U.S., Europe, Australia and SouthAfrica are supported by our business development teams.Our sales, marketing and business development teams are responsible for new client acquisitions, public relations, relations with outsourcing advisorycompanies, analyst relations and rankings, lead generation, knowledge management, content development, campaign management, digital/web presence, brandawareness and participation in industry forums and conferences. As of December 31, 2017, we employed approximately 120 sales, marketing, businessdevelopment and client management professionals with the majority of them based in either the U.S. or Europe. Our professionals generally have significantexperience in business process services, technology, operations, analytics and consulting.ClientsEXL generated revenues from approximately 415 and 400 clients in 2017 and 2016, respectively (with annual revenue exceeding $50,000 per client). Wehave won 42 and 40 new clients during 2017 and 2016, respectively.Our top three, five and ten clients generated 17.1%, 24.6% and 38.6% of our revenues, respectively, in 2017. Our top three, five and ten clients generated16.8%, 25.4% and 40.1% of our revenues, respectively, in 2016. We have a limited number of clients in our Utilities and Banking and Financial services operatingsegments. However, no client accounted for more than 10% of our total revenues in 2017 or 2016. Our revenue concentration with our top clients remainsconsistent year-over-year and we continue to develop relationships with new clients to diversify our client base. We believe that the loss of any of our ten largestclients could have a material adverse effect on our financial performance. See “Item 1A. Risk Factors-Risks Related to Our Business-We derive a substantialportion of our revenues from a limited number of clients.”Our long-term relationships with our clients typically evolve from providing a single, discrete service or process into providing a series of complex, integratedprocesses across multiple business lines. For operations management services other than consulting, we enter into long-term agreements with our clients withtypical initial terms of between three and five years. Consulting engagements have typical terms of six to twelve months. Agreements for Analytics services areeither project based or having shorter initial terms, which are typically between one to three years. However, each agreement is individually negotiated with theclient.CompetitionCompetition in the BPM services industry is intense and growing. See “Item 1A. Risk Factors-Risks Related to Our Business-We face significant competitionfrom U.S.-based and non-U.S.-based BPM and information technology (“IT”)6Table of Contentscompanies and from our clients, who may build shared services centers to perform these services themselves, either in-house, in the U.S. or through offshoregroups or other arrangements.” Many companies, including certain of our clients, choose to perform some or all of their customer-facing and back-office processesinternally, utilizing their own employees to provide these services as part of their regular business operations. Some companies have moved portions of their in-house customer management functions offshore, including to offshore affiliates. We believe our key advantage over in-house business processes management isthat we provide companies the opportunity to focus on their core products and markets while we focus on service delivery and operational excellence. We competeprimarily against:•BPM service companies with delivery capability in offshore locations, particularly India, such as Genpact Limited and WNS (Holdings) Limited;•BPM divisions of large global IT service companies, such as Accenture, Cognizant Technology Solutions, Infosys and Tata Consultancy Services;•Niche providers that provide services in a specific geographic market, industry or service area such as analytics or healthcare; and•Leading accounting and management consulting firms.We compete against these entities by working to establish ourselves as a service provider with deep industry expertise, strong client relationships, leadingindustry talent, superior operational and process capabilities, differentiated technology and BPaaS solutions, and sophisticated analytic and consulting capabilities,which enable us to respond rapidly to market trends and the evolving needs of our clients.Intellectual PropertyOur intellectual property consists of proprietary and licensed platforms, software and databases, trade secrets, methodologies and know-how, trademarks,copyrighted software, operating procedures and other materials and patents and pending patent applications. We have several registered trademarks and logos, twopatents and several pending trademark applications with the U.S. Patent and Trademark Office and certain foreign jurisdictions. We consider our businessprocesses and implementation methodologies to be trade secrets or proprietary and confidential information. To provide our services, in addition to our ownproprietary materials we use software and data licensed from third parties, as well as software and data licensed by our clients from third parties and available ontheir systems. We also use software-as-a-service or “SaaS” services pursuant to contracts with third parties or made available to us by our clients who contractdirectly with the third parties. In particular, we have developed several strategic partnerships with robotics and process automation software companies to facilitateour offering of automation to our clients.Clients and business partners sign nondisclosure agreements requiring confidential treatment of our information. Our employees are required to sign work-for-hire and confidentiality covenants as a condition to their employment.Our technology group and various business lines independently develop proprietary tools that we deploy to support services for our clients. We typicallyretain ownership of any pre-existing tools. While working on client engagements, we also often develop new tools or methodologies, including robotics andprocess automation software or “bots,” and we endeavor to negotiate contracts that give us ownership or licenses to use or demonstrate such tools for other clients.Information Security and Data PrivacyWe have a strong focus on information security, cyber security, data privacy and the protection of our clients’ and their customers’ confidential personal andsensitive information. We have made significant investments to strengthen our information security and cyber security posture and protocols to ensure compliancewith the established confidentiality policies and the laws and regulations governing our activities. These investments involve ensuring we have the appropriatepeople, processes and technology in place to protect information throughout its life cycle.EXL places significant focus on implementing and maintaining cyber security capabilities to identify, protect, detect, respond and recover from cyber threats,incidents and attacks; reduce vulnerabilities and minimize the impact of cyber incidents. We have a strong culture of compliance and a rigorous system ofinstitutional governance built upon and supported by policies and processes, tools and technologies, and regular knowledge and awareness training.According to the needs of our clients as well as the regulatory requirements of the geographies in which we operate, most of our delivery centers are certifiedin regard to quality, information security and employee safety, such as the ISO 9001:2008 standard for quality management system, the ISO 27001:2013 standardfor our information security management system and the OHSAS 18001:2007 standard for our occupational health and safety management system. Some of ourcenters in the Philippines and South Africa and certain client processes in other operation centers in India are compliant with the Payment Card Industry DataSecurity Standard (PCI-DSS) version 3.2 or higher requirements. We engage independent firms to conduct General Controls and business process specific SSAE16 (SOC I - Type II) assessments. EXL aligns with the globally leading Cyber Security Framework of the National Institute of Standards and Technology of theU.S. Department of Commerce to provide security for client and business data. EXL has undertaken proactive measures to comply with new7Table of ContentsEuropean privacy regulations including the General Data Protection Regulation (EU) 2016/679 (“GDPR”) and/or any corresponding or equivalent national laws orregulations and expects to be compliant by the deadline included in the enacting legislation.EXL offers managed hosting environments for our BPaaS solutions in our Insurance and Healthcare verticals. Clients who adopt our BPaaS solutions on amanaged hosted basis are offered a highly reliable, scalable, and secure hosting environment. The technology applications designed to meet disaster recoverrequirements are hosted in ISO 27001 certified, SSAE18 SOC1 Compliant Tier 4 data centers that are proactively monitored and managed 24 hours a day to meetthe client’s business requirements.We have a robust, wide area network and international telecommunications capacity to support our global business operations. Our infrastructure is built toindustry standards, leveraging leading technology providers and partners. Our business continuity management includes plans to mitigate and manage operationalrisks by building resilience and redundancy in our telecommunications and network infrastructure, applications and IT infrastructure, utilities and power, andtrained talent across our service delivery locations.EmployeesAs of December 31, 2017, we had a headcount of approximately 27,800 employees, with approximately 19,400 employees based in India and approximately4,800 employees in the Philippines. We have approximately 2,300 employees in the U.S, 150 employees in the U.K., 200 employees in Colombia, and 450employees in the Czech Republic, Bulgaria, Romania, and 450 in South Africa and other geographies. None of our employees are unionized. We have neverexperienced any work stoppages and believe that we enjoy good employee relations.Hiring and RecruitingOur employees are critical to the success of our business. Accordingly, we focus on recruiting, training and retaining our professionals. We have developedeffective strategies that enable an efficient recruitment process. We have approximately 115 employees dedicated to recruitment. Some of the strategies we haveadopted to increase efficiency in our hiring practices include the utilization of online voice assessments and a centralized hiring center. Our hiring policies focus onidentifying high quality employees who demonstrate a propensity for learning, contribution to client services and growth. Candidates must undergo numerous testsand interviews before we extend offers for employment. We also conduct background checks on candidates, including criminal background checks, wherepermitted and as required by clients or on a sample basis. In addition, where permitted and required for client services, we perform random drug testing on theworkforce on a regular basis.We offer our employees competitive compensation packages that include incentive-based compensation and offer a variety of benefits that vary by facility,including free transport to and from home in certain circumstances, subsidized meals and free access to recreational facilities that are located within some of ouroperations centers. Our attrition rate for employees who had been with EXL for more than 180 days was 32.0% and 31.5% for the years ended December 31, 2017and 2016, respectively. As competition in our industry increases, our turnover rate could increase. See “Item 1A. Risk Factors-Risks Related to Our Business-Wemay fail to attract and retain enough sufficiently trained employees to support our operations, as competition for highly skilled personnel is intense and weexperience significant employee turnover rates.”Capability Development and TrainingWe maintain a strong focus on capability development, with an emphasis on digital transformation deeper knowledge, specialization and domain expertise.Our talent and learning strategies are aligned to the overall business strategy. This creates thought leaders with high industry acumen who are better able to addressour clients’ requirements. We also provide a career -linked learning path to our employees from new hires to tenured employees to senior levels of leadership.Our domain academies focus on building domain expertise through certifications and specialization. These include our Insurance Academy, Travel Academy,Finance and Accounting Academy, Healthcare Academy, Analytics Academy and Digital Capability Development. These domain academies focus on achievingexcellence and developing skill sets that can be used across the different domains. Our training includes behavioral and functional components to enhance andensure job readiness as well as also boosting ongoing productivity and effectiveness. We also focus on promoting better diversity and inclusion through ourtraining programs. We have a global presence catering to the specific learning requirements of each geography. We provide learning through our blended learningmethodology comprising of classroom, on the job coaching and technology led learning.8Table of ContentsRegulationOur operations sometimes are subject to rules, regulations and statutes in the countries where we have operations and where we deliver services as a result ofthe diverse and complex nature of our service offerings. More often, however, our clients contractually require that we comply with certain rules and regulationsapplicable to their specific industries.We are one of the few service providers that can provide third-party administrator insurance services from India and the Philippines and are currently able toprovide such services in the U.S. for 48 states and 16 states, respectively. Additionally, our Philippines subsidiary is able to provide utilization review services inthe U.S. for 39 states (including the District of Columbia). Further, through a domestic subsidiary, we are licensed or otherwise eligible to provide third-partyadministrator services in all states within the U.S. as well as utilization review and insurance producer services in select states. Certain of our debt collection,utilization review, workers compensation utilization review, insurance producer and telemarketing services require us to maintain licenses in various jurisdictionsor require certain categories of our professionals to be individually licensed. Our facilities in the Philippines are accredited by the Utilization Review AccreditationCommission and the National Committee for Quality Assurance, both of which are leading healthcare and education accreditation organization. We continue toobtain licenses and accreditations required from time to time by our business operations.Our operations are also subject to compliance with a variety of other laws, including U.S. federal and state regulations that apply to certain portions of ourbusiness such as the Fair Credit Reporting Act, the Foreign Corrupt Practices Act, the Federal Trade Commission Act, the Gramm-Leach-Bliley Act, the HealthInsurance Portability and Accountability Act of 1996, the Health Information Technology for Economics and Clinical Health Act of 2009 and the UK Bribery Act.We must also comply with applicable regulations relating to health and other personal information that we handle as part of our services.We benefit from tax relief provided by laws and regulations in India and the Philippines from time to time. Regulation of our business by the Indiangovernment affects us in several ways. During the last several years, we either established or acquired new centers that are eligible for tax benefits under theSpecial Economic Zones Act, 2005 (the “SEZ Act”). The SEZ Act introduced a 15-year tax holiday scheme for operations established in designated specialeconomic zones (“SEZs”). Under the SEZ Act, qualifying operations are eligible for a deduction from taxable income equal to (i) 100% of their export profitsderived for the first five years from the commencement of operations; (ii) 50% of such export profits for the next five years; and (iii) 50% of the export profits for afurther five years, subject to satisfying certain capital investment requirements. The SEZ Act provides, among other restrictions, that this holiday is not available tooperations formed by splitting up or reconstructing existing operations or transferring existing plant and equipment (beyond a prescribed limit) to new SEZlocations. We anticipate establishing additional operations centers in SEZs or other tax advantaged locations in the future. See “Item 1A - Risk Factors - Risksrelated to the International nature of our business - Our financial condition could be negatively affected if foreign governments introduce new legislation, reduce orwithdraw tax benefits and other incentives currently provided to companies within our industry or if we are not eligible for these benefits.”We also benefit from a corporate tax holiday in the Philippines for some of our operations centers established there over the last several years. The Companyregistered with the Philippines Economic Zone Authority (“PEZA”) and is inter-alia, eligible for income tax exemption for four years. This exemption incentivemay be extended in certain instances upon fulfillment of certain conditions. Following the expiry of the tax exemption, income generated from centers in thePhilippines will be taxed at the prevailing annual tax rate, which is currently 5.0% on the gross income.Available InformationWe file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”) under theSecurities Exchange Act of 1934, as amended (the “Exchange Act”). You may read and copy this information at the Public Reference Room of the SEC, Room1580, 100 F Street, N.E., Washington, D.C. 20549. You may obtain information about the Public Reference Room by calling the SEC at 1-800-SEC-0330. Inaddition, the SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers thatfile electronically through the EDGAR System.We also maintain a website at http://www.exlservice.com. Information on our website does not constitute a part of, nor is it incorporated in any way, into thisForm 10-K or any other report we file with or furnish to the SEC. We make available, free of charge, on our website our annual reports on Form 10-K, quarterlyreports on Form 10-Q, proxy statements, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of theExchange Act, as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC. Our website also includes announcementsof investor conferences and events, information on our business strategies and results, corporate governance information, and other news and announcements thatinvestors might find useful or interesting.9Table of ContentsITEM 1A. Risk FactorsRisks Related to Our BusinessWe derive a substantial portion of our revenues from a limited number of clients.We have derived and believe that we will continue to derive a substantial portion of our total revenues from a limited number of large clients. The loss of orfinancial difficulties at any of our large clients could have a material adverse effect on our business, results of operations, financial condition and cash flows.Moreover, the loss of a major customer could also impact our reputation in the market, making it more difficult to attract and retain customers more generally.Our results of operations could be adversely affected by economic and political conditions and the effects of these conditions on our clients’ businesses andlevels of business activity.Global economic and political conditions affect our clients’ businesses and the markets they serve. The domestic and international capital and credit marketshave been experiencing volatility and disruption for the past several years, resulting in uncertainty in the financial markets in general, which includes companies inthe banking, financial services and insurance industries to which we provide services. Although there has been recent improvement in general economic conditionsin these industries, there can be no assurance that the economic environment will continue to improve. Our business largely depends on continued demand for ourservices from clients and potential clients in these industries. Adverse developments in these industries or any other select industries to which we provide servicescould further unfavorably affect our business. In particular, we currently derive, and are likely to continue to derive, a significant portion of our revenues fromclients located in the U.S. Any future decreases in the general level of economic activity, such as decreases in business and consumer spending, could result in adecrease in demand for our services, particularly our analytics and consulting services, thus reducing our revenues. Weakness in the U.S. labor market could alsoadversely affect the demand for our services. Other developments in response to economic events, such as consolidations, restructurings or reorganizations,particularly involving our clients, could also cause the demand for our services to decline.Market disruptions may limit our ability to access financing or increase our cost of financing to meet liquidity needs, and affect the ability of our customers touse credit to purchase our services or to make timely payments to us, resulting in adverse effects on our financial condition, results of operations and cash flows.Our client contracts contain certain termination and other provisions that could have an adverse effect on our business, results of operations, financialcondition and cash flows.Consistent with industry practice, most of our client contracts may be terminated by our clients without cause and do not commit our clients to provide uswith a specific volume of business. Any failure to meet a client’s expectations could result in a cancellation or non-renewal of a contract or a decrease in businessprovided to us. We may not be able to replace any client that elects to terminate or not renew its contract with us, which would reduce our revenues. The loss of orfinancial difficulties at any of our large clients would have a material adverse effect on our business, results of operations, financial condition and cash flows.A number of our contracts allow the client, in certain limited circumstances, to request a benchmark study comparing our pricing and performance with thatof an agreed list of other service providers for comparable services. Based on the results of the study and depending on the reasons for any unfavorable variance,we may be required to make improvements in the services we provide or reduce the pricing for services on a prospective basis to be performed under the remainingterm of the contract or our client could elect to terminate the contract, which could have an adverse effect on our business, results of operations, financial conditionand cash flows. Many of our contracts contain provisions that would require us to pay penalties to our clients and/or provide our clients with the right to terminatethe contract if we do not meet pre-agreed service level requirements or if we do not provide certain productivity benefits. Failure to meet these requirements oraccurately estimate the productivity benefits could result in the payment of significant penalties to our clients which in turn could have a material adverse effect onour business, results of operations, financial condition and cash flows. Some of our contracts with clients specify that if a change of control of our company occursduring the term of the contract, the client has the right to terminate the contract. These provisions may result in our contracts being terminated if there is such achange in control, resulting in a potential loss of revenues. In addition, these provisions may act as a deterrent to any attempt by a third party to acquire ourcompany.10Table of ContentsWe may fail to attract and retain enough sufficiently trained employees to support our operations, as competition for highly skilled personnel is intense and weexperience significant employee turnover rates.Our success depends to a significant extent on our ability to attract, hire, train and retain qualified employees, including our ability to attract employees withneeded skills in the geographic areas in which we operate. Our industry, including us, experiences high employee turnover. There is significant competition forprofessionals with skills necessary to perform the services we offer to our clients. Increased competition for these professionals could have an adverse effect on us.A significant increase in the turnover rate among our employees, particularly among our higher skilled workforce, would increase our recruiting and training costsand decrease our operating efficiency, productivity and profit margins, and could lead to a decline in demand for our services. High turnover rates generally do notimpact our revenues as we factor the attrition rate into our pricing models by maintaining additional employees for each process. However, high turnover rates doincrease our cost of revenues and therefore impact our profit margins due to higher recruitment, training and retention costs. High employee turnover increasestraining, recruitment and retention costs because we must maintain larger hiring, training and human resources departments and it also increases our operating costsdue to having to reallocate certain business processes among our operations centers where we have access to the skilled workforce needed for our business. Theseadditional costs could have a material adverse effect on our results of operations and cash flows.If we are unable to attract and retain highly-skilled technical personnel, our ability to effectively lead our current projects and develop new business could bejeopardized, and our business, results of operations and financial condition could be adversely affected.We often have a long selling cycle for our operations management services that requires significant funds and management resources and a longimplementation cycle that requires significant resource commitments.We often have a long selling cycle for our operations management services, which requires significant investment of capital, resources and time by both ourclients and us. Before committing to use our services, potential clients require us to expend substantial time and resources educating them as to the value of ourservices, including testing our services for a limited period of time, and assessing the feasibility of integrating our systems and processes with theirs. Our clientsthen evaluate our services before deciding whether to use them. Therefore, our selling cycle, which generally ranges from six to eighteen months, is subject tomany risks and delays over which we have little or no control, including our clients’ decision to choose alternatives to our services (such as other providers or in-house offshore resources) and the timing of our clients’ budget cycles and approval processes. In addition, we may not be able to successfully conclude a contractafter the selling cycle is complete.Implementing our services involves a significant commitment of resources over an extended period of time from both our clients and us. Our clients may alsoexperience delays in obtaining internal approvals or delays associated with technology or system implementations, thereby delaying further the implementationprocess. Our clients and future clients may not be willing or able to invest the time and resources necessary to implement our services, and we may fail to closesales with potential clients to which we have devoted significant time and resources. These factors could have a material adverse effect on our business, results ofoperations, financial condition and cash flows.Once we are engaged by a client, it may take us several months before we start to recognize significant revenues.When we are engaged by a client after the selling process for our operations management services, it takes from four to six weeks to integrate the client’ssystems with ours, and from three months to six months thereafter to build our services to the client’s requirements and perform any necessary transformationinitiatives. Depending on the complexity of the processes being implemented, these time periods may be significantly longer. Implementing processes can besubject to potential delays similar to certain of those affecting the selling cycle. Therefore, we do not recognize significant revenues until after we have completedthe implementation phase.We typically enter into long-term contracts and fixed price contracts with our clients, and our failure to accurately estimate the resources and time required forour contracts may negatively affect our revenues, cash flows and profitability.The initial terms of our operations management contracts typically range from three to five years. In many of our operations management contracts wecommit to long-term pricing with our clients and therefore bear the risk of cost overruns, completion delays, wage inflation and adverse movements in exchangerates in connection with these contracts. If we fail to estimate accurately the resources and time required for a contract, potential productivity benefits over time,future wage inflation rates or currency exchange rates (or fail to accurately hedge our currency exchange rate exposure) or if we fail to complete our contractualobligations within the contracted timeframe, our revenues, cash flows and profitability may be negatively affected.11Table of ContentsConsistency in our revenues from period to period depends in part on our ability to reflect the changing demands and needs of our existing and potentialclients. If we are unable to adjust our pricing terms or the mix of products and services we provide to meet the changing demands of our clients and potentialclients, our business, results of operations, financial condition and cash flows may be adversely affected.A significant portion of our contracts use a pricing model that provides for hourly or annual billing rates. Industry pricing models are evolving, however, andwe anticipate that clients may increasingly request transaction-based, outcome-based or other pricing models. If we make inaccurate assumptions for contracts withsuch alternative pricing models, our profitability may be negatively affected. If we are unable to adapt our operations to evolving pricing protocols, our results ofoperations may be adversely affected or we may not be able to offer pricing that is attractive relative to our competitors.In addition, for the services we provide to our clients, the revenues and income from such services may decline or vary as the type and volume of services weprovide under those contracts changes over time, including as a result of a shift in the mix of products and services we provide. Furthermore, our clients, some ofwhich have experienced significant and adverse changes in their prospects, substantial price competition and pressures on their profitability, have in the past andmay in the future demand price reductions, automate some or all of their processes or change their operations management strategy by moving more work in-houseor to other providers, any of which could reduce our profitability. Any significant reduction in or the elimination of the use of the services we provide to any of ourclients, or any requirement to lower our prices, would harm our business.Our profitability will suffer if we are not able to price our services appropriately or manage our asset utilization levels.Our profitability is largely a function of the efficiency with which we utilize our assets, in particular our people and our operations centers, and the pricingthat we are able to obtain for our services. Our asset utilization levels are affected by a number of factors, including our ability to transition employees fromcompleted projects to new assignments, attract, train and retain employees, forecast demand for our services and maintain an appropriate headcount in each of ourlocations, as well as our need to dedicate resources to employee training and development and other typically non-chargeable activities. The prices we are able tocharge for our services are affected by a number of factors, including our clients’ perceptions of our ability to add value through our services, substantial pricecompetition, introduction of new services or products by us or our competitors, our ability to accurately estimate, attain and sustain revenues from clientengagements, our ability to estimate resources for long-term pricing, margins and cash flows for long-term contracts and general economic and political conditions.Therefore, if we are unable to appropriately price our services or manage our asset utilization levels, there could be a material adverse effect on our business,results of operations, cash flows and financial condition.Our analytics and consulting services are cyclical and based on specific projects involving short-term contracts.Our analytics and consulting services are cyclical and can be significantly affected by variations in business cycles. Changes in the deadlines or the scope ofwork required for compliance with the requirements of legislation applicable to our clients could curtail significantly those service offerings.In addition, our project based analytics and consulting services consists of contracts with terms generally not exceeding one year and may not produceongoing or recurring business for us once the project is completed. These contracts also usually contain provisions permitting termination of the contract after ashort notice period. The short-term nature and specificity of these projects could lead to material fluctuations and uncertainties in the revenues generated fromproviding analytics and consulting services.Our operating results may experience significant variability and as a result it may be difficult for us to make accurate financial forecasts.Our operating results may vary significantly from period to period. Although our existing agreements with original terms of three or more years provide uswith a relatively predictable revenue base for a substantial portion of our business, the long selling cycle for our services and the budget and approval processes ofprospective clients make it difficult to predict the timing of entering into definitive agreements with new clients. The timing of revenue recognition under newclient agreements also varies depending on when we complete the implementation phase with new clients. The completion of implementation varies significantlybased upon the complexity of the processes being implemented.Our period-to-period results have in the past and may also in the future fluctuate due to other factors, including client losses, delays or failure by our clients toprovide anticipated business, variations in employee utilization rates resulting from changes in our clients’ operations, delays or difficulties in expanding ouroperations centers and infrastructure (including hiring new employees or constructing new operations centers), changes to our pricing structure or that of ourcompetitors, currency fluctuations, seasonal12Table of Contentschanges in the operations of our clients and other events identified in this Annual Report on Form 10-K. Our revenues are also affected by changes in pricing underour contracts at the time of renewal or by pricing under new contracts. In addition, most of our contracts do not commit our clients to provide us with a specificvolume of business. Further, as we increase our capabilities utilizing technology service platforms and other software-based services, we expect that revenues fromsuch services will continue to grow in proportion to our total revenues. Revenues from annual maintenance and support contracts for our software platformsprovide us with a relatively predictable revenue base whereas revenues from new license sales and implementation projects have a long selling cycle and it isdifficult to predict the timing of when such new contracts will be signed which may lead to fluctuations in our short term revenues. All these factors may make itdifficult to make accurate financial forecasts or replace anticipated revenues that we do not receive as a result of delays in implementing our services or clientlosses. If our actual results do not meet any estimated results that we announce, or if we underperform market expectations as a result of such factors, trading pricesfor our common stock could be adversely affected.Our senior management team is critical to our continued success and the loss of one or more members of our senior management team could harm ourbusiness.Our future success substantially depends on the continued services and performance of the members of our management team and other key employeespossessing technical and business capabilities, including industry expertise, that are difficult to replace. Specifically, the loss of the services of our Vice Chairmanand Chief Executive Officer could seriously impair our ability to continue to manage and expand our business. There is intense competition for experienced seniormanagement and personnel with technical and industry expertise in the industry in which we operate, and we may not be able to retain these officers or keyemployees. Although we have entered into employment and non-competition agreements with all of our executive officers, certain terms of those agreements maynot be enforceable and in any event these agreements do not ensure the continued service of these executive officers.In addition, we currently do not maintain “key person” insurance covering any member of our management team. The loss of any of our key employees,particularly to competitors, could have a material adverse effect on our business, results of operations, financial condition and cash flows.Our inability to manage our rapid infrastructure and personnel growth effectively could have a material adverse effect on our business, results of operations,financial condition and cash flows.Since we were founded in April 1999, we have experienced rapid growth and significantly expanded our operations, and that growth has continued in recentyears as well. We have several operations centers in India, the U.S., the Philippines and an operations center in each of South Africa, Colombia, Bulgaria,Romania, and the Czech Republic. Further, we have acquired multiple regional offices in the U.S. as part of our acquisitions. Our headcount has increasedsignificantly over the past several years. We expect to develop and improve our internal systems in the locations where we operate in order to address theanticipated continued growth of our business. We are also continuing to look for operations centers at additional locations outside of our current operatinggeographies. We believe expanding our geographic base of operations will provide higher value to our clients by decreasing the risks of operating from a singlecountry (including potential shortages of skilled employees, increases in wage costs during strong economic times and currency fluctuations), while also giving ourclients access to a wider talent pool and establishing a base in countries that may be competitive in the future. However, we may not be able to effectively manageour infrastructure and employee expansion, open additional operations centers or hire additional skilled employees as and when they are required to meet theongoing needs of our clients, and we may not be able to develop and improve our internal systems. We also need to manage cultural differences between ouremployee populations and that may create a risk for employment law claims. Our inability to execute our growth strategy, to ensure the continued adequacy of ourcurrent systems or to manage our expansion effectively could have a material adverse effect on our business, results of operations, financial condition and cashflows.We may engage in strategic acquisitions or transactions, which could have a material adverse effect on our business, results of operations, financial conditionand cash flows.As part of our business strategy, we intend to continue to selectively consider acquisitions or investments, some of which may be material. Through theacquisitions we pursue, we may seek opportunities to expand the scope of our existing services, add new clients or enter new geographic markets. There can be noassurance that we will successfully identify suitable candidates in the future for strategic transactions at acceptable prices, have sufficient capital resources tofinance potential acquisitions or be able to consummate any desired transactions. Our failure to close transactions with potential acquisition targets for which wehave invested significant time and resources could have a material adverse effect on our financial condition and cash flows.13Table of ContentsAcquisitions, including completed acquisitions, involve a number of risks, including diversion of management’s attention, ability to finance the acquisition onattractive terms, failure to retain key personnel or valuable customers, legal liabilities and the need to amortize acquired intangible assets, any of which could havea material adverse effect on our business, results of operations, financial condition and cash flows. Future acquisitions may also result in the incurrence ofindebtedness or the issuance of additional equity securities.The intellectual property of an acquired business may be an important component of the value that we agree to pay for such a business. Although we conductdue diligence in connection with each of our acquisitions, such acquisitions are subject to the risks that the acquired business may not own the intellectual propertythat we believe we are acquiring, that the intellectual property is dependent upon licenses from third parties, that the acquired business infringes upon theintellectual property rights of others or that the technology does not have the acceptance in the marketplace that we anticipated.We could also experience financial or other setbacks if transactions encounter unanticipated problems, including problems related to execution, integration orunderperformance relative to prior expectations. Our management may not be able to successfully integrate any acquired business into our operations or maintainour standards, controls and policies, which could have a material adverse effect on our business, results of operations and financial condition. Consequently, anyacquisition we complete may not result in long-term benefits to us or we may not be able to further develop the acquired business in the manner we anticipated.Following the completion of some acquisitions, we may have to rely on the seller to provide administrative and other support, including financial reportingand internal controls, and other transition services to the acquired business for a period of time. There can be no assurance that the seller will do so in a manner thatis acceptable to us.We may not be able to realize the entire book value of goodwill and other intangible assets from acquisitions.We periodically assess our goodwill and intangible assets to determine if they are impaired and we monitor for impairment of goodwill relating to allacquisitions. Goodwill is not amortized but is tested for impairment at least once on an annual basis as of October 1 of each year, based on a number of factorsincluding operating results, business plans and future cash flows. Impairment testing of goodwill may also be performed between annual tests if an event occurs orcircumstances change that would more likely than not reduce the fair value of goodwill below its carrying amount. We perform a quantitative assessment todetermine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. In the event that the carrying amount of goodwillis impaired, any such impairment would be charged to earnings in the period of impairment. Since this involves use of critical accounting estimates, we cannotassure you that future impairment of goodwill will not have a material adverse effect on our business, financial condition or results of operations.If we are unable to collect our receivables from, or bill our unbilled services to, our clients, our results of operations and cash flows could be adversely affected.Our business depends on our ability to successfully obtain payment from our clients for work performed. We evaluate the financial condition of our clientsand usually bill and collect on relatively short cycles. We maintain allowances against receivables and unbilled services. Actual losses on client balances coulddiffer from those that we currently anticipate and, as a result, we might need to adjust our allowances. We might not accurately assess the creditworthiness of ourclients. Macroeconomic conditions, such as any domestic or global credit crisis and disruption or the global financial system, could also result in financialdifficulties for our clients, including limited access to the credit markets, insolvency or bankruptcy, and, as a result, could cause clients to delay payments to us,request modifications to their payment arrangements that could increase our receivables balance, or default on their payment obligations to us. Timely collection ofclient balances also depends on our ability to complete our contractual commitments and bill and collect our contracted revenues. If we are unable to meet ourcontractual requirements, we might experience delays in collection of and/or be unable to collect our client balances, and if this occurs, our results of operationsand cash flows could be adversely affected. In addition, if we experience an increase in the time to bill and collect for our services, our cash flows could beadversely affected.Employee wage increases may prevent us from sustaining our competitive advantage and may reduce our profit margin.Our most significant costs are the salaries and related benefits of our operations staff and other employees. For example, wage costs in India have historicallybeen significantly lower than wage costs in the U.S. and Europe for comparably skilled professionals, which has been one of our competitive advantages. However,because of rapid economic growth in India, increased demand for outsourcing services from India and increased competition for skilled employees in India, wagesfor comparably skilled employees in India are increasing at a faster rate than in the U.S. and Europe, which may reduce this competitive advantage. We may needto increase the levels of employee compensation more rapidly than in the past to remain competitive in attracting14Table of Contentsand retaining the quality and number of employees that our business requires. Wages are generally higher for employees performing analytics and consultingservices than for employees performing operations management services. As the scale of our analytics and consulting services increases, wages as a percentage ofrevenues will likely increase. To the extent that we are not able to control or share wage increases with our clients, wage increases may reduce our margins andcash flows. We will attempt to control such costs by our efforts to add capacity in locations where we consider wage levels of skilled personnel to be satisfactory,but we may not be successful in doing so.We face significant competition from U.S.-based and non-U.S.-based BPM and IT companies and from our clients, who may build shared services centers toperform these services themselves, either in-house, in the U.S. or through offshore groups or other arrangements.The market for outsourcing services is highly competitive, and we expect competition to intensify and increase from a number of sources. We believe that theprincipal competitive factors in our markets are breadth and depth of process expertise, knowledge of industries served, service quality, the ability to attract, trainand retain qualified people, compliance rigor, global delivery capabilities, price and sales and client management capabilities. We also face competition from non-U.S.-based outsourcing and IT companies (including those in the U.K. and India) and U.S.-based outsourcing and IT companies. Further, a client may choose touse its own internal resources rather than engage an outside firm to perform the types of services we provide. In addition, the trend toward offshore outsourcing,international expansion by foreign and domestic competitors and continuing technological changes, such as cloud computing, will result in new and differentcompetition for our services.These competitors may include entrants from the communications, software and data networking industries or entrants in geographic locations with lowercosts than those in which we operate. Some of these existing and future competitors have greater financial, personnel and other resources, a broader range ofservice offerings, greater technological expertise, more recognizable brand names and more established relationships in industries that we currently serve or mayserve in the future. In addition, some of our competitors may enter into strategic relationships or mergers or acquisitions with larger, more established companies inorder to increase their ability to address client needs, or enter into similar arrangements with potential clients. The trend in multi-vendor relationships has beengrowing, which could reduce our revenues to the extent that we are required to modify the terms of our relationship with clients or that clients obtain services fromother vendors. Increased competition, our inability to compete successfully against competitors, pricing pressures or loss of market share could result in reducedgross margins, which could harm our business, results of operations, financial condition and cash flows.We expect competition to intensify in the future as more companies enter our markets. Increased competition may result in lower prices and volumes, highercosts for resources, especially people, and lower profitability. We may not be able to supply clients with services that they deem superior and at competitive pricesand we may lose business to our competitors. Any inability to compete effectively would adversely affect our business, results of operations, financial conditionand cash flows.We may disrupt our clients’ operations as a result of inadequate service or other factors, including telecommunications or technology downtime orinterruptions.The services we provide are often critical to our clients’ businesses, and any failure to provide those services could result in a reduction in revenues or a claimfor substantial damages against us, regardless of whether we are responsible for that failure. Most of our agreements with clients contain service level andperformance requirements, including requirements relating to the quality of our services. Failure to consistently meet service requirements of a client or errorsmade by our employees in the course of delivering services to our clients could disrupt the client’s business and result in a reduction in revenues or a claim fordamages against us. Additionally, we could incur certain liabilities if a process we manage for a client were to result in internal control failures or processingerrors, or impair our client’s ability to comply with its own internal control requirements.Our dependence on our offshore operations centers requires us to maintain active voice and data communications among our operations centers, ourinternational technology hubs and our clients’ offices. Although we maintain redundant facilities and communications links, disruptions could result from, amongother things, technical breakdowns, computer glitches and viruses and weather conditions. We also depend on certain significant vendors for facility storage andrelated maintenance of our main technology equipment and data at those technology hubs, as well as for some of the third party technology and platforms wesometimes use to deliver our services. Any failure by these vendors to perform those services, any temporary or permanent loss of our equipment or systems, orany disruptions to basic infrastructure like power and telecommunications could impede our ability to provide services to our clients, have a negative impact on ourreputation, cause us to lose clients, reduce our revenues and cash flows and harm our business.15Table of ContentsOur contractual limitations on liability with our clients and third parties may not be enforceable.Under most of our agreements with our clients, our liability for breach of certain of our obligations is generally limited to actual damages suffered by theclient and is typically capped at the fees paid or payable to us for a period of time under the relevant agreement. These limitations and caps on liability may beunenforceable or otherwise may not protect us from liability for damages. In addition, certain liabilities, such as claims of third parties for which we may berequired to indemnify our clients, including intellectual property infringement claims, or liability for fraud or breaches of confidentiality, are generally not limitedunder those agreements. Because our agreements are governed by laws of multiple jurisdictions, the interpretation of certain provisions, and the availability ofcertain defenses to us, may vary, which, in certain circumstances, may contribute to uncertainty as to the scope of our potential liability.Our business could be negatively affected if we incur legal liability, including with respect to our contractual obligations, in connection with providing oursolutions and services.If we fail to meet our contractual obligations or otherwise breach obligations to our clients, we could be subject to legal liability. We may enter into non-standard agreements because we perceive an important economic opportunity by doing so or because our personnel did not adequately adhere to our guidelines. Inaddition, the contracting practices of our competitors may cause contract terms and conditions that are unfavorable to us to become standard in the marketplace. Ifwe cannot or do not perform our obligations, we could face legal liability and our contracts might not always protect us adequately through limitations on the scopeand/or amount of our potential liability. If we cannot, or do not, meet our contractual obligations to provide solutions and services, and if our exposure is notadequately limited through the enforceable terms of our agreements, we might face significant legal liability and our business could be adversely affected.Our business could be materially and adversely affected if we do not protect our intellectual property or if our services are found to infringe on the intellectualproperty of others.Our success depends in part on certain methodologies, practices, tools and technical expertise we utilize in providing our services. We engage in designing,developing, implementing and maintaining applications and other proprietary materials. In order to protect our rights in these various materials, we may seekprotection under trade secret, patent, copyright and trademark laws. We also generally enter into confidentiality and nondisclosure agreements with our clients andpotential clients, and third party vendors, and seek to limit access to and distribution of our proprietary information. For our employees and independentcontractors, we generally require confidentiality and work-for-hire agreements. These measures may not prevent misappropriation or infringement of ourintellectual property or proprietary information and a resulting loss of competitive advantage. Additionally, we may not be successful in obtaining or maintainingpatents or trademarks for which we have applied.We may be unable to protect our intellectual property and proprietary technology effectively, which may allow competitors to duplicate our technology andproducts and may adversely affect our ability to compete with them. To the extent that we do not protect our intellectual property effectively through patents orother means, other parties, including former employees, with knowledge of our intellectual property may leave and seek to exploit our intellectual property for theirown or others’ advantage. We may not be able to detect unauthorized use and take appropriate steps to enforce our rights, and any such steps may not besuccessful. Infringement by others of our intellectual property, including the costs of enforcing our intellectual property rights, may have a material adverse effecton our business, results of operations, financial condition and cash flows.In addition, competitors or others may allege that our systems, processes, marketing or technologies infringe on their intellectual property rights, includingpatents. Non-practicing entities may also bring baseless, but nonetheless costly to defend, infringement claims. We could be required to indemnify our clients ifthey are sued by a third party for intellectual property infringement arising from materials that we have provided to the clients in connection with our services anddeliverables. We may not be successful in defending against any intellectual property claims or in obtaining licenses or an agreement to resolve any intellectualproperty disputes. Given the complex, rapidly changing and competitive technological and business environment in which we operate, and the potential risks anduncertainties of intellectual property-related litigation, we cannot provide assurances that a future assertion of an infringement claim against us or our clients willnot cause us to alter our business practices, lose significant revenues, incur significant license, royalty or technology development expenses, or pay significantmonetary damages. Any such claim for intellectual property infringement may have a material adverse effect on our business, results of operations, financialcondition and cash flows.16Table of ContentsWe may not be fully insured for all losses we may incur.We could be sued directly for claims that could be significant, such as claims related to breaches of privacy or network security, infringement of intellectualproperty rights, violation of wage and hour laws, or systemic discrimination, and our liability under our contracts may not fully limit or insulate us from thoseliabilities. Although we have general liability insurance coverage, including coverage for errors or omissions, cyber security incidents, property damage or loss andbreaches of privacy and network security, that coverage may not continue to be available on reasonable terms or in sufficient amounts to cover one or more largeclaims, and our insurers may disclaim coverage as to any future claim. Insurance is not available for certain types of claims, including patent infringement,violation of wage and hour laws, failure to provide equal pay in the U.S., and our indemnification obligations to our clients based on employment law. Thesuccessful assertion of one or more large claims against us that are excluded from our insurance coverage or exceed available insurance coverage, or changes in ourinsurance policies (including premium increases, the imposition of large deductible or co-insurance requirements, or our insurers’ disclaimer of coverage as tofuture claims), could have a material adverse effect on our business, results of operations, financial condition and cash flows.New and changing laws, corporate governance and public disclosure requirements add uncertainty to our compliance policies and increase our costs ofcompliance.Changing laws, regulations and standards relating to accounting, corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, theDodd-Frank Wall Street Reform and Consumer Protection Act, (“Dodd Frank”), other SEC regulations, rules and regulations of the Consumer Financial ProtectionBureau, Public Company Accounting Oversight Board, and the NASDAQ Global Select Market, and generally accepted accounting principles issued by theFinancial Accounting Standards Board can create uncertainty for companies like ours. These laws, regulations and standards may lack specificity and are subject tovarying interpretations. Their application in practice may evolve over time, as new guidance is provided by regulatory and governing bodies. This could result incontinuing uncertainty regarding compliance matters and higher costs of compliance as a result of ongoing revisions to such corporate governance standards.In particular, our efforts to comply with Section 404 of the Sarbanes-Oxley Act of 2002 and the related regulations regarding our required assessment of ourinternal controls over financial reporting and our external auditors’ audit of that assessment requires the commitment of significant financial and managerialresources. We consistently assess the adequacy of our internal controls over financial reporting, remediate any control deficiencies that may be identified, andvalidate through testing that our controls are functioning as documented. Internal control over financial reporting has inherent limitations, including human error,sample-based testing, the possibility that controls could be circumvented or become inadequate because of changed conditions, and fraud. Because of theseinherent limitations, internal control over financial reporting might not prevent or detect all misstatements or fraud. While we do not anticipate any internal controlfailures, if we cannot maintain effective internal controls or if management or our independent auditor fail in the future to provide us with an unqualified report asto the adequacy and effectiveness, respectively, of our internal controls over financial reporting for future year ends, it could result in adverse consequences to us,including, but not limited to, a loss of investor confidence in the reliability of our financial statements, which could cause the market price of our stock to decline.We are committed to maintaining high standards of corporate governance and public disclosure, and our efforts to comply with evolving laws, regulationsand standards in this regard have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of managementtime and attention from revenue-generating activities to compliance activities. In addition, the laws, regulations and standards regarding corporate governance maymake it more difficult for us to obtain director and officer liability insurance. Further, our board members, chief executive officer and chief financial officer couldface an increased risk of personal liability in connection with their performance of duties. As a result, we may face difficulties attracting and retaining qualifiedboard members and executive officers, which could harm our business. If we fail to comply with new or changed laws, regulations or standards of corporategovernance, our business and reputation may be harmed.Failure to adhere to the regulations or accreditation or licensing standards that govern our business could have an adverse impact on our operations.Our clients’ business operations are often subject to regulation and accreditation and licensing standards, and our clients may require that we perform ourservices in a manner that will enable them to comply with applicable regulations or accreditations or licensing standards. Our clients are located around the world,and the laws and regulations that apply include, among others, United States federal laws such as the Gramm-Leach-Bliley Act and the Health Insurance Portabilityand Accountability Act, the Health Information Technology for Economic and Clinical Health Act, state laws on third party administration services, utilizationreview services, telemarketing services or state laws on debt collection in the United States and the Financial Services Act in the United Kingdom as well as similarconsumer protection laws in other countries in which our clients’ customers are based. Failure to perform our services in a manner that complies with any suchrequirements could result in breaches of contracts with our clients.17Table of ContentsIn addition, we are required under various laws to obtain and maintain accreditations, permits and/or licenses for the conduct of our business in all jurisdictions inwhich we have operations, including India, and, in some cases, where our clients receive our services, including the United States and Europe. If we do notmaintain our accreditations, licenses or other qualifications to provide our services or if we do not adapt to changes in legislation or regulation, we may have tocease operations in the relevant jurisdictions and may not be able to provide services to existing clients or be able to attract new clients. In addition, we may berequired to expend significant resources in order to comply with laws and regulations in the jurisdictions mentioned above. Any failure to abide by regulationsrelating either to our business or our clients’ businesses may also, in some limited circumstances, result in civil fines and criminal penalties for us. Any suchceasing of operations or civil or criminal actions may have a material adverse effect on our business, results of operations, financial condition and cash flows.We may face difficulties in delivering complex and large projects for our clients that could cause clients to discontinue their work with us, which in turn couldharm our business.We have been expanding the nature and scope of our engagements. Our ability to effectively offer a wider breadth of end-to-end business services depends onour ability to attract existing or new clients to these expanded service offerings. To obtain engagements for such complex and large projects, we also are morelikely to compete with large, well-established international consulting firms, resulting in increased competition and marketing costs. Accordingly, we cannot becertain that our new service offerings will effectively meet client needs or that we will be able to attract existing and new clients to these expanded serviceofferings. The increased breadth of our service offerings may result in larger and more complex projects with our clients. This will require us to establish closerrelationships with our clients and a thorough understanding of their operations. Our ability to establish such relationships will depend on a number of factors,including the proficiency of our employees and management. Our failure to deliver services that meet the requirements specified by our clients could result intermination of client contracts, and we could be liable to our clients for significant penalties or damages. Larger projects may involve multiple engagements orstages, and there is a risk that a client may choose not to retain us for additional stages or may cancel or delay additional planned engagements. These terminations,cancellations or delays may result from factors that have little or nothing to do with the quality of our services, such as the business or financial condition of ourclients or the economy generally. Such cancellations or delays make it difficult to plan for project resource requirements and inaccuracies in such resource planningand allocation may have a negative impact on our profitability and cash flows.We may be unable to service our debt or obtain additional financing on competitive terms.Our credit agreement contains covenants which require, among other things, maintenance of certain financial ratios, indebtedness and also, under certainconditions, restrict our ability to pay dividends, repurchase common shares and make other restricted payments as defined in the credit agreement. The creditagreement provides for a $200 million revolving credit facility including a letter of credit sub-facility. Our credit facility has a maturity date of November 21, 2022and is voluntarily payable from time to time without premium or penalty. Our cash flow from operations provides the primary source of funds for our debt servicepayments. If our cash flow from operations declines, we may be unable to service or refinance our current debt which could adversely affect our business andfinancial condition. In addition, we have limited ability to increase our borrowings under our existing credit agreement. We may in the future require additionalfinancing to fund one or more acquisitions and may not be able to obtain such additional financing on competitive terms or at all, which could restrict our ability tocomplete such transactions, or could impose financial or operational restrictions on our business.Uncertainties in the interpretation and application of the U.S. Tax Cuts and Jobs Act of 2017 could materially affect our tax obligations and effective tax rate.The Tax Cuts and Jobs Act of 2017 (the “Tax Reform Act”) was enacted on December 22, 2017, and significantly affected U.S. tax law by changing how theU.S. imposes income tax on multinational corporations. The U.S. Department of Treasury has broad authority to issue regulations and interpretative guidance thatmay significantly impact how we will apply the law and impact our results of operations in the period issued. The Tax Reform Act requires complex computationsnot previously provided in U.S. tax law. As such, the application of accounting guidance for such items is currently uncertain. Further, compliance with the TaxReform Act and the accounting for such provisions require accumulation of information not previously required or regularly produced. As a result, we haveprovided a provisional estimate on the effect of the Tax Reform Act in our financial statements. As additional regulatory guidance is issued by the applicable taxingauthorities, as accounting treatment is clarified, as we perform additional analysis on the application of the law, and as we refine estimates in calculating the effect,our final analysis, which will be recorded in the period completed, may be different from our current provisional amounts, which could materially affect our taxobligations and effective tax rate.18Table of ContentsRisks Related to the International Nature of Our BusinessWe may choose to expand operations to additional countries and may not be successful in maintaining our current profit margins in our new locations due tofactors beyond our control.We have offices and operations in various countries around the world and provide services to customers globally. We continually evaluate additionallocations outside our current operating geographies in which to invest in operations centers, in order to maintain an appropriate cost structure for our clients’ needs.In recent years we have opened new operations centers in countries outside of the U.S. We cannot predict the extent of government support, availability ofqualified workers, or monetary and economic conditions in other countries. Additionally, we may expand into less developed countries that have less political,social or economic stability and less developed infrastructure and legal systems. Although some of these factors will influence our decision to establish operationsin another country, there are inherent risks beyond our control, including exposure to currency fluctuations, political uncertainties, foreign exchange restrictionsand foreign regulatory restrictions. We may also face difficulties integrating new facilities in different countries into our existing operations. One or more of thesefactors or other factors relating to expanded international operations could result in increased operating expenses and make it more difficult for us to manage ourcosts and operations, which could harm our business and negatively impact our operating results and cash flows.If more stringent labor laws become applicable to us or if our employees unionize, our profitability may be adversely affected.India has stringent labor legislation that protects employee interests, including legislation that sets forth detailed procedures for dispute resolution andemployee removal and legislation that imposes financial obligations on employers upon retrenchment. Though we are exempt from some of these labor laws atpresent under exceptions in some states for providers of IT-enabled services, there can be no assurance that such laws will not become applicable to us in thefuture. If these labor laws become applicable to our employees, it may become difficult for us to maintain flexible human resource policies and attract and employthe numbers of sufficiently qualified candidates that we need or discharge employees, and our compensation expenses may increase significantly. Regulations inother countries in which we operate also regulate our relations with our employees.In addition, our employees may in the future form unions. If employees at any of our operations centers become eligible for union membership, we may berequired to raise wage levels or grant other benefits that could result in an increase in our compensation expenses, in which case our profitability and cash flowsmay be adversely affected.The Government of India in the past few years has focused on the occupational health and safety concerns experienced by workers in the outsourcingindustry. The introduction of legislation imposing restrictions on working hours or conditions of professionals in the outsourcing industry could have an adverseeffect on our business, results of operations, cash flows and financial condition.Our financial condition could be negatively affected if foreign governments introduces new legislation, reduce or withdraw tax benefits and other incentivescurrently provided to companies within our industry or if we are not eligible for these benefits.We are subject to income taxes in the United States and other foreign jurisdictions. Our tax expense and cash tax liability in the future could be adverselyaffected by various factors, including, but not limited to, changes in tax laws, regulations, accounting principles or interpretations and the potential adverseoutcome of tax examinations. Changes in the valuation of deferred tax assets and liabilities, which may result from a decline in our profitability or changes in taxrates or legislation, could have a material adverse effect on our tax expense.Under the Indian Income Tax Act, 1961, our operations centers in India, from which we derive a significant portion of our revenues, benefited up to March31, 2011, from a ten-year holiday from Indian corporate income taxes in respect of their export profits under the Software Technology Parks of India (“STPI”)Scheme. In the absence of this tax holiday, income derived from our Indian operations is taxed up to the maximum tax rate generally applicable to Indianenterprises.During the last several years, we either established or acquired new centers that are eligible for tax benefits under the SEZ Act. The SEZ Act introduced a 15-year tax holiday scheme for operations established in designated SEZs. Under the SEZ Act, qualifying operations are eligible for a deduction from taxable incomeequal to (i) 100% of their export profits derived for the first five years from the commencement of operations; (ii) 50% of such export profits for the next fiveyears; and (iii) 50% of the export profits for a further five years, subject to satisfying certain capital investment requirements. The SEZ Act provides, among otherrestrictions, that this holiday is not available to operations formed by splitting up or reconstructing existing operations or transferring existing plant and equipment(beyond a prescribed limit) to new SEZ locations. We anticipate establishing additional operations centers in SEZs or other tax advantaged locations in the future.19Table of ContentsAs our SEZ legislation benefits are phasing out, our Indian tax expense may materially increase and our after-tax profitability may be materially reduced,unless we can obtain comparable benefits under new legislation or otherwise reduce our tax liability. Similarly, alternative minimum taxes are imposed by certainjurisdictions on otherwise exempt income, which may increase our tax expense in future years.We also benefit from a corporate tax holiday in the Philippines for our operations centers established there over the last several years. The tax holiday alreadyexpired for few of our centers and will expire in the future for the other centers, which may lead to an increase in our overall tax rate. Following the expiry of thetax exemption, income generated from centers in the Philippines will be taxed at the prevailing annual tax rate.As a result of the foregoing, our overall effective tax rate may increase in future years and such increase may be material and may have impact on ourbusiness, results of operations, financial condition and cash flows.If the transfer pricing arrangements we have among our subsidiaries are determined to be inappropriate, our tax liability may increase.U.S. and Indian transfer pricing regulations, as well as regulations applicable in other countries in which we operate, require that any international transactioninvolving associated enterprises be at an arm’s-length price. Transactions among the Company’s subsidiaries and the Company may be required to satisfy suchrequirements. Accordingly, the Company determines the pricing among its associated enterprises on the basis of detailed functional and economic analysisinvolving benchmarking against transactions among entities that are not under common control. The tax authorities have jurisdiction to review this arrangementand in the event that they determine that the transfer price applied was not appropriate, the Company may incur increased tax liability, including accrued interestand penalties, which would cause our tax expense to increase, possibly materially, thereby reducing our profitability and cash flows. The Company is currentlyinvolved in disputes with the Indian tax authorities over the application of some of its transfer pricing policies for past years. Please see Note 23 to our consolidatedfinancial statements for details.Introduction of tax legislation and disputes with tax authorities may have an adverse effect on our operations and our overall effective tax rate.Governments in countries in which we operate or provide services could enact new tax legislation, which could have a material adverse effect on ourbusiness, results of operations, financial condition and cash flows. In addition, our ability to repatriate surplus earnings from our operations centers in a tax-efficient manner is dependent upon interpretations of local laws, possible changes in such laws and the renegotiation of existing double tax avoidance treaties.Changes to any of these may adversely affect our overall tax rate, which would have a material adverse effect on our business, results of operations, financialcondition and cash flows.The Company’s legal entity rationalization project is an ongoing endeavor to simplify our global legal entity structure, remove redundancies and reducecompliance risks and costs. Furthermore, we also strive to optimize the tax and financial efficiencies of the group structure. As a result, we may carry out certainre-organizations under the tax laws of various jurisdictions in which we operate and take certain positions to qualify for tax neutrality for such internal re-organization. However, we cannot assure you that any of these projects will be fully implemented or implemented in a manner satisfactory to the Company, or, if itis implemented, that there will not be any adverse actions brought by the tax authorities of certain jurisdictions if this re-organization is implemented.Our earnings may be adversely affected if we repatriate funds held by our foreign subsidiaries.We earn a significant amount of our earnings outside of the United States. We have not determined the extent, if any, to which we may repatriate funds heldby our foreign subsidiaries in light of the current regulatory environment (including under the Tax Reform Act) and because our future growth depends in part uponcontinued infrastructure and technology investments, geographical expansions and acquisitions outside of the U.S. Not all of the undistributed earnings may beavailable for repatriation due to foreign legal restrictions that require minimum reserves to be maintained in those countries. However, in light of the Tax ReformAct, such earnings have been subject to U.S. federal tax as a result of the mandatory repatriation provision described in “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations - Income Taxes” and in Note 20 to our consolidated financial statements contained herein. If we decide to repatriatesuch earnings, we may have to accrue further taxes associated with such earnings in accordance with local tax laws, rules and regulations in the relevantjurisdictions. All of these risks and uncertainties could have a material adverse effect on our business, results of operations, financial condition and cash flows.20Table of ContentsOur global operations expose us to numerous and sometimes conflicting legal and regulatory requirements, and violations of these regulations could harm ourbusiness.We provide services to clients throughout the world, therefore we are subject to numerous, and sometimes conflicting, legal rules on matters as diverse asimport/export controls, content requirements, trade restrictions, tariffs, taxation, sanctions, government affairs, internal and disclosure control obligations, dataprivacy and labor relations. The global nature of our operations increases the difficulty of compliance. Compliance with diverse legal requirements is costly, time-consuming and requires significant resources. Violations of these laws or regulations in the conduct of our business could result in fines, criminal sanctions againstus or our officers, prohibitions on doing business, damage to our reputation and other unintended consequences such as liability for monetary damages, fines and/orcriminal prosecution, unfavorable publicity, restrictions on our ability to process information and allegations by our clients that we have not performed ourcontractual obligations. Due to the varying degrees of development of the legal systems of the countries in which we operate, local laws might be insufficient toprotect our rights. Our failure to comply with applicable legal and regulatory requirements could have a material adverse effect on our business, results ofoperations, financial condition and cash flows.In addition, it may be difficult to enforce our intellectual property rights both within and outside of the U.S. India is a member of the Berne Convention, aninternational intellectual property treaty, and has agreed to recognize protections on intellectual property rights conferred under the laws of other foreign countries,including the laws of the U.S. There can be no assurance, however, that the laws, rules, regulations and treaties in effect in the U.S., India and the otherjurisdictions in which we operate and the contractual and other protective measures we take, are adequate to protect us from misappropriation or unauthorized useof our intellectual property, or that such laws will not change.Among other anti-corruption laws and regulations, including the U.K. Bribery Act, we are subject to the United States Foreign Corrupt Practices Act, orFCPA, which prohibits improper payments or offers of improper payments to foreign officials to obtain business or any other benefit. The FCPA also requirescovered companies to make and keep books and records that accurately and fairly reflect the transactions of the company and to devise and maintain an adequatesystem of internal accounting controls. In many parts of the world, including countries in which we operate, practices in the local business community might notconform to international business standards and could violate these anti-corruption laws or regulations. Although we have policies and procedures in place that aredesigned to promote legal and regulatory compliance, our employees, subcontractors and agents could take actions that violate these policies or procedures orapplicable anti-corruption laws or regulations. Furthermore, the U.S. government may seek to hold us liable for successor liability FCPA violations committed bycompanies in which we invest or that we acquire. Violations of these laws or regulations could subject us to criminal or civil enforcement actions, including finesand suspension or disqualification from government contracting or contracting with private entities in certain highly regulated industries, any of which could have amaterial adverse effect on our business.Currency exchange rate fluctuations in the various currencies in which we do business, especially the Indian rupee and the U.S. dollar, could have a materialadverse effect on our results of operations.Although we report our operating results in U.S. dollars, a portion of our revenues and expenses are denominated in currencies other than the U.S. dollar.Fluctuations in foreign currency exchange rates can have a number of adverse effects on us. Because our consolidated financial statements are presented in U.S.dollars, we must translate revenues, expenses and income, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of eachreporting period. The exchange rates among the Indian rupee, Philippine peso and other currencies in which we incur costs or receive revenues and the U.S. dollarhave changed substantially in recent years and may fluctuate substantially in the future. See Item 7A-“Quantitative and Qualitative Disclosures about MarketRisk.” Additionally, because a majority of our employees are based in India and the Philippines and paid in Indian rupees or Philippine peso while our revenues areprimarily reported in U.S. dollars and U.K. pounds sterling, our employee costs as a percentage of revenues may increase or decrease significantly if the exchangerates among the Indian rupee, Philippine peso and the U.S. dollar fluctuate significantly.Our results of operations could be adversely affected over time by certain movements in exchange rates, particularly if the Indian rupee or other currencies inwhich we incur expenses or receive revenues, change substantially against the U.S. dollar. Although we take steps to hedge a substantial portion of our Indianrupee/U.S. dollar, U.K pounds sterling/U.S. dollar and Philippine peso/U.S. dollar foreign currency exposures, there is no assurance that our hedging strategy willbe successful or that the hedging markets will have sufficient liquidity or depth to allow us to implement our hedging strategy in a cost-effective manner. Anyfailure by our hedging counterparties to meet their contractual obligations could materially and adversely affect our profitability. We are subject to legal restrictionson hedging activities as well as the convertibility of currencies in India. This could limit our ability to use cash generated in one country in another country andcould limit our ability to hedge our exposures.21Table of ContentsDuring June 2016, the U.K. held a referendum in which British citizens approved an exit from the European Union ("EU"), commonly referred to as “Brexit.”As a result of the referendum, the global markets and currencies have been adversely impacted, including experiencing a decline in the value of the U.K. poundsterling as compared to the U.S. dollar. Volatility in exchange rates is expected to continue in the short term as the U.K. negotiates its exit from the EU. Although itis unknown what the result of those negotiations will be, it is possible that new terms may adversely affect our financial results, operations and cash flows.Terrorist attacks and other acts of violence involving India, the Philippines, the U.S. or other countries could adversely affect the financial markets, result in aloss of client confidence and adversely affect our business, results of operations, financial condition and cash flows.Terrorist attacks and other acts of violence or war, including those involving India, the Philippines, the U.S. or other countries, may adversely affectworldwide financial markets and could lead to economic recession, which could adversely affect our business, results of operations, financial condition and cashflows. These events could adversely affect our clients’ levels of business activity and precipitate sudden significant changes in regional and global economicconditions and cycles. These events also pose significant risks to our people and to our operations centers. South Asia has, from time to time, experienced instancesof civil unrest and hostilities among neighboring countries, including Bangladesh, Pakistan and China. In recent years there have been several instances of militaryconfrontations along the Indo-Pakistani border. There continues to be potential for hostilities between India and Pakistan due to recent terrorist activities and thegeopolitical climate along the border. Although this has not been the case to date, such political tensions could create a perception that there is a risk of disruptionof services provided by companies with operations in India, which could have a material adverse effect on the market for our services. Furthermore, if India were tobecome engaged in armed hostilities, particularly hostilities that were protracted or involved the threat or use of nuclear weapons, we might not be able to continueour operations in India. Our insurance policies may not insure us against losses and interruptions caused by terrorist attacks and other acts of violence or war.A substantial portion of our assets and operations are located in India, and we are subject to regulatory, economic and political uncertainties in India.Many of our operating subsidiaries are incorporated in India, and a substantial portion of our assets and our professionals are located in India. We intend tocontinue to develop and expand our offshore facilities in India. In the past, India experienced significant inflation, low growth in gross domestic product andshortages of foreign currency reserves. The Indian government, however, has exercised and continues to exercise significant influence over many aspects of theIndian economy. India’s government has provided significant tax incentives and relaxed certain regulatory restrictions in order to encourage foreign investment inspecified sectors of the economy, including our industry. Certain of those programs, which have benefited us, include tax holidays, liberalized import and exportduties and preferential rules on foreign investment and repatriation. We cannot assure you that liberalization policies will continue or that any other changes madeby the Indian government will be favorable to our operations or business. Recent changes in the leadership of the Indian government, could result in themodification of India’s economic liberalization, deregulation and other policies and disrupt business and economic conditions in India generally and our business inparticular. Any such actions could remove benefits currently received by us or impose additional taxes or other obligations on us and therefore negatively impactour business.The choice of India as an outsourcing destination and our financial performance may be adversely affected by general economic conditions and economic andfiscal policy in India, including changes in exchange rates and controls, interest rates and taxation policies, as well as social stability and political, economic ordiplomatic developments affecting India in the future. In particular, India has experienced significant economic growth over the last several years, but faces majorchallenges in sustaining that growth in the years ahead. These challenges include the need for substantial infrastructure development and improving access tohealthcare and education. Our ability to recruit, train and retain qualified employees, develop and operate our operations centers, and attract and retain clients couldbe adversely affected if India does not successfully meet these challenges.Restrictions on visas and work permits may affect our ability to compete for and provide services to clients in the U.S. and other jurisdictions, which couldmake it more difficult to staff engagements and could increase our costs, which could have an adverse effect on our net income.Immigration and work permit laws and regulations in the countries in which we have customers are subject to legislative and administrative changes as wellas changes in the application of standards and enforcement. For example, the U.S. Congress has been actively considering various proposals that would makeextensive changes to U.S. immigration laws regarding the admission of high-skilled temporary and permanent workers.22Table of ContentsThe ability of some of our executives and employees based in India and other foreign locations to work with and meet clients in the U.S. and otherjurisdictions depends on their ability to obtain the necessary visas and work permits. In recent years, immigration authorities, in the U.S. as well as otherjurisdictions in which our clients are based, have increased the level of scrutiny in granting such visas and work permits. In addition, immigration laws are subjectto legislative change and varying standards of application and enforcement due to political forces, economic conditions or other events, including terrorist attacks.We cannot predict the political or economic events that could affect immigration laws or any restrictive impact those events could have on obtaining or monitoringvisas or work permits for our professionals. The ability to move our employees around the world as necessary to meet client demands is important to our business.If we are unable to efficiently deploy talent because of increased regulation of immigration or work visas, including limitations placed on the number of visasgranted, limitations on the type of work performed or location in which the work can be performed, and new or higher minimum salary requirements, it could bemore difficult to staff our employees on client engagements and could increase our costs and have an adverse effect on our net income and cash flows.We are vulnerable to natural disasters, technical disruptions and man-made events that could severely disrupt the normal operation of our business andadversely affect our business, results of operations, financial condition and cash flows.Our operations centers and our data and voice communications, particularly in India and the Philippines, may be damaged or disrupted as a result of naturaldisasters such as earthquakes, floods, heavy rains, epidemics, tsunamis and cyclones, technical disruptions such as electricity or infrastructure breakdowns,including damage to telecommunications cables, computer glitches and electronic viruses or man-made events such as protests, riots and labor unrest. Such eventsmay lead to the disruption of information systems and telecommunication services for sustained periods. They also may make it difficult or impossible foremployees to reach our business locations. Damage or destruction that interrupts our provision of services could adversely affect our reputation, our relationshipswith our clients, our leadership team’s ability to administer and supervise our business or it may cause us to incur substantial additional expenditure to repair orreplace damaged equipment or delivery centers. We may also be liable to our clients for disruption in service resulting from such damage or destruction. While wecurrently have commercial liability insurance, our insurance coverage may not be sufficient. Furthermore, we may be unable to secure such insurance coverage atpremiums acceptable to us in the future or at all. Prolonged disruption of our services would also entitle our clients to terminate their contracts with us. Any of theabove factors may adversely affect our business, results of operations, financial condition and cash flows.Investors may have difficulty effecting service of process or enforcing judgments obtained in the U.S. against our subsidiaries in India or our executiveofficers.Our primary operating subsidiaries are organized outside the U.S. and some of our executive officers may reside outside of the U.S. A substantial portion ofour assets are located in India. As a result, you may be unable to effect service of process upon our affiliates who reside in India outside their jurisdiction ofresidence. In addition, you may be unable to enforce against these persons outside the jurisdiction of their residence judgments obtained in courts of the U.S.,including judgments predicated solely upon the federal securities laws of the U.S.Sections 44A and Section 13 of the Indian Civil Procedure Code, 1908 (the “Civil Code”) govern recognition and enforcement of foreign judgments. Section44A of the Civil Code provides for recognition and enforcement of a foreign judgment without having to file an original suit in India, provided such judgmentshave been rendered by courts in a country or territory outside India which the Government of India has declared to be a reciprocating territory. We have beenadvised by our Indian counsel that the U.S. and India do not currently have a treaty providing for reciprocal recognition and enforcement of judgments (other thancertain arbitration awards) in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any federal or state court in the U.S.based on civil liability, whether or not it is predicated upon the federal securities laws of the U.S., would not be enforceable in India as such.However, if the party in whose favor such final judgment is rendered brings a new suit in a competent court in India based on a final judgment that has beenobtained in the U.S., Section 13 of the Civil Code provides that the foreign judgment will be conclusive as to certain matters. The suit must be brought in Indiawithin three years of the date of the foreign judgment. It is unlikely, however, that a court in India would award damages on the same basis as a court in the U.S. ifan action is brought in India. It is also unlikely that an Indian court would enforce judgments obtained in the U.S. if it viewed the amount of damages awarded asexcessive or inconsistent with Indian practice.23Table of ContentsRisks Related to our Common StockDelaware law and our amended and restated certificate of incorporation and by-laws contain certain anti-takeover provisions that could delay or discouragebusiness combinations and takeover attempts that stockholders may consider favorable.Our amended and restated certificate of incorporation and by-laws contain provisions that may make it more difficult, expensive or otherwise discourage atender offer or a change in control or takeover attempt by a third-party that is opposed by our board of directors. These provisions include classified boardprovisions, provisions permitting the board of directors to fill vacancies created by its expansion, provisions permitting the removal of directors only for cause andwith the vote of holders of two thirds of our common stock, provisions requiring the vote of holders of two thirds of our common stock for certain amendments toour organizational documents, provisions barring stockholders from calling a special meeting of stockholders or requiring one to be called or from taking action bywritten consent and provisions that set forth advance notice procedures for stockholders’ nominations of directors and proposals for consideration at meetings ofstockholders. These provisions may have the effect of delaying or preventing a change of control or changes in management that stockholders consider favorable.Additionally, because we are incorporated in Delaware, we are subject to Section 203 of the Delaware General Corporation Law. Section 203 may prohibit largestockholders, in particular those owning 15.0% or more of our outstanding voting stock, from merging or combining with us. These provisions of our amended andrestated certificate of incorporation, by-laws and Delaware law could discourage potential takeover attempts and reduce the price that investors might be willing topay for shares of our common stock in the future which could reduce the market price of our stock.We do not intend to pay dividends in the foreseeable future, and, because we are also a holding company, we may be unable to pay dividends.For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying anycash dividends on our common stock. Any future determination to pay dividends will be at the discretion of our board of directors and will be dependent on then-existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, including restrictions under our creditagreement, business prospects and other factors that our board of directors considers relevant. Furthermore, because we are also a holding company, any dividendpayments would also depend on the cash flow from our subsidiaries. Accordingly, under certain circumstances, we may not be able to pay dividends even if ourboard of directors would otherwise deem it appropriate.Our stock price continues to be volatile.Our stock has at times experienced substantial price volatility as a result of, among other reasons, variations between our actual and anticipated financialresults, announcements by us and our competitors, projections or speculation about our business or that of our competitors by the media or investment analysts oruncertainty about current global economic conditions. The stock market, as a whole, experiences extreme price and volume fluctuations that affect the market priceof many companies, including technology companies, in ways that may have been unrelated to these companies’ operating performance. Furthermore, we believeour stock price should reflect future growth and profitability expectations and, if we fail to meet these expectations, this may have a materially adverse effect on thetrading price of our common stock.Risks Related to our IndustryOur industry is subject to rapid technological change, and we may not be successful in addressing these changes.Our industry is characterized by rapid technological change, evolving industry standards, changing client preferences and new product introductions. Thesuccess of our business depends, in part, upon our ability to develop services that keep pace with changes in the industry. We may not be successful in addressingthese changes on a timely basis, or at all, or successfully marketing any changes that we implement. In addition, products or technologies developed by others mayrender our services uncompetitive or obsolete. If we do not sufficiently invest in new technology and industry developments or if we do not make the right strategicinvestments to respond to these developments and successfully drive innovation, our services and solutions, our results of operations, and our ability to develop andmaintain a competitive advantage and continue to grow could be negatively affected.Our industry may not develop in ways that we currently anticipate due to negative public reaction in the U.S. and elsewhere to offshore outsourcing, recentlyproposed legislation or otherwise.We have based our strategy of future growth on certain assumptions regarding our industry and future developments in the market for outsourcing services.For example, we believe that there will continue to be changes in product and service requirements,24Table of Contentsand investments in the products offered by our clients will continue to increase. However, the trend to outsource business processes may not continue and couldreverse. Offshore outsourcing is a politically sensitive topic in the U.S. and elsewhere, and many organizations and public figures have publicly expressed concernabout a perceived association between offshore outsourcing providers and the loss of jobs in the U.S. and elsewhere. In the past year there have been high-profilemovements among activists as well as executive and legislative leadership in the U.S. with the potential to restrict or reduce the use of offshore resources. Inaddition, there has been limited publicity about the negative experience of certain companies that use offshore outsourcing, particularly in India. Current orprospective clients may elect to perform such services themselves or may be discouraged from transferring these services to offshore providers to avoid anynegative perception that may be associated with using an offshore provider. Any slowdown or reversal of existing industry trends would harm our ability tocompete effectively with competitors that operate out of facilities located in the U.S. and elsewhere.A variety of U.S. federal and state legislation has been proposed that, if enacted, could restrict or discourage U.S. companies from outsourcing their servicesto companies with facilities outside the U.S. For example, legislation has been proposed that would require offshore providers to identify where they are locatedand that would require notice to individuals whose personal information is disclosed to non-U.S. companies. In addition, bills have been proposed that wouldprovide tax and other economic incentives for companies that create employment in the U.S. by reducing their offshore outsourcing. Other bills have proposedrequiring call centers to disclose their geographic locations, requiring notice to individuals whose personal information is disclosed to non-U.S. affiliates orsubcontractors, requiring disclosures of companies’ foreign outsourcing practices or restricting U.S. private sector companies that have federal governmentcontracts, federal grants or guaranteed loan programs from outsourcing their services to offshore service providers. Because most of our clients are located in theU.S., any expansion of existing laws or the enactment of new legislation restricting offshore outsourcing could adversely impact our ability to do business withU.S. clients and have a material and adverse effect on our business, results of operations, financial condition and cash flows.In other countries, such as the U.K., there has also been some negative publicity and concern expressed regarding the possible effect of job losses caused byoutsourcing. Legislation enacted in the U.K. as well as other European jurisdictions provides that if a company transfers or outsources its business or a part of itsbusiness to a transferee or a service provider, the employees who were employed in such business are entitled to become employed by the transferee or serviceprovider on the same terms and conditions as they had been employed before the transfer. The dismissal of such employees as a result of such transfer of businessis deemed unfair dismissal and entitles the employees to compensation. As a result, we may become liable for redundancy payments to the employees of our clientswho outsource business to us from those jurisdictions. We are generally indemnified in our existing contracts with clients in those jurisdictions to the extent weincur losses or additional costs due to the application of this legislation to us, and we intend to obtain indemnification in future contracts with clients. However, ifwe are unable to obtain indemnification in future contracts with clients or if the existing indemnification is not enforceable or available, we may be liable underthose agreements we enter into with clients in the U.K. and other European jurisdictions.Unauthorized disclosure of sensitive or confidential client and customer data, whether through breach of our computer systems or otherwise, could expose usto protracted and costly litigation and cause us to lose clients.We are typically required to process, and sometimes collect and/or store sensitive data, including data regulated by the U.S. Health Insurance Portability andAccountability Act of 1996, as amended, of our clients’ end customers in connection with our services, including names, addresses, social security numbers,personal health information, credit card account numbers, checking and savings account numbers and payment history records, such as account closures andreturned checks. In addition, we collect and store data regarding our employees. As a result, we are subject to various data protection and privacy laws, includingthe GDPR, in the countries in which we operate, and the failure to comply could result in significant fines and penalties. In addition, many of our agreements withour clients do not include any limitation on our liability to them with respect to breaches of our obligation to keep the information we receive from themconfidential.Although we devote substantial resources to protect our information assets and our clients' confidential information, any network infrastructure are subject tobe vulnerable to rapidly evolving cyber-attacks, and our user data and corporate systems and security measures may be breached due to the actions of outsideparties (including cyber-attacks), employee error, malfeasance, a combination of these, or otherwise, allowing an unauthorized party to obtain access to our data orour users’ or customers’ data. Additionally, outside parties may attempt to fraudulently induce employees, users, or customers to disclose sensitive information inorder to gain access to our data or our users’ or customers’ data. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotagesystems change frequently or may be designed to remain dormant until a predetermined event and often are not recognized until launched against a target, we maybe unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of our security occurs (or a breach of acustomer’s security that can be attributed to our fault or is perceived to be our fault), the market perception of the effectiveness of our security measures25Table of Contentscould be harmed and we could lose users and customers. Security breaches expose us to a risk of loss of this information, litigation, remediation costs, increasedcosts for security measures, loss of revenue, damage to our reputation, and potential liability.If any person, including any of our employees, negligently disregards or intentionally breaches controls or procedures with which we are responsible forcomplying with respect to such data or otherwise mismanages or misappropriates that data, or if unauthorized access to or disclosure of data in our possession orcontrol occurs, we could be subject to significant liability to our clients or our clients’ customers for breaching contractual confidentiality and security provisions orprivacy laws, as well as liability and penalties in connection with any violation of applicable privacy laws or criminal prosecution. Unauthorized disclosure ofsensitive or confidential client or employee data, whether through breach of computer systems, systems failure, employee negligence, fraud or misappropriation, orotherwise, could damage our reputation and cause us to lose clients. Similarly, unauthorized access to or through our information systems and networks or those wedevelop or manage for our clients, whether by our employees or third parties, could result in negative publicity, legal liability and damage to our reputation.If any person, including any of our employees, is able to penetrate our perimeter or internal network security, computing infrastructure or otherwisemismanages or misappropriates sensitive data, discloses or distributes any such data in an unauthorized manner, we could be subject to significant liability andlawsuits from our clients or their customers for breaching contractual confidentiality provisions or privacy laws, or investigations and penalties from regulators.Under some of our client contracts, we have agreed to pay for the costs of remediation or notice to end users or credit monitoring, as well as other costs.Cyber-attacks penetrating the network security of our data centers or any unauthorized disclosure or access to confidential information and data of our clientsor their end customers could also have a negative impact on our reputation and client confidence, which could have a material adverse effect on our business,results of operations, financial condition and cash flows.ITEM 1B. Unresolved Staff CommentsNone.26Table of ContentsITEM 2. PropertiesOur corporate headquarters are located in New York, New York. We have 26 operations centers in India, six operations centers in the Philippines and oneoperations center in each of Bulgaria, Colombia, the Czech Republic, Romania and South Africa with an aggregate area of approximately 1,850,000 square feetand a current installed capacity of approximately 27,700 workstations, including workstations for training and our employees in enabling functions. We also havemultiple operations centers and regional offices in the U.S. and an operation center in the U.K.Our corporate headquarters and all of our operations centers are leased under long-term leases with varying expiration dates, except for an operations centerin Pune, India with an area of 86,361 sq. ft. and containing approximately 1,600 agent workstations, which we own. Substantially all of our owned and leasedproperty is used to service all of our reporting segments. We believe that our current facilities are adequate to support our existing operations. We also believe thatwe will be able to obtain suitable additional facilities on commercially reasonable terms on an “as needed basis.”ITEM 3. Legal ProceedingsIn the course of our normal business activities, various lawsuits, claims and proceedings may be instituted or asserted against us. Although there can be noassurance, we believe that the disposition of matters currently instituted or asserted will not have a material adverse effect on our consolidated financial position,results of operations or cash flows. Please see Note 23 to our consolidated financial statements contained herein for details regarding our tax proceedings.ITEM 4. Mine Safety DisclosuresNot applicable.27Table of ContentsPART II. ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesOur common stock trades on the Nasdaq Global Select Market under the symbol “EXLS.” Price RangeCalendar PeriodHigh Low2017 First Quarter$51.29 $44.25Second Quarter$56.66 $45.05Third Quarter$59.84 $52.50Fourth Quarter$63.35 $57.892016 First Quarter$52.92 $40.80Second Quarter$52.91 $46.24Third Quarter$54.78 $47.52Fourth Quarter$51.38 $42.00As of February 21, 2018 , there were 24 holders of record of our outstanding common stock. A substantially greater number of holders of our common stockare “street name” or beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions.We have not paid or declared any cash dividends on our common stock. We currently expect to retain all of our earnings for use in developing our businessand do not anticipate paying any cash dividends in the foreseeable future. Future cash dividends, if any, will be paid at the discretion of our board of directors andwill depend, among other things, upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions andsuch other factors as our board of directors may deem relevant.Unregistered Sales of Equity SecuritiesNone.Issuer Purchases of Equity SecuritiesOn December 30, 2014, the Company’s Board of Directors authorized a common stock repurchase program (the “2014 Repurchase Program”), under whichshares were authorized to be purchased by the Company from time to time from the open market and through private transactions during each of the fiscal years2015 through 2017 up to an annual amount of $20 million.On February 28, 2017, the Company’s Board of Directors authorized an additional common stock repurchase program (the “2017 Repurchase Program”),under which shares may be purchased by the Company from time to time from the open market and through private transactions during each of the fiscal years2017 through 2019 up to an aggregate additional amount of $100 million. The approval increases the 2017 authorization from $20 million to $40 million andauthorizes stock repurchases of up to $40 million in each of 2018 and 2019.The Company has structured open market purchases under the 2014 Repurchase Program and 2017 Repurchase Program to comply with Rule 10b-18 underthe Exchange Act. Repurchases may be discontinued at any time by management.Repurchased shares under these programs are recorded as treasury shares and are held until our Board of Directors designates that these shares be retired orused for other purposes.28Table of ContentsThe following table provides information regarding the purchase of equity securities by the Company during the three months ended December 31, 2017:Period Total Number ofShares Purchased Average Price Paidper Share Total Number of SharesPurchased as Part ofPublicly Announced Plans orPrograms Approximate DollarValue of Shares ThatMay Yet Be PurchasedUnder the Plans orProgramsOct 1, 2017 through Oct 31, 2017 9,700 $58.82 9,700 $10,109,462Nov 1, 2017 through Nov 30, 2017 79,165 $61.61 79,165 $5,232,369Dec 1, 2017 through Dec 31, 2017 (1) 92,423 $61.36 88,272 $—Total 181,288 $61.33 177,137 (1 ) Includes 4,151 shares of the Company’s common stock acquired by the Company at the price of $60.45 in connection with satisfaction of tax withholdingobligations on vested restricted stock. Price paid per share for the restricted stock was the average of high and low price of common stock on the trading day prior tothe vesting date of the restricted stock units.During the year ended December 31, 2017, the Company purchased 761,154 shares of its common stock under the “2014 Repurchase Program” and “2017Repurchase Program”, for an aggregate purchase price of approximately $40.19 million including commissions, representing an average purchase price per share of$52.80 .During the year ended December 31, 2017, the Company acquired 69,154 shares from employees in connection with withholding tax payments related tothe vesting of restricted stock for a total consideration of $3.27 million . The weighted average purchase price of $47.24 was the average of the high and low priceof the Company’s shares of common stock on the Nasdaq Global Select Market on the trading day prior to the vesting date of the shares of restricted stock.Equity Compensation Plan InformationThe following table provides information as of December 31, 2017 with respect to the shares of our common stock that may be issued under our existingequity compensation plans. For a description of our equity compensation plans, please see Note 21 to our consolidated financial statements.Plan CategoryNumber of Securitiesto be Issued UponExercise/Vesting ofOutstandingOptions, Warrants andRights* WeightedAverage ExercisePrice ofOutstandingOptions, Warrants andRights Number of SecuritiesRemaining Available for FutureIssuance Under EquityCompensation Plans (ExcludingSecuritiesReflected in Column 1)Equity compensation plans approved by securityholders2,215,523 $18.03 1,509,976Equity compensation plans not approved by securityholders— — —Total2,215,523 $18.03 1,509,976 *This includes outstanding options and unvested Restricted Stock, Restricted Stock Units and Performance Restricted Stock Units. Refer to Note 21 to our consolidatedfinancial statements for further details.29Table of ContentsPerformance GraphThe following graph compares the cumulative total stockholder return on our common stock with the cumulative total return of the Nasdaq 100 Index(capitalization weighted) and our peer group of companies for the period beginning December 31, 2012. Our peer group of companies is comprised of twocompanies that we believe are our closest reporting issuer competitors: Genpact Limited and WNS (Holdings) Limited. The returns of the component entities ofour peer group index are weighted according to the market capitalization of each company as of the beginning of each period for which a return is presented. Thereturns assume that $100 was invested on December 31, 2012 and that all dividends were reinvested. The stock performance shown on the graph below is notindicative of future price performance.This graph will not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This graph will not bedeemed to be incorporated by reference into any prior or subsequent filing under the Securities Act, or the Exchange Act.30Table of ContentsITEM 6. Selected Financial DataThe following table sets forth our selected consolidated historical financial data as of the dates and for the periods indicated. Our selected consolidatedfinancial data set forth below as of December 31, 2017 and 2016 and for each of the three years in the period ended December 31, 2017 has been derived from ourconsolidated financial statements included elsewhere in this Annual Report on Form 10-K. Our selected consolidated financial data set forth below as ofDecember 31, 2015, 2014 and 2013 and for years ended December 31, 2014 and 2013 is derived from our audited financial statements, which are not included inthis Annual Report on Form 10-K. Our selected consolidated financial information for 2017, 2016 and 2015 should be read in conjunction with our consolidatedfinancial statements and the notes thereto and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which areincluded elsewhere in this Annual Report on Form 10-K. Year ended December 31, 2017 2016 2015 2014 2013 (in millions, except share and per share data)Consolidated Statements of Income Data: Revenues, net$762.3 $686.0 $628.5 $499.3 $478.5Cost of revenues (excluding depreciation andamortization)495.6 448.0 402.9 332.6 291.0Gross profit266.7 238.0 225.6 166.7 187.5General and administrative expenses102.6 88.6 77.3 65.4 58.8Selling and marketing expenses53.4 50.6 49.5 39.3 36.4Depreciation and amortization expenses38.5 34.6 31.5 28.0 24.9Income from operations72.264.267.334.067.4Foreign exchange gain/(loss), net2.8 5.6 2.8 — (5.0)Interest expense(1.9) (1.3) (1.3) (0.4) (0.6)Other income, net11.9 15.4 7.0 4.0 3.2Income before income taxes85.0 83.9 75.8 37.6 65.0Income tax expense36.1 22.2 24.2 5.2 16.9Net income$48.9 $61.7 $51.6 $32.4 $48.1Earnings per share: Basic:$1.44 $1.84 $1.55 $0.99 $1.47Diluted:$1.39 $1.79 $1.51 $0.96 $1.42Weighted-average number of shares used incomputing earnings per share: Basic33,897,916 33,566,367 33,298,104 32,804,606 32,750,178Diluted35,110,210 34,563,319 34,178,340 33,636,593 33,842,938 As of December 31, 2017 2016 2015 2014 2013 (in millions)Consolidated Statements of Balance Sheets Data: Cash and cash equivalents$86.8 $213.2 $205.3 $176.5 $148.1Working capital (1)308.6 254.6 232.1 207.0 169.6Total assets824.8 706.5 650.8 573.6 463.4Borrowings60.7 45.0 70.0 50.0 —Other long term obligations (2)30.1 15.1 17.9 13.4 21.2ExlService Holdings, Inc. stockholders' equity$599.8 $532.0 $465.6 $419.2 $366.2 (1) Working capital means total current assets less total current liabilities. Pursuant to ASU No. 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification ofDeferred Taxes”, all deferred tax liabilities and assets have been classified as long-term in the consolidated balance sheets.(2) Other long term obligations include unrecognized tax benefits, retirement benefits, capital leases obligation, deferred rent, unrealized losses on effective cash flowhedges, income taxes payable and other long term liabilities.31Table of ContentsITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsYou should read the following discussion in connection with our consolidated financial statements and the related notes included elsewhere in this AnnualReport on Form 10-K. Some of the statements in the following discussion are forward looking statements. See “—Forward-Looking Statements.” Dollar amountswithin Item 7 are presented as actual dollar amounts.Forward-Looking StatementsThis Annual Report on Form 10-K contains forward looking statements. You should not place undue reliance on these statements because they are subject tonumerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond ourcontrol. These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similarexpressions. 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. As you read and consider this AnnualReport on Form 10-K, you should understand that these statements are not guarantees of performance or results. They involve known and unknown risks,uncertainties and assumptions. Although we believe that these forward looking statements are based on reasonable assumptions, you should be aware that manyfactors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward lookingstatements. These factors include but are not limited to:• our dependence on a limited number of clients in a limited number of industries;•worldwide political, economic or business conditions;•negative public reaction in the U.S. or elsewhere to offshore outsourcing;•fluctuations in our earnings;•our ability to attract and retain clients including in a timely manner;•our ability to successfully consummate or integrate strategic acquisitions;•restrictions on immigration;•our ability to hire and retain enough sufficiently trained employees to support our operations;•our ability to grow our business or effectively manage growth and international operations;•any changes in the senior management team;•increasing competition in our industry;•telecommunications or technology disruptions;•our ability to withstand the loss of a significant customer;•regulatory, legislative and judicial developments, including changes to or the withdrawal of governmental fiscal incentives;•changes in tax laws or decisions regarding repatriation of funds held abroad;•ability to service debt or obtain additional financing on favorable terms;•legal liability arising out of customer contracts;•technological innovation;•political or economic instability in the geographies in which we operate;•cyber security incidents, data breaches, or other unauthorized disclosure of sensitive or confidential client and customer data; and•adverse outcome of our disputes with the Indian tax authorities.These and other factors are more fully discussed elsewhere in this Annual Report on Form 10-K. These and other risks could cause actual results to differmaterially from those implied by forward-looking statements in this Annual Report on Form 10-K.The forward-looking statements made by us in this Annual Report on Form 10-K, or elsewhere, speaks only as of the date on which they were made. Newrisks and uncertainties come up from time to time, and it is impossible for us to predict these events or how they may affect us. We have no obligation to updateany forward-looking statements in this Annual Report on Form 10-K after the date of this Annual Report on Form 10-K, except as required by federal securitieslaws.32Table of ContentsExecutive OverviewWe are an operations management and analytics company that helps businesses enhance revenue growth and improve profitability. Using proprietaryplatforms, methodologies, and our full range of digital capabilities, we look deeper to help companies transform their businesses, functions and operations, to helpthem deliver better customer experience and business outcomes, while managing risk and compliance. We serve our customers in the insurance, healthcare, travel,transportation and logistics, banking and financial services and utilities industries, among others.We operate in the business process management (“BPM”) industry and we provide operations management and analytics services. Our eight operatingsegments are strategic business units that align our products and services with how we manage our business, approach our key markets and interact with our clients.Six of those operating segments provide BPM or “operations management” services, which we organize into industry focused operating segments (Insurance,Healthcare, Travel, Transportation and Logistics, Banking and Financial Services, and Utilities) and one “capability” operating segment (finance and accounting)that provides services to clients in our industry-focused segments as well as clients across other industries. In each of these six operating segments we provideoperations management services, which typically involve transfer to the Company business operations of a client, after which we administer and manage thoseoperations for our client on an ongoing basis. Our remaining two operating segments are Consulting, which provides industry-specific digital transformationalservices related to operations management services, and our Analytics operating segment, which provides services that focus on driving improved businessoutcomes for clients by generating data-driven insights across all parts of their business.We present information for the following reportable segments:•Insurance,•Healthcare,•Travel, Transportation and Logistics,•Finance and Accounting,•Analytics, and•All Other (consisting of our remaining operating segments including our banking and financial services, utilities and consulting operating segments).For further information on our operating segments, please see “Item 1. Business.”Our global delivery network, which includes highly trained industry and process specialists across the United States, Latin America, South Africa, Europe andAsia (primarily India and the Philippines), is a key asset. We have operations centers in India, the U.S., the Philippines, Bulgaria, Colombia, South Africa,Romania and the Czech Republic.Consistent with our growth strategy, on December 22, 2017, we acquired substantially all of the assets and assumed certain liabilities related thereto ofHealth Integrated, Inc. (“Health Integrated”).The acquisition of Health Integrated is included in the Healthcare reportable segment. Health Integrated is a Florida-based care management company thatprovides end-to-end analytics- and behavioral IP-enabled care management services including case management, utilization management, disease management,special needs programs, and multi-chronic care management on behalf of health plans. Health Integrated serves millions of lives in the Medicaid, Medicare, anddual eligible populations.33Table of ContentsRevenuesFor the year ended December 31, 2017, we had revenues of $762.3 million compared to revenues of $686.0 million for the year ended December 31, 2016, anincrease of $76.3 million or 11.1% .We serve clients mainly in the U.S. and the U.K., with these two regions generating approximately 82.2% and 14.3% , respectively, of our total revenues forthe year ended December 31, 2017 and approximately 80.9% and 16.0%, respectively, of our revenues for the year ended December 31, 2016.For the years ended December 31, 2017 and 2016, our total revenues from our top ten clients accounted for 38.6% and 40.1% of our total revenues,respectively. Our revenue concentration with our top clients remains consistent year-over-year and we continue to develop relationships with new clients todiversify our client base. We believe that the loss of any of our ten largest clients could have a material adverse effect on our financial performance.Our BusinessWe provide operations management and analytics services. We market our services to our existing and prospective clients through our sales and clientmanagement teams, which are aligned by key industry verticals and cross-industry domains such as finance and accounting. Our sales and client managementteams operate from the U.S., Europe and Australia.Operations Management Services: We provide our clients with a range of operations management services principally in the insurance, healthcare, travel,transportation and logistics, banking and financial services and utilities sectors, among others, as well as cross-industry operations management services, such asfinance and accounting services. We also provide services related to operations management, through our Consulting services that provide advice regardingtransformational initiatives.Our operations management services typically involve the transfer to the Company business operations of a client such as claims processing, clinicaloperations, or financial transaction processing, after which we administer and manage the operations for our client on an ongoing basis. As part of this transfer, wehire and train employees to work at our operations centers on the relevant business operations, implement a process migration to these operations centers and thenprovide services either to the client or directly to the client’s customers. Each client contract has different terms based on the scope, deliverables and complexity ofthe engagement.We have been observing a shift in industry pricing models toward transaction-based pricing, outcome-based pricing and other pricing models. We believe thistrend will continue and we have begun to use such alternative pricing models with some of our current clients and are seeking to move certain other clients from abilling rate model to a transaction-based or other pricing model. These pricing models place the focus on operating efficiency in order to maintain our grossmargins. In addition, we have also observed that prospective larger clients are entering into multi-vendor relationships with regard to their outsourcing needs. Webelieve that the trend toward multi-vendor relationships will continue. A multi-vendor relationship allows a client to seek more favorable pricing and other contractterms from each vendor, which can result in significantly reduced gross margins from the provision of services to such client for each vendor. To the extent ourlarge clients expand their use of multi-vendor relationships and are able to extract more favorable contract terms from other vendors, our gross margins andrevenues may be reduced with regard to such clients if we are required to modify the terms of our relationships with such clients to meet competition.Our existing agreements with original terms of three or more years provide us with a relatively predictable revenue base for a substantial portion of ouroperations management business, however, we have a long selling cycle for our services and the budget and approval processes of prospective clients make itdifficult to predict the timing of entering into definitive agreements with new clients. Similarly, new license sales and implementation projects for our technologyservice platforms and other software-based services have a long selling cycle, however ongoing annual maintenance and support contracts for existingarrangements provide us with a relatively predictable revenue base.Analytics: Our Analytics services focus on driving improved business outcomes for our customers by generating data-driven insights across all parts of ourcustomers’ business. Our teams deliver predictive and prescriptive analytics in the areas of customer acquisition and lifecycle management, risk underwriting andpricing, operational effectiveness, credit and operational risk monitoring and governance, regulatory reporting, and data management. We actively cross-sell and,where appropriate, integrate our Analytics services with other operations management services as part of a comprehensive offering set for our clients.34Table of ContentsWe anticipate that revenues from our Analytics services will grow as we expand our service offerings and client base, both organically and throughacquisitions.ExpensesCost of RevenuesOur cost of revenues primarily consists of:•employee costs, which include salary, bonus and other compensation expenses; recruitment and training costs; employee insurance; transport and meals;rewards and recognition for certain employees; and non-cash stock compensation expense; and•costs relating to our facilities and communications network, which include telecommunication and IT costs; facilities and customer management support;operational expenses for our outsourcing centers; rent expenses; and•travel and other billable costs to our clients.The most significant components of our cost of revenues are salaries and benefits (including stock based compensation), recruitment, training, transport,meals, rewards and recognition and employee insurance. Salary levels, employee turnover rates and our ability to efficiently manage and utilize our employeessignificantly affect our cost of revenues. Salary increases for most of our operations personnel are generally awarded each year effective April 1. Accordingly,employee costs are generally lower in the first quarter of each year compared to the rest of the year. We make every effort to manage employee and capacityutilization and continuously monitor service levels and staffing requirements. Although we generally have been able to reallocate our employees as client demandhas fluctuated, a contract termination or significant reduction in work assigned to us by a major client could cause us to experience a higher-than-expected numberof unassigned employees, which would increase our cost of revenues as a percentage of revenues until we are able to reduce or reallocate our headcount. Asignificant increase in the turnover rate among our employees, particularly among the highly skilled workforce needed to execute certain services, would increaseour recruiting and training costs and decrease our operating efficiency, productivity and profit margins. In addition, cost of revenues also includes non-cashamortization of stock compensation expense relating to our issuance of equity awards to employees directly involved in providing services to our clients.We expect our cost of revenues to continue to increase as we continue to add professionals in our operating centers globally to service additional business andas wages continue to increase globally. In particular, we expect training costs to continue to increase as we continue to add staff to service new clients and provideexisting staff with additional skill sets. There is significant competition for professionals with skills necessary to perform the services we offer to our clients. Asour existing competitors continue to grow, and as new competitors enter the market, we expect competition for skilled professionals in each of these areas tocontinue to increase, with corresponding increases in our cost of revenues to reflect increased compensation levels for such professionals. However, a significantportion of our client contracts include inflation-based adjustments to our billing rates year over year which partially offset such increase in cost of revenues. SeeItem 1A-“Risk Factors-Employee wage increases may prevent us from sustaining our competitive advantage and may reduce our profit margin.”We generally experience a higher cost of revenues as a percentage of revenues during the initial 12 months to 18 months in a long-term BPM contract due toupfront investments in infrastructure, resource hiring and training during migration. The cost of revenues as a percentage of revenues improve as we scale up,achieve operational efficiencies and complete the migration.Selling, General and Administrative Expenses ("SG&A")Our general and administrative expenses are comprised of expenses relating to salaries and benefits (including stock based compensation) as well as costsrelated to recruitment, training and retention of senior management and other support personnel in enabling functions, telecommunications, utilities, travel andother miscellaneous administrative costs. General and administrative (“G&A”) expenses also include acquisition-related costs, legal and professional fees (whichrepresent the costs of third party legal, tax, accounting and other advisors), investment in product development, digital technology, advanced automation androbotics, bad debt allowance and non-cash amortization of stock compensation expenses related to our issuance of equity awards to members of our board ofdirectors. We expect our G&A costs to increase as we continue to strengthen our support and enabling functions and invest in leadership development, performancemanagement and training programs.Selling and marketing expenses primarily consist of salaries and benefits (including stock based compensation) and other compensation expenses of sales andmarketing and client management personnel, sales commission, travel and brand building, client events and conferences. We expect that sales and marketingexpenses will continue to increase as we invest in our sales and client management functions to better serve our clients and in our branding.35Table of ContentsDepreciation and AmortizationDepreciation and amortization pertains to depreciation of our tangible assets, including network equipment, cabling, computers, office furniture andequipment, motor vehicles and leasehold improvements and amortization of intangible assets. As we add new facilities and expand our existing operations centers,we expect that depreciation expense will increase, reflecting additional investments in equipment such as desktop computers, servers and other infrastructure. Weexpect amortization of intangible assets to increase further as we pursue strategic relationships and acquisitions.Foreign ExchangeWe report our financial results in U.S. dollars. However, a significant portion of our total revenues are earned in U.K. pounds sterling (14.3% and 16.0%,respectively, for the years ended December 31, 2017 and 2016), while a significant portion of our expenses are incurred and paid in Indian rupees (29.6% and33.6%, respectively, of our total costs for the years ended December 31, 2017 and 2016) and the Philippine peso (8.4% and 11.0%, of our total costs for the yearsended December 31, 2017 and 2016). The exchange rates among the Indian rupee, the Philippine peso, the U.K. pound sterling and the U.S. dollar have changedsubstantially in recent years and may fluctuate substantially in the future as well. The results of our operations could be substantially impacted as the Indian rupee,the Philippine peso and the U.K. pound sterling appreciate or depreciate against the U.S. dollar. We early adopted ASU 2017-12, Derivative and Hedging (Topic815), Targeted Improvements to Accounting for Hedging Activities. Pursuant to this adoption, effective January 1, 2017, we recorded the resultant foreignexchange gain/(loss) upon settlement of cash flow hedges to cost of revenues and operating expenses, as applicable, in the consolidated statements of income. SeeNotes 2 and 15 to our consolidated financial statements and Item 7A -“Quantitative and Qualitative Disclosures about Market Risk-Foreign Currency Risk.”Interest ExpenseInterest expense consist of interest on our borrowings under the credit facility, capital lease obligation and notional interest segregated from purchase ofproperty and equipment.Other Income, netOther income, net primarily consists of gain/(loss) on sale, and dividend income on our investments in mutual funds, money market accounts and interest ontime deposits included in cash and cash equivalents and short-term investments on our consolidated balance sheet. Other income, net also consists of change in fairvalue of earn-out consideration and interest on refunds received from income tax authorities in India on completion of tax assessments.Income TaxesWe are subject to income taxes in the United States and other foreign jurisdictions. Our tax expense and cash tax liability in the future could be adverselyaffected by various factors, including, but not limited to, changes in tax laws, regulations, accounting principles or interpretations and the potential adverseoutcome of tax examinations. Changes in the valuation of deferred tax assets and liabilities, which may result from a decline in our profitability or changes in taxrates or legislation, could have a material adverse effect on our tax expense.On December 22, 2017, the United States enacted the Tax Reform Act, which significantly impacted our effective tax rate for the year ended December 31,2017. The Tax Reform Act makes broad and complex changes to the U.S. tax code including, but not limited to (1) reducing the U.S. federal corporate tax ratefrom 35.0% to 21.0% effective January 1, 2018 and (2) implementing a modified territorial tax system that includes a one-time transition tax on the mandatorydeemed repatriation of accumulated earnings and profits of foreign subsidiaries that is payable over eight years. We recognized a one-time income tax expense of$29.2 million during the three months and year ended December 31, 2017, comprised of a provisional deemed repatriation tax expense of $27.2 million and aprovisional net deferred tax expense of $2.0 million. The one-time incremental income tax expense reflects certain assumptions based upon our interpretation of theTax Reform Act and may change as we receive additional clarification and guidance and as the interpretation of the Tax Reform Act evolves over time. See“Results of Operations-Year Ended December 31, 2017 Compared to Year Ended December 31, 2016-Income Tax Expense” and see Note 20 to our consolidatedfinancial statements.Under the Indian Income Tax Act, 1961, our operations centers in India, from which we derive a significant portion of our revenues, benefited through March 31,2011 from a ten-year holiday from Indian corporate income taxes in respect of their export profits under the Software Technology Parks of India (“STPI”) Scheme.In the absence of this tax holiday, income derived from our Indian operations is taxed up to the maximum tax rate generally applicable to Indian enterprises, which,as of December 31, 2017, was 34.61%.36Table of ContentsDuring the last several years, we either established or acquired new centers that are eligible for tax benefits under the SEZ Act. The SEZ Act introduced a 15-year tax holiday scheme for operations established in designated special economic zones (“SEZs”). Under the SEZ Act, qualifying operations are eligible for adeduction from taxable income equal to (i) 100% of their export profits derived for the first five years from the commencement of operations; (ii) 50% of suchexport profits for the next five years; and (iii) 50% of the export profits for a further five years, subject to satisfying certain capital investment requirements. TheSEZ Act provides, among other restrictions, that this holiday is not available to operations formed by splitting up or reconstructing existing operations ortransferring existing plant and equipment (beyond a prescribed limit) to new SEZ locations. During the year company started operations from two new SEZ units,and Tax holiday for one of the unit expired in 2017, following the expiry of the tax exemption, SEZ unit is taxed at the prevailing annual tax rate, which as ofDecember 31, 2017 was 34.61%. We anticipate establishing additional operations centers in SEZs or other tax advantaged locations in the future.We also benefit from a corporate tax holiday in the Philippines for our operations centers established there over the last several years. The tax holiday expiredfor two of our centers in 2014 and in 2016 and will expire over the next few years for other centers, which may lead to an increase in our overall tax rate. Followingthe expiry of the tax exemption, income generated from centers in the Philippines will be taxed at the prevailing annual tax rate, which as of December 31, 2017was 5% of the gross income.We recognize deferred tax assets and liabilities for temporary differences between the financial statement carrying amounts of existing assets and liabilitiesand their respective tax bases and operating loss carry forwards. We determine if a valuation allowance is required or not on the basis of an assessment of whetherit is more likely than not that a deferred tax asset will be realized.Critical Accounting Policies and EstimatesThe discussion and analysis of our financial condition and results of operations are based upon the financial statements included in this Annual Report onForm 10-K, which have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”). A summary of our significant accountingpolicies is included in Note 2-“Summary of Significant Accounting Policies” to our consolidated financial statements. We consider the policies discussed below tobe critical to an understanding of our consolidated financial statements, as their application places the most significant demands on management’s judgmentregarding matters that are inherently uncertain at the time an estimate is made. These policies include revenue recognition, accounts receivable, businesscombinations, goodwill, intangibles and long-lived assets, stock-based compensation, derivative instruments and hedging activity, income taxes and assets andobligations related to employee benefit plans. These accounting policies and the associated risks are set out below. Future events may not develop exactly asforecasted and estimates routinely require adjustment.Revenue RecognitionWe derive our revenues from operations management and analytics services. Revenues from operations management services are recognized primarily on atime-and-material-based, transaction-based, outcome-based, cost-plus and fixed-price basis; revenues from analytics services are recognized primarily on a time-and-material or fixed price basis. The services provided within our operations management and Analytics contracts generally contain one unit of accounting, exceptfor the software and related services contracts involving implementation services and post contract maintenance services. In such multiple element arrangements,revenue is allocated to maintenance based on the price charged when that element is sold separately (vendor specific objective evidence or “VSOE”). Revenues arerecognized when the four basic criteria are met; persuasive evidence of an arrangement exists, the sales price is fixed or determinable, services have beenperformed and collection of amounts billed is reasonably assured.Revenues under time-and-material, transaction and outcome-based contracts are recognized as the services are performed. When the terms of the clientcontract specify service level parameters that must be met (such as turnaround time or accuracy), we monitor such service level parameters to determine if anyservice credits or penalties have been incurred. Revenues are recognized net of any penalties or service credits that are due to a client.Revenue from Analytics services including modeling, targeting and designing of campaigns and mail marketing including email marketing and other digitalsolutions is typically recognized on delivery of such campaigns. In respect of arrangements involving subcontracting of part or whole of the assigned work, theCompany evaluates revenue to be recognized under Accounting Standards Codification (“ASC”) 605-45 “Revenue recognition - Principal agent considerations”.Revenues for our fixed-price contracts are recognized using the proportional performance method when the pattern of performance under the contracts can bereasonably determined. We estimate the proportional performance of a contract by comparing the actual number of hours or days worked to the estimated totalnumber of hours or days required to complete37Table of Contentseach engagement. The use of the proportional performance method requires significant judgment relative to estimating the number of hours or days required tocomplete the contracted scope of work, including assumptions and estimates relative to the length of time to complete the project and the nature and complexity ofthe work to be performed. We regularly monitor our estimates for completion of a project and record changes in the period in which a change in an estimate isdetermined. If a change in an estimate results in a projected loss on a project, such loss is recognized in the period in which it is first identified.Revenues from our software and related services contracts, which are not significant, are primarily related to maintenance renewals or incremental licensefees for additional users. Maintenance revenues are generally recognized on a straight-line basis over the annual contract term. Fees for incremental license feeswithout any associated services are recognized upon delivery of the related incremental license. To a lesser extent, our software and related services contracts maycontain software license, related services and maintenance elements as a multiple element arrangement. In such cases, revenue is allocated to maintenance based onthe price charged when that element is sold separately (vendor specific objective evidence or “VSOE”). Services related to software licenses are evaluated todetermine whether those services are significant or essential to the functionality of the software. When services are significant or considered essential, revenuesrelated to license fee and services are recognized as the services are performed using the percentage of completion method of accounting, under which the totalvalue of revenue is recognized on the basis of the percentage that each contract’s total labor hours to date bears to the total expected labor hours (input method).We defer the revenues and related cost of revenue while a process is under migration and recognize such revenues and costs ratably over the period duringwhich the related services are expected to be performed. The deferred costs are limited to the amounts of the deferred revenues.Accounts ReceivableWe record accounts receivable net of allowances for doubtful accounts. Allowances for doubtful accounts are established through the evaluation of accountsreceivable aging, prior collection experience, current market conditions, clients’ financial condition and the amount of receivables in dispute to estimate thecollectability of these receivables.Business CombinationsWe account for all business combinations using the acquisition method of accounting as prescribed by ASC Topic 805, “Business Combinations”. Theguidance requires the use of significant estimates and assumptions in allocation of the purchase price in determining the fair value of identifiable assets acquiredand liabilities assumed, including intangible assets and contingent consideration and allocation of purchase price over such assets and liabilities on the acquisitiondate. The significant estimates and assumptions include, but are not limited to, the timing and amount of future revenue and cash flows based on, among otherthings, anticipated growth rates and customer attrition rates and the discount rate reflecting the risk inherent in future cash flows.Goodwill, Intangible Assets and Long-lived AssetsGoodwill represents the cost of acquired businesses in excess of the fair value of the identifiable tangible and intangible assets acquired and liabilitiesassumed. All assets and liabilities of the acquired business including goodwill are assigned to reporting units. We test goodwill for impairment at least annually onOctober 1, or if indicators of impairment arise, such as the effects of obsolescence, demand, competition and other economic factors or on occurrence of an eventor change in circumstances that would more likely than not reduce the fair value of the reporting unit below its carrying amount. When determining the fair valueof our reporting units, we utilize various assumptions, including operating results, business plans and projections of future cash flows. Any adverse changes in keyassumptions about our businesses and their prospects or an adverse change in market conditions may cause a change in the estimation of fair value and could resultin an impairment charge.We review long-lived assets and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carryingamount of an asset may not be recoverable. In general, we will recognize an impairment loss when the sum of undiscounted expected future cash flows is less thanthe carrying amount of such asset. The estimate of undiscounted cash flows and the fair value of assets require several assumptions and estimates like the weightedaverage cost of capital, discount rates, risk-free rates, market rate of return and risk premiums and can be affected by a variety of factors, including external factorssuch as industry and economic trends, and internal factors such as changes in our business strategy and our internal forecasts. Although we believe the historicalassumptions and estimates we have made are reasonable and appropriate, different assumptions and estimates could materially impact our reported financialresults. See Note 2-“Summary of Significant Accounting Policies-Business Combinations, Goodwill and Other Intangible Assets” to our consolidated financialstatements for more information about how we value our intangible assets.38Table of ContentsStock-based CompensationUnder the fair value recognition provisions of ASC topic 718, “Compensation-Stock Compensation” (“ASC No. 718”), cost is measured at the grant date,based on the fair value of the award and is amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting periods.Determining the fair value of stock-based awards at the grant date requires significant judgment, including estimating the expected term over which the stockawards will be outstanding before they are exercised and the expected volatility of our stock.We also grant performance-based restricted stock units (“PRSUs”) to executive officers and other specified employees. 50% of the PRSUs cliff vest at theend of a three-year period based on a revenue target of the third year (“PUs”). The remaining 50% vest based on a market condition (“MUs”) that is contingent onEXL meeting or exceeding the total shareholder return relative to a group of peer companies specified under the program, measured over a three-year performanceperiod. The award recipient may earn up to two hundred percent (200%) of the PRSUs granted based on the actual achievements of both targets.The fair value of each PU is determined based on the market price of one share of our common stock on the date of grant. The grant date fair value for theMUs is determined using a Monte Carlo simulation model. The Monte Carlo simulation model simulates a range of possible future stock prices and estimates theprobabilities of the potential payouts. The Monte Carlo simulation model also involves the use of additional key assumptions, including dividend yield and risk-free interest rate. We periodically assess the reasonableness of our assumptions and update our estimates as required. If actual results differ significantly from ourestimates, stock-based compensation expense and our results of operations could be materially affected.Derivative Instruments and Hedging ActivitiesIn the normal course of business, we actively look to mitigate the exposure of foreign currency market risk associated with forecasted transactionsdenominated in certain foreign currencies and to minimize earnings and cash flow volatility associated with changes in foreign currency exchanges rates byentering into various foreign currency exchange forward contracts, with counterparties that are highly rated financial institutions.We hedge forecasted transactions that are subject to foreign exchange exposure with foreign currency exchange contracts that qualify as cash flow hedges.Changes in the fair value of these cash flow hedges are recorded as a component of accumulated other comprehensive income/(loss), net of tax, until the hedgedtransactions occurs. We early adopted ASU 2017-12, Derivative and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. Pursuantto this adoption, effective January 1, 2017, the resultant foreign exchange gain/(loss) upon settlement of cash flow hedges are recorded in the consolidatedstatements of income along with the underlying hedged item in the same income statement line as either part of “Cost of revenue”, “General and administrativeexpenses”, “Selling and marketing expenses”, "Depreciation and Amortization”, as applicable.Prior to January 1, 2017, the resultant foreign exchange gain/(loss) on settlement of cash flow hedges and changes in the fair value of cash flow hedgesdeemed ineffective have been recorded in “Foreign exchange gain, net” in the consolidated statements of income.We also use derivative instruments consisting of foreign currency exchange contracts to economically hedge intercompany balances and other monetaryassets or liabilities denominated in currencies other than the functional currency. These derivatives do not qualify as fair value hedges. Changes in the fair value ofthese derivatives are recognized in the consolidated statement of income and are included in foreign exchange gain/(loss).We determine the fair value of our derivatives based on market observable inputs including both forward and spot prices for currencies. Derivative assets andliabilities included in Level 2 primarily represent foreign currency forward contracts. The quotes are taken primarily from independent sources, including highlyrated financial institutions.We evaluate hedge effectiveness of cash flow hedges at the time a contract is entered into as well as on an ongoing basis. For hedge relationships that arediscontinued because the forecasted transaction is not expected to occur by the end of the originally specified period, any related derivative amounts recorded inequity are reclassified to earnings.Income TaxesWe account for income tax using the asset and liability method. Under this method, income tax expense is recognized for the amount of taxes payable orrefundable for the current year. In addition, deferred tax assets and liabilities are recognized in respect of future tax consequences attributable to differencesbetween the financial statement carrying amounts of existing assets and liabilities and their tax bases and operating losses carried forward, if any. Deferred taxassets and liabilities are measured using the anticipated tax rates for the years in which such temporary differences are expected to be recovered or settled. Werecognize the effect of a change in tax rates on deferred tax assets and liabilities during the period in which the39Table of Contentsnew tax rate was enacted or the change in tax status was filed or approved. Deferred tax assets are recognized in full, subject to a valuation allowance that reducesthe amount recognized to that which is more likely than not to be realized. In assessing the likelihood of realization, we consider all available evidence for eachjurisdiction including past operating results, estimates of future taxable income and the feasibility of tax planning strategies. With respect to any entity that benefitsfrom a corporate tax holiday, deferred tax assets or liabilities for existing temporary differences are recorded only to the extent such temporary differences areexpected to reverse following the expiration of the tax holiday.We also evaluate potential exposures related to tax contingencies or claims made by the tax authorities in various jurisdictions in order to determine whethera reserve may be required. A reserve is recorded if we believe that a loss is more likely than not to occur and if the amount of such loss can be reasonablyestimated. Such reserves are based on estimates and, consequently, are subject to changing facts and circumstances, including the progress of ongoing audits,changes in case law and the passage of new legislation. We believe that we have established adequate reserves to cover any current tax assessments.We have not determined the extent, if any, to which we may repatriate funds held by our foreign subsidiaries in light of the current regulatory environment(including under the Tax Reform Act) and because our future growth depends in part upon continued infrastructure and technology investments, geographicalexpansions and acquisitions outside of the U.S. Not all of our undistributed foreign earnings may be available for repatriation due to foreign legal restrictions thatrequire minimum reserves to be maintained in those countries. However, in light of the Tax Reform Act, such earnings have been subject to U.S. federal tax as aresult of the mandatory repatriation provision described in Note 20 to our consolidated financial statements contained herein. If we decide to repatriate suchearnings, we may have to accrue further taxes associated with such earnings in accordance with local tax laws, rules and regulations in the relevant jurisdictions.We employ a two-step process for recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition bydetermining, based on the technical merits, that the position will, more likely than not, be sustained upon examination. The second step is to measure the tax benefitas the largest amount of the tax benefit that has a greater than 50% likelihood of being realized upon settlement. Our income tax expense also takes into accountany interest or penalties related to unrecognized tax benefits.Employee BenefitsWe record contributions to defined contribution plans to the consolidated statements of income in the period in which services are rendered by the coveredemployees. Current service costs for defined benefit plans are accrued in the period to which they relate. The liability in respect of defined benefit plans iscalculated annually by using the projected unit credit method and various actuarial assumptions including discount rates, mortality, expected return on assets,expected increase in the compensation rates and attrition rates. We evaluate these critical assumptions at least annually. If actual results differ significantly fromour estimates, current service costs for defined benefit plans and our results of operations could be materially impacted.We recognize the liabilities for compensated absences dependent on whether the obligation is attributable to employee services already rendered, relates torights that vest or accumulate and payment is probable and estimable.ContingenciesLoss contingencies are recorded as liabilities when a loss is considered probable and the amount can be reasonably estimated. When a material losscontingency is reasonably possible but not probable, we do not record a liability, but instead disclose the nature and the amount of the claim, and an estimate of theloss or range of loss, if such an estimate can be made. Significant judgment is required in the determination of both probability and whether an exposure isreasonably estimable. Our judgments are subjective and based on the information available from the status of the legal or regulatory proceedings, the merits of ourdefenses and consultation with in-house and outside legal counsel. As additional information becomes available, we reassess any potential liability related to anypending litigation and may revise our estimates. Such revisions in estimates of any potential liabilities could have a material impact on our results of operations,financial position and cash flows.40Table of ContentsResults of OperationsThe following table summarizes our results of operations for the years ended December 31, 2017, 2016 and 2015: Year ended December 31, 2017 2016 2015 (dollars in millions)Revenues, net$762.3 $686.0 $628.5Cost of revenues (exclusive of depreciation and amortization)495.6 448.0 402.9Gross profit266.7 238.0 225.6Operating expenses: General and administrative expenses102.6 88.6 77.3Selling and marketing expenses53.4 50.6 49.5Depreciation and amortization38.5 34.6 31.5Total operating expenses194.5 173.8 158.3Income from operations72.2 64.2 67.3Foreign exchange gain, net2.8 5.6 2.8Interest expense(1.9) (1.3) (1.3)Other income, net11.9 15.4 7.0Income before income tax expense85.0 83.9 75.8Income tax expense36.1 22.2 24.2Net income$48.9 $61.7 $51.641Table of ContentsYear Ended December 31, 2017 Compared to Year Ended December 31, 2016Revenues. Year ended December 31, Percentagechange 2017 2016 Change (dollars in millions) Insurance$234.8 $206.3 $28.5 13.8 %Healthcare77.0 68.7 8.3 12.2 %Travel, Transportation and Logistics71.0 69.4 1.6 2.3 %Finance and Accounting86.5 79.4 7.1 9.0 %All Other83.1 96.5 (13.4) (13.9)%Analytics209.9 165.7 44.2 26.7 %Total revenues, net$762.3 $686.0 $76.3 11.1 %Revenues for the year ended December 31, 2017 were $762.3 million up $76.3 million or 11.1% compared to the year ended December 31, 2016.Revenue growth in Insurance of $28.5 million was driven by expansion of business from our new and existing clients of $26.9 million, includingincremental $3.7 million from our Liss Systems Limited (“Liss”) acquisition in 2016. The remaining increase of $1.6 million was attributable to a net impact ofappreciation of the South African Rand and Indian rupee against the U.S. dollar during the year ended December 31, 2017 compared to the year ended December31, 2016. Insurance revenues were 30.8% and 30.1% of our total revenues in 2017 and 2016, respectively.Revenue growth in Healthcare of $8.3 million was primarily driven by expansion of business from our new and existing clients. Healthcare revenues were10.1% and 10.0% of our total revenues in 2017 and 2016, respectively.Revenue growth in Travel, Transportation and Logistics ("TT&L") of $1.6 million was primarily driven by net volume increases from our new and existingclients of $2.5 million, partially offset by a $0.9 million impact due to depreciation of the Philippine Peso against the U.S. dollar during the year ended December31, 2017 compared to the year ended December 31, 2016. TT&L revenues were 9.3% and 10.1% of our total revenues in 2017 and 2016, respectively.Revenue growth in Finance and Accounting ("F&A") of $7.1 million was driven by net volume increases from our new and existing clients of $6.5 million.The remaining increase of $0.6 million was attributable to a net impact of appreciation of the Indian rupee against the U.S. dollar during the year ended December31, 2017 compared to the year ended December 31, 2016. F&A revenues were 11.4% and 11.6% of our total revenues in 2017 and 2016, respectively.Revenue decline in All Other of $13.4 million was driven primarily by lower revenue in our Consulting and Utilities operating segments, aggregating to$14.8 million, partially offset by higher revenue in our Banking and Financial Services operating segment of $0.6 million. This was partially offset by a netincrease of $0.8 million due to the appreciation of the Indian rupee against the U.S. dollar during the year ended December 31, 2017 compared to the year endedDecember 31, 2016. All Other revenues were 10.9% and 14.1% of our total revenues in 2017 and 2016, respectively.Revenue growth in Analytics of $44.2 million was driven by our recurring and project based engagements from our new and existing clients, includingincremental $19.9 million from our IQR Consulting Inc. ("IQR") and Datasource Consulting, LLC ("Datasource") acquisitions in 2016. Analytics revenues were27.5% and 24.2% of our total revenues in 2017 and 2016, respectively.42Table of ContentsCost of Revenues and Gross Margin: The following table sets forth cost of revenues and gross margin of our reportable segments. Cost of Revenues Gross Margin Year ended December 31, Percentagechange Year ended December 31, 2017 2016 Change 2017 2016 Change (dollars in millions) Insurance$159.5 $146.2 $13.3 9.1 % 32.1% 29.1% 3.0 %Healthcare49.5 44.1 5.4 12.2 % 35.7% 35.8% (0.1)%TT&L41.4 42.0 (0.6) (1.3)% 41.6% 39.5% 2.1 %F&A51.5 48.3 3.2 6.5 % 40.5% 39.2% 1.3 %All Other56.7 61.1 (4.4) (7.1)% 31.8% 36.7% (4.9)%Analytics137.0 106.3 30.7 28.9 % 34.7% 35.8% (1.1)%Total$495.6 $448.0 $47.6 10.6 % 35.0% 34.7% 0.3 %For the year ended December 31, 2017, cost of revenues was $495.6 million compared to $448.0 million for the year ended December 31, 2016, an increaseof $47.6 million or 10.6% . Our gross margin for 2017 was 35.0% compared to 34.7% for 2016, an increase of 0.3% or 30 basis points (“bps”).The increase in cost of revenues in Insurance of $13.3 million was primarily due to an increase in employee-related costs of $10.7 million on account ofhigher headcount and wage inflation, technology and infrastructure costs of $3.3 million. This was partially offset by a decrease in other operating costs of $0.2million. There was a net decrease of $0.5 million due to foreign exchange gains and losses on settlement of cash flow hedges during the year ended December 31,2017 compared to the year ended December 31, 2016. Gross margin in Insurance increased by 300 bps during the year ended December 31, 2017 compared to theyear ended December 31, 2016, primarily due to higher revenues and margin expansion in existing clients.The increase in cost of revenues in Healthcare of $5.4 million was primarily due to an increase in employee-related costs of $4.8 million on account ofhigher headcount and wage inflation, and technology and infrastructure costs of $1.1 million. This was partially offset by $0.7 million due to the depreciation of thePhilippine peso against the U.S. dollar during the year ended December 31, 2017 compared to the year ended December 31, 2016. Gross margin in Healthcareduring 2017 as compared to 2016 was relatively flat.The decrease in cost of revenues in TT&L of $0.6 million was primarily due to foreign exchange gains and losses on settlement of cash flow hedges duringthe year ended December 31, 2017 compared to the year ended December 31, 2016. Gross margin in TT&L increased by 210 bps during 2017 as compared to2016, primarily due to margin expansion in existing clients and lower operating costs.The increase in cost of revenues in F&A of $3.2 million was primarily due to an increase in employee-related costs of $2.8 million on account of higherheadcount and wage inflation, and technology and infrastructure costs of $1.4 million and travel costs of $0.2 million. This increase was partially offset by a netdecrease of $1.2 million due to foreign exchange gains and losses on settlement of cash flow hedges during the year ended December 31, 2017 compared to theyear ended December 31, 2016. Gross margin in F&A increased by 130 bps during 2017 compared to 2016, primarily due to increase in volumes in new clients.The decline in cost of revenues in All Other of $4.4 million was primarily due to a decrease in employee-related costs of $2.8 million on account of lowerheadcount, partially offset by wage inflation. There was also a decrease in travel-related costs of $1.6 million. Gross margin in All Other decreased by 490 bpsduring 2017 compared to 2016, primarily due to lower revenues in our Consulting and Utilities operating segments.The increase in cost of revenues in Analytics of $30.7 million was primarily due to an increase in employee-related costs of $28.4 million (including $15.8million related to our IQR and Datasource acquisitions in 2016) on account of higher headcount and wage inflation, and an increase in technology costs andinfrastructure costs of $2.7 million. The increase was partially offset by a net decrease of $0.5 million due to foreign exchange gains and losses on settlement ofcash flow hedges during the year ended December 31, 2017 compared to the year ended December 31, 2016. Gross margin in Analytics decreased by 110 bpsduring 2017 compared to 2016, primarily due to higher operating costs and lower gross margin from our 2016 acquisitions.43Table of ContentsSelling, General and Administrative (“SG&A”) Expenses. Year ended December 31, Percentagechange 2017 2016 Change (dollars in millions) General and administrative expenses$102.6 $88.6 $14.0 15.7%Selling and marketing expenses53.4 50.6 2.8 5.5%Selling, general and administrative expenses$156.0 $139.2 $16.8 12.0%As a percentage of revenues20.5% 20.3% The increase in SG&A expenses of $16.8 million was primarily due to an increase in employee-related costs of $10.5 million (including $5.3 million ofincremental employee-related costs related to our 2016 acquisitions) as a result of annual wage increments and an increase in our average headcount to support theincreased business volumes. There was an increase of $2.7 million due to recognition of reserve for doubtful account receivables, increase in professional fees of$1.2 million related to our acquisitions and other strategic initiatives and increase in travel, infrastructure and other operating expenses of $2.4 million (includingincremental operating expenses of $1.1 million related to our 2016 acquisitions). There was a net decrease of $0.1 million due to foreign exchange gains and losseson settlement of cash flow hedges during the year ended December 31, 2017 compared to year ended December 31, 2016.Depreciation and Amortization. Year ended December 31, Percentagechange 2017 2016 Change (dollars in millions) Depreciation expense$24.5 $22.7 $1.8 8.0%Intangible amortization expense14.0 11.9 2.1 17.7%Depreciation and amortization expense$38.5 $34.6 $3.9 11.5%As a percentage of revenues5.1% 5.0% Depreciation and amortization expense increased by $3.9 million , or 11.5% , from $34.6 million for the year ended December 31, 2016 to $38.5 millionfor the year ended December 31, 2017. The increase in intangible amortization expense of $ 2.1 million was primarily due to amortization of intangibles associatedwith our 2016 acquisitions. There was an increase in our depreciation expenses of $1.8 million , due to depreciation related to our new operating centers in Indiaand the Philippines to support our business growth and depreciation expense associated with our 2016 acquisitions.Income from Operations. Income from operations increased by $8.0 million , or 12.5% , from $64.2 million for the year ended December 31, 2016 to $72.2million for the year ended December 31, 2017. As a percentage of revenues, income from operations increased from 9.4% for the year ended December 31, 2016 to9.5% for the year ended December 31, 2017.Foreign Exchange Gain/(Loss). Net foreign exchange gains and losses are primarily attributable to movement of the U.S. dollar against the Indian rupee, theU.K. pound sterling and the Philippine peso during 2017. The average exchange rate of the Indian rupee against the U.S. dollar decreased from 67.25 during theyear ended 2016 to 64.93 during the year ended 2017. The average exchange rate of the U.K. pound sterling against the U.S. dollar increased from 0.74 during2016 to 0.77 during 2017. The average exchange rate of the Philippine peso against the U.S. dollar increased from 47.67 during the year ended 2016 to 50.38during the year ended 2017.We recorded a net foreign exchange gain of $2.8 million for the year ended December 31, 2017 compared to the foreign exchange gain of $5.6 million forthe year ended December 31, 2016. The decrease of $2.8 million was primarily due to change in presentation of foreign exchange gains and losses upon settlementof cash flow hedges in the consolidated statements of income along with the underlying hedged item as either part of “Cost of revenue”, “General andadministrative expenses”, “Selling and marketing expenses”, “Depreciation and amortization”, as applicable, for the fiscal year beginning January 1, 2017.44Table of ContentsOther Income, net. Year ended December 31, Percentagechange 2017 2016 Change (dollars in millions) Interest and dividend income$1.6 $1.7 $(0.1) (2.9)%Gain on mutual fund investments8.8 8.1 0.7 8.4 %Change in fair value of earn-out consideration— 4.1 (4.1) (100.0)%Other, net1.5 1.5 — 0.0 %Other income, net$11.9 $15.4 $(3.5) (23.0)%Other income, net decreased by $3.5 million, from $15.4 million for the year ended December 31, 2016 to $11.9 million for the year ended December 31,2017 primarily due to recognition of $4.1 million to income due to reversal of earn-out liability for the year ended December 31, 2016 related to our 2015acquisition of RPM Direct LLC and RPM Data Solutions LLC (collectively, “RPM”). This decrease was partially offset by higher gain on sale of mutual fundinvestments of $0.7 million during the year ended December 31, 2017 compared to year ended December 31, 2016.Income Tax Expense. The effective tax rate increased from 26.4% for the year ended December 31, 2016 to 42.5% for the year ended December 31, 2017.The increase was the result of (i) higher income tax expense of $29.2 million (comprised of a provisional deemed repatriation tax expense of $27.2 million and aprovisional net deferred tax expense of $2.0 million) associated with the Tax Reform Act enacted in 2017, partially offset by (ii) excess tax benefit related to stockawards of $9.8 million pursuant to ASU No. 2016 - 09 during the year ended December 31, 2017; (iii) conclusion of uncertain taxpositions of $4.1 million (including interest of $1.6 million); (iv) lower domestic profits; and (v) an increase in earnings and incentives in lower tax jurisdictions.See Note 20 to our consolidated financial statements.Net Income. Net income decreased from $61.7 million for the year ended December 31, 2016 to $48.9 million for the year ended December 31, 2017,primarily due to lower other income and foreign exchange gain of $ 6.3 million and higher income tax expense of $14.0 million , partially offset by higher incomefrom operations of $8.0 million . As a percentage of revenues, net income decreased from 9.0% for the year ended December 31, 2016 to 6.4% for the year endedDecember 31, 2017.45Table of ContentsYear Ended December 31, 2016 Compared to Year Ended December 31, 2015Revenues. Year ended December 31, Percentage change 2016 2015 Change (dollars in millions) Insurance$206.3 $199.9 $6.4 3.2 %Healthcare68.7 55.2 13.5 24.4 %Travel, Transportation and Logistics69.4 62.2 7.2 11.4 %Finance and Accounting79.4 78.5 0.9 1.2 %All Other96.5 110.5 (14.0) (12.7)%Analytics165.7 122.2 43.5 35.7 %Total revenues, net$686.0 $628.5 $57.5 9.1 %For the year ended December 31, 2016, revenues were $686.0 million compared to $628.5 million for the year ended December 31, 2015, representing anincrease of $57.5 million or 9.1% .Revenue growth in Insurance of $6.4 million was driven by net volume increases from our new and existing clients of $8.2 million (including $1.4 millionrelated to the 2016 acquisition of Liss), partially offset by $1.8 million impact due to the depreciation of the Indian rupee and the U.K. pound sterling against theU.S. dollar during 2016 compared to 2015. Insurance revenues were 30.1% and 31.8% of our total revenues in 2016 and 2015, respectively.Revenue growth in Healthcare of $13.5 million was driven by net volume increases from our existing clients. Healthcare revenues were 10.0% and 8.8% ofour total revenues in 2016 and 2015, respectively.Revenue growth in Travel, Transportation and Logistics ("TT&L") of $7.2 million was primarily driven by net volume increases from our existing clientsof $9.2 million, partially offset by $2.0 million impact due to the depreciation of the Indian rupee against the U.S. dollar during 2016 compared to 2015. TT&Lrevenues were 10.1% and 9.9% of our total revenues in 2016 and 2015, respectively.Revenue growth in Finance and Accounting ("F&A") of $0.9 million was driven by net volume increases from our new and existing clients of $1.5 million,partially offset by $0.6 million impact due to the depreciation of the Indian rupee against the U.S. dollar during 2016 compared to 2015. F&A revenues were 11.6%and 12.5% of our total revenues in 2016 and 2015, respectively.Revenue decline in All Other of $14.0 million was driven primarily by lower revenue in our Consulting and Utilities businesses, partially offset by higherrevenue in our Banking and Financial Services business aggregating to $10.1 million and $3.9 million impact due to the depreciation of the Indian rupee and theU.K. pound sterling against the U.S. dollar during 2016 compared to 2015 across operating segments included in that category. All Other revenues were 14.1% and17.6% of our total revenues in 2016 and 2015, respectively.Revenue growth in Analytics of $43.5 million was driven by net volume increases in our recurring and project based engagements from our new andexisting clients of $28.6 million and incremental revenues of $17.3 million from our RPM acquisition in 2015 and the IQR and Datasource Acquisitions in 2016.The increase was partially offset by a decrease of $2.4 million due to the depreciation of the U.K. pound sterling against the U.S. dollar during 2016 compared to2015. Analytics revenues were 24.2% and 19.4% of our total revenues in 2016 and 2015, respectively.46Table of ContentsCost of Revenues and Gross Margin: The following table sets forth cost of revenues and gross margin of our reportable segments. Cost of Revenues Gross Margin Year ended December 31, Percentage change Year ended December 31, 2016 2015 Change 2016 2015 Change (dollars in millions) Insurance$146.2 $134.2 $12.0 8.9 % 29.1% 32.9% (3.8)%Healthcare44.1 37.2 6.9 18.5 % 35.8% 32.6% 3.2 %TT&L42.0 37.5 4.5 11.9 % 39.5% 39.8% (0.3)%F&A48.3 46.9 1.4 3.1 % 39.2% 40.3% (1.1)%All Other61.1 68.3 (7.2) (10.6)% 36.7% 38.2% (1.5)%Analytics106.3 78.8 27.5 34.9 % 35.8% 35.5% 0.3 %Total$448.0 $402.9 $45.1 11.2 % 34.7% 35.9% (1.2)%For the year ended December 31, 2016, cost of revenues was $448.0 million compared to $402.9 million for the year ended December 31, 2015, an increaseof $45.1 million or 11.2% . Our overall gross margin for 2016 was 34.7% compared to 35.9% for 2015, a decrease of 1.2% or 120 bps.The increase in cost of revenues in Insurance of $12.0 million was primarily due to an increase in employee-related costs of $12.4 million (including $0.8million related to the Liss acquisition) on account of higher headcount (approximately 8,000 as of December 31, 2016 compared to approximately 6,800 as ofDecember 31, 2015) and wage inflation, technology and infrastructure costs of $1.7 million and travel related costs of $1.0 million. This was partially offset by$3.1 million due to the depreciation of the Indian rupee and the Philippine peso against the U.S. dollar during 2016 compared to 2015. Gross margin decreased by380 bps during 2016 compared to 2015, primarily due to lower insurance survey revenues, incremental costs due to the integration of our acquisition of OverlandHoldings, Inc. (the “Overland acquisition”) and migration costs associated with new client wins.The increase in cost of revenues in Healthcare of $6.9 million was primarily due to an increase in employee-related costs of $6.4 million on account ofhigher headcount (approximately 3,000 as of December 31, 2016 compared to approximately 2,500 as of December 31, 2015) and wage inflation, technology andinfrastructure costs of $1.4 million and travel related costs of $0.7 million. This was partially offset by $1.6 million due to the depreciation of the Indian rupee andthe Philippine peso against the U.S. dollar during 2016 compared to 2015. Gross margin increased by 320 bps during 2016 compared to 2015, primarily due tohigher revenues and maturity of our client relationships.The increase in cost of revenues in TT&L of $4.5 million was primarily due to an increase in employee-related costs of $4.5 million on account of wageinflation partially offset by lower headcount (approximately 3,500 as of December 31, 2016 compared to approximately 3,600 as of December 31, 2015), and anincrease in technology and infrastructure costs of $1.9 million. This increase was partially offset by $1.9 million due to the depreciation of the Indian rupee and thePhilippine peso against the U.S. dollar during 2016 compared to 2015. Gross margin during 2016 as compared to 2015 was relatively stable.The increase in cost of revenues in F&A of $1.5 million was primarily due to an increase in employee-related costs of $1.6 million on account of higherheadcount (approximately 3,700 as of December 31, 2016 compared to approximately 3,200 as of December 31, 2015) and wage inflation and travel related costsof $1.1 million. This increase was partially offset by $1.3 million due to the depreciation of the Indian rupee against the U.S. dollar during 2016 compared to 2015.Gross margin decreased by 110 bps during 2016 compared to 2015, primarily due to migration costs associated with our new client wins.The decline in cost of revenues in All Other of $7.2 million was primarily due to decrease in employee-related costs of $2.6 million on account of lowerheadcount (approximately 3,700 as of December 31, 2016 compared to approximately 4,500 as of December 31, 2015) partially offset by a wage inflation. Therewas a decrease in travel related costs of $2.1 million and other operating expenses of $0.5 million due to lower revenues. The cost of revenues decreased by $2.0million due to the depreciation of the Indian rupee, Philippines peso and the U.K. pound sterling against the U.S. dollar during 2016 compared to 2015. Grossmargin decreased by 150 bps during 2016 compared to 2015, primarily due to lower revenues in our consulting operating segment.The increase in cost of revenues in Analytics of $27.5 million was primarily due to an increase in employee-related costs of $20.5 million (including $4.9million of incremental employee-related costs related to our 2015 and 2016 acquisitions) on account of higher headcount (approximately 2,500 as of December 31,2016 compared to approximately 1,900 as of47Table of ContentsDecember 31, 2015) and wage inflation. A further increase of $8.8 million was due to technology and infrastructure costs, travel related costs and other operatingexpenses (including $6.6 million of incremental other operating expenses related to our 2015 and 2016 acquisitions). The increase was partially offset by a decreaseof $1.9 million due to the impact of depreciation of the Indian rupee, the U.K pound sterling and the Philippine peso against the U.S. dollar during 2016 comparedto 2015. Gross margin during 2016 as compared to 2015 was relatively stable.Selling, General and Administrative (“SG&A”) Expenses. Year ended December 31, Percentagechange 2016 2015 Change (dollars in millions) General and administrative expenses$88.6 $77.3 $11.3 14.7%Selling and marketing expenses50.6 49.5 1.1 2.2%Selling, general and administrative expenses$139.2 $126.8 $12.4 9.8%As a percentage of revenues20.3% 20.2% The increase in SG&A expenses was primarily due to an increase in employee-related costs of $12.4 million (including $4.0 million of incrementalemployee-related costs related to our 2015 and 2016 acquisitions). The remaining increase of $8.4 million in employee-related cost was primarily due to annualwage increments and an increase in our average headcount to support the increased business volumes. We also experienced an increase in our other SG&Aexpenses of $2.3 million (including incremental SG&A expenses of $0.8 million related to our 2015 and 2016 acquisitions) primarily due to an increase in facilityand other general and administrative expenses in connection with our new operating centers in India and the Philippines and legal and professional expensesprimarily associated with our recent acquisitions. This increase was partially offset by a decrease of $2.4 million due to the impact of depreciation of the Indianrupee, the U.K. pound sterling and the Philippine peso against the U.S. dollar during 2016 compared to 2015.Depreciation and Amortization. Year ended December 31, Percentagechange 2016 2015 Change (dollars in millions) Depreciation and amortization expense$22.7 $21.3 $1.4 6.9%Intangible amortization expense11.9 10.2 1.7 16.1%Depreciation and amortization expense$34.6 $31.5 $3.1 9.9%As a percentage of revenues5.0% 5.0% Depreciation and amortization expense increased $3.1 million, or 9.9% , from $31.5 million for the year ended December 31, 2015 to $34.6 million for theyear ended December 31, 2016. Intangible amortization expense increased by $ 1.7 million, primarily due to an incremental amortization expense associated withour acquisitions. The increase in depreciation expenses of $1.4 million was the result of $2.3 million increase, primarily associated with our new capitalinvestments in India, South Africa and the Philippines to support the business growth. This increase was partially offset by a decrease of $0.9 million due to theimpact of depreciation of the Indian rupee and the Philippine peso against the U.S. dollar during 2016 compared to 2015.Income from Operations. Income from operations decreased by $3.1 million, or 4.6%, from $67.3 million for the year ended December 31, 2015 to $64.2million for the year ended December 31, 2016. As a percentage of revenues, income from operations decreased from 10.7% for the year ended December 31, 2015to 9.4% for the year ended December 31, 2016 .Foreign Exchange Gain/(Loss). Net foreign exchange gains and losses are primarily attributable to movement of the U.S. dollar against the Indian rupee, theU.K. pound sterling and the Philippine peso during 2016. The average exchange rate of the Indian rupee against the U.S. dollar increased from 64.28 during 2015to 67.25 during 2016. The average exchange rate of the U.K. pound sterling against the U.S. dollar increased from 0.66 during 2015 to 0.74 during 2016. Theaverage exchange rate of the Philippine peso against the U.S. dollar increased from 45.60 during 2015 to 47.67 during 2016.We recorded a net foreign exchange gain of $5.6 million for the year ended December 31, 2016 compared to the foreign exchange gain of $2.8 million forthe year ended December 31, 2015.48Table of ContentsOther Income, net Year ended December 31, Percentagechange 2016 2015 Change (dollars in millions) Interest and dividend income$1.7 $2.9 $(1.2) (42.4)%Gain on mutual fund investments8.1 3.9 4.2 107.3 %Change in fair value of earn out consideration4.1 — 4.1 100.0 %Other, net1.5 0.2 1.3 618.6 %Other income, net$15.4 $7.0 $8.4 119.3 %Increase in gain on sale of mutual fund investments of $4.2 million, partially offset by a decrease in interest and dividend income of $1.2 million, wasprimarily due to higher cash balances in certain of our foreign subsidiaries and higher yield on investments during the year ended December 31, 2016 compared tothe year ended December 31, 2015. Other income increased by $1.3 million primarily due to interest on refund received from income tax authorities in India oncompletion of tax assessments. We also recorded $4.1 million in 2016 due to reversal of earn-out liability related to our RPM acquisition.Income Tax Expense. The effective tax rate decreased from 32.0% for the year ended December 31, 2015 to 26.4% for the year ended December 31, 2016.The decrease was the result of (i) higher income tax expense during the year ended December 31, 2015 due to an income tax expense which related to immaterialerrors from prior years of approximately $2.5 million; (ii) lower domestic profits; and (iii) an increase in earnings and incentives in lower tax jurisdictions.Net Income. Net income increased from $51.6 million for the year ended December 31, 2015 to $61.7 million for the year ended December 31, 2016,primarily due to higher other income and foreign exchange gain of $11.2 million and lower income tax expense of $2.1 million, partially offset by lower incomefrom operations of $3.1 million. As a percentage of revenues, net income increased from 8.2% for the year ended December 31, 2015 to 9.0% for the year endedDecember 31, 2016.Liquidity and Capital Resources Year ended December 31, 2017 2016 (dollars in millions)Opening cash and cash equivalents$213.2 $205.3Net cash provided by operating activities113.1 100.3Net cash used for investing activities(222.7) (54.7)Net cash used for financing activities(20.5) (32.7)Effect of exchange rate changes3.7 (5.0)Closing cash and cash equivalents$86.8 $213.2As of December 31, 2017 and 2016, we had $265.3 million and $226.6 million , respectively, in cash, cash equivalents and short-term investments (including$219.2 million and $170.1 million, respectively, held by our foreign subsidiaries). We have not determined the extent, if any, to which we may repatriate fundsheld by our foreign subsidiaries in light of the current regulatory environment (including under the Tax Reform Act) and because our future growth depends in partupon continued infrastructure and technology investments, geographical expansions and acquisitions outside of the U.S. Not all of our undistributed foreignearnings may be available for repatriation due to foreign legal restrictions that require minimum reserves to be maintained in those countries. However, in light ofthe Tax Reform Act, such earnings have been subject to U.S. federal tax as a result of the mandatory repatriation provision. If we decide to repatriate such earnings,we may have to accrue further taxes associated with such earnings in accordance with local tax laws, rules and regulations in the relevant jurisdictions.Operating Activities: Cash flows provided by operating activities increased by $12.8 million from $100.3 million for the year ended December 31, 2016 to$113.1 million for the year ended December 31, 2017. Generally, factors that affect our earnings—including pricing, volume of services, costs and productivity—affect our cash flows provided from operations in a similar manner. However, while management of working capital, including timing of collections and paymentsaffects operating results only indirectly, the impact on the working capital and cash flows provided by operating activities can be significant.49Table of ContentsThe increase in cash flows provided by operations for the year ended December 31, 2017 compared to the year ended December 31, 2016 was due to anincrease in non-cash expenses of $25.8 million . The increase was partially offset by decrease in net income of $12.8 and an increase in working capital of $3.1million during the year ended December 31, 2017 compared to an increase of $2.9 million during the year ended December 31, 2016. The increase in workingcapital was primarily due to an increase in accounts receivable, other assets, and a decrease in deferred revenue and accrued expenses and other current liabilitiesby $23.9 million, offset by decrease in restricted cash, prepaid expense and other current assets, and increase in account payable and advance income tax, net by$23.7 million.Investing Activities: Cash flows used for investing activities increased from $ 54.7 million for the year ended December 31, 2016 to $222.7 million for theyear ended December 31, 2017. The increase was primarily due to an increase in cash used for purchase of short term investments (net of redemption) of $161.2million , cash used for purchase of property and equipment of $9.3 million and cash paid of $3.0 million for investment in equity affiliate during the year endedDecember 31, 2017 as compared to December 31, 2016. This increase was offset by a decrease in cash paid for business acquisition of $5.4 million ( $23.3 millionpaid for our Health Integrated acquisition in 2017 and closing date working capital adjustment related to our Liss and Datasource acquisitions in 2016 compared to$28.7 million paid for Liss, IQR and Datasource acquisitions in 2016) during the year ended December 31, 2017 as compared to December 31, 2016.Financing Activities: Cash flows used for financing activities were $ 20.5 million during the year ended December 31, 2017 compared to cash flows used forfinancing activities of $32.7 million during the year ended December 31, 2016. The decrease in cash flows used for financing activities was primarily due to netborrowings of $15.0 million under our New Credit Facility (as described below in “—Financing Arrangements”) during the year ended December 31, 2017compared to repayment of borrowings of $25.0 million during the year ended December 31, 2016. This decrease was partially offset by higher purchases oftreasury stock by $25.3 million under our share repurchase program during the year ended December 31, 2017 compared to the year ended December 31, 2016.We expect to use cash from operating activities to maintain and expand our business. As we have focused on expanding our cash flow from operatingactivities we expect to continue to make capital investments, primarily related to new facilities and capital expenditures associated with leasehold improvements tobuild our facilities and the purchase of telecommunications equipment and computer hardware and software in connection with managing client operations. Weincurred $35.2 million of capital expenditures in the year ended December 31, 2017. We expect to incur capital expenditures of between $35.0 million to $40.0million in 2018, primarily to meet our growth requirements, including additions to our facilities as well as investments in technology applications, productdevelopment, digital technology, advanced automation & robotics and infrastructure.In connection with any tax assessment orders that have been issued or may be issued against us or our subsidiaries, we may be required to deposit additionalamounts with respect to such assessment orders (see Note 23 to our consolidated financial statements for further details). We anticipate that we will continue to relyupon cash from operating activities to finance our smaller acquisitions, capital expenditures and working capital needs. If we have significant growth throughacquisitions, we may need to obtain additional financing.Financing Arrangements (Debt Facility)On October 24, 2014, we entered into a Credit Agreement that provided for a $50.0 million revolving credit facility (“Credit Facility”). We had an option toincrease the commitments under the Credit Facility by up to an additional $50.0 million which we exercised on February 23, 2015, via an amendment to the CreditAgreement under the same terms and conditions which were available in the Credit Agreement. The Credit Facility had a maturity date of October 24, 2019 andwas voluntarily pre-payable from time to time without premium or penalty. On November 21, 2017, we prepaid all outstanding amounts, including accrued interestand fees, and terminated all commitments under, the Credit Agreement. The Credit Facility carried an effective interest rate of 2.81% per annum during the yearended December 31, 2017.On November 21, 2017, we and each of our wholly owned material domestic subsidiaries entered into a Credit Agreement with Citibank, N.A., PNC Bank,N.A., JPMorgan Chase Bank, N.A., Bank of America, N.A. and the lenders party thereto from time to time, with Citibank, N.A. serving as administrative agent(the “New Credit Agreement”). The New Credit Agreement provides for a $200.0 million revolving credit facility (the “New Credit Facility”). The Company hasan option to increase the commitments under the New Credit Agreement by up to $100.0 million, subject to certain approvals and conditions as set forth in the NewCredit Agreement. The New Credit Agreement also includes a letter of credit sub-facility. The New Credit Facility has a maturity date of November 21, 2022 andis voluntarily pre-payable from time to time without premium or penalty. Borrowings under the New Credit Agreement were used to refinance Credit Facility andmay otherwise50Table of Contentsbe used for working capital and general corporate purposes of the Company and its subsidiaries, including permitted acquisitions.Depending on the type of borrowing, loans under the New Credit Agreement bear interest at a rate equal to the specified prime rate (alternate base rate) or adjustedLIBO rate, plus, in each case, an applicable margin. The applicable margin is tied to the Company’s total net leverage ratio and ranges from 0.00% to 0.75% perannum with respect to loans (“ABR Loans”) pegged to the specified prime rate, and 1.00% to 1.75% per annum on loans (“Eurodollar Loans”) pegged to theadjusted LIBO rate (such applicable margin, the “Applicable Rate”). The revolving credit commitments under the New Credit Agreement are subject to acommitment fee. The commitment fee is also tied to the Company’s total net leverage ratio, and ranges from 0.15% to 0.30% per annum on the average dailyamount by which the aggregate revolving commitments exceed the sum of outstanding revolving loans and letter of credit obligations. The New Credit Facilitycarried an effective interest rate of 2.65% per annum during the year ended December 31, 2017.Obligations under the New Credit Agreement are guaranteed by our material domestic subsidiaries and are secured by all or substantially all of the assets ofthe Company and our material domestic subsidiaries. The New Credit Agreement contains customary affirmative and negative covenants including, but not limitedto, restrictions on our ability to incur indebtedness, create liens, make certain investments, make certain dividends and related distributions, enter into, or undertake,certain liquidations, mergers, consolidations or acquisitions and dispose of assets or subsidiaries. In addition, the New Credit Agreement contains a covenant to notpermit the interest coverage ratio (the ratio of EBITDA to cash interest expense) or the total net leverage ratio (total funded indebtedness, less unrestricted domesticcash and cash equivalents not to exceed $50.0 million to EBITDA), for the four consecutive quarter period ending on the last day of each fiscal quarter, to be lessthan 3.5 to 1.0 or more than 3.0 to 1.0, respectively. At December 31, 2017, we were in compliance with the financial covenants listed in the New CreditAgreement.As of December 31, 2017, we had an outstanding debt of $60.0 million under the New Credit Agreement of which $10.0 million is expected to be repaidwithin the next twelve months and is included under "short-term borrowings" and the balance of $50.0 million is included under "long-term borrowings" in theconsolidated balance sheets.Off-Balance Sheet ArrangementsAs of December 31, 2017, we did not have any off-balance sheet arrangements or obligations.Contractual ObligationsThe following table sets forth our contractual obligations as of December 31, 2017: Payment Due by Period Less than 1-3 3-5 After 1 year years years 5 years Total (dollars in millions)Capital leases $0.3 $0.3 $0.1 $— $0.7Operating leases 11.7 14.1 3.9 0.8 30.5Purchase obligations 9.3 0.2 — — 9.5Other obligations (a) 2.0 3.3 2.3 3.2 10.8Fair value of earn-out consideration 0.9 — — — 0.9Borrowings Principal payments 10.3 20.4 30.0 — 60.7Interest Payments (b) 1.7 2.6 1.5 — 5.8Total contractual cash obligations (c) $36.2 $40.9 $37.8 $4.0 $118.9 (a)Represents estimated payments under the Gratuity Plan.(b)Interest on borrowings is calculated based on the effective interest rate on the outstanding borrowings as of December 31, 2017.(c)Excludes $0.9 million related to uncertain tax positions, since the extent of the amount and timing of payment is currently not reliably estimable or determinable.51Table of ContentsCertain units of our Indian subsidiaries were established as 100% Export-Oriented units or under the “STPI” scheme promulgated by the Government ofIndia. These units are exempt from customs, central excise duties, and levies on imported and indigenous capital goods, stores, and spares. We have undertaken topay custom duties, service taxes, levies, and liquidated damages payable, if any, in respect of imported and indigenous capital goods, stores, and spares consumedduty free, in the event that certain terms and conditions are not fulfilled. We believe, however, that these units have in the past satisfied and will continue to satisfythe required conditions.Our operations centers in the Philippines are registered with the “PEZA.” The registration provides us with certain fiscal incentives on the import of capitalgoods and requires that ExlService Philippines, Inc. (“Exl Philippines”) meet certain performance and investment criteria. We believe that these centers have in thepast satisfied and will continue to satisfy the required criteria.Recent Accounting PronouncementsFor a description of recent accounting pronouncements, see Note 2—“Summary of Significant Accounting Policies” to our consolidated financial statements.52Table of ContentsITEM 7A. Quantitative and Qualitative Disclosures About Market RiskGeneralMarket risk is the loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of afinancial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and other marketchanges that affect market risk sensitive instruments. Market risk is attributable to all market sensitive financial instruments including foreign currency receivablesand payables.Our exposure to market risk is a function of our expenses and revenue generating activities in foreign currencies. The objective of market risk management isto avoid excessive exposure of our earnings and equity to loss. We manage market risk through our treasury operations. Our senior management and our Board ofDirectors approve our treasury operations’ objectives and policies. The responsibilities of our treasury operations include management of cash resources,implementing hedging strategies for foreign currency exposures, borrowing strategies and ensuring compliance with market risk limits and policies.Components of Market RiskForeign Currency Risk. Our exposure to market risk arises principally from exchange rate risk. Although substantially all of our revenues are denominatedin U.S. dollars 82.2% in the year ended December 31, 2017) or U.K. pounds sterling 14.3% in the year ended December 31, 2017), a substantial portion of ourexpenses were incurred and paid in Indian rupees and Philippine peso 29.6% and 8.4% respectively, in the year ended December 31, 2017). We also incur expensesin U.S. dollars, and currencies of the other countries in which we have operations. The exchange rates among the Indian rupee, the Philippine peso and the U.S.dollar have changed substantially in recent years and may fluctuate substantially in the future.Our exchange rate risk primarily arises from our foreign currency revenues, expenses incurred by our foreign subsidiaries and foreign currency accountsreceivable and payable. The average exchange rate of the Indian rupee against the U.S. dollar decreased from 67.25 during the year ended December 31, 2016 to64.93 during the year ended December 31, 2017, representing an appreciation of 3.5%. The average exchange rate of the Philippine peso against the U.S. dollarincreased from 47.67 during the year ended December 31, 2016 to 50.38 during the year ended December 31, 2017, representing a depreciation of 5.7%. Basedupon our level of operations during the year ended December 31, 2017 and excluding any hedging arrangements that we had in place during that period, a 10%appreciation/depreciation in the Indian rupee against the U.S. dollar would have increased/decreased our revenues by approximately $8.9 million andincreased/decreased our expenses incurred and paid in Indian rupees by approximately $19.5 million in the year ended December 31, 2017, respectively. Similarly,a 10% appreciation/depreciation in the Philippine Peso against the U.S. dollar would have increased/decreased our revenues by approximately $1.5 million andincreased/decreased our expenses incurred and paid in Philippine Peso by approximately $5.6 million in the year ended December 31, 2017, respectively.In order to mitigate our exposure to foreign currency fluctuation risks and minimize the earnings and cash flow volatility associated with forecastedtransactions denominated in certain foreign currencies, we enter into foreign currency forward contracts that are designated as cash flow hedges. These contractsmust be settled on the day of maturity or may be canceled subject to the receipts or payments of any gains or losses respectively, equal to the difference betweenthe contract exchange rate and the market exchange rate on the date of cancellation. We do not enter into foreign currency forward contracts for speculative ortrading purposes. As such, we may not purchase adequate contracts to insulate ourselves from Indian rupee and Philippine peso foreign exchange currency risks. Inaddition, any such contracts may not perform adequately as a hedging mechanism. We may, in the future, adopt more active hedging policies, and have done so inthe past.The impact on earnings and/or cash flows related to these foreign currency forward contracts is immaterial as the impact of the maturing cash flow hedges inrespective periods are intended to offset the foreign currency impact on the related expenses. Further, a significant number of our customer contracts includeprotection against foreign exchange rate fluctuations which minimizes the impact of volatility in the exchange rates on our operating results. Cash flow hedges with notional amounts of $300.8 million and $218.5 million were outstanding as at December 31, 2017 and 2016, respectively, withmaturity periods of one to forty five-months. The fair value of these cash flow hedges as of December 31, 2017 and 2016 was $17.5 million and $3.9 million ,respectively and is included in Accumulated Other Comprehensive loss on our Consolidated Balance Sheets. During the year ended December 31, 2017 werecognized $8.0 million as a foreign exchange gain from the maturing cash flow hedges, which was largely offset by the foreign exchange loss on the relatedexpenses of $7.9 million. The net impact on earnings for the year ended December 31, 2017 from the maturing cash flow hedges was insignificant, offset by aninsignificant foreign currency impact on the related expenses.53Table of ContentsWe also enter into foreign currency forward contracts to economically hedge our intercompany balances and other monetary assets and liabilitiesdenominated in currencies other than functional currencies. These derivatives do not qualify as fair value hedges under ASC topic 815, “Derivatives and Hedging”(“ASC No. 815”). Changes in the fair value of these derivatives are recognized in the consolidated statements of income and are included in foreign exchangegain/(loss). These derivative instruments do not subject us to material balance sheet risk due to exchange rate movements because gains and losses on thesettlement of these derivatives are intended to offset revaluation losses and gains on the assets and liabilities being hedged. Forward exchange contracts withnotional amounts of $98.5 million, GBP 17.9 million and EUR 0.8 million were outstanding at December 31, 2017 compared to $71.3 million andGBP 11.2 million outstanding at December 31, 2016. The fair values of these derivative instruments as of December 31, 2017 and 2016 were nil and $0.1 million,respectively and are included in the "foreign exchange gain/(loss)" in our Consolidated Statements of Income. At December 31, 2017, the outstanding derivativeinstruments had maturities of 31 days or less.Interest Rate Risk. As described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” on November 21,2017 we entered into the New Credit Agreement that provides for a $200.0 million revolving credit facility and a letter of credit sub-facility. We have an option toincrease the commitments under the New Credit Facility by up to an additional $100.0 million. The New Credit Facility has a maturity date of November 21, 2022and is voluntarily pre-payable from time to time without premium or penalty.Depending on the type of borrowing, loans under the New Credit Facility bear interest at a rate equal to the specified prime rate (alternate base rate) oradjusted LIBO rate, plus, in each case, an applicable margin. The applicable margin is tied to the Company’s total net leverage ratio and ranges from 0.00% to0.75% per annum with respect to loans (“ABR Loans”) pegged to the specified prime rate, and 1.00% to 1.75% per annum on loans (“Eurodollar Loans”) peggedto the adjusted LIBO rate (such applicable margin, the “Applicable Rate”). The revolving credit commitments under the New Credit Agreement are subject to acommitment fee. The commitment fee is also tied to the Company’s leverage ratio, and ranges from 0.15% to 0.30% per annum on the average daily amount bywhich the aggregate revolving commitments exceed the sum of outstanding revolving loans and letter of credit obligations.We had cash, cash equivalents and short-term investments totaling $265.3 million and $226.6 million at December 31, 2017 and 2016, respectively. Theseamounts were invested principally in a short-term investment portfolio primarily comprised of highly-rated debt mutual funds, money market accounts and timedeposits. The cash and cash equivalents are held for potential acquisitions of complementary businesses or assets, working capital requirements and generalcorporate purposes. We do not enter into these investments for trading or speculative purposes. We believe that we have no material exposure to changes in the fairvalue of our investment portfolio as a result of changes in interest rates. The interest income from these funds is subject to fluctuations due to changes in interestrates. Declines in interest rates would reduce future investment income. A 50 basis point increase or decrease in short term rates may impact our net interest incomefor the year ended December 31, 2017 by approximately $0.7 million.Credit Risk. As of December 31, 2017 and 2016, we have accounts receivable of $135.7 million and $113.1 million, respectively. We believe that our creditpolicies reflect normal industry terms and business risk. We do not anticipate non-performance by the counterparties and, accordingly, do not require collateral.Credit losses and write-offs of accounts receivable balances historically have not been material. No single client owed more than 10% of accounts receivablebalance as on December 31, 2017 and 2016.54Table of ContentsITEM 8. Financial Statements and Supplementary DataThe financial statements required to be filed pursuant to this Item 8 are appended to this Annual Report on Form 10-K. A list of the financial statements filedherewith is found at Item 15. "Exhibits and Financial Statement Schedules.”ITEM 9. Changes in and Disagreement with Accountants on Accounting and Financial DisclosureNone.ITEM 9A. Controls and ProceduresEvaluation of Disclosure Controls and ProceduresThe Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports the Companyfiles or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and thatsuch information is accumulated and communicated to the Company’s management, including its Chief Executive Officer (“CEO”) and Chief Financial Officer(“CFO”), to allow timely decisions regarding required disclosure. In connection with the preparation of this Annual Report on Form 10-K, the Company’smanagement carried out an evaluation, under the supervision and with the participation of the CEO and CFO, of the effectiveness and operation of the Company’sdisclosure controls and procedures as of December 31, 2017. Based upon that evaluation, the CEO and CFO have concluded that the Company’s disclosurecontrols and procedures, as of December 31, 2017, were effective.Management’s Responsibility for Financial StatementsResponsibility for the objectivity, integrity and presentation of the accompanying financial statements and other financial information presented in this reportrests with our management. The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the U.S.(“US GAAP”). The financial statements include amounts that are based on estimates and judgments which management believes are reasonable under thecircumstances.Ernst & Young LLP, an independent registered public accounting firm, is retained to audit the Company’s consolidated financial statements and theeffectiveness of our internal control over financial reporting. Its accompanying reports are based on audits conducted in accordance with the standards of the PublicCompany Accounting Oversight Board.The Audit Committee of the board of directors is composed solely of independent directors and is responsible for recommending to the Board of Directorsthe independent public accounting firm to be retained for the coming year. The Audit Committee meets regularly and privately with the independent publicaccountants, with the Company’s internal auditors and with management to review accounting, auditing, internal control and financial reporting matters.Management’s Annual Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f)promulgated under the Exchange Act. Those rules define internal control over financial reporting as a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted inthe U.S. The Company’s internal control over financial reporting includes those policies and procedures that:•pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets;•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accountingprinciples generally accepted in the U.S.;•provide reasonable assurance that receipts and expenditures are being made only in accordance with the authorization of our management and our board ofdirectors; and•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have amaterial effect on the consolidated financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate.55Table of ContentsOur management, under the supervision and with the participation of the CEO and CFO, assessed the effectiveness of our internal control over financialreporting as of December 31, 2017. In making this assessment, management used the criteria described in “ Internal Control—Integrated Framework ” issued bythe Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Management’s assessment included an evaluation of the design ofour internal control over financial reporting and testing of the operational effectiveness of its internal control over financial reporting. Management reviewed theresults of its assessment with the Audit Committee of the board of directors. Based on this assessment and those criteria, management concluded that wemaintained effective internal control over financial reporting as of December 31, 2017. See Ernst & Young LLP’s accompanying report on their audit of ourinternal controls over financial reporting.In making its assessment of the changes in internal control over financial reporting as of December 31, 2017, our management excluded an evaluation of thedisclosure controls and procedures of Health Integrated, Inc. substantially all of whose assets, and certain liabilities related thereto, were acquired by us onDecember 22, 2017. Health Integrated’s total and net assets were $31,331 thousands and $22,647 thousands, respectively as of December 31, 2017 andinsignificant revenues for the year then ended.Changes in Internal Control over Financial ReportingDuring the three months ended December 31, 2017, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.ITEM 9B. Other InformationNone.56Table of ContentsPART III. ITEM 10. Directors, Executive Officers and Corporate GovernanceCode of Ethics.We have adopted a code of conduct and ethics that applies to all of our directors, officers and employees, including our principal executive officer, principalfinancial officer, principal accounting officer and persons performing similar functions. Our code of conduct and ethics can be found posted in the investorrelations section on our website at http://ir.exlservice.com/governance.cfm. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regardingan amendment to, or waiver from, a provision of our code of conduct and ethics by posting such information on our website at the address and the locationspecified above.The additional information required by this Item 10 will be set forth in the definitive proxy statement for our 2017 Annual Meeting of Stockholders (the“Proxy Statement”), including under the headings “Our Board of Directors”, “Our Executive Officers” and “Corporate Governance — Committees — AuditCommittee”, “— Committees — Nominating and Governance Committee” and “— Section 16(a) Beneficial Ownership Reporting Compliance”, and isincorporated herein by reference. We intend to file the Proxy Statement with the SEC within 120 days after the fiscal year end of December 31, 2017.ITEM 11. Executive CompensationWe incorporate by reference the information responsive to this Item appearing in our Proxy Statement, including under the headings “ExecutiveCompensation — Compensation Discussion and Analysis”, “— Compensation Committee Report”, “— Summary Compensation Table for Fiscal Year 2017”, “—Grants of Plan-Based Awards Table for Fiscal Year 2017”, “Outstanding Equity Awards at Fiscal 2017 Year-End”, “Option Exercises and Stock Vested DuringFiscal Year 2017”, “— Pension Benefits for Fiscal Year 2017”, “— Potential Payments upon Termination or Change in Control at Fiscal 2017 Year-End”, “—Director Compensation for Fiscal Year 2017”, “— Risk and Compensation Policies” and “Corporate Governance —Compensation Committee Interlocks andInsider Participation”.ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersWe incorporate by reference the information responsive to this Item appearing in our Proxy Statement, including under the heading “Principal Stockholders”.ITEM 13. Certain Relationships and Related Transactions, and Director IndependenceWe incorporate by reference the information responsive to this Item appearing in our Proxy Statement, including under the headings “Certain Relationshipsand Related Person Transactions” and “Corporate Governance — Director Independence”.ITEM 14. Principal Accountant Fees and ServicesWe incorporate by reference the information responsive to this Item appearing in our Proxy Statement, including under the heading “Ratification of theAppointment of Independent Registered Public Accounting Firm — Audit and Non-Audit Fees.”57Table of ContentsPART IV. ITEM 15. Exhibits and Financial Statement Schedules(a)1. Financial Statements.The consolidated financial statements are listed under “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.2.Financial Statement Schedules.Financial statement schedules as of December 31, 2017 and 2016, have been omitted since they are either not required, not material or the informationis otherwise included in our consolidated financial statements or the notes to our consolidated financial statements.3.Exhibits.The Exhibits filed as part of this Annual Report on Form 10-K are listed on the Exhibit Index immediately preceding such Exhibits, whichExhibit Index is incorporated in this Annual Report on Form 10-K by reference.(b)Exhibits. See Item 15(a)(3) above.(c)Financial Statement Schedules. See Item 15(a)(2) above.58Table of ContentsSIGNATURESPursuant 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 Reporton Form 10-K to be signed on its behalf by the undersigned hereunto duly authorized.Date: February 27, 2018EXLSERVICE HOLDINGS, INC. By: / S / V ISHAL C HHIBBAR Vishal ChhibbarChief Financial Officer(Duly Authorized Signatory, Principal Financial and Accounting Officer)Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed below by the followingpersons on behalf of the Registrant and in the capacities and on the dates indicated.Signature Title Date / S / R OHIT K APOOR Chief Executive Officer, Vice-Chairman and Director(Principal Executive Officer) February 27, 2018Rohit Kapoor / S / G AREN K. S TAGLIN Chairman of the Board February 27, 2018Garen K. Staglin / S / V ISHAL C HHIBBAR Chief Financial Officer (Principal Financial and AccountingOfficer) February 27, 2018Vishal Chhibbar / S / A NNE M INTO Director February 27, 2018Anne Minto / S / C LYDE W. O STLER Director February 27, 2018Clyde W. Ostler / S / D AVID B. K ELSO Director February 27, 2018David B. Kelso /S/ D EBORAH K ERR Director February 27, 2018Deborah Kerr /S/ N ITIN S AHNEY Director February 27, 2018Nitin Sahney / S / S OM M ITTAL Director February 27, 2018Som Mittal59Table of ContentsINDEX TO EXHIBITSThe following exhibits are being filed as part of this report or incorporated by reference as indicated therein:2.1* Securities Purchase Agreement dated as of February 23, 2015 by and among ExlService Holdings, Inc., ExlService.com LLC, RPM Direct LLC,RPM Data Solutions, LLC and the security holders named therein (incorporated by reference to Exhibit 2.1 of the Company’s Quarterly Report onForm 10-Q (File No. 1-33089) filed on May 1, 2015). 3.1 Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Current Report onForm 8-K (File No. 1-33089) filed on October 25, 2006). 3.2 Fourth Amended and Restated By-laws of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K(File No. 1-33089) filed on February 28, 2017). 4.1 Registration Rights Agreement (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K (File No. 1-33089) filed onOctober 25, 2006). 10.1+ Amended and Restated Employment and Non-Competition Agreement, dated as of September 19, 2017 between ExlService Holdings, Inc. andRohit Kapoor, dated as of September 19, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (FileNo. 1-33089) filed on October 26, 2017). 10.2+ Employment Agreement, dated July 31, 2002, between ExlService Holdings, Inc. and Pavan Bagai (incorporated by reference to Exhibit 10.15 tothe Company’s Registration Statement on Form S-1 (Registration No. 333-121001) filed on December 6, 2004). 10.3+ Employment Agreement, effective as of January 1, 2016, between ExlService Holdings, Inc. and Vishal Chhibbar (incorporated by reference toExhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (File No. 1-33089) filed on April 29, 2016). 10.4+ Employment Agreement, dated as of September 15, 2014, between ExlService Holdings, Inc. and Nalin Kumar Miglani (incorporated by referenceto Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-33089) filed on April 29, 2016). 10.5+ Letter Agreement, dated March 14, 2014, between ExlService Holdings, Inc. and Nancy Saltzman (incorporated by reference to Exhibit 10.1 to theCompany’s Quarterly Report on Form 10-Q (File No. 1-33089) filed on May 1, 2015). 10.6+ Employment Agreement, dated November 19, 2016, between ExlService Holdings, Inc. and Nagaraja Srivatsan (incorporated by reference toExhibit 10.6 to the Company’s Annual Report on Form 10-K (File No. 1-330089) filed on March 15, 2017). 10.7+ Letter Agreement, dated March 20, 2008, between Exl Service.com, Inc. and Rembert de Villa (incorporated by reference to Exhibit 10.29 to theCompany’s Annual Report on Form 10-K (File No. 1-33089) filed on March 16, 2011). 10.8+ ExlService Holdings, Inc. 2003 India Employee Stock Option Plan (incorporated by reference to Exhibit 10.16 of Amendment 3 to the Company’sRegistration Statement on Form S-1 (Registration No. 333-121001) filed on July 28, 2006). 10.9+ ExlService Holdings, Inc. 2003 Stock Option Plan (incorporated by reference to Exhibit 10.18 of Amendment 3 to the Company’s RegistrationStatement on Form S-1 (Registration No. 333-121001) filed July 28, 2006). 10.10+ ExlService Holdings, Inc. 2006 Omnibus Plan (incorporated by reference to Exhibit 10.20 of Amendment 3 to the Company’s RegistrationStatement on Form S-1 (Registration No. 333-121001) filed July 28, 2006). 10.11+ ExlService Holdings, Inc. 2006 Omnibus India Subplan 1 (incorporated by reference to Exhibit 10.21 of Amendment 6 to the Company’sRegistration Statement on Form S-1 (Registration No. 333-121001) filed October 17, 2006) . 10.12+ Form of Non-Qualified Stock Option Agreement under the 2006 Omnibus India Subplan 1 (incorporated by reference to Exhibit 10.22 ofAmendment 5 to the Company’s Registration Statement on Form S-1 (Registration No. 333-121001) filed October 4, 2006). 10.13+ ExlService Holdings, Inc. Management Incentive Plan (incorporated by reference to Exhibit 10.23 of Amendment 5 to the Company’s RegistrationStatement on Form S-1 (Registration No. 333-121001) filed October 4, 2006). 60Table of Contents10.14+ Form of Restricted Stock Award Agreement under the 2006 Omnibus Award Plan (incorporated by reference to Exhibit 10.31 of Amendment 5 tothe Company’s Registration Statement on Form S-1 (Registration No. 333-121001) filed October 4, 2006). 10.15+ Form of Non-Qualified Stock Option Agreement under the 2006 Omnibus Award Plan (incorporated by reference to Exhibit 10.32 of Amendment 5to the Company’s Registration Statement on Form S-1 (Registration No. 333-121001) filed October 4, 2006). 10.16+ Form of Restricted Stock Award Agreement under the 2006 Omnibus India Subplan 1 (incorporated by reference to Exhibit 10.33 of Amendment 5to the Company’s Registration Statement on Form S-1 (Registration No. 333-121001) filed October 4, 2006). 10.17+ ExlService Holdings, Inc. 2006 Omnibus India Subplan 2 (incorporated by reference to Exhibit 10.38 of Amendment 6 to the Company’sRegistration Statement on Form S-1 (Registration No. 333-121001) filed October 17, 2006). 10.18+ Form of Non-Qualified Stock Option Agreement under the 2006 Omnibus India Subplan 2 (incorporated by reference to Exhibit 10.39 ofAmendment 5 to the Company’s Registration Statement on Form S-1 (Registration No. 333-121001) filed October 4, 2006). 10.19+ Form of Restricted Stock Award Agreement under the 2006 Omnibus India Subplan 2 (incorporated by reference to Exhibit 10.40 of Amendment 5to the Company’s Registration Statement on Form S-1 (Registration No. 333-121001) filed October 4, 2006). 10.20+ Non-Qualified Stock Option Agreement between Rohit Kapoor and the Company dated July 27, 2006 (incorporated by reference to Exhibit 10.42of Amendment 5 to the Company’s Registration Statement on Form S-1 (Registration No. 333-121001) filed October 4, 2006). 10.21+ Amendment to ExlService Holdings, Inc. 2006 Omnibus Award Plan (incorporated by reference to Exhibit 10.43 of Amendment 5 to theCompany’s Registration Statement on Form S-1 (Registration No. 333-121001) filed October 4, 2006). 10.22+ Form of Restricted Stock Unit Agreement 1 under the 2006 Omnibus Award Plan (incorporated by reference to Exhibit 10.44 of Amendment 5 tothe Company’s Registration Statement on Form S-1 (Registration No. 333-121001) filed October 4, 2006). 10.23+ Form of Restricted Stock Unit Agreement 2 under the 2006 Omnibus Award Plan (incorporated by reference to Exhibit 10.45 of Amendment 5 tothe Company’s Registration Statement on Form S-1 (Registration No. 333-121001) filed October 4, 2006). 10.24+ Amendment No. 2 to ExlService Holdings, Inc. 2006 Omnibus Award Plan (incorporated by reference to Exhibit 10.46 of Amendment 6 to theRegistration Statement on Form S-1 (Registration No. 333-121001) filed October 17, 2006). 10.25+ Form of 2010 Restricted Stock Unit Agreement (U.S.) under the 2006 Omnibus Award Plan (incorporated by reference to Exhibit 99.1 to theCompany’s Current Report on Form 8-K (File No. 1-33089) filed on February 4, 2010). 10.26+ Form of 2010 Restricted Stock Unit Agreement (U.S.) under the 2006 Omnibus Award Plan (incorporated by reference to Exhibit 99.2 to theCompany’s Current Report on Form 8-K (File No. 1-33089) filed on February 4, 2010). 10.27+ Form of 2010 Restricted Stock Unit Agreement (International) under the 2006 Omnibus Award Plan (incorporated by reference to Exhibit 99.3 tothe Company’s Current Report on Form 8-K (File No. 1-33089) filed on February 4, 2010). 10.28+ Form of 2010 Restricted Stock Unit Agreement (U.S.) under the 2006 Omnibus Award Plan (incorporated by reference to Exhibit 99.4 to theCompany’s Current Report on Form 8-K (File No. 1-33089) filed on February 4, 2010). 10.29+ Form of 2010 Restricted Stock Unit Agreement (International) under the 2006 Omnibus Award Plan (3 Year Variable Vesting) (incorporated byreference to Exhibit 99.5 to the Company’s Current Report on Form 8-K (File No. 1-33089) filed on February 4, 2010). 10.30+ Amendment No. 3 to ExlService Holdings, Inc. 2006 Omnibus Award Plan (incorporated by reference to Exhibit 4.6 to the Company’s RegistrationStatement on Form S-8 (Registration No. 333-157076) filed February 2, 2009). 10.31+ Form of Restricted Stock Unit Agreement (U.S.) under the 2006 Omnibus Award Plan (incorporated by reference to Exhibit 10.1 to the Company’sQuarterly Report on Form 10-Q (File No. 1-33089) filed on May 1, 2014). 61Table of Contents10.32 Credit Agreement, dated as of October 24, 2014, among ExlService Holdings, Inc., JPMorgan Chase Bank, N.A., as administrative agent and co-lead arranger, Citibank, N.A., as co-lead arranger, and the other Loan Parties and Lenders thereto (incorporated by reference to Exhibit 10.39 to theCompany’s Annual Report on Form 10-K (File No. 1-33089) filed on February 27, 2015). 10.33 First Amendment to Credit Agreement and Incremental Facility Agreement, dated as of February 23, 2015, by and among ExlService Holdings,Inc., each of its subsidiaries party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent for the Lenders(incorporated by reference to Exhibit 10.40 to the Company’s Annual Report on Form 10-K (File No. 1-33089) filed on February 27, 2015). 10.34+ ExlService Holdings, Inc. 2015 Amendment and Restatement of the 2006 Omnibus Award Plan (incorporated by reference to Exhibit 10.1 to theCompany’s Current Report on Form 8-K (File No. 1-33089) filed on June 25, 2015). 10.35+ Form of Restricted Stock Unit Agreement (U.S.) under the ExlService Holdings, Inc. 2015 Amendment and Restatement of the 2006 OmnibusAward Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-33089) filed on October 27,2016). 10.36+ Form of Restricted Stock Unit Agreement (U.S.) under the ExlService Holdings, Inc. 2015 Amendment and Restatement of the 2006 OmnibusAward Plan “(incorporated by reference to Exhibit 10.40 to the Company’s Annual Report on Form 10-K (File No. 1-33089) filed on March 15,2017). 10.37 Credit Agreement, dated as of November 21, 2017, among ExlService Holdings, Inc., the other loan parties thereto, the lenders party thereto, andCitibank, N.A., as administrative agent, Citibank, N.A. and PNC Capital Markets LLC, as joint lead arrangers and joint bookrunners, and JPMorganChase Bank, N.A., as syndication agent. 21.1 Subsidiaries of the Company. 23.1 Consent of Independent Registered Public Accounting Firm. 31.1 Certification of the Chief Executive Officer of ExlService Holdings, pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant toSection 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of the Chief Financial Officer of ExlService Holdings, pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002. 101.INS XBRL Instance Document** 101.SCH XBRL Taxonomy Extension Schema** 101.CAL XBRL Taxonomy Extension Calculation Linkbase** 101.DEF XBRL Taxonomy Extension Definition Linkbase** 101.LAB XBRL Taxonomy Extension Label Linkbase** 101.PRE XBRL Extension Presentation Linkbase** *Pursuant to Item 601(b)(2) of Regulation S-K promulgated by the SEC, certain schedules to this agreement have been omitted. The Company hereby agrees tofurnish supplementally to the SEC, upon its request, any or all of such omitted schedules.**This exhibit will not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Such exhibit will notbe deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specificallyincorporates it by reference.+ Indicates management contract or compensatory plan required to be filed as an Exhibit.62Table of ContentsEXLSERVICE HOLDINGS, INC.INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting FirmF-2 Consolidated Balance Sheets as of December 31, 2017 and 2016F-4 Consolidated Statements of Income for the years ended December 31, 2017, 2016 and 2015F-5 Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015F-6 Consolidated Statements of Equity for the years ended December 31, 2017, 2016 and 2015F-7 Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015F-8 Notes to Consolidated Financial StatementsF-9F-1Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Stockholders and the Board of Directors of ExlService Holdings, Inc.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of ExlService Holdings, Inc. (the Company) as of December 31, 2017 and 2016, the relatedconsolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2017, and therelated notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidatedfinancial position of the Company at December 31, 2017 and 2016, and the consolidated results of its operations and its cash flows for each of the three years in theperiod ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company'sinternal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control-Integrated Framework issued by the Committeeof Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 27, 2018 expressed an unqualified opinion thereon.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financialstatements 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 inaccordance 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 reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures toassess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Suchprocedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating theaccounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believethat our audits provide a reasonable basis for our opinion./s/ Ernst & Young LLPWe have served as the Company’s auditor since 2002.New York, New YorkFebruary 27, 2018F-2Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Stockholders and the Board of Directors of ExlService Holdings, Inc.Opinion on Internal Control over Financial ReportingWe have audited ExlService Holdings, Inc.’s internal control over financial reporting as of December 31, 2017, based on criteria established in InternalControl-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In ouropinion, ExlService Holdings, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,based on the COSO criteria.As indicated in the accompanying Management’s Annual Report on Internal Control over Financial Reporting, management’s assessment of and conclusionon the effectiveness of internal control over financial reporting did not include the internal controls of Health Integrated Inc., which is included in the 2017consolidated financial statements of the Company and constituted 3.8% each of total and net assets, as of December 31, 2017 and 0.1% of revenues, for the yearthen ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reportingof Health Integrated Inc.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedbalance sheets of ExlService Holdings, Inc. as of December 31, 2017 and 2016, and the related consolidated statements of income, comprehensive income, equityand cash flows for each of the three years in the period ended December 31, 2017, and the related notes and our report dated February 27, 2018 expressed anunqualified opinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registeredwith 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 andregulations 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 reasonableassurance 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 andevaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessaryin the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting andthe preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control overfinancial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate./s/ Ernst & Young LLPNew York, New YorkFebruary 27, 2018F-3Table of ContentsEXLSERVICE HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands, except share and per share amounts) As of December 31, 2017 December 31, 2016Assets Current assets: Cash and cash equivalents $86,795 $213,155Short-term investments 178,479 13,491Restricted cash 3,674 3,846Accounts receivable, net 135,705 113,067Prepaid expenses 9,781 7,855Advance income tax, net 8,801 6,242Other current assets 29,582 21,168Total current assets 452,817 378,824Property and equipment, net 66,757 49,029Restricted cash 3,808 3,393Deferred taxes, net 8,585 14,799Intangible assets, net 48,958 53,770Goodwill 204,481 186,770Other assets 36,369 19,943Investment in equity affiliate 3,000 —Total assets $824,775 $706,528Liabilities and Equity Current liabilities: Accounts payable $5,918 $3,288Current portion of long-term borrowings 10,318 10,000Deferred revenue 10,716 16,615Accrued employee cost 55,664 50,832Accrued expenses and other current liabilities 61,366 43,264Current portion of capital lease obligations 267 232Total current liabilities 144,249 124,231Long term borrowings 50,391 35,000Capital lease obligations, less current portion 331 300Income taxes payable 13,557 —Non-current liabilities 16,202 14,819Total liabilities 224,730 174,350Commitments and contingencies (Note 23) Preferred stock, $0.001 par value; 15,000,000 shares authorized, none issued — —ExlService Holdings, Inc. stockholders’ equity: Common stock, $0.001 par value; 100,000,000 shares authorized, 36,790,751 shares issued and 33,888,733shares outstanding as of December 31, 2017 and 35,699,819 shares issued and 33,628,109 sharesoutstanding as of December 31, 2016 37 36Additional paid-in-capital 322,246 284,646Retained earnings 427,064 382,722Accumulated other comprehensive loss (45,710) (75,057)Total including shares held in treasury 703,637 592,347Less: 2,902,018 shares as of December 31, 2017 and 2,071,710 shares as of December 31, 2016, held in treasury,at cost (103,816) (60,362)Stockholders' equity $599,821 $531,985Non-controlling interest 224 193Total equity $600,045 $532,178Total liabilities and equity $824,775 $706,528See accompanying notes to consolidated financial statements.F-4Table of ContentsEXLSERVICE HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(In thousands, except share and per share amounts) Year ended December 31, 2017 2016 2015Revenues, net $762,310 $685,988 $628,492Cost of revenues (exclusive of depreciation and amortization) 495,586 447,956 402,917Gross profit 266,724 238,032 225,575Operating expenses: General and administrative expenses 102,567 88,648 77,293Selling and marketing expenses 53,383 50,582 49,474Depreciation and amortization 38,549 34,580 31,465Total operating expenses 194,499 173,810 158,232Income from operations 72,225 64,222 67,343Foreign exchange gain, net 2,839 5,597 2,744Interest expense (1,889)(1,343)(1,338)Other income, net 11,859 15,408 7,027Income before income tax expense 85,034 83,884 75,776Income tax expense 36,146 22,151 24,211Net income $48,888 $61,733 $51,565Earnings per share: Basic $1.44 $1.84 $1.55Diluted $1.39 $1.79 $1.51Weighted-average number of shares used in computing earnings per share: Basic 33,897,916 33,566,367 33,298,104Diluted 35,110,210 34,563,319 34,178,340See accompanying notes to consolidated financial statements.F-5Table of ContentsEXLSERVICE HOLDINGS, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In thousands) Year ended December 31, 2017 2016 2015Net income$48,888 $61,733 $51,565 Other comprehensive income: Unrealized gain/(loss) on effective cash flow hedges, net of taxes $5,821, $1,734 and$109, respectively13,981 3,395 23 Foreign currency translation adjustment18,894 (9,236) (12,510) Retirement benefits, net of taxes $164, ($204) and $22, respectively1,109 (439) 584 Reclassification adjustments Realized loss/(gain) on cash flow hedges, net of taxes ($2,110), ($1,190) and ($49),respectively (1)(4,789) (1,479) (71) Retirement benefits, net of taxes $104, $63 and $53, respectively (2)152 27 158 Total other comprehensive income/(loss)$29,347 $(7,732) $(11,816)Total comprehensive income$78,235 $54,001 $39,749 (1)These are reclassified to net income and are included either in cost of revenue, operating expenses, foreign exchange gain, as applicable in the consolidated statementsof income. See Note 15 to the consolidated financial statements.(2)These are reclassified to net income and are included in the computation of net periodic pension costs in the consolidated statements of income. See Note 18 to theconsolidated financial statements .See accompanying notes to consolidated financial statements.F-6Table of ContentsEXLSERVICE HOLDINGS, INC.CONSOLIDATED STATEMENTS OF EQUITY(In thousands, except share and per share amounts) Common Stock AdditionalPaid-inCapital RetainedEarnings Accumulated OtherComprehensiveIncome/(Loss) Treasury Stock Non -ControllingInterest TotalEquity Shares Amount Shares Amount Balance as of January 1, 201534,203,352 $34 $233,173 $269,424 $(55,509) (1,297,885) $(27,964) $— $419,158Stock issued on exercise/vestingof equity awards577,849 1 3,374 — — — — — 3,375Stock based compensation— — 16,047 — — — — — 16,047Excess tax benefit from stockbased compensation— — 1,458 — — — — — 1,458Acquisition of treasury stock — — — — (392,093) (14,195) — (14,195)Non-controlling interest— — — — — — — 179 179Other comprehensive income— — — — (11,816) — — — (11,816)Net income— — — 51,565 — — — — 51,565Balance as of December 31,201534,781,201 $35 $254,052 $320,989 $(67,325) (1,689,978) $(42,159) $179 $465,771Stock issued on exercise/vestingof equity awards918,618 1 6,498 — — — — — 6,499Stock based compensation— — 19,770 — — — — — 19,770Excess tax benefit from stockbased compensation— — 4,326 — — — — — 4,326Acquisition of treasury stock— — — — — (381,732) (18,203) — (18,203)Non-controlling interest— — — — — — — 14 14Other comprehensive loss— — — — (7,732) — — — (7,732)Net income— — — 61,733 — — — — 61,733Balance as of December 31,201635,699,819 $36 $284,646 $382,722 $(75,057) (2,071,710) $(60,362) $193 $532,178Impact on adoption of ASU 2016-09 *— — 5,999 (4,546) — — — — 1,453Balance as of January 1, 201735,699,819 36 290,645 378,176 (75,057) (2,071,710) (60,362) 193 533,631Stock issued on exercise/vestingof equity awards1,090,932 1 8,560 — — — — — 8,561Stock based compensation— — 23,041 — — — — — 23,041Acquisition of treasury stock— — — — — (830,308) (43,454) — (43,454)Non-controlling interest— — — — — — — 31 31Other comprehensive income— — — — 29,347 — — — 29,347Net income— — — 48,888 — — — — 48,888Balance as of December 31,201736,790,751 $37 $322,246 $427,064 $(45,710) (2,902,018) $(103,816) $224 $600,045* Refer note 2(o) to consolidated financial statements for details.See accompanying notes to consolidated financial statements.F-7Table of ContentsEXLSERVICE HOLDINGS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)Year ended December 31,2017 2016 2015Cash flows from operating activities: Net income$48,888 $61,733 $51,565Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization38,984 34,580 31,465Stock-based compensation expense23,041 19,770 16,047Unrealized foreign exchange (gain)/loss1,523 (1,001) (3,798)Deferred income tax (benefit)/expense731 (3,384) 2,238Excess tax benefit from stock-based compensation— (4,326) (1,458)Change in fair value of earn-out consideration— (4,060) —Allowance for doubtful accounts receivable2,816 — —Others, net252 (107) (278)Change in operating assets and liabilities (net of effect of acquisitions): Restricted cash(19) (2,137) (787)Accounts receivable(20,482) (18,062) (9,087)Prepaid expenses and other current assets218 (5,421) (3,112)Accounts payable1,706 (2,628) 44Deferred revenue(6,625) 5,726 2,566Accrued employee costs6,391 5,304 8,528Accrued expenses and other liabilities6,903 9,080 (4,699)Advance income tax, net11,037 437 8,865Other assets(2,224) 4,754 (1,408)Net cash provided by operating activities113,140 100,258 96,691 Cash flows from investing activities: Purchase of property and equipment(35,154) (25,850) (25,585)Investment in equity affiliate(3,000) — —Business acquisitions (net of cash acquired)(23,300) (28,666) (44,270)Purchase of investments(402,721) (182,471) (129,050)Proceeds from redemption of investments241,439 182,320 125,365Net cash used for investing activities(222,736) (54,667) (73,540) Cash flows from financing activities: Principal payments on capital lease obligations(174) (348) (720)Proceeds from borrowings60,574 — 30,000Repayments of borrowings(45,192) (25,000) (10,000)Proceeds from non-controlling interest— — 176Payment of debt issuance costs(790) — (74)Acquisition of treasury stock(43,454) (18,203) (14,195)Proceeds from exercise of stock options8,561 6,499 3,375Excess tax benefit from stock-based compensation— 4,326 1,458Net cash (used for)/provided by financing activities(20,475) (32,726) 10,020Effect of exchange rate changes on cash and cash equivalents3,711 (5,033) (4,347)Net increase/(decrease) in cash and cash equivalents(126,360) 7,832 28,824Cash and cash equivalents, beginning of year213,155 205,323 176,499Cash and cash equivalents, end of year$86,795 $213,155 $205,323 Supplemental disclosure of cash flow information: Cash paid for interest$1,122 $1,178 $1,188Cash paid for taxes, net of refund$19,128 $15,667 $11,505Assets acquired under capital lease$301 $334 $215See accompanying notes to consolidated financial statements.F-8Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2017(In thousands, except share and per share amounts)1. Nature of operation and organizationExlService Holdings, Inc. (“ExlService Holdings”) is organized as a corporation under the laws of the state of Delaware. ExlService Holdings, together withits subsidiaries (collectively, the “Company”), operates in Business Process Management ("BPM") industry providing operations management services andanalytics services that helps businesses enhance revenue growth and improve profitability. Using its proprietary platforms, methodologies and tools, the Companylooks deeper to help companies improve global operations, enhance data-driven insights, increase customer satisfaction, and manage risk and compliance. TheCompany’s clients are located principally in the U.S. and the U.K.2. Summary of Significant Accounting Policies(a)Basis of Preparation and Principles of ConsolidationThe accompanying consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles (“USGAAP”). The accompanying financial statements have been prepared on a consolidated basis and reflect the financial statements of ExlService Holdings and all ofits subsidiaries and includes the Company's share in the results of its associates.Accounting policies of the respective individual subsidiary and associate are aligned wherever necessary, so as to ensure consistency with the accountingpolicies that are adopted by the Company under US GAAP. The standalone financial statements of subsidiaries are fully consolidated on a line-by-line basis. Intragroup balances and transactions, and income and expensesarising from intra-group transactions, are eliminated while preparing the said financial statements. The un-realized gains resulting from intra-group transactions arealso eliminated. Similarly, the un-realized losses are eliminated, unless the transaction provides evidence as to impairment of the asset transferred.The Company’s investments in equity affiliate are initially recorded at cost and any excess cost over proportionate share of the fair value of the net assets of theinvestee at the acquisition date is recognized as goodwill. The proportionate share of net income or loss of the investee is recognized in the consolidated statementsof income.Non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to the parent and it represents the minority partner’s interest in theoperation of ExlService Colombia S.A.S. Non-controlling interest consists of the amount of such interest at the date of obtaining control over the subsidiary, andthe non-controlling interest's share of changes in equity since that date. The non-controlling interest in the operations for the years ended December 31, 2017, 2016and 2015 was insignificant and are included under general and administrative expenses in the consolidated statements of income.(b)Use of EstimatesThe preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the relatedamount of revenue and expenses during the reporting period. Although these estimates are based on management’s best assessment of the current businessenvironment, actual results may be different from those estimates. The significant estimates and assumptions that affect the financial statements include, but are notlimited to, allowance for doubtful account receivables, recoverability of service tax receivables, assets and obligations related to employee benefit plans, deferredtax valuation allowances, income-tax uncertainties and other contingencies, valuation of derivative financial instruments, assumptions used to calculate stock-basedcompensation expense, depreciation and amortization periods, purchase price allocation, recoverability of long-term assets including goodwill and intangibles, andestimates to complete fixed price contracts.In accordance with its policy, the Company reviews the estimated useful lives of its property and equipment on an ongoing basis.F-9Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)(c)Foreign Currency TranslationThe functional currency of each entity in the Company is its respective local country currency which is also the currency of the primary economicenvironment in which it operates except for the entities in Mauritius which use the U.S. dollar as its functional currency. Transactions in foreign currencies areinitially recorded into functional currency at the rates of exchange prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreigncurrencies are remeasured into functional currency at the rates of exchange prevailing at the balance sheet date. Non-monetary assets and liabilities are remeasuredto the functional currency of the subsidiary at historical exchange rates. All transaction foreign exchange gains and losses are recorded in the accompanyingconsolidated statements of income.The assets and liabilities of the subsidiaries for which the functional currency is other than the U.S. dollar are translated into U.S. dollars, the reportingcurrency, at the rate of exchange prevailing on the balance sheet date. Revenues and expenses are translated into U.S. dollars at the exchange rates prevailing on thelast business day of each month, which approximates the average monthly exchange rate. Resulting translation adjustments are included in accumulated othercomprehensive loss in the consolidated balance sheet.(d)Revenue RecognitionThe Company derives its revenues from operations management and analytics services. Revenues from operations management services are recognizedprimarily on a time-and-material based, transaction-based, outcome-based, cost-plus and fixed-price basis; revenues from analytics services are recognizedprimarily on a time-and-material and fixed price basis. The services provided by the Company under its contracts with the customer generally contain one unit ofaccounting except for the software and related services contracts involving implementation services and post contract maintenance services. In such multipleelement arrangements, revenue is allocated to maintenance based on the price charged when that element is sold separately (vendor specific objective evidence or“VSOE”). Revenues are recognized when the four basic criteria are met; persuasive evidence of an arrangement exists, the sales price is fixed or determinable,services have been performed and collection of amounts billed is reasonably assured.Revenues under time-and-material, transaction and outcome-based contracts are recognized as the services are performed. When the terms of the clientcontract specify service level parameters that must be met (such as turnaround time or accuracy), the Company monitors such service level parameters to determineif any service credits or penalties have been incurred. Revenues are recognized net of any penalties or service credits that are due to a client.Revenue from Analytics services including modeling, targeting and designing of campaigns and mail marketing including email marketing and other digitalsolutions is typically recognized on delivery of such campaigns. In respect of arrangements involving subcontracting, in part or whole, of the assigned work, theCompany evaluates revenues to be recognized under Accounting Standard Codification ("ASC") topic 605-45, “Revenue recognition - Principal agentconsiderations”.Revenues for Company’s fixed-price contracts are recognized using the proportional performance method when the pattern of performance under thecontracts can be reasonably determined. The Company estimates the proportional performance of a contract by comparing the actual number of hours or daysworked to the estimated total number of hours or days required to complete each engagement. The use of the proportional performance method requires significantjudgment relative to estimating the number of hours or days required to complete the contracted scope of work, including assumptions and estimates relative to thelength of time to complete the project and the nature and complexity of the work to be performed. The Company regularly monitors its estimates for completion ofa project and record changes in the period in which a change in an estimate is determined. If a change in an estimate results in a projected loss on a project, suchloss is recognized in the period in which it is first identified.Revenues from the Company's software and related services contracts, which are not significant, are primarily related to maintenance renewals or incrementallicense fees for additional users. Maintenance revenues are generally recognized on a straight-line basis over the annual contract term. Fees for incremental licensefees without any associated services are recognized upon delivery of the related incremental license. To a lesser extent, software and related services contracts maycontain software license, related services and maintenance elements as a multiple element arrangement. In such cases, revenue is allocated to maintenance based onthe price charged when that element is sold separately (vendor specific objective evidence or “VSOE”). Services related to software licenses are evaluated todetermine whether those services are significant or essential to the functionality of the software. When services are significant or considered essential, revenuesrelated to license fee and services are recognized as the servicesF-10Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)are performed using the percentage of completion method of accounting, under which the total value of revenue is recognized on the basis of the percentage thateach contract’s total labor hours to date bears to the total expected labor hours (input method).The Company accrues revenues for services rendered between the last billing date and the balance sheet date. Accordingly, its accounts receivable includeamounts for services, as unbilled accounts receivables, that the Company has performed and for which an invoice has not yet been issued to the client.The Company defers the revenues and related cost of revenue while a process is under migration and recognizes such revenues and costs ratably over theperiod during which the related services are expected to be performed. The deferred costs are limited to the amounts of the deferred revenues. Deferred revenuealso includes the amount for which the services have been rendered but the other conditions of revenue recognition are not met, for example where the Companydoes not have the persuasive evidence of the arrangements.Reimbursements of out-of-pocket expenses received from clients are included as part of revenues. Reimbursements of out-of-pocket expenses included inrevenues were $17,982 , $21,812 and $18,848 for the years ended December 31, 2017, 2016 and 2015, respectively.(e)Cash and Cash Equivalents and Restricted CashThe Company considers all highly liquid investments purchased with an original maturity of ninety days or less to be cash equivalents. Pursuant to theCompany’s investment policy, surplus funds are invested in highly-rated debt mutual funds, money market accounts and time deposits to reduce its exposure tomarket risk with regard to these funds.Restricted cash represents amounts on deposit with banks against bank guarantees issued through banks for equipment imports and for demands againstpending income tax assessments (see Note 23 for details). These deposits with banks have maturity dates before and after December 31, 2018. Restricted cash alsoincludes client funds held in dedicated bank accounts.(f)InvestmentsThe Company’s investments consist of time deposits with financial institutions which are valued at cost and approximate fair value. Interest earned on suchinvestments is included in interest income. Investments with original maturities greater than ninety days but less than twelve months are classified as short-terminvestments. Investments with maturities greater than twelve months from the balance sheet date are classified as long-term investments.The Company's mutual fund investments are in debt and money market funds which invest in instruments of various maturities in India. These investmentsare accounted for in accordance with the fair value option under ASC topic 825-10 and change in fair value is included in interest and other income. The fair valueis represented by original cost on the acquisition date and the net asset value (“NAV”) as quoted, at each reporting period. Gain or loss on the disposal of theseinvestments is calculated using the weighted average cost of the investments sold or disposed and is included in interest and other income.(g)Accounts ReceivableAccounts receivable are recorded net of allowances for doubtful accounts. Allowances for doubtful accounts are established through the evaluation of theaccounts receivable aging and prior collection experience, current market conditions, clients’ financial condition and the amount of receivables in dispute toascertain the ultimate collectability of these receivables. As of December 31, 2017 and 2016 , the Company had $2,923 and $241 of allowance for doubtfulaccounts, respectively.Accounts receivable include unbilled accounts receivable which represent revenues on contracts to be billed, in subsequent periods, as per the terms of therelated contracts. As of December 31, 2017 and 2016 , the Company had $49,125 and $34,785 of unbilled accounts receivable, respectively.(h)Property and equipmentProperty and equipment are stated at cost less accumulated depreciation and impairment. Equipment held under capital leases are capitalized at thecommencement of the lease at the lower of present value of minimum lease payments at the inception of theF-11Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)leases or its fair value. Advances paid towards acquisition of property and equipment and the cost of property and equipment not yet placed in service before theend of the reporting period are classified as capital work in progress.Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Depreciation and amortization on equipment held undercapital leases and leasehold improvements are computed using the straight-line method over the shorter of the assets’ estimated useful lives or the lease term. (in years)Assets: Network equipment and computers3-5 yearsSoftware3-5 yearsLeasehold improvements3-8 yearsOffice furniture and equipment3-8 yearsMotor vehicles2-5 yearsBuildings30 years(i)Software Development CostsCosts incurred for developing software or enhancements to the existing software products to be sold and/or used for internal use are capitalized oncepreliminary project stage is complete and technological feasibility, as defined in ASC 985 and ASC 350, has been established, i.e., it is probable that the softwarewill be used as intended. Technological feasibility is established upon completion of a detailed design program or, in its absence, completion of a working model.Costs that qualify as software development costs include (i) external direct costs of materials and services utilized in developing or obtaining computer software,(ii) compensation and related benefits for employees who are directly associated with the software project, and (iii) interest costs (if any) incurred while developingthe computer software. The capitalized costs are amortized on a straight-line basis over the estimated useful life. Costs associated with preliminary project stageactivities, training, maintenance and all post-implementation stage activities are expensed as incurred.(j)Business Combinations, Goodwill and Other Intangible AssetsASC topic 805, “Business Combinations”, requires that the purchase method of accounting be used for all business combinations. The guidance specifiescriteria as to intangible assets acquired in a business combination that must be recognized and reported separately from goodwill. Contingent consideration isrecognized at its fair value on the acquisition date. A liability resulting from contingent consideration is re-measured to fair value as of each reporting date until thecontingency is resolved. Changes in fair value are recognized in earnings. These fair value measurements represent Level 3 measurements as they are based onsignificant inputs not observable in the market. Under ASC topic 350, “Intangibles-Goodwill and Other”, all assets and liabilities of the acquired businesses,including goodwill, are assigned to reporting units. Acquisition related costs are expensed as incurred under general and administrative expenses.Goodwill represents the cost of the acquired businesses in excess of the fair value of identifiable tangible and intangible net assets purchased. Goodwill is notamortized but is tested for impairment at least on an annual basis, relying on a number of factors including operating results, business plans and estimated futurecash flows of the reporting units to which it is assigned. Recoverability of goodwill is evaluated using a two-step process.The first step involves a comparison of the fair value of a reporting unit with its carrying value. The fair value of the reporting unit is measured bydiscounting estimated future cash flows. If the carrying amount of the reporting unit exceeds its fair value, the second step of the goodwill impairment test isperformed to measure the amount of impairment loss, if any. The second step of the process involves a comparison of the implied fair value and carrying value ofthe goodwill of that reporting unit. If the carrying value of the goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in anamount equal to the excess. Goodwill of a reporting unit is tested for impairment annually or more frequently if an event occurs or circumstances change thatwould more likely than not reduce the fair value of the reporting unit below its carrying amount.F-12Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)Intangible assets acquired in a business combination are initially valued and recognized at fair market value using generally accepted valuation methodsappropriate for the type of intangible asset. Intangible assets with definite lives are amortized over the estimated useful lives and are reviewed for impairment, ifindicators of impairment arise. The evaluation of impairment is based upon a comparison of the carrying amount of the intangible asset to its fair value, which iscalculated using the estimated future undiscounted net cash flows expected to be generated by the asset. If the fair value of the intangible assets is less than thecarrying amount of the asset, the asset is considered impaired and an impairment expense is recognized equal to any shortfall in the current period.The Company’s definite lived intangible assets are amortized over their estimated useful lives as listed below using a straight-line method:Customer relationships3-15 yearsLeasehold benefits3-8 yearsDeveloped technology5-10 yearsNon-compete agreements1-5 yearsTrade names and trademarks3-10 years(k)Investment in equity affiliateInvestments in equity affiliate are initially recorded at cost and any excess cost over proportionate share of the fair value of the net assets of the investee at theacquisition date is recognized as goodwill. The proportionate share of net income or loss of the investee is recognized in the consolidated statements of income.The Company periodically reviews the carrying value of its investment to determine if there has been any other than temporary decline in carrying value. Theinvestment balance is increased or decreased for cash contribution and distributions to or from, respectively, these investee.(l)Impairment of long-lived assetsLong-lived assets, including intangible assets, to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that thecarrying amount of such assets may not be recoverable. Such assets are required to be tested for impairment if the carrying amount of the assets is higher than thefuture undiscounted net cash flows expected to be generated from the assets. The impairment amount to be recognized is measured as the amount by which thecarrying value of the assets exceeds their fair value. The Company determines fair value by using a discounted cash flow approach.(m)Derivative Financial InstrumentsIn the normal course of business, the Company uses derivative instruments for the purpose of mitigating the exposure from foreign currency fluctuation risksassociated with forecasted transactions denominated in certain foreign currencies and to minimize earnings and cash flow volatility associated with changes inforeign currency exchange rates, and not for speculative trading purposes. These derivative contracts are purchased within the Company’s policy and are withcounterparties that are highly rated financial institutions.The Company hedges forecasted transactions that are subject to foreign exchange exposure with foreign currency exchange contracts that qualify as cash flowhedges. Changes in the fair value of these cash flow hedges are recorded as a component of accumulated other comprehensive income/(loss), net of tax, until thehedged transactions occurs. The Company early adopted ASU 2017-12, Derivative and Hedging (Topic 815), Targeted Improvements to Accounting for HedgingActivities. Pursuant to this adoption, effective January 1, 2017, the resultant foreign exchange gain/(loss) upon settlement of cash flow hedges are recorded in theconsolidated statements of income along with the underlying hedged item in the same income statement line as either part of “Cost of revenue”, “General andadministrative expenses”, “Selling and marketing expenses”, “Depreciation and amortization”, as applicable.Prior to January 1, 2017, the resultant foreign exchange gain/(loss) on settlement of cash flow hedges and changes in the fair value of cash flow hedgesdeemed ineffective have been recorded in “Foreign exchange gain, net” in the consolidated statements of income.F-13Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)The Company also uses derivatives instruments consisting of foreign currency exchange contracts to economically hedge intercompany balances and othermonetary assets or liabilities denominated in currencies other than the functional currency. Changes in the fair value of these derivatives are recognized in theconsolidated statements of income and are included in foreign exchange gain/(loss).The Company evaluates hedge effectiveness of cash flow hedges at the time a contract is entered into as well as on an ongoing basis. For hedge relationshipsthat are discontinued because the forecasted transaction is not expected to occur by the end of the originally specified period, any related derivative amountsrecorded in equity are reclassified to earnings.(n)Employee BenefitsContributions to defined contribution plans are charged to the consolidated statements of income in the period in which services are rendered by the coveredemployees. Current service costs for defined benefit plans are accrued in the period to which they relate. The liability in respect of defined benefit plans iscalculated annually by the Company using the projected unit credit method. Prior service cost, if any, resulting from an amendment to a plan is recognized andamortized over the remaining period of service of the covered employees.The Company recognizes its liabilities for compensated absences dependent on whether the obligation is attributable to employee services already rendered,relates to rights that vest or accumulate and payment is probable and estimable.(o)Stock-Based CompensationThe Company recognizes stock-based compensation expense in the consolidated financial statements for awards of equity instruments to employees and non-employee directors based on the grant-date fair value of those awards. The Company recognizes these compensation costs over the requisite service period of theaward. Forfeitures are accounted when the actual forfeitures occur.Under the Company’s 2015 Amendment and Restatement of the 2006 Omnibus Award Plan (the “2015 Plan”), the Company grants performance-basedrestricted stock units (“PRSUs”) to executive officers and other specified employees. 50% of the PRSUs cliff vest based on a revenue target ("PU") at the end of athree -year period. The remaining 50% vest based on a market condition (“MUs”) that is contingent on meeting or exceeding the total shareholder return relative toa group of peer companies specified under the program, measured over a three -year performance period. The award recipient may earn up to two hundred percent (200% ) of the PRSUs granted based on the actual achievement of both targets.The fair value of each PU was determined based on the market price of one common share of the Company on the date of grant, and the associatedcompensation expense was calculated on the basis that performance targets to receive 100% of the PUs is probable of being achieved. The compensation expensefor the PUs is recognized on a straight-line basis over the service period, which is through the end of the third year. Over this period, the number of shares that willbe issued will be adjusted upward or downward based upon the probability of achievement of the performance targets. The ultimate number of shares issued andthe related compensation cost recognized as an expense will be based on a comparison of the final performance metrics to the specified targets. The expense relatedto the unvested PUs as of December 31, 2017 was based on the Company's assessment that the performance criteria for these grants would be met at the 100%performance target level during the respective years of vesting.The grant date fair value for the MUs was determined using a Monte Carlo simulation model and the related compensation expense is expensed on a straight-line basis over the vesting period. All compensation expense related to the MUs will be recognized if the requisite performance period is fulfilled, even if themarket condition is not achieved.In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718). ASU No. 2016-09 identifies areas for simplificationinvolving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity orliabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on theStatement of Cash Flows. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15,2016. The Company adopted this ASU effective January 1, 2017. The following summarizes the effects of the adoption on the Company's consolidated financialstatements:Income taxes - Upon adoption of this standard, all excess tax benefits and tax deficiencies are recognized as income tax expense or benefit in the incomestatement. The tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. The Company also recognizesexcess tax benefits regardless of whether the benefit reduces taxesF-14Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)payable in the current period. As a result, the Company recognized discrete adjustments to income tax expense for the year ended December 31, 2017 in theamount of $9,797 related to excess tax benefits. No adjustment is recorded for any windfall benefits previously recorded in Additional Paid-In Capital.Forfeitures - Prior to adoption, stock-based compensation expense was recognized on a straight line basis, net of estimated forfeitures, such that expensewas recognized only for stock-based awards that are expected to vest. A forfeiture rate was estimated annually and revised, if necessary, in subsequent periods ifactual forfeitures differed from initial estimates. Upon adoption, the Company will no longer apply a forfeiture rate and instead will account for forfeitures as theyoccur. The Company has applied the modified retrospective adoption approach as of January 1, 2017 and has recognized a cumulative-effect adjustment to reduceadditional paid-in-capital of $5,999 and retained earnings of $4,546 (net of deferred tax effect of $1,453 ).Statements of Cash Flows - The Company historically accounted for excess tax benefits on the statement of cash flows as a financing activity. Uponadoption of this standard, excess tax benefits are classified along with other income tax cash flows as an operating activity. The Company has elected to adopt thisportion of the standard on a prospective basis beginning in 2017 and accordingly prior periods have not been adjusted.Earnings Per Share - The Company uses the treasury stock method to compute diluted earnings per share, unless the effect would be anti-dilutive. TheCompany excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of diluted earnings per share.(p)Income TaxesThe Company accounts for income taxes using the asset and liability method of accounting for income taxes. The Company calculates and provides forincome taxes in each of the tax jurisdictions in which it operates. The deferred tax assets and liabilities are recognized for future tax consequences attributable totemporary differences between the financial statement carrying values of existing assets and liabilities and their respective tax bases and all operating losses carriedforward, if any. Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which the applicable temporarydifferences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates or tax status is recognized in thestatement of income in the period in which the change is identified. Deferred tax assets are reduced by a valuation allowance if, based on available evidence, it ismore likely than not that some portion or all of the deferred tax assets will not be realized.The Company establishes provisions for uncertain tax provisions and related interest and penalties when the Company believes those tax positions are notmore likely than not of being sustained, if challenged.(q)Financial Instruments and Concentration of Credit RiskFinancial Instruments. For certain financial instruments, including cash and cash equivalents, short-term investments, accounts receivable, accounts payable,accrued expenses, and other current liabilities, recorded amounts approximate fair value due to the relatively short maturity periods of such instruments.Concentration of Credit Risk . Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cashequivalents, time deposits, mutual fund investments, accounts receivable and derivative financial instruments. By their nature, all such financial instrumentsinvolve risks including the credit risks of non-performance by counterparties. Pursuant to the Company’s investment policy, its surplus funds are maintained ascash or cash equivalents and are invested in highly-rated mutual funds, money market accounts and time deposits, placed with highly rated financial institutions toreduce its exposure to market risk with regard to these funds. The Company’s exposure to credit risk on account receivable is influenced mainly by the individualcharacteristic of each customer and the concentration of risk from the top few customer s. To mitigate this risk the Company evaluates the creditworthiness of itsclients in conjunction with its revenue recognition processes as well as through its ongoing collectability assessment processes for accounts receivable. TheCompany does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.F-15Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)(r)Lease ObligationsLeases under which the Company assumes substantially all risks and rewards of the ownership are classified as capital lease. When acquired, such assets arecapitalized at fair value or present value of minimum committed lease payments at the inception of the lease, whichever is lower.The Company leases its office facilities under non-cancellable operating lease agreements. Office facilities subject to an operating lease and the related leasepayments are not recorded on the Company’s balance sheet. Lease payments under operating lease are recognized as an expense on a straight line basis in theconsolidated statement of income over the lease term.(s)Government GrantsGovernment grants related to income are recognized as a reduction of expenses in the consolidated statement of income when there is a reasonable assurancethat the entity will comply with the conditions attached to the grant and that the grants will be received.(t)Earnings per shareBasic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share iscomputed using the weighted average number of common and dilutive common equivalent shares outstanding during the period. For the purposes of calculatingdiluted earnings per share, the treasury stock method is used for stock-based awards except where the results would be anti-dilutive.(u)Commitments and contingenciesLiabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that aliability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Legal costs incurred in connection with suchliabilities are expensed as incurred.(v)Recent Accounting PronouncementsIn May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, “Revenue from Contracts withCustomers” (Topic 606). This standard replaces existing revenue recognition guidance with a comprehensive revenue measurement and recognition standard andexpanded disclosure requirements. The ASU also includes guidance regarding the accounting for contract acquisition costs, including sales commissions. TheCompany will adopt the new standard as of January 1, 2018 using the modified retrospective transition method, applied to those contracts which were notcompleted as of that date. Upon adoption, the Company will recognize the cumulative effect of adopting this guidance as an adjustment to our opening balance ofretained earnings. Prior periods will not be retrospectively adjusted.During the year the Company has worked to assess all potential impacts of the new standard and prepare for adoption. As part of this process, the Companyclosely monitored FASB activity and other relevant information on specific interpretative issues. During the adoption process, findings and progress of the projectwere regularly reported to senior management and the Audit Committee. We expect that adoption of Topic 606 will not have a material impact to our consolidatedfinancial statements, including the presentation of revenues in our consolidated statements of income.The key area impacted upon adoption of the new standard relates to the accounting for commissions costs. Specifically, under the new standard a portion ofsales commissions cost will be recorded as an asset and recognized as an operating expense over the time period that the Company expects to recover the costs.Currently, the Company expenses sales commission costs as incurred.Additionally, some contracts contain provisions with regard to “service levels” to be achieved by the Company, failing which or exceeding which theCompany is liable to make payments to the customer or receive performance bonuses from the customers. Such service level payment or bonuses need to beestimated at contract inception and accounted for in revenue. Based on an evaluation of the service levels penalties for past periods, the Company believes that theimpact of this clause will not be significant.F-16Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)We have identified changes to the Company systems processes and internal control to meet the standard reporting and disclosure requirement.In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU No. 2016-02 requires the identification of arrangements that should beaccounted for as leases by lessees. In general, for lease arrangements exceeding a twelve month term, these arrangements must now be recognized as assets andliabilities on the balance sheet of the lessee. Under ASU No. 2016-02, a right-of-use asset and lease obligation will be recorded for all leases, whether operating orfinancing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The balance sheetamount recorded for existing leases at the date of adoption of ASU No. 2016-02 must be calculated using the applicable incremental borrowing rate at the date ofadoption. In addition, ASU No. 2016-02 requires the use of the modified retrospective method, which will require adjustment to all comparative periods presentedin the consolidated financial statements. The new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within thosefiscal years. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements and theimplementation approach to be used.In June 2016, FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses, which require a financial asset (or a group of financial assets) measuredat amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is to be deducted fromthe amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The new guidance iseffective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The amendment should be applied through amodified retrospective approach. Early adoption as of the fiscal years beginning after December 15, 2018 is permitted. The adoption of ASU No. 2016-13 is notexpected to have a material effect on the Company's consolidated financial statements.In August 2016, FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. The amendments apply to all entities that arerequired to present a statement of cash flows under Topic 230. The amendments are an improvement to GAAP because they provide guidance for each of the eightissues, thereby reducing the current and potential future diversity in practice. The amendments are effective for fiscal years beginning after December 15, 2017 andinterim periods within those annual periods and should be applied using a retrospective transition method to each period presented. The Company does not expectthe adoption of this ASU to have a material effect on its financial position or results of operations.In November 2016, FASB issued ASU No. 2016-18, Statement of cash flows - Restricted cash. The amendments apply to all entities that have restricted cashor restricted cash equivalents and are required to present a statement of cash flows under Topic 230. The amendments in this update require that a statement of cashflows should explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cashequivalents. The amendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods. Early adoption ispermitted with an adjustment reflected as of the beginning of the fiscal year in which the amendment is adoption. The Company does not expect the adoption ofthis ASU to have a material effect on the presentation of its statement of cash flows.In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350), which eliminates Step 2 from the goodwillimpairment test. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, however, the loss recognizedshould not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual and interim periods in fiscal years beginningafter December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017 and should be appliedprospectively. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements.In March, 2017, FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost. The ASUamends ASC 715, Compensation — Retirement Benefits, to require employers that present a measure of operating income in their statement of income to includeonly the service cost component of net periodic pension cost and net periodic post-retirement benefit cost in operating expenses (together with other employeecompensation costs). The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to beincluded in non-operating expenses. The update also stipulates that only the service cost component of net benefit cost is eligible for capitalization. Theamendments are effective for fiscal years beginning after December 15, 2017 and interim periods within those annual periods. Early adoption is permitted as of thebeginning of an annual period. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.In May 2017, FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides guidance onthe types of changes to the terms or conditions of share-based payment awards to which an entityF-17Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)would be required to apply modification accounting. Modification accounting is required only if the fair value, the vesting conditions, or the classification of theaward changes as a result of the change in terms or conditions. The amendments in this ASU are effective for all entities for annual periods, and interim periodswithin those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for public business entitiesfor reporting periods for which financial statements have not yet been issued. The amendments in this ASU should be applied prospectively to an award modifiedon or after the adoption date. The Company will adopt this guidance for modification that occur after January 1, 2018.In August 2017, FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This ASUamends and simplifies existing guidance in order to allow companies to more accurately present the economic effects of risk management activities in theirfinancial statements. This includes simplifying how hedge results are presented and disclosed both on the face of the financial statements and in the footnotes, andprovides relief around the documentation and assessment requirements. The amendments are effective for fiscal years beginning after December 15, 2018 andinterim periods within those fiscal years, with early adoption being permitted. The Company has early adopted the guidance beginning January 1, 2017. Theamendments of this ASU have an impact on the way the Company has been presenting the impact of hedge ineffectiveness and the settlement gain or loss for cashflow hedges in the prior years. The amended presentation have been applied prospectively from the date of adoption, whereby the entire change in the fair value ofthe hedging instrument included in the assessment of hedge effectiveness is recorded in other comprehensive income. Such amount, upon settlement of cash flowhedges, are presented to earnings in the same income statement line item that is used to present the earnings effect of the hedged item when the hedged item affectsearnings. See Note 15 to consolidated financial statements for details.F-18Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)3. Segment & Geographical InformationThe Company operates in the BPM industry and is a provider of operations management and analytics services. The Company has eight operating segmentswhich are strategic business units that align its products and services with how it manages its business, approaches its key markets and interacts with its clients. Sixof those operating segments provide BPM or “operations management” services, which the company organizes into industry-focused operating segments(Insurance, Healthcare, Travel, Transportation and Logistics, Banking and Financial Services, and Utilities) and one “capability” operating segment (Finance andAccounting) that provides services to clients in our industry-focused segments as well as clients across other industries. In each of these six operating segments, theCompany provides operations management services, which typically involve transfer to the Company of business operations of a client, after which it administersand manages those operations for its client on an ongoing basis. The remaining two operating segments are Consulting, which provides industry-specifictransformational services related to operations management services, and the Analytics operating segment, which provides services that focus on driving improvedbusiness outcomes for clients by generating data-driven insights across all parts of their business.The Company presents information for the following reportable segments:•Insurance•Healthcare•Travel, Transportation and Logistics (“TT&L”)•Finance and Accounting (“F&A”),•Analytics, and•All Other (consisting of the Company's remaining operating segments which includes the Banking and Financial services, Utilities and Consultingoperating segments).For the year ended December 31, 2015, the Company previously reported and presented two reportable segments: Operations Management (which includedInsurance, Healthcare, Travel, Transportation and Logistics, Finance and Accounting, Banking and Financial services, Utilities and Consulting operating segments)and Analytics.Segment information for all prior period presented herein has been changed to conform to the current presentation. This change in segment presentation doesnot affect the Company's consolidated statements of income and comprehensive income, balance sheets or statements of cash flows.The chief operating decision maker (“CODM”) generally reviews financial information such as revenues, cost of revenues and gross profit, disaggregated bythe operating segments to allocate an overall budget among the operating segments.The Company does not allocate and therefore the CODM does not evaluate other operating expenses, interest expense or income taxes by segment. Many ofthe Company’s assets are shared by multiple operating segments. The Company manages these assets on a total Company basis, not by operating segment, andtherefore asset information and capital expenditures by operating segment are not presented.The Company early adopted ASU 2017-12, Derivative and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. Pursuant tothis adoption, effective January 1, 2017, the resultant foreign exchange gain/(loss) upon settlement of cash flow hedges are recorded along with the underlyinghedged item in the same income statement line as either part of “Cost of revenue”, “General and administrative expenses”, “Selling and marketing expenses”,"Depreciation and Amortization”, as applicable.F-19Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)Revenues and cost of revenues for each of the years ended December 31, 2017, 2016 and 2015, for each of the reportable segments, are as follows: Year ended December 31, 2017 Insurance Healthcare TT&L F&A All Other Analytics Total Revenues, net$234,794 $77,013 $70,951 $86,527 $83,082 $209,943 $762,310Cost of revenues (exclusive ofdepreciation and amortization)159,529 49,483 41,409 51,445 56,697 137,023 495,586Gross profit$75,265 $27,530 $29,542 $35,082 $26,385 $72,920 $266,724Operating expenses 194,499Foreign exchange gain, interestexpense and other income, net 12,809Income tax expense 36,146Net income $48,888 Year ended December 31, 2016 Insurance Healthcare TT&L F&A All Other Analytics Total Revenues, net$206,327 $68,656 $69,366 $79,416 $96,489 $165,734 $685,988Cost of revenues (exclusive ofdepreciation and amortization)146,203 44,098 41,962 48,302 61,050 106,341 447,956Gross profit$60,124 $24,558 $27,404 $31,114 $35,439 $59,393 $238,032Operating expenses 173,810Foreign exchange gain, interestexpense and other income, net 19,662Income tax expense 22,151Net income $61,733 Year ended December 31, 2015 Insurance Healthcare TT&L F&A All Other Analytics Total Revenues, net$199,878 $55,209 $62,264 $78,504 $110,486 $122,151 $628,492Cost of revenues (exclusive ofdepreciation and amortization)134,196 37,224 37,506 46,846 68,307 78,838 402,917Gross profit$65,682 $17,985 $24,758 $31,658 $42,179 $43,313 $225,575Operating expenses 158,232Foreign exchange gain, interestexpense and other income, net 8,433Income tax expense 24,211Net income $51,565F-20Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)Net revenues of the Company by service type, were as follows:Year ended December 31,2017 2016 2015BPM and related services (1)$552,367 $520,254 $506,341Analytics services209,943 165,734 122,151Total$762,310 $685,988 $628,492(1) BPM and related services include revenues of the Company's five industry-focused operating segments, one capability operating segment and theconsulting operating segment, which provides services related to operations management services.The Company attributes the revenues to regions based upon the location of its customers. Year ended December 31, 2017 2016 2015Revenues, net United States$626,336 $554,945 $496,418Non-United States United Kingdom108,640 109,905 108,868Rest of World27,334 21,138 23,206Total Non-United States135,974 131,043 132,074 $762,310 $685,988 $628,492Property and equipment, net by geographic area, are as follows: As of December 31, 2017 December 31, 2016Property and equipment, net India$39,143 $23,362United States16,371 10,809Philippines8,217 11,900Rest of World3,026 2,958 $66,757 $49,029For a discussion of risks attendant to foreign operations, see “Item 1A. Risk Factors - Risks Related to the International Nature of Our Business”.F-21Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)4. Quarterly Financial Data (Unaudited)Summarized quarterly results for the years ended December 31, 2017 and 2016 are as follows:Three months ended 2017 Year ended March 31 June 30 September 30 December 31 December 31, 2017 Revenues, net$183,033 $189,057 $192,345 $197,875 $762,310Gross profit**$63,851 $65,211 $69,156 $68,506 $266,724Net income/(loss)$16,788 $20,378 $21,077 $(9,355) $48,888Earnings/(loss) per share: Basic*$0.50 $0.60 $0.62 $(0.27) $1.44Diluted*$0.48 $0.58 $0.60 $(0.27) $1.39Weighted-average number of shares used in computingearnings per share: Basic*33,845,560 33,819,320 33,838,374 34,086,711 33,897,916Diluted*35,108,882 34,993,226 35,043,987 34,086,711 35,110,210 Stock compensation expense$5,956 $5,107 $5,708 $6,270 $23,041Amortization of intangibles$3,498 $3,507 $3,487 $3,483 $13,975Three months ended 2016 Year ended March 31 June 30 September 30 December 31 December 31, 2016 Revenues, net$167,036 $170,478 $171,200 $177,274 $685,988Gross profit**$58,657 $58,452 $59,433 $61,490 $238,032Net income$13,820 $16,375 $16,050 $15,488 $61,733Earnings per share: Basic*$0.41 $0.49 $0.48 $0.46 $1.84Diluted*$0.40 $0.47 $0.46 $0.45 $1.79Weighted-average number of shares used in computingearnings per share: Basic*33,380,028 33,621,444 33,624,401 33,638,170 33,566,367Diluted*34,351,657 34,510,400 34,675,485 34,714,308 34,563,319 Stock compensation expense$5,809 $4,450 $4,484 $5,027 $19,770Amortization of intangibles$2,715 $2,718 $2,848 $3,592 $11,873* Total of quarterly basic and diluted earnings per share and weighted average number of shares used in computing earnings per share will not be equal to year endbasic and diluted earnings per share and weighted average number of shares used in computing earnings per share, respectively. For the quarter ended December31, 2017, 1,206,335 weighted average common shares were considered anti-dilutive and not included in computing diluted earnings per share.**During the quarter ended December 31, 2017, the Company early adopted ASU 2017-12, Derivative and Hedging (Topic 815), Targeted Improvements toAccounting for Hedging Activities. Pursuant to this adoption effective January 1, 2017, the Company recorded settlement gain/(loss) on cash flow hedges in cost ofrevenues and operating expenses, as applicable, in the consolidated statements of income for each of the quarters of 2017. See Note 15 for further details.F-22Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)5. Earnings Per ShareBasic earnings per share is computed by dividing net income to common stockholders by the weighted average number of common shares outstanding duringeach period. Diluted earnings per share is computed using the weighted average number of common shares plus the potentially dilutive effect of common stockequivalents issued and outstanding at the reporting date, using the treasury stock method. Stock options, restricted stock and restricted stock units that are anti-dilutive are excluded from the computation of weighted average shares outstanding.The following table sets forth the computation of basic and diluted earnings per share: Year ended December 31, 2017 2016 2015Numerators: Net income$48,888 $61,733 $51,565Denominators: Basic weighted average common shares outstanding33,897,916 33,566,367 33,298,104Dilutive effect of stock based awards1,212,294 996,952 880,236Diluted weighted average common shares outstanding35,110,210 34,563,319 34,178,340Earnings per share: Basic$1.44 $1.84 $1.55Diluted$1.39 $1.79 $1.51Weighted average common shares considered anti-dilutive and not included incomputing diluted earnings per share151,961 92,538 73,8966. Other Income, netOther Income, net consists of the following:Year ended December 31,2017 2016 2015Interest and dividend income$1,625 $1,673 $2,904Gain on mutual fund investments8,766 8,087 3,902Change in fair value of earn-out consideration— 4,060 —Other, net1,468 1,588 221Other income, net$11,859 $15,408 $7,027F-23Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)7. Property and EquipmentProperty and equipment consist of the following: As ofEstimated useful lives(Years) December 31, 2017 December 31, 2016Owned Assets: Network equipment and computers3-5 $77,587 $65,381Software3-5 59,325 44,617Leasehold improvements3-8 38,857 31,192Office furniture and equipment3-8 19,667 15,426Motor vehicles2-5 638 580Buildings30 1,245 1,171Land- 815 766Capital work in progress- 9,184 4,964 207,318 164,097Less: Accumulated depreciation and amortization (141,059) (115,568) $66,259 $48,529Assets under capital leases: Leasehold improvements $941 $854Office furniture and equipment 167 133Motor vehicles 710 810 1,818 1,797Less: Accumulated depreciation (1,320) (1,297) $498 $500Property and Equipment, net $66,757 $49,029Capital work in progress represents advances paid towards acquisition of property and equipment and cost of property and equipment and internallygenerated software costs not yet ready to be placed in service.The depreciation and amortization expense excluding amortization of acquisition-related intangibles recognized in the consolidated statements of income wasas follows: Year ended December 31, 2017 2016 2015Depreciation and amortization expense$24,574 $22,707 $21,239Effective January 1, 2017, the depreciation and amortization expenses set forth above includes the effect of the foreign exchange gain/(loss) upon settlementof cash flow hedges, amounting to $435 for the year ended December 31, 2017 (see Note 15 to the consolidated financial statements for further details).F-24Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)Internally developed software costs, included under Software, was as follows: As of December 31, 2017 December 31, 2016Cost$2,571 $2,242Less : Accumulated amortization976 336 $1,595 $1,906During the year ended December 31, 2017, there were no changes in estimated useful lives of property and equipment.8. Business Combinations, Goodwill and Intangible AssetsHealth Integrated, Inc.On December 22, 2017 , a wholly owned subsidiary of the Company entered into an Asset Purchase Agreement to acquire substantially all the assets andassumed certain liabilities of Health Integrated, Inc. (“Health Integrated”), a company based in Tampa, Florida. The initial purchase consideration consisted of$22,577 in cash including working capital adjustment. The purchase agreement allows sellers the ability to earn up to $5,000 as earn-out, based on the achievementof certain performance goals by Health Integrated during the 2018 calendar year. The earn-out has an estimated fair value of $920 .A portion of the purchase consideration otherwise payable was placed into escrow as security for the post-closing working capital adjustments and theindemnification obligations under the Asset Purchase Agreement.Health Integrated is a Florida-based care management company that provides end-to-end analytics- and behavioral IP-enabled care management servicesincluding case management, utilization management, disease management, special needs programs, and multichronic care management on behalf of healthplans. Health Integrated serves millions of lives in the Medicaid, Medicare, and dual eligible populations. It is known for its strong capabilities in improvingmember health status through behavioral change. Accordingly, the Company paid a premium for the acquisition, which is reflected in the goodwill recognized fromthe purchase price allocation. The acquisition of Health Integrated is included in the Healthcare reportable segment. The Company has preliminary allocated the purchase price to the net tangible and intangible assets based on their fair values as set forth below: Amount (In thousands)Tangible Assets $5,945Liabilities (7,193)Identifiable Intangible Assets: Customer relationships 6,760 Developed technology 1,510 Trade names and trademarks 570Goodwill 15,957Total purchase price $23,549The amount of goodwill recognized from the Health Integrated acquisition is deductible for tax purposes.The customer relationships from the Health Integrated acquisition are being amortized over the weighted average useful life of 7.0 years and developedtechnology and trademarks are being amortized over the useful life of 1.0 year and 2.0 years , respectively.F-25Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)Under ASC topic 805, "Business Combination", the preliminary allocation of the purchase price to the tangible and intangible assets and liabilities acquiredmay change for a period of up to one year from the date of the acquisition. The Company's purchase accounting for Health Integrated as of December 31, 2017 wasincomplete and the Company expects to complete the working capital adjustment and valuation of the tangible assets, intangible assets and liabilities assumed as ofthe acquisition date during the first quarter of 2018. Accordingly, the Company may adjust the amounts recorded as of December 31, 2017 to reflect the finalvaluations of assets acquired or liabilities assumed.During the year ended December 31, 2017 , the Company recognized $795 as acquisition related costs. Such amounts are included in general andadministrative expenses in the consolidated statements of income. The Company’s results of operations for the year ended December 31, 2017 includesinsignificant amount of revenues and net income from its Health Integrated acquisition from December 22, 2017 through December 31, 2017 .Subsequent to December 31, 2017 , the Company also issued 4,444 shares of restricted stock units with an aggregate fair value of $275 to certain keyemployees of Health Integrated, each of whom accepted employment positions with the Company upon consummation of the combination. The restricted stockunits vest proportionally over four years and the fair value of these grants will be recognized as compensation expense on a straight-line basis over the vestingterm.Unaudited Pro Forma Financial InformationThe following unaudited pro forma results of operations have been prepared using the acquisition method of accounting to give effect to the Health Integratedacquisition as though it occurred on January 1, 2016. The Company completed its acquisition of Health Integrated on December 22, 2017 and accordingly HealthIntegrated’s operations for the period from December 22, 2017 to December 31, 2017 are included in the Company’s consolidated statement of income. The proforma amounts reflect certain adjustments, such as depreciation and amortization on assets acquired, interest expense related to liabilities not assumed by theCompany and facility costs for certain facilities not acquired. The unaudited pro forma financial information is presented for illustrative purposes only, is based ona preliminary purchase price allocation, and is not necessarily indicative of the results of operations that would have actually been reported had the acquisitionsoccurred on January 1, 2016, nor is it necessarily indicative of the future results of operations of the combined company. Year ended December 31, 2017 2016Revenues$801,101 $729,938Net income$46,998 $58,232Earnings per share: Basic$1.39 $1.73Diluted$1.34 $1.68F-26Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)GoodwillThe following table sets forth details of the Company’s goodwill balance as of December 31, 2017 :Insurance Healthcare TT&L F&A All Other Analytics TotalBalance as at January 1, 2016$35,824 $19,276 $13,278 $47,891 $5,326 $49,940 $171,535Acquisitions2,510 — — — — 13,598 16,108Currency translation adjustments(224) — (295) (354) — — (873)Balance as at December 31, 2016$38,110 $19,276 $12,983 $47,537 $5,326 $63,538 $186,770Acquisitions— 15,957 — — — — 15,957Currency translation adjustments223 — 696 835 — — 1,754Balance as at December 31, 2017$38,333 $35,233 $13,679 $48,372 $5,326 $63,538 $204,481Based on the results of the impairment testing performed during the year ended December 31, 2017 , the Company’s goodwill was not impaired. TheCompany makes every reasonable effort to ensure that it accurately estimates the fair value of the reporting units. However, future changes in the assumptions usedto make these estimates could result in an impairment loss.F-27Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)Intangible AssetsInformation regarding the Company’s intangible assets is set forth below: As of December 31, 2017 GrossCarrying Amount AccumulatedAmortization Net CarryingAmountFinite-lived intangible assets: Customer relationships$82,165 $(43,667) $38,498Leasehold benefits2,888 (2,596) 292Developed technology15,835 (8,749) 7,086Non-compete agreements2,045 (1,780) 265Trade names and trademarks5,951 (4,034) 1,917 $108,884 $(60,826) $48,058Indefinite-lived intangible assets: Trade names and trademarks$900 $— $900Total intangible assets$109,784 $(60,826) $48,958 As of December 31, 2016 GrossCarrying Amount AccumulatedAmortization Net CarryingAmountFinite-lived intangible assets: Customer relationships$75,181 $(32,968) $42,213Leasehold benefits2,715 (2,247) 468Developed technology14,186 (6,468) 7,718Non-compete agreements2,045 (1,612) 433Trade names and trademarks5,360 (3,322) 2,038 $99,487 $(46,617) $52,870Indefinite-lived intangible assets: Trade names and trademarks$900 $— $900Total intangible assets$100,387 $(46,617) $53,770The amortization expenses is as follows: Year ended December 31, 2017 2016 2015Amortization expense$13,975 $11,873 $10,226The remaining weighted average life of intangible assets is as follows: (in years)Customer relationships5.36Leasehold benefits1.41Developed technologies3.07Non-compete agreements1.69Trade names and trademarks (Finite lived)4.29F-28Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)Estimated amortization of intangible assets during the year ending December 31:2018$15,249201912,50820205,08620214,02120223,2132023 and thereafter7,981Total$48,0589. Investment in equity affiliateOn December 12, 2017 , the Company acquired preferred stock in Corridor Platform Inc. (“Corridor”), a big data credit risk management platform f or$3,000 . The Company has determined that based on its ownership interest and other rights, Corridor is an equity affiliate. The Company has the right and option toacquire additional preferred stock from Corridor as per the terms of the agreement. The Company's proportionate share of net loss of Corridor for the periodDecember 12, 2017 to December 31, 2017 was insignificant.10. Other current assetsOther current assets consists of the following: As of December 31, 2017 December 31, 2016Derivative instruments$10,938 $3,324Advances to suppliers2,451 1,091Receivables from statutory authorities7,598 11,870Others8,595 4,883Other current assets$29,582 $21,16811. Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities consists of the following: As of December 31, 2017 December 31, 2016Accrued expenses$43,235 $30,690Derivative instruments555 1,430Client liability account8,982 4,005Others8,594 7,139Accrued expenses and other current liabilities$61,366 $43,264F-29Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)12. Non-current liabilitiesNon-current liabilities consists of the following: As of December 31, 2017 December 31, 2016Derivative instruments$322 $828Unrecognized tax benefits892 3,640Deferred rent8,176 7,237Retirement benefits3,377 1,977Others3,435 1,137Non-current liabilities$16,202 $14,81913. Accumulated Other Comprehensive LossAccumulated other comprehensive loss consists of amortization of actuarial gain/(loss) on retirement benefits and changes in the cumulative foreign currencytranslation adjustments. In addition, the Company enters into foreign currency exchange contracts, which are designated as cash flow hedges in accordance withASC No. 815. Changes in the fair values of contracts are recognized in other comprehensive income on the Company's consolidated balance sheet until thesettlement of those contracts. The balances as of December 31, 2017 and 2016 are as follows: As of December 31, 2017 December 31, 2016Cumulative currency translation adjustments$(58,405) $(77,299)Unrealized gain on cash flow hedges, net of taxes of $4,918 and $1,20711,932 2,740Retirement benefits, net of taxes of ($74) and ($342)763 (498)Accumulated other comprehensive loss$(45,710) $(75,057)F-30Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)14. Fair Value MeasurementsASC topic 820, “Fair Value Measurements and Disclosures ” ("ASC No. 820") defines fair value as the price that would be received upon sale of an asset orpaid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market forthat asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not onassumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the Company’s owncredit risk.ASC No. 820 establishes a three-level hierarchy of fair value measurements based on whether the inputs to those measurements are observable orunobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. Thefair-value hierarchy requires the use of observable market data when available and consists of the following levels:•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; andmodel-derived valuations in which all significant inputs are observable in active markets; and•Level 3—Valuations derived from valuation techniques in which one or more significant inputs are unobservable.Assets and Liabilities Measured at Fair ValueThe following table sets forth the Company’s assets and liabilities that were accounted for at fair value as of December 31, 2017 and 2016 . The table excludesaccounts receivable, accounts payable and accrued expenses for which fair values approximate their carrying amounts.As of December 31, 2017Level 1 Level 2 Level 3 TotalAssets Money market and mutual funds*$162,906 $— $— $162,906Derivative financial instruments— 18,298 — 18,298Total$162,906 $18,298 $— $181,204Liabilities Derivative financial instruments$— $877 $— $877Fair value of earn-out consideration— — 920 920Total$— $877 $920 $1,797 As of December 31, 2016Level 1 Level 2 Level 3 TotalAssets Money market and mutual funds*$— $— $— $—Derivative financial instruments— 6,318 — 6,318Total$— $6,318 $— $6,318Liabilities Derivative financial instruments$— $2,258 $— $2,258Total$— $2,258 $— $2,258* Represents short-term investments carried on fair value option under ASC 825 "Financial Instruments" as of December 31, 2017Derivative Financial Instruments: The Company’s derivative financial instruments consist of foreign currency forward exchange contracts. Fair values forderivative financial instruments are based on independent sources including highly rated financial institutions and are classified as Level 2. See Note 15 for furtherdetails.F-31Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)Fair value of earn-out consideration: The fair value measurement of earn-out consideration is determined using Level 3 inputs. The Company’s earn-outconsideration represents a component of the total purchase consideration for its acquisition of Health Integrated. The measurement is calculated using unobservableinputs based on the Company’s own assessment of achievement of certain performance goals by Health Integrated during the 2018 calendar year. The Companyestimated the fair value of the earn-out consideration to be $920 , based on expected probability method.15. Derivatives and Hedge AccountingThe Company uses derivative instruments and hedging transactions to mitigate exposure to foreign currency fluctuation risks associated with forecastedtransactions denominated in certain foreign currencies and to minimize earnings and cash flow volatility associated with changes in foreign currency exchangesrates. The Company’s derivative financial instruments are largely forward foreign exchange contracts that are designated as effective hedges and that qualify ascash flow hedges under ASC No. 815. The Company had outstanding cash flow hedges totaling $300,757 as of December 31, 2017 and $218,545 as ofDecember 31, 2016 .Changes in the fair value of these cash flow hedges are recorded as a component of accumulated other comprehensive income / (loss), net of tax, until thehedged transactions occurs. The Company early adopted ASU 2017-12, Derivative and Hedging (Topic 815), Targeted Improvements to Accounting for HedgingActivities. Pursuant to this adoption, effective January 1, 2017, the resultant foreign exchange gain/(loss) are recorded along with the underlying hedged item in thesame line of consolidated statements of income as either part of “Cost of revenue”, “General and administrative expenses”, “Selling and marketing expenses”,Depreciation and amortization”, as applicable.Prior to January 1, 2017, the resultant foreign exchange gain/(loss) on settlement of cash flow hedges and changes in the fair value of cash flow hedgesdeemed ineffective were recorded in “Foreign exchange gain, net” in the consolidated statements of income.The Company also enters into foreign currency forward contracts to economically hedge its intercompany balances and other monetary assets and liabilitiesdenominated in currencies other than functional currency. These derivatives do not qualify as fair value hedges under ASC No. 815. Changes in the fair value ofthese derivatives are recognized in the consolidated statement of income and are included in foreign exchange gain/(loss). The Company’s primary exchange rateexposure is with the Indian Rupee, the U.K. pound sterling and the Philippine peso. The Company also has exposure to Colombian pesos, Czech Koruna, the Euro,South African ZAR and other local currencies in which it operates. Outstanding foreign currency forward contracts amounted to $98,967 and GBP 17,947 as ofDecember 31, 2017 and amounted to $63,980 and GBP 17,974 as of December 31, 2016 .The Company estimates that approximately $10,411 of net derivative gains included in accumulated other comprehensive loss (“AOCI”) could bereclassified into earnings within the next twelve months based on exchange rates prevailing as of December 31, 2017 . At December 31, 2017 , the maximumoutstanding term of the cash flow hedges was 45 months.The Company evaluates hedge effectiveness at the time a contract is entered into as well as on an ongoing basis. For hedging positions that are discontinuedbecause the forecasted transaction is not expected to occur by the end of the originally specified period, any related amounts recorded in equity are reclassified toearnings.F-32Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)The following tables set forth the fair value of the foreign currency exchange contracts and their location on the consolidated financial statements:Derivatives designated as hedging instruments : As ofForeign currency exchange contracts December 31, 2017 December 31, 2016Other current assets $10,892 $3,211Other assets $7,360 $2,994Accrued expense and other current liabilities $481 $1,430Other non-current liabilities $322 $828 Derivatives not designated as hedging instruments : As ofForeign currency exchange contracts December 31, 2017 December 31, 2016Other current assets $46 $113Accrued expense and other current liabilities $74 $—The following table set forth the effect of foreign currency exchange contracts in the consolidated statements of income and accumulated other comprehensive lossfor the years ended December 31, 2017 and 2016 : Derivatives in hedging relationships Year ended December 31,Forward Exchange Contracts : 2017 2016(Gain)/loss recognized in AOCI Derivatives in cash flow hedging relationships $(19,802) $(5,129) (Gain)/loss recognized in consolidated statements of income Derivatives in fair value hedging relationships $(5,056) $(4,790)F-33Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)Location and amount of (gain)/loss recognized in consolidated statements of income for cash flow and fair value hedging relationships Year ended December 31, 2017* 2016*Type of hedging relationships As perconsolidatedstatements ofincome (Gain)/loss onforeign currencyexchangecontracts As perconsolidatedstatements ofincome (Gain)/loss onforeign currencyexchangecontractsCash flow hedging relationships Location in consolidated statements of income where(gain)/loss was reclassed from AOCI Cost of revenue $495,586 $(5,465) $— $—General & administrative expenses $102,567 (960) $— —Selling & marketing expenses $53,383 (103) $— —Depreciation & amortization $38,549 (371) $— —Foreign exchange gain, net $(2,839) — $(5,597) (2,669) $(6,899) $(2,669) Fair value hedging relationships Location in consolidated statements of income where(gain)/loss was recognized Foreign exchange gain, net $(2,839) $(5,056) $(5,597) $(4,790) $(2,839) $(5,056) $(5,597) $(4,790)* The Company early adopted ASU 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities.Pursuant to this adoption, effective January 1, 2017, the Company recorded settlement gain/(loss) on cash flow hedges in cost of revenues and operating expenses,as applicable, in the consolidated statements of income. In prior periods, such gain/loss were included under "Foreign exchange gain, net" line in the consolidatedstatements of income.16. BorrowingsOn October 24, 2014, the Company entered into a credit agreement that provided for a $50,000 revolving credit facility (the “Credit Facility”). On February 23,2015, the Company increased the commitments under the Credit Facility by up to an additional $50,000 . The Credit Facility had a maturity date of October 24,2019 and was voluntarily pre-payable from time to time without premium or penalty. On November 21, 2017, the Company prepaid all outstanding amounts,including accrued interest and fees, and terminated all commitments, under the Credit Agreement. The Credit Facility carried an effective interest rate of 2.99% per annum during the year ended December 31, 2017.On November 21, 2017, the Company and each of the Company’s wholly owned material domestic subsidiaries entered into a Credit Agreement with certainlenders, and Citibank, N.A. as Administrative Agent (the “New Credit Agreement”). The New Credit Agreement provides for a $200,000 revolving credit facility(the “New Credit Facility”) with an option to increase the commitments by up to $100,000 , subject to certain approvals and conditions as set forth in the NewCredit Agreement. The New Credit Agreement also includes a letter of credit sub facility. The New Credit Facility has a maturity date of November 21, 2022 and isvoluntarily pre-payable from time to time without premium or penalty. Borrowings under the New Credit Agreement wereF-34Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)used to repay amounts outstanding under the Credit Facility and may otherwise be used for working capital and general corporate purposes, including permittedacquisitions.Depending on the type of borrowing, loans under the New Credit Agreement bear interest at a rate equal to the specified prime rate (alternate base rate) oradjusted LIBO rate, plus, in each case, an applicable margin. The applicable margin is tied to the Company’s total net leverage ratio and ranges from 0.00% to0.75% per annum with respect to loans pegged to the specified prime rate, and 1.00% to 1.75% per annum on loans pegged to the adjusted LIBO rate. Therevolving credit commitments under the New Credit Agreement are subject to a commitment fee which is also tied to the Company’s total net leverage ratio, andranges from 0.15% to 0.30% per annum on the average daily amount by which the aggregate revolving commitments exceed the sum of outstanding revolvingloans and letter of credit obligations. The New Credit Facility carried an effective interest rate of 3.5% per annum during the year ended December 31, 2017.Obligations under the New Credit Agreement are guaranteed by the Company’s material domestic subsidiaries and are secured by all or substantially all ofthe assets of the Company and our material domestic subsidiaries. The New Credit Agreement contains affirmative and negative covenants, including, but notlimited to, restrictions on the ability to incur indebtedness, create liens, make certain investments, make certain dividends and related distributions, enter into, orundertake, certain liquidations, mergers, consolidations or acquisitions and dispose of assets or subsidiaries. In addition, the New Credit Agreement contains acovenant to not permit the interest coverage ratio or the total net leverage ratio, both as defined for the four consecutive quarter period ending on the last day ofeach fiscal quarter, to be less than 3.5 to 1.0 or more than 3.0 to 1.0, respectively. At December 31, 2017, the Company was in compliance with all financial andnon - financial covenants listed under the New Credit Agreement.As of December 31, 2017, we had an outstanding debt of $60,000 of which $10,000 is expected to be repaid within the next twelve months and is includedunder "current portion of long-term borrowings" and the balance of $50,000 is included under "long-term borrowings" in the consolidated balance sheets.In connection with the New Credit Agreement, the Company incurred issuance cost of $790 which are deferred and amortized as an adjustment to interestexpense over the term of the New Credit Facility. The unamortized debt issuance costs as of December 31, 2017 and December 31, 2016 was $773 and $272 ,respectively and is included under "other current assets" and “other assets” in the consolidated balance sheets.Borrowings also includes structured payables which are in the nature of debt, amounting to $709 , of which $318 and $391 is included under "current portionof long-term borrowings" and "long-term borrowings", respectively in the consolidated balance sheet as of December 31, 2017.17. Capital StructureCommon StockThe Company has one class of common stock outstanding.During the years ended December 31, 2017 and 2016 , the Company acquired 69,154 and 17,676 shares of common stock, respectively from employees inconnection with withholding tax payments related to the vesting of restricted stock for a total consideration of $3,267 and $807 , respectively. The weightedaverage purchase price per share of $47.24 and $45.65 , respectively, was the average of the high and low price of the Company’s share of common stock on theNasdaq Global Select Market on the trading day prior to the vesting date of the shares of restricted stock.On December 30, 2014, the Company’s Board of Directors authorized a common stock repurchase program (the “2014 Repurchase Program”), under whichshares were authorized to be purchased by the Company from time to time from the open market and through private transactions during each of the fiscal years2015 through 2017 up to an annual amount of $20,000 .On February 28, 2017, the Company’s Board of Directors authorized an additional common stock repurchase program (the “2017 Repurchase Program”),under which shares may be purchased by the Company from time to time from the open market and through private transactions during each of the fiscal years2017 through 2019 up to an aggregate additional amount of $100,000 . The approval increases the 2017 authorization from $20,000 to $40,000 and authorizesstock repurchases of up to $40,000 in each of 2018 and 2019.F-35Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)During the year ended December 31, 2017 , the Company purchased 761,154 shares of its common stock for an aggregate purchase price of approximately$40,187 , including commissions, representing an average purchase price per share of $52.80 under the 2014 and 2017 Repurchase program.During the year ended December 31, 2016 , the Company purchased 364,056 shares of its common stock for an aggregate purchase price of approximately$17,396 , including commissions, representing an average purchase price per share of $47.78 under the 2014 Repurchase program.Repurchased shares have been recorded as treasury shares and will be held until the Board of Directors designates that these shares be retired or used forother purposes.18. Employee Benefit PlansThe Company’s Gratuity Plans in India ("Gratuity Plan") provide for lump sum payment to vested employees on retirement or upon termination ofemployment in an amount based on the respective employee’s salary and years of employment with the Company. Liabilities with regard to the Gratuity Plans aredetermined by actuarial valuation using the projected unit credit method. Current service costs for the Gratuity Plan are accrued in the year to which they relate.Actuarial gains or losses or prior service costs, if any, resulting from amendments to the plans are recognized and amortized over the remaining period of service ofthe employees.In addition, the Company’s subsidiary operating in the Philippines conforms to the minimum regulatory benefit which provide for lump sum payment tovested employees on retirement from employment in an amount based on the respective employee’s salary and years of employment with the Company (the"Philippines Plan"). The benefit costs of the Philippines Plan for the year are calculated on an actuarial basis.The benefit obligation has been measured as of December 31, 2017 . The following table sets forth the activity and the funded status of the Gratuity Plansand the amounts recognized in the Company’s consolidated financial statements at the end of the relevant periods: As of December 31, 2017 December 31, 2016Change in projected benefit obligation: Projected benefit obligation at the beginning of the year$9,711 $7,909Service cost1,933 1,601Interest cost645 599Benefits paid(1,001) (837)Actuarial (gain)/loss(1,471) 677Acquisition— 47Effect of exchange rate changes488 (285)Projected benefit obligation at the end of the year$10,305 $9,711Unfunded amount–non-current$3,377 $1,977Unfunded amount–current13 2,094Total accrued liability$3,390 $4,071 Accumulated benefit obligation$7,022 $6,533F-36Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)Net gratuity cost includes the following components: Year ended December 31, 2017 2016 2015Service cost$1,933 $1,601 $1,638Interest cost645 599 550Expected return on plan assets(401) (416) (385)Amortization of Actuarial loss256 90 211Net gratuity cost$2,433 $1,874 $2,014The components of accumulated other comprehensive gain/(loss) (net of tax) that have not been recognized as components of net gratuity cost in thestatement of income as of December 31, 2017 and 2016 are as follows: December 31, 2017 2016Net actuarial gain/(loss)$697 $(831)Net prior service cost(8) (9)Deferred taxes74 342Accumulated other comprehensive gain/(loss), net of tax$763 $(498) The amount in accumulated other comprehensive gain that is expected to be recognized as a component of net periodic benefit cost over the next fiscal yearis $161 .The weighted average actuarial assumptions used to determine benefit obligations and net periodic gratuity cost are: December 31, 2017 2016 2015Discount rate7.0% 6.8% 7.8%Rate of increase in compensation levels9.1% 9.2% 8.4%Expected long term rate of return on plan assets per annum8.3% 9.0% 9.0%The Company evaluates these assumptions annually based on its long-term plans of growth and industry standards. The discount rates are based on currentmarket yields on government securities adjusted for a suitable risk premium.Expected benefit payments during the year ending December 31, 2018$2,0112019$1,7722020$1,5312021$1,3022022$1,0292023 to 2027$3,206The gratuity plan in India is partially funded and the Philippines Plan is unfunded. The Company makes annual contributions to the employees’ gratuity fundestablished with Life Insurance Corporation of India and HDFC Standard Life Insurance Company. They calculate the annual contribution required to be made bythe Company and manage the Gratuity Plans, including any required payouts. Fund managers manage these funds on a cash accumulation basis and declare interestretrospectively on March 31 of each year. The company earned a return of approximately 7.9% on these Gratuity Plans for the period ended December 31, 2017.F-37Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)Change in Plan Assets Plan assets at January 1, 2016$4,923Actual return450Employer contribution1,242Benefits paid*(837)Effect of exchange rate changes(138)Plan Assets at December 31, 2016$5,640Actual return202Employer contribution1,700Benefits paid*(1,001)Effect of exchange rate changes374Plan assets at December 31, 2017$6,915* All benefits payments were made through the plan assets during the year ended December 31, 2017 and December 31, 2016.The Company maintains several 401(k) Plans (the “401(k) Plans”) under Section 401(k) of the Internal Revenue Code of 1986 (the “Code”), covering alleligible employees, as defined in the Code is a defined contribution plan. The Company may make discretionary contributions of up to a maximum of 4% ofemployee compensation within certain limits. Contributions to the 401(k) Plans amounted to $2,709 , $2,383 and $1,907 during the years ended December 31,2017 , 2016 and 2015 , respectively.During the years ended December 31, 2017 , 2016 and 2015 , the Company contributed $7,115 , $6,306 and $5,753 respectively, for various definedcontribution plans on behalf of its employees in India, the Philippines, Bulgaria, Romania, the Czech Republic, South Africa, Colombia, and Singapore.19. LeasesThe Company finances its use of certain motor vehicles and other equipment under various lease arrangements provided by financial institutions. Futureminimum lease payments under these capital leases as of December 31, 2017 are as follows:During the next twelve months ending December 31,2018$33020192012020127202164Total minimum lease payments722Less: amount representing interest124Present value of minimum lease payments598Less: current portion267Long term capital lease obligation$331F-38Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)The Company conducts its operations using facilities leased under operating lease agreements that expire at various dates. Future minimum lease paymentsunder such agreements expiring after December 31, 2017 are set forth below: During the next twelve months ending December 31, 2018$20,850201917,802202014,840202112,888202210,2342023 and thereafter28,273Future minimum lease payment$104,887Rent expenseThe operating leases are subject to renewal periodically and have scheduled rent increases. The company recognizes rent on such leases on a straight-linebasis over cancelable and non-cancelable lease period determined under ASC topic 840, "Leases": Year ended December 31, 2017 2016 2015Rent expense$24,015 $21,382 $19,943Deferred rent As of December 31, 2017 December 31, 2016Cancelable and non-cancelable operating leases$8,959 $7,915Deferred rent is included under "Accrued expenses and other current liabilities" and "Non-current liabilities" in the consolidated balance sheets.20. Income TaxesThe components of income before income taxes consist of the following: Year ended December 31, 2017 2016 2015Domestic$4,626 $12,652 $25,045Foreign80,408 71,232 50,731 $85,034 $83,884 $75,776F-39Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)The income tax expense consists of the following: Year ended December 31, 2017 2016 2015Current provision: Domestic$17,407 $7,107 $9,951Foreign18,008 18,428 12,022 $35,415 $25,535 $21,973Deferred provision/(benefit): Domestic$2,618 $(2,506) $3,041Foreign(1,887) (878) (803) $731 $(3,384) $2,238Income tax expense$36,146 $22,151 $24,211The effective income tax rate differs from the amount computed by applying the U.S. federal statutory income tax rate to income before income taxesapproximately as follows: Year ended December 31, 2017 2016 2015Expected tax expense$29,762 $29,361 $26,521Change in valuation allowance(21) 22 19Impact of tax holiday(4,396) (4,027) (2,991)Foreign tax rate differential(2,616) (2,716) (2,797)Deferred tax (benefit)/provision(1,887) (878) (803)Unrecognized tax benefits and interest(3,905) 495 324State taxes, net of Federal taxes339 202 1,327Non-deductible expenses825 144 26Prior year tax expense/(benefit)— — 2,450US Tax Reform Act impact29,185 — —Excess tax benefit for stock-based compensation(9,797) — —Other(1,343) (452) 135Tax expense$36,146 $22,151 $24,211The effective income tax rate was 42.5% and 26.4% during the year ended December 31, 2017 and 2016 , respectively. The effective tax rate for the yearended December 31, 2017 was significantly impacted by recording the impact of the Tax Cuts and Jobs Act (the “Tax Reform Act”), enacted on December 22,2017 by the U.S. government. The Tax Reform Act makes broad and complex changes to the U.S. tax code that has affected our fiscal year ended December 31,2017 , including, but not limited to (1) reducing the U.S. federal corporate tax rate from 35.0% to 21.0% effective January 1, 2018 and (2) implementing a modifiedterritorial tax system that includes a one-time transition tax on the mandatory deemed repatriation of accumulated earnings and profits (“E&P”) of foreignsubsidiaries that is payable over eight years.The Company has re-measured its net deferred tax assets and liabilities using the enacted Federal Tax Rate that will apply when these amounts are expectedto reverse. The effect of the re-measurement of $1,949 is reflected entirely in the current period that includes the enactment date and is allocated directly to incometax expense from continuing operations.The Deemed Repatriation Transition Tax (the “Transition Tax”) is a tax on previously untaxed accumulated E&P of certain of our foreign subsidiaries. Todetermine the amount of the Transition Tax, the Company must determine, in addition to other factors, the amount of post-1986 E&P of the relevant subsidiaries,as well as the amount of non-U.S. income taxes paid on such earnings. The Company was able to make a reasonable estimate and recorded a provisional TransitionTax obligation of $27,236 .F-40Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)On December 22, 2017, the SEC issued Staff Accounting Bulletin (“SAB 118”), which provides guidance on accounting for tax effects of the Tax ReformAct. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Reform Act enactment date for companies to complete theaccounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Reform Act for which theaccounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Reform Act is incomplete but it is ableto determine a reasonable estimate, it must record a provisional estimate to be included in the financial statements. If a company cannot determine a provisionalestimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provision of the tax laws that were in effect immediatelybefore the enactment of the Tax Reform Act. While the Company was able to make reasonable estimates of the impact of the reduction in corporate rate and thedeemed repatriation transition tax, the final impact of the Tax Reform Act may differ from these estimates, due to, among other things, changes in ourinterpretations and assumptions, additional guidance that may be issued by the I.R.S., and actions the Company may take. The Company continues to gatheradditional information to determine the final impact.Company also derive benefit from a corporate tax holiday in the Philippines for our operations centers established there over the last several years. The taxholiday expired for two of our centers in 2014 and in 2016 and will expire over the next few years for other centers, which may lead to an increase in our overalltax rate. Following the expiry of the tax exemption, income generated from centers in the Philippines will be taxed at the prevailing annual tax rate, which iscurrently 5.0% on gross income.Certain operations centers in India, which were established in Special Economic Zones (“SEZs”), are eligible for tax incentives until 2025. These operationscenters are eligible for a 100% income tax exemption for first five years of operations and 50% exemption for a period of five years thereafter.The diluted earnings per share effect of the tax holiday is $0.13 , $0.12 and $0.09 for the years ended December 31, 2017 , 2016 and 2015 , respectively.F-41Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)The components of the deferred tax balances as of December 31, 2017 and 2016 are as follows: As of December 31, 2017 December 31, 2016Deferred tax assets: Tax credit carry forward$1,474 $4,806Depreciation and amortization2,183 3,765Stock-based compensation7,647 10,385Accrued employee costs and other expenses3,673 5,130Net operating loss carry forwards2,068 1,856Unrealized exchange loss252 2,099Deferred rent2,064 1,307Others1,007 484 $20,368 $29,832Valuation allowance(108) (454)Deferred tax assets$20,260 $29,378Deferred tax liabilities: Unrealized exchange gain$5,069 $1,414Intangible assets4,648 13,165Others1,958 —Deferred tax liabilities:$11,675 $14,579Net deferred tax assets$8,585 $14,799Deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carryingvalues of assets and liabilities and their respective tax bases and operating loss carry forwards. At December 31, 2017 and 2016 , the Company performed ananalysis of the deferred tax asset valuation allowance for net operating loss carry forward for its domestic entities. Based on this analysis, the Company continuesto carry a valuation allowance on the deferred tax assets on certain net operating loss carry forwards. Accordingly, the Company had recorded a valuationallowance of $20 and $351 as of December 31, 2017 and 2016 , respectively. The Company also recorded a valuation allowance of $88 and $103 related to taxcredit carry forward as of December 31, 2017 and 2016 , respectively.As a result of the multiple acquisitions over the last few years, the Company acquired federal and state net operating losses in the United States. As ofDecember 31, 2017 and 2016 , the Company has federal net operating loss carry forwards of approximately of $1,554 and $4,052 , respectively, which expirethrough various years until 2032 . The Company’s federal net operating loss carry forwards are subject to certain annual utilization limitations under Section 382 ofthe United States Internal Revenue Code. The Company also has state and local net operating loss carry forwards of varying amounts, which are subject tolimitations under the applicable rules and regulations of those taxing jurisdictions. The Company estimates that it will be able to utilize all of the losses before theirexpiration.At December 31, 2017 , undistributed earnings of the Company’s foreign subsidiaries amounted to approximately $376,649 . Not all of the undistributedearnings may be available for repatriation due to foreign legal restrictions that require minimum reserves to be maintained in those Countries and additional taxesthat could be imposed on the distribution of those earnings. U.S. federal deferred income taxes on these earnings are not required because under the Tax ReformAct such earnings have been subject to U.S. federal tax as a result of the mandatory repatriation provision. Additionally, such earnings will not be subject to U.S.federal tax when actually distributed as provided in the Tax Reform Act, except that certain foreign jurisdictions may impose a tax on such distributions.The Company’s income tax expense also includes the impact of provisions established for uncertain income tax positions determined in accordance withASC topic 740, “ Income Taxes ” , as well as the related net interest. Tax exposures can involve complex issues and may require an extended resolution period.Although the Company believes that it has adequately reserved for its uncertain tax positions, no assurance can be given that the final tax outcome of these matterswill not be different. The Company adjusts these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinementF-42Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)of an estimate. To the extent that the final tax outcome of these matters differs from the amounts recorded, such differences will impact the income tax expense inthe period in which such determination is made.The following table summarizes the activity related to the gross unrecognized tax benefits from January 1, 2017 through December 31, 2017Balance as of January 1, 2017$3,087Increases related to prior year tax positions—Decreases related to prior year tax positions(2,520)Increases related to current year tax positions169Decreases related to current year tax positions—Effect of exchange rate changes88Balance as of December 31, 2017$824The unrecognized tax benefits as of December 31, 2017 of $824 , if recognized, would impact the effective tax rate.The Company has recognized interest of nil and $315 during the years ended December 31, 2017 and 2016 , respectively, which is included in the income taxexpense in the consolidated statements of income. As of December 31, 2017 and 2016 , the Company has accrued interest and penalties of $68 and $1,553 relatingto unrecognized tax benefits.21. Stock Based CompensationOn June 19, 2015, at the Company’s 2015 Annual Meeting of Stockholders, the Company's stockholders approved the 2015 Plan, which amended andrestated the 2006 Omnibus Award Plan to, among other things, increased the total number of shares reserved for grants of awards under the 2015 Plan by 1,700,000shares. As of December 31, 2017, the Company had 1,509,976 shares available for grant under the 2015 Plan (includes 145,193 shares against vested performance-based restricted stock units for which the underlying common stock was issued subsequent to December 31, 2017).Under the 2015 Plan, the Compensation Committee (the “Committee”) may grant awards of non-qualified stock options, incentive stock options, stockappreciation rights, restricted stock, restricted stock units, stock bonus awards, performance based compensation awards (including cash bonus awards and marketcondition based awards) or any combination of the foregoing.The Committee determines which employees are eligible to receive the equity awards, the number of equity awards to be granted, the exercise price, thevesting period and the exercise period. The vesting period for the equity award issued is determined on the date of the grant and is non-transferable during the lifeof the equity award. The majority of options expire ten years from the date of grant. The equity awards generally vest proportionally over a period of four yearsfrom the date of grant, unless specified otherwise.The Company applies the provisions of ASC 718, to account for its stock based compensation, using the modified prospective method of transition. Underthe provisions of this guidance, the estimated fair value of stock-based awards granted under stock incentive plans is recognized as compensation expense over thevesting period.The following costs related to the Company’s stock-based compensation plan are included in the consolidated statements of income: Year ended December 31, 2017 2016 2015Cost of revenue$4,600 $3,664 $2,895General and administrative expenses10,363 8,372 6,077Selling and marketing expenses8,078 7,734 7,075Total$23,041 $19,770 $16,047F-43Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)Stock OptionsThe fair value of each stock option granted to employees is estimated on the date of grant using the Black-Scholes option-pricing model.The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the optionvaluation model. All stock-based payment awards are amortized on a straight-line basis over the requisite service periods of the awards, which are generally thevesting periods. The Company accounts for the forfeitures as and when the actual forfeitures occur.Stock option activity under the Company’s stock plans is shown below:Number of Options Weighted- Average Exercise Price Aggregate Intrinsic Value Weighted- Average Remaining Contractual Life (Years)Outstanding at December 31, 2016811,902 $16.31 $27,7182.96 Granted— — Exercised(552,339) 15.50 Forfeited— — Outstanding at December 31, 2017259,563 $18.03 $10,985 2.76Vested and exercisable at December 31, 2017259,563 $18.03 $10,985 2.76The unrecognized compensation cost for unvested options as of December 31, 2017 is nil . The Company did not grant any options during the years endedDecember 31, 2017, 2016 and 2015. The total grant date fair value of options vested during the years ended December 31, 2017 , 2016 and 2015 was nil , $706 and$1,228 , respectively. The aggregate intrinsic value of options exercised during the years ended December 31, 2017 , 2016 and 2015 was $23,027 , $12,911 and$4,413 , respectively.The following table summarizes the status of the Company’s stock options outstanding, vested and exercisable at December 31, 2017 : Options Outstanding, Vested and ExercisableRange of Exercise PricesShares Weighted-AverageExercise Price$8.00 to $15.0098,784 $9.64$15.01 to $21.0036,516 19.05$21.01 to $28.00124,263 24.40Total259,563 $18.03F-44Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)Restricted Stock and Restricted Stock UnitsAn award of restricted stock is a grant of shares subject to conditions and restrictions set by the Committee. The grant or the vesting of an award of restrictedstock may be conditioned upon service to the Company or its affiliates or upon the attainment of performance goals or other factors, as determined in the discretionof the Committee. The Committee may also, in its discretion, provide for the lapse of restrictions imposed upon an award of restricted stock. Holders of an awardof restricted stock may have, with respect to the restricted stock granted, all of the rights of a stockholder, including the right to vote and to receive dividends.The Committee is authorized to award restricted stock units to participants. The Committee establishes the terms, conditions and restrictions applicable toeach award of restricted stock units, including the time or times at which restricted stock units will be granted or vested and the number of units to be covered byeach award. The terms and conditions of each restricted stock award will be reflected in a restricted stock unit agreement.Any cash or in-kind dividends paid with respect to unvested shares of restricted stock and restricted stock units are withheld by the Company and paid to theholder of such shares of restricted stock, without interest, only if and when such shares of restricted stock and restricted stock units vest. Any unvested shares ofrestricted stock and restricted stock units are immediately forfeited without consideration upon the termination of holder’s employment with the Company or itsaffiliates. Accordingly, the Company’s unvested restricted stock and restricted stock units do not include non-forfeitable rights to dividends or dividend equivalentsand are therefore not considered as participating securities for purposes of earnings per share calculations pursuant to the two-class method.Restricted stock and restricted stock unit activity under the Company’s stock plans is shown below: Restricted Stock Restricted Stock Units Number Weighted-AverageFair Value Number Weighted-AverageFair ValueDecember 31, 2016 (1)246,940 $42.42 1,256,288 $37.38 Granted— — 391,927 48.02 Vested(60,168) 42.30 (489,176) 34.52 Forfeited(4,505) 35.11 (112,040) 41.50December 31, 2017 (1)182,267 $42.64 1,046,999 $42.26 (1) Excludes 11,058 and 19,874 restricted stock units vested during the years ended December 31, 2017 and 2016 , respectively. As of December 31, 2017 and 2016 restrictedstock units vested for which the underlying common stock is yet to be issued are 146,112 and 135,054 , respectively.The fair value of restricted stock and restricted stock units is generally the market price of the Company’s shares on the date of grant. As of December 31,2017 , unrecognized compensation cost of $34,463 is expected to be expensed over a weighted average period of 2.47 years . The weighted-average fair value ofrestricted stock and restricted stock units granted during the years ended December 31, 2017 , 2016 and 2015 was $48.02 , $48.97 and $35.18 , respectively. Thetotal grant date fair value of restricted stock and restricted stock units vested during the years ended December 31, 2017 , 2016 and 2015 was $19,430 , $10,761 and$12,620 , respectively.F-45Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)Performance Based Stock AwardsUnder the 2015 Plan, the Company grants performance-based restricted stock units (“PRSUs”) to executive officers and other specified employees. 50% ofthe PRSUs cliff vest at the end of a three -year period based on a revenue target for the third year (“PUs”). However, for PUs granted in 2015, up to one-third of thePUs may be earned based on the Company’s revenue performance in each of the first two years against annual revenue targets in those years. The total amount ofPUs that the recipient earns based on these performance criteria will be the greater of (i) the PUs earned in the year of vesting and (ii) the sum of the earned PUsduring the first two years. The remaining 50% is based on a market condition (“MUs”) that is contingent on the Company meeting or exceeding the totalshareholder return relative to a group of peer companies specified under the program measured over a three -year performance period. The award recipient mayearn up to two hundred percent ( 200% ) of the PRSUs granted based on the actual achievement of targets.The fair value of each PU was determined based on the market price of one common share on the date of grant, and the associated compensation expense wascalculated on the basis that performance targets at 100% of the PUs is probable of being achieved. The compensation expense for the PUs is recognized on astraight-line basis over the service period, which is through the end of the third year. Over this period, the number of shares that will be issued will be adjustedupward or downward based upon the probability of achievement of the performance targets. The ultimate number of shares issued and the related compensationcost recognized as an expense will be based on a comparison of the final performance metrics to the specified targets.The grant date fair value for the MUs was determined using a Monte Carlo simulation model and the related compensation expense will be expensed on astraight-line basis over the vesting period. All compensation expense related to the MUs will be recognized if the requisite performance period is fulfilled, even ifthe market condition is not achieved.The Monte Carlo simulation model simulates a range of possible future stock prices and estimates the probabilities of the potential payouts. This model alsoincorporates the following ranges of assumptions:•The historical volatilities are used over the most recent three-year period for the components of the peer group.•The risk-free interest rate is based on the U.S. Treasury rate assumption commensurate with the three-year performance period •Since the plan stipulates that the awards are based upon the TSR of the Company and the components of the peer group, it is assumed that the dividendsget reinvested in the issuing entity on a continuous basis.•The correlation coefficients are used to model the way in which each entity tends to move in relation to each other are based upon the price data used tocalculate the historical volatilities.The fair value of each MU granted to employees is estimated on the date of grant using the following weighted average assumptions: Year ended December 31, 2017 2016 2015Dividend yield— — —Expected life (years)2.86 2.85 2.84Risk free interest rate1.40% 0.88% 0.98%Volatility23.8% 28.0% 30.3%F-46Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)Performance restricted stock unit activity under the Company’s stock plans is shown below: Revenue Based PRSUs Market Condition Based PRSUs Number Weighted AvgFair Value Number Weighted AvgFair ValueOutstanding at December 31, 2016115,174 $41.70 215,171 $47.42Granted62,113 47.73 62,100 54.10Adjustment upon final determination of level of performancegoal achievement*(9,320) 34.75 154,513 39.60Vested(45,192) 34.75 (309,026) 39.60Forfeited(9,585) 44.35 (9,584) 58.85Outstanding at December 31, 2017113,190 $48.13 113,174 $60.80* Represents adjustment of shares issued in respect of PUs and MUs granted in February 2015 and MUs granted in April 2015 upon certification of the levelof achievement of the performance targets for such awards for which the underlying common stock was issued subsequent to December 31, 2017.As of December 31, 2017 , unrecognized compensation cost of $6,810 is expected to be expensed over a weighted average period of 1.76 years .Subsequent to December 31, 2017, the Company granted approximately 458,000 PRSUs and restricted stock units to its employees.22. Related Party DisclosuresThe Company provides consulting services to PharmaCord, LLC. One of the Company’s directors, Nitin Sahney, is the member-manager and chief executiveofficer of PharmaCord, LLC. The Company recognized revenue of approximately $1,748 for the year ended December 31, 2017 for services provided.At December 31, 2017, the Company had an account receivable of $140 related to these services.23. Commitments and ContingenciesFixed Asset CommitmentsAt December 31, 2017 , the Company has committed to spend approximately $9,500 under agreements to purchase fixed assets. This amount is net of capitaladvances paid in respect of these purchases.Other CommitmentsCertain units of the Company’s Indian subsidiaries were established as 100% Export-Oriented units or under the Software Technology Parks of India(“STPI”) scheme promulgated by the Government of India. These units are exempt from customs, central excise duties, and levies on imported and indigenouscapital goods, stores, and spares. The Company has undertaken to pay custom duties, service taxes, levies, and liquidated damages payable, if any, in respect ofimported and indigenous capital goods, stores and spares consumed duty free, in the event that certain terms and conditions are not fulfilled. The Company’smanagement believes, however, that these units have in the past satisfied and will continue to satisfy the required conditions.The Company’s operations centers in the Philippines are registered with the Philippine Economic Zone Authority (“PEZA”). The registration provides theCompany with certain fiscal incentives on the import of capital goods and requires Exl Philippines to meet certain performance and investment criteria. TheCompany’s management believes that these centers have in the past satisfied and will continue to satisfy the required criteria.F-47Table of ContentsEXLSERVICE HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)December 31, 2017(In thousands, except share and per share amounts)ContingenciesU.S. and Indian transfer pricing regulations require that any international transaction involving associated enterprises be at an arm’s-length price.Accordingly, the Company determines the appropriate pricing for the international transactions among its associated enterprises on the basis of a detailedfunctional and economic analysis involving benchmarking against transactions among entities that are not under common control. The tax authorities havejurisdiction to review this arrangement and in the event that they determine that the transfer price applied was not appropriate, the Company may incur increasedtax liability, including accrued interest and penalties. The Company is currently involved in disputes with the Indian tax authorities over the application of certainof its transfer pricing policies for some of its subsidiaries. Further, the Company and a U.S. subsidiary are engaged in tax litigation with the income-tax authoritiesin India on the issue of permanent establishment.The aggregate amount demanded by Income tax authorities (net of advance payments, if any) from the Company related to its transfer pricing issues for taxyears 2003 to 2014 and its permanent establishment issues for tax years 2003 to 2007 as of December 31, 2017 and 2016 is $18,065 and $17,963 , respectively, ofwhich the Company has made payments or provided bank guarantee to the extent $8,573 and $8,640 , respectively. Amounts paid as deposits in respect of suchassessments aggregating to $6,499 and $6,690 as of December 31, 2017 and 2016 , respectively, are included in “Other assets” and amounts deposited for bankguarantees aggregating to $2,074 and $1,950 as of December 31, 2017 and 2016 , respectively, are included in “Restricted cash” in the non-current assets section ofthe Company’s consolidated balance sheets.Based on advice from its Indian tax advisors, the facts underlying the Company’s position and its experience with these types of assessments, the Companybelieves that the probability that it will ultimately be found liable for these assessments is remote and accordingly has not accrued any amount with respect to thesematters in its consolidated financial statements. The Company does not expect any impact from these assessments on its future income tax expense. It is possiblethat the Company might receive similar orders or assessments from tax authorities for subsequent years. Accordingly even if these disputes are resolved, the Indiantax authorities may still serve additional orders or assessments.F-48Exhibit 10.37CREDIT AGREEMENTdated as ofNovember 21, 2017amongEXLSERVICE HOLDINGS, INC.,The other Loan Parties Party Hereto,The Lenders Party Hereto,andCITIBANK, N.A.,as Administrative Agent CITIBANK, N.A. and PNC CAPITAL MARKETS LLC, as Joint Lead Arrangers and Joint BookrunnersJPMORGAN CHASE BANK, N.A., as Syndication AgentWEIL:\96326885\14\35899.0571TABLE OF CONTENTSPageARTICLE IDEFINITIONS 1Section 1.01Defined Terms 1Section 1.02Classification of Loans and Borrowings 24Section 1.03Terms Generally 24Section 1.04Accounting Terms; GAAP 25Section 1.05Status of Obligations 25ARTICLE IITHE CREDITS 25Section 2.01Commitments 25Section 2.02Loans and Borrowings 26Section 2.03Requests for Borrowings 26Section 2.04[Section intentionally omitted] 27Section 2.05[Section intentionally omitted] 27Section 2.06Letters of Credit 27Section 2.07Funding of Borrowings 32Section 2.08Interest Elections 32Section 2.09Termination and Reduction of Commitments 33Section 2.10Repayment of Loans; Evidence of Debt 34Section 2.11Prepayment of Loans 35Section 2.12Fees 35Section 2.13Interest 36Section 2.14Alternate Rate of Interest 37TABLE OF CONTENTS (continued)PageSection 2.15Increased Costs 37Section 2.16Break Funding Payments 38Section 2.17Withholding of Taxes; Gross-Up 39Section 2.18Payments Generally; Allocation of Proceeds; Sharing of Setoffs 42Section 2.19Mitigation Obligations; Replacement of Lenders 45Section 2.20Defaulting Lenders 46Section 2.21Returned Payments 47Section 2.22Amend and Extend Transactions 47Section 2.23Increase of Commitments 49Section 2.24Banking Services and Swap Agreements 50ARTICLE IIIREPRESENTATIONS AND WARRANTIES 50Section 3.01Organization; Powers 50Section 3.02Authorization; Enforceability 50Section 3.03Governmental Approvals; No Conflicts 51Section 3.04Financial Condition; No Material Adverse Change 51Section 3.05Properties 51Section 3.06Litigation and Environmental Matters 51Section 3.07Compliance with Laws and Agreements 52Section 3.08Investment Company Status 52Section 3.09Taxes 52Section 3.10ERISA 52Section 3.11Disclosure 52Section 3.12Capitalization and Subsidiaries 53Section 3.13Security Interest in Collateral 53TABLE OF CONTENTS (continued)PageSection 3.14Federal Reserve Regulations 53Section 3.15Anti-Corruption Laws and Sanctions 53Section 3.16Common Enterprise 53Section 3.17Not an EEA Financial Institution 54ARTICLE IVCONDITIONS 54Section 4.01Conditions to Initial Loans 54Section 4.02Each Credit Event 56ARTICLE VAFFIRMATIVE COVENANTS 56Section 5.01Financial Statements and Other Information 57Section 5.02Notices of Material Events 58Section 5.03Existence; Conduct of Business 59Section 5.04Payment of Taxes 59Section 5.05Maintenance of Properties; Insurance; Casualty and Condemnation 59Section 5.06Books and Records; Inspection Rights 59Section 5.07Compliance with Laws 60Section 5.08Use of Proceeds 60Section 5.09Additional Collateral; Further Assurances 60ARTICLE VINEGATIVE COVENANTS 61Section 6.01Indebtedness 61Section 6.02Liens 64Section 6.03Fundamental Changes 65Section 6.04Investments, Loans, Advances, Guarantees and Acquisitions 66TABLE OF CONTENTS (continued)PageSection 6.05Asset Dispositions; Sale and Leaseback Transactions 67Section 6.06Swap Agreements 68Section 6.07Restricted Payments 68Section 6.08Transactions with Affiliates 69Section 6.09Restrictive Agreements 69Section 6.10Amendment of Material Documents 70Section 6.11Financial Covenants 70ARTICLE VIIEVENTS OF DEFAULT 70ARTICLE VIIITHE ADMINISTRATIVE AGENT 73Section 8.01Appointment 73Section 8.02Rights as a Lender 73Section 8.03Duties and Obligations 73Section 8.04Reliance 74Section 8.05Actions through Sub-Agents 74Section 8.06Resignation 74Section 8.07Non-Reliance 75Section 8.08Not Partners or Co-Venturers; Administrative Agent as Representative of the Secured Parties 76Section 8.09Lenders Not Subject to ERISA 77ARTICLE IXMISCELLANEOUS 77Section 9.01Notices 77Section 9.02Waivers; Amendments 79Section 9.03Expenses; Indemnity; Damage Waiver 81TABLE OF CONTENTS (continued)PageSection 9.04Successors and Assigns 83Section 9.05Survival 86Section 9.06Counterparts; Integration; Effectiveness; Electronic Execution 86Section 9.07Severability 87Section 9.08Right of Setoff 87Section 9.09Governing Law; Jurisdiction; Consent to Service of Process 87Section 9.10WAIVER OF JURY TRIAL 88Section 9.11Headings 88Section 9.12Confidentiality 88Section 9.13Several Obligations; Nonreliance; Violation of Law 89Section 9.14USA PATRIOT Act 90Section 9.15Disclosure 90Section 9.16Appointment for Perfection 90Section 9.17Interest Rate Limitation 90Section 9.18No Advisory or Fiduciary Responsibility 90Section 9.19Acknowledgement and Consent to Bail-In of EEA Financial Institutions 91ARTICLE XLOAN GUARANTY 91Section 10.01Guaranty 91Section 10.02Guaranty of Payment 92Section 10.03No Discharge or Diminishment of Loan Guaranty 92Section 10.04Defenses Waived 93Section 10.05Rights of Subrogation 93Section 10.06Reinstatement; Stay of Acceleration 93TABLE OF CONTENTS (continued)PageSection 10.07Information 93Section 10.08Termination 93Section 10.09Taxes 94Section 10.10Maximum Liability 94Section 10.11Contribution 94Section 10.12Liability Cumulative 95Section 10.13Keepwell 95SCHEDULES :Commitment ScheduleSchedule 1.01— Subordination TermsSchedule 3.12— Capitalization and SubsidiariesSchedule 6.01— Existing IndebtednessSchedule 6.02— Existing LiensSchedule 6.04— Existing InvestmentsSchedule 6.08— Transactions with AffiliatesSchedule 6.09— Restrictive AgreementsEXHIBITS :Exhibit A— Form of Assignment and AssumptionExhibit B— Form of Compliance CertificateExhibit C— Joinder AgreementExhibit D— Form of Solvency CertificateExhibit E - 1— U.S. Tax Certificate (For Foreign Lenders that are not Partnerships for U.S. Federal Income Tax Purposes)Exhibit E - 2— U.S. Tax Certificate (For Foreign Participants that are not Partnerships for U.S. Federal Income Tax Purposes)Exhibit E - 3— U.S. Tax Certificate (For Foreign Participants that are Partnerships for U.S. Federal Income Tax Purposes)Exhibit E - 4— U.S. Tax Certificate (For Foreign Lenders that are Partnerships for U.S. Federal Income Tax Purposes)Exhibit F — Form of Borrowing RequestExhibit G — Form of Notice of Continuation/ConversionTHIS CREDIT AGREEMENT, dated as of November 21, 2017 (as it may be amended, restated, amended and restated or otherwisemodified from time to time, this “ Agreement ”), among EXLSERVICE HOLDINGS, INC., as the Borrower, the other Loan Parties partyhereto from time to time, the Lenders party hereto from time to time, the Issuing Banks party hereto from time to time, and CITIBANK, N.A.,as the Administrative Agent.The parties hereto agree as follows:Article I DEFINITIONSSECTION 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 whether such Loan, or the Loans comprising such Borrowing,are bearing interest at a rate determined by reference to the Alternate Base Rate.“ Acquisition ” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) theacquisition of all or substantially all of the assets of a Person, or of any business or division of a Person, (b) the acquisition of in excess of50% of the Equity Interests of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger, amalgamation orconsolidation or any other combination with another Person (other than a Person that is a Subsidiary); provided , that the applicable LoanParty is the surviving entity.“ Adjusted LIBO Rate ” means, with respect to any Eurodollar Borrowing for any Interest Period or for any ABR Borrowing, aninterest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multipliedby (b) the Statutory Reserve Rate; provided , that if the Adjusted LIBO Rate is less than zero, it shall be deemed to be zero for purposes ofthis Agreement.“ Administrative Agent ” means Citibank, N.A., 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 a specified Person, another Person that directly, or indirectly through one or more intermediaries,Controls or is Controlled by or is under common Control with the specified Person.“ Aggregate Credit Exposure ” means, at any time, the aggregate Credit Exposure of all the Lenders at such time.“ 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) theFederal Funds Effective Rate in effect on such day plus ½ of 1% and (c) the Adjusted LIBO Rate for a one month Interest Period on such day(or if such day is not a Business Day, the immediately preceding Business Day) plus 1%; provided , that, for the avoidance of doubt, theAdjusted LIBO Rate for any day shall be based on the rate appearing on the Reuters Screen LIBOR01 Page (or onany successor or substitute page) at approximately 11:00 a.m. London time on such day (without any rounding). Any change in the AlternateBase Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from andincluding the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively. Ifthe 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 thegreater of clause (a) and (b) above and shall be determined without reference to clause (c) above. In the event that that the Alternate BaseRate is less than zero, it shall be deemed to be zero for purposes of this Agreement.“ Anti-Corruption Laws ” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or its Subsidiaries fromtime to time concerning or relating to bribery or corruption.“ Applicable Percentage ” means, with respect to any Lender, (a) with respect to Loans and LC Exposure, a percentage equal to afraction the numerator of which is such Lender’s Commitment and the denominator of which is the aggregate Commitment of all Lenders (ifthe Commitments have terminated or expired, the Applicable Percentages shall be determined based upon such Lender’s share of theAggregate Credit Exposure at that time); provided , that in the case of Section 2.20 when a Defaulting Lender shall exist, any such DefaultingLender’s Commitment shall be disregarded in the calculation, and (b) with respect to the Aggregate Credit Exposure, a percentage based uponits share of the Aggregate Credit Exposure and the unused Commitments; provided , that in the case of Section 2.20 when a DefaultingLender shall exist, any such Defaulting Lender’s Commitment shall be disregarded in the calculation.“ Applicable Rate ” means, for any day, with respect to any ABR Loan or Eurodollar Loan, or with respect to the commitment feespayable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “ABR Spread”, “Eurodollar Spread”or “Commitment Fee Rate”, as the case may be, based upon the Borrower’s Total Net Leverage Ratio as of the most recent determinationdate; provided , that until the delivery to the Administrative Agent, pursuant to Section 5.01 , of the Borrower’s consolidated financialinformation for the Borrower’s first fiscal quarter ending after the Effective Date, the “Applicable Rate” shall be the applicable rate perannum set forth below in Category I:CategoryTotal Net Leverage RatioABR Spread (Per Annum)Eurodollar Spread (Per Annum)Unused Fee (Per Annum)I≤ 1.00x0.0 bps100.0 bps15.0 bpsII> 1.00x but ≤ 1.50x12.5 bps112.5 bps17.5 bpsIII> 1.50x but ≤ 2.00x50.0 bps150.0 bps20.0 bpsIV> 2.00x but ≤ 2.50x62.5 bps162.5 bps25.0 bpsV> 2.50x75.0 bps175.0 bps30.0 bpsFor purposes of the foregoing, (a) the Applicable Rate shall be determined as of the end of each fiscal quarter of the Borrower basedupon the Borrower’s annual or quarterly consolidated financial statements delivered pursuant to Section 5.01 and (b) each change in theApplicable Rate resulting from a change in the Total Net Leverage Ratio shall be effective during the period commencing on and includingthe date of delivery to the Administrative Agent of such consolidated financial statements indicating such change and ending on the dateimmediately preceding the effective date of the next such change; provided , that the Total Net Leverage Ratio shall be deemed to be inCategory V at the option of the Administrative Agent or at the request of the Required Lenders if the Borrower fails to deliver the annual orquarterly consolidated financial statements required to be delivered by it pursuant to Section 5.01 , during the period from the expiration ofthe time for delivery thereof until such consolidated financial statements are delivered.“ Approved Fund ” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing inbank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) anAffiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an assignee (with the consent ofany party whose consent is required by Section 9.04 ), and accepted by the Administrative Agent, in the form of Exhibit A or any other formapproved by the Administrative Agent.“ Available Commitment ” means, at any time, the aggregate Commitments of all Lenders then in effect minus the Aggregate CreditExposure at such time.“ Availability Period ” means the period from and including the Effective Date to but excluding the earlier of the Maturity Date andthe date of termination of the Commitments.“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority inrespect 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 theEuropean Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to timewhich is described in the EU Bail-In Legislation Schedule.“ Banking Services ” means each and any of the following bank services provided to any Loan Party or any Subsidiary by any Lenderor any of its Affiliates: (a) credit cards for commercial customers (including, without limitation, “commercial credit cards” and purchasingcards), (b) stored value cards, (c) treasury management services (including, without limitation, controlled disbursement, automatedclearinghouse transactions, return items, overdrafts and interstate depository network services) and (d) documentary services and foreigncurrency exchange services.“ Banking Services Obligations ” means any and all obligations of the Loan Parties or any Subsidiary, whether absolute or contingentand howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof andsubstitutions therefor) in connection with Banking Services, but excluding any Swap Agreement Obligations.“ Bankruptcy Event ” means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding,or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with thereorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken anyaction in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment; provided , that aBankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by aGovernmental Authority or instrumentality thereof; provided , further , that such ownership interest does not result in or provide such Personwith immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on itsassets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts oragreements made by such Person.“ Beneficial Owner ” means, with respect to any U.S. Federal withholding Tax, the beneficial owner, for U.S. Federal income taxpurposes, to whom such Tax relates.“ Benefit Plan ” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” asdefined in Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposesof Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.“ Billing Statement ” has the meaning assigned to such term in Section 2.18(g) .“ Board ” means the Board of Governors of the Federal Reserve System of the United States of America.“ Borrower ” means ExlService Holdings, Inc., a Delaware corporation.“ Borrowing ” means Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans,as to which a single Interest Period is in effect.“ Borrowing Request ” means a request by the Borrower for a Borrowing in accordance with Section 2.03 .“ Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City areauthorized or required by law to remain closed; provided , that, when used in connection with a Eurodollar Loan, the term “ Business Day ”shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.“ Capital Expenditures ” means, without duplication, any expenditure for any purchase or other acquisition of any asset which wouldbe classified as a fixed or capital asset on a consolidated balance sheet of the Borrower and its Subsidiaries prepared in accordance withGAAP. Notwithstanding the foregoing, Capital Expenditures shall not include, without duplication: (a) the consideration for any PermittedAcquisition, or any increase in fixed or capital assets on such consolidated balance sheet attributable to Permitted Acquisitions, (b) capitalexpenditures to the extent financed with the proceeds of any casualty insurance claim or condemnation proceeding or any asset sale permittedhereunder, (c) capital expenditures to the extent financed with Indebtedness (other than the Loans and Letters of Credit) permitted hereunder,(d) capital expenditures to the extent financed with the proceeds of the issuance of Equity Interests by the Borrower or any of its Subsidiariespermitted hereunder so long as, and to the extent that, prior to such issuance the Borrower or such Subsidiary expressly designates in a writtenstatement to the Administrative Agent that the proceeds thereof will be used for capital expenditures, and (e) any such expenditures to theextent the Borrower has received reimbursement in cash from a third party other than the Borrower or one or more of its Subsidiaries (suchas, for example, a landlord or a seller of assets pursuant to a Permitted Acquisition) and for which none of the Borrower or any of itsSubsidiaries has provided or is required to provide any specific consideration to such third party or other person for such reimbursements.“ Capital Lease Obligations ” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (orother arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to beclassified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be thecapitalized amount thereof determined in accordance with GAAP, it being understood that solely with respect to any change in GAAP afterthe Effective Date with respect to the accounting for leases as either operating leases or capital leases, any lease that at the time it is enteredinto is not (or would not be) a capital lease under GAAP as then in effect shall not be treated as a capital lease notwithstanding any such laterchange in GAAP.“ Cash Equivalents ” means:(a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United Statesof America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), ineach case maturing within one year from the date of acquisition thereof;(b) investments in commercial paper maturing within one (1) year from the date of acquisition thereof and having, at such date ofacquisition, the highest credit rating obtainable from S&P or from Moody’s;(c) investments in certificates of deposit, bankers’ acceptances and time deposits maturing within one (1) year from the date ofacquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by (i) any domestic office ofany commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplusand undivided profits of not less than $500 million, or (ii) the State Bank of India (U.S. Branch) so long as the aggregate amount of suchinvestments described in this clause (ii) does not at any time exceed $30 million;(d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above andentered into with a financial institution satisfying the criteria described in clause (c) above;(e) money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under theInvestment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5 billion;(f) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any publicinstrumentality thereof maturing within one (1) year from the date of acquisition thereof and, at the time of acquisition, having one of the twohighest ratings obtainable from either S&P or Moody’s; and(g) investments made by foreign Subsidiaries of the Borrower consistent with the Borrower’s investment guidelines as approvedfrom time to time by the Borrower’s board of directors.“ Change in Control ” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group(within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effecton the date hereof) of Equity Interests representing more than 40% of the aggregate ordinary voting power represented by the issued andoutstanding Equity Interests of the Borrower, or (b) the occupation of a majority of the seats (other than vacant seats) on the board ofdirectors of the Borrower by Persons who were neither (i) nominated or approved by the board of directors of the Borrower nor (ii) appointedby directors so nominated.“ Change in Law ” means the occurrence after the date of this Agreement (or, with respect to any Lender, such later date on whichsuch Lender becomes a party to this Agreement) of any of the following: (a) the adoption or taking effect of any law, rule, regulation ortreaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any GovernmentalAuthority; or (c) compliance by any Lender or any Issuing Bank (or, for purposes of Section 2.15(b) , by any lending office of such Lender orby such Lender’s or such Issuing Bank’s holding company, if any) with any request, guideline, requirement or directive (whether or nothaving the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided , that, notwithstandinganything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines,requirements or directives thereunder or issued in connection therewith or in the implementation thereof, and (y) all requests, rules,guidelines, requirements or directives promulgated by the Bank forInternational Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreignregulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the dateenacted, adopted, issued or implemented.“ Charges ” has the meaning assigned to such term in Section 9.17 .“ Citi ” means Citibank, N.A., a national banking association, in its individual capacity, and its successors.“ Code ” means the Internal Revenue Code of 1986, as amended from time to time.“ Collateral ” has the meaning given to “Collateral” in the Security Agreement.“ Collateral Documents ” means, collectively, the Security Agreement and any other documents granting a Lien upon the Collateral assecurity for payment of the Secured Obligations.“ Commitment ” means, with respect to each Lender, the commitment, if any, of such Lender to make Loans and to acquireparticipations in Letters of Credit hereunder, expressed as an amount representing the maximum possible aggregate amount of such Lender’sCredit Exposure hereunder, as such commitment may be reduced or increased from time to time pursuant to (a) Section 2.09 or 2.23 and (b)assignments by or to such Lender pursuant to Section 9.04 . The initial amount of each Lender’s Commitment is set forth on the CommitmentSchedule , or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable. Theinitial aggregate amount of the Lenders’ Commitments as of the Effective Date is $200 million.“ Commitment Schedule ” means the Schedule attached hereto identified as such.“ Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and anysuccessor statute.“ Communications ” has the meaning assigned to such term in Section 9.01(d) .“ Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by net income (however denominated)or that are franchise Taxes or branch profits Taxes.“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies ofa Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meaningscorrelative thereto.“ Credit Exposure ” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’sLoans and its LC Exposure at such time.“ Credit Party ” means the Administrative Agent, any Issuing Bank or any Lender.“ Default ” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would,unless cured or waived, become 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 otheramount 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’sgood faith determination that a condition precedent to funding (specifically identified and including the particular Default, if any) has notbeen satisfied, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does not intendor expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that suchposition is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particularDefault, if any) to funding a Loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits toextend credit, (c) has failed, within three (3) Business Days after request by a Credit Party, acting in good faith, to provide a certification inwriting from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) tofund prospective Loans and participations in then outstanding Letters of Credit under this Agreement; provided , that such Lender shall ceaseto be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of such certification in form and substance satisfactoryto it and the Administrative Agent, (d) has become the subject of a Bankruptcy Event, or (e) has become (or whose direct or indirect parentcompany has become) subject to a Bail-In Action.“ Disposition ” or “ Dispose ” means the sale, transfer, license, lease or other disposition of any property by any Person (or thegranting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or withoutrecourse, of any notes or accounts receivable or any rights and claims associated therewith.“ dollars ” or “ $ ” refers to lawful money of the United States of America.“ EBITDA ” means, for any period, the sum of:(a) Net Income for such period; plus(b) without duplication and to the extent deducted in determining Net Income for such period, the sum of:(i) Interest Expense for such period;(ii) federal, state, local and foreign income tax expense for such period;(iii) all amounts attributable to depreciation and amortization expense for such period;(iv) amortization of intangibles (including, but not limited to, goodwill) for such period;(v) any extraordinary non-cash charges, expenses or losses for such period;(vi) non-cash compensation expenses, including as a result of any grant of equity or options to employees, officers,directors or contractors;(vii) costs and expenses incurred on or prior to the Effective Date with respect to the Transactions;(viii) expenses, charges and losses incurred in such period and which are reimbursed in cash during such period by Persons(other than the Borrower and its Subsidiaries) so long as such payments were not added in determining Net Income for such period;(ix) non-recurring fees, costs and expenses directly incurred during such period in connection with any of the followingwhich are attempted, whether or not consummated: any Permitted Acquisition and any related debt or equity offering undertaken inconnection therewith (in respect of which all or substantially all of the proceeds are intended to be used to pay the cash considerationfor such Permitted Acquisition);(x) non-cash purchase accounting adjustments made during such period;(xi) all proceeds of business interruption insurance received during such period;(xii) unrealized losses on financial derivatives recognized in such period in accordance with SFAS No. 133;(xiii) any write-off or amortization made in such period of deferred financing costs or any write-down of assets or assetvalue carried on the balance sheet of the Borrower or any of its Subsidiaries;(xiv) any one-time restructuring charges incurred during such period (determined in accordance with GAAP);(xv) the amount of any expected “run-rate” cost savings and synergies (collectively, “ Expected Cost Savings ”) (net ofactual amounts realized) that are reasonably identifiable and factually supportable (in the good faith determination of the Borrower)related to any acquisition, disposition, restructuring or cost savings initiative; provided , that (A) such Expected Cost Savings areexpected by the Borrower in good faith to be realized within 12 months of the consummation of the event giving rise thereto and (B)the aggregate amount of Expected Cost Savings shall not exceed 10% of EBITDA for the relevant period (calculated prior to givingeffect to such add-back); and(xvi) any other non-cash charges (but excluding any non-cash charge in respect of an item that was included in Net Incomein a prior period); minus(c) without duplication and to the extent included in Net Income, (i) any cash payments made during such period in respect of non-cash charges described in clause (a)(xvi) taken in a prior period and (ii) any extraordinary gains and any non-cash items of income for suchperiod;all calculated for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. For the purposes of calculatingEBITDA for any period of four consecutive fiscal quarters (each, a “ Reference Period ”), (i) if at any time during such Reference Period theBorrower or any Subsidiary shall have made any sale, transfer, or disposition of property, EBITDA for such Reference Period shall bereduced by an amount equal to the EBITDA (if positive) attributable to the property that is the subject of such sale, transfer, or disposition, asapplicable, for such Reference Period or increased by an amount equal to the EBITDA (if negative) attributable thereto for such ReferencePeriod, and (ii) if during such Reference Period the Borrower or any of its Subsidiaries shall have made a Permitted Acquisition for which theEBITDA attributable to the acquired Person or assets in connection therewith for the most recently ended four consecutive fiscal quarterperiod is greater than $5 million, EBITDA for such Reference Period shall be calculated after giving effect thereto on a pro forma basis as ifsuch Permitted Acquisition occurred on the first day of such Reference Period.“ ECP ” means an “eligible contract participant” as defined in Section 1(a)(18) of the Commodity Exchange Act or any regulationspromulgated thereunder and the applicable rules issued by the Commodity Futures Trading Commission and/or the SEC.“ EEA Financial Institution ” means (a) any credit institution or investment firm established in any EEA Member Country which issubject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of aninstitution described in clause (a) of this definition and is subject to the supervision of an EEA Resolution Authority, or (c) any financialinstitution established in an EEA Member Country which is a Subsidiary of an institution described in clause (a) or (b) of this definition andis subject to consolidated supervision of an EEA Resolution Authority 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 authorityof any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.“ Effective Date ” means November 21, 2017.“ Electronic Signature ” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record andadopted by a Person with the intent to sign, authenticate or accept such contract or record.“ Electronic System ” means any electronic system, including e-mail, e-fax, Intralinks ® , ClearPar ® , Debt Domain, Syndtrak and anyother Internet or extranet-based site, whether such electronic system is owned, operated or hosted by the Administrative Agent and the IssuingBanks and any of its respective Related Parties or any other Person, providing for access to data protected by passcodes or other securitysystem.“ Environmental Laws ” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices orbinding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservationor reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to employee health andsafety matters.“ Environmental Liability ” means any liability, contingent or otherwise (including any liability for damages, costs of environmentalremediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) anyviolation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any HazardousMaterials, (c) any exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials into theenvironment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect toany of the foregoing.“ Equity Interests ” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficialinterests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof topurchase or acquire any of the foregoing.“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time.“ ERISA Affiliate ” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a singleemployer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as asingle employer under Section 414 of the Code.“ ERISA Event ” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder withrespect to a Plan (other than an event for which the 30‑day notice period is waived); (b) the failure to make any “minimum requiredcontribution” (as defined in Section 430(a) of the Code) with respect to any Plan, at the time and in the amount provided for in Section 430 ofthe Code; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimumfunding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV ofERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a planadministrator of any notice relating to an intention to terminate any Plan or Plans in a distress termination described in Section 4041(c) ofERISA or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability withrespect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISAAffiliate of any notice concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected tobe, insolvent or in reorganization, within the meaning of Title IV of ERISA.“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or anysuccessor person), as in effect from time to time.“ Eurodollar ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising suchBorrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.“ Event of Default ” has the meaning assigned to such term in Article VII .“ Excluded Swap Obligation ” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion ofthe Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guaranteethereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures TradingCommission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute anECP at the time the Guarantee of such Guarantor or the grant of such security interest becomes or would become effective with respect tosuch Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply onlyto the portion of such 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 ordeducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, andbranch profits Taxes, in each case, (i) imposed as a result of such Recipient being a resident of, being organized under the laws of, or havingits principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any politicalsubdivision thereof) or (ii) that are Other Connection Taxes; (b) in the case of a Lender, withholding Taxes imposed on amounts payable to orfor the account of such Lender with respect to an applicable interest in a Loan, Note, Letter of Credit, Commitment or other Loan Documentpursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan, Note, Letter of Creditor Commitment (other than pursuant to an assignment request by the Borrower under Section 2.19(b) ) or (ii) such Lender changes its lendingoffice, except in each case to the extent that, pursuant to Section 2.17 , an amount that was due and payable, but not yet paid to (A) suchLender’s assignor immediately before such Lender acquired the applicable interest in a Loan or Commitment or (B) such Lender immediatelybefore it changed its lending office; (c) Taxes attributable to such Recipient’s failure to comply with Section 2.17(f) ; and (d) any U.S.Federal withholding Taxes imposed under FATCA.“ Existing Credit Agreement ” means the Credit Agreement, dated as of October 24, 2014 (as amended by the First Amendment toCredit Agreement and Incremental Facility Agreement, dated as of February 23, 2015, by and among the Borrower, the Loan Guarantors (asdefined therein) party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A. (“ JPMorgan ”) as administrative agent, and by theSecond Amendment to Credit Agreement, dated as of September 28, 2015, by and among the Borrower, the Loan Guarantors (as definedtherein) party thereto, the lenders party thereto and JPMorgan, as administrative agent), by and among, inter alios , the Borrower, the otherLoan Parties (as defined therein) party thereto, the lenders party thereto, JPMorgan, as administrative agent, and JPMorgan and Citibank,N.A. as co-lead arrangers.“ Expected Cost Savings ” has the meaning assigned to such term in the definition of “EBITDA”.“ Extended Commitment ” means the Commitments, the maturity of which shall have been extended pursuant to Section 2.22 .“ Extended Loans ” means any Loans made pursuant to the Extended Commitments.“ Extension ” has the meaning assigned to such term in Section 2.22(a) .“ Extension Amendment ” means an amendment to this Agreement (which may, at the option of the Administrative Agent andBorrower, be in the form of an amendment and restatement of this Agreement) among the Loan Parties, the applicable extending Lenders, theAdministrative Agent and, to the extent required by Section 2.22 , the Issuing Bank implementing an Extension in accordance with Section2.22 .“ Extension Offer ” has the meaning assigned to such term in Section 2.22(a) .“ FATCA ” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor versionthat is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretationsthereof and any agreement entered into pursuant to Section 1471(b)(1) of the Code and any applicable intergovernmental agreement withrespect thereto.“ Federal Funds Effective Rate ” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%)of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published on the next succeedingBusiness Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the AdministrativeAgent from three Federal funds brokers of recognized standing selected by it.“ Financial Covenants ” means the covenants set forth in Section 6.11 .“ Financial Officer ” means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower.“ Foreign Lender ” means any Lender that is not a “United States person” as defined in Section 7701(a)(30) of the Code.“ Funded Indebtedness ” means, with respect to any Person and without duplication, (i) all Indebtedness of such Person of the typesreferred to in clauses (a) , (b) , (c) , (d) (other than the portion thereof consisting of contingent or unliquidated earn-outs), (g) and (j) of thedefinition of “Indebtedness” in this Section 1.01 , (ii) all Indebtedness of others of the type referred to in clause (i) of this definition securedby (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien on, or payable out ofthe proceeds of production from, any property or asset of such Person, whether or not the obligations secured thereby have been assumed bysuch Person and (iii) all Guarantees of such Person with respect to Indebtedness of others of the type referred to in clause (i) of this definition.The Funded Indebtedness of any Person shall include the Funded Indebtedness of any other entity (including any partnership in which suchPerson is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationshipwith such entity, except to the extent the terms of such Funded Indebtedness provide that such Person is not liable therefor.“ GAAP ” means generally accepted accounting principles in the United States of America.“ Governmental Authority ” means the government of the United States of America, any other nation or any political subdivision ofany of the foregoing, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entityexercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.“ Guarantee ” of or by any Person (the “ guarantor ”) means any obligation, contingent or otherwise, of the guarantor guaranteeing orhaving the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “ primary obligor ”) in any manner,whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supplyfunds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of)any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of suchIndebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statementcondition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as anaccount party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided , that the termGuarantee shall not include endorsements for collection or deposit in the ordinary course of business.“ Guaranteed Obligations ” has the meaning assigned to such term in Section 10.01 .“ Hazardous Materials ” means: (a) any substance, material, or waste that is included within the definitions of “hazardoussubstances,” “hazardous materials,” “hazardous waste,” “toxic substances,” “toxic materials,” “toxic waste,” or words of similar import inany Environmental Law; (b) those substances listed as hazardous substances by the United States Department of Transportation (or anysuccessor agency) (49 C.F.R. 172.101 and amendments thereto) or by the Environmental Protection Agency (or any successor agency) (40C.F.R. Part 302 and amendments thereto); and (c) any substance, material, or waste that is petroleum, petroleum-related, or a petroleum by-product, asbestos or asbestos-containing material, polychlorinated biphenyls, flammable, explosive, radioactive, freon gas, radon, or apesticide, herbicide, or any other agricultural chemical.“ 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 2.23(a)(i) .“ Indebtedness ” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect todeposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) allobligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) allobligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred inthe ordinary course of business), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right,contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness securedthereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person,(h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (i) allobligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (j) obligations under any liquidated earn-out, (k) anyother Off-Balance Sheet Liability and (l) any Swap Obligations to the extent required to be reflected as a liability on a balance sheet of suchPerson under GAAP. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in whichsuch Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or otherrelationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.“ Indemnified Taxes ” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by, or onaccount of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in subsection (a), OtherTaxes.“ Indemnitee ” has the meaning assigned to such term in Section 9.03(b) .“ Ineligible Institution ” means a (a) natural person, (b) a Defaulting Lender, (c) holding company, investment vehicle or trust for, orowned and operated for the primary benefit of, a natural person or relative(s) thereof; provided , that, such holding company, investmentvehicle or trust shall not constitute an Ineligible Institution if it (x) has not been established for the primary purpose of acquiring any Loans orCommitments, (y) is managed by a professional advisor, who is not such natural person or a relative thereof, having significant experience inthe business of making or purchasing commercial loans, and (z) has assets greater than $25 million and a significant part of its activitiesconsist of making or purchasing commercial loans and similar extensions of credit in the ordinary course of its business , or (d) a Loan Partyor a Subsidiary or other Affiliate of a Loan Party.“ Information ” has the meaning assigned to such term in Section 9.12 .“ Interest Coverage Ratio ” means, at any date, the ratio of (a) EBITDA to (b) cash Interest Expense, all calculated for the period offour consecutive fiscal quarters ended on such date (or, if such date is not the last day of a fiscal quarter, ended on the last day of the fiscalquarter most recently ended prior to such date).“ Interest Election Request ” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.08 .“ Interest Expense ” means, with reference to any period, total interest expense (including that attributable to Capital LeaseObligations) of the Borrower and its Subsidiaries for such period with respect to all outstanding Indebtedness of the Borrower and itsSubsidiaries (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptancefinancing and net costs under Swap Agreements in respect of interest rates to the extent such net costs are allocable to suchperiod in accordance with GAAP), calculated on a consolidated basis for the Borrower and its Subsidiaries for such period in accordance withGAAP.“ Interest Payment Date ” means (a) with respect to any ABR Loan, the first Business Day of each January, April, July and Octoberand the Maturity Date, and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of whichsuch Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior tothe last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period and the MaturityDate.“ Interest Period ” means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing andending on the numerically corresponding day in the calendar month that is one, three or six months, or, if available to all Lenders, twelvemonths thereafter, as the Borrower may elect; provided , that (i) if any Interest Period would end on a day other than a Business Day, suchInterest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such nextsucceeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding BusinessDay, (ii) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a dayfor which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day ofthe last calendar month of such Interest Period and (iii) no Interest Period may extend beyond the Maturity Date. For purposes hereof, thedate of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recentconversion 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 placesas the LIBO Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifesterror) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBO Screen Rate for the longest period (forwhich the LIBO Screen Rate is available) that is shorter than the Impacted Interest Period and (b) the LIBO Screen Rate for the shortestperiod (for which the LIBO Screen Rate is available) that exceeds the Impacted Interest Period, in each case, at such time.“ IRS ” means the United States Internal Revenue Service.“ Issuing Banks ” means, individually and collectively as the context may require, (a) Citi, in its capacity as an issuer of Letters ofCredit hereunder, and its successors in such capacity, and (b) and any other Lender from time to time designated by the Borrower as anIssuing Bank, with the consent of such Lender and the Administrative Agent and such Lender’s successors in such capacity. Any IssuingBank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term“Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate. At any time there is more than oneIssuing Bank, all singular references to the Issuing Bank shall mean any Issuing Bank, either Issuing Bank, each Issuing Bank, the IssuingBank that has issued the applicable Letter of Credit, or both (or all) Issuing Banks, as the context may require.“ Joinder Agreement ” has the meaning assigned to such term in Section 5.09 .“ LC Disbursement ” means a payment made by any Issuing Bank pursuant to a Letter of Credit.“ LC Exposure ” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such timeplus (b) the aggregate amount of all LC Disbursements relating to Letters ofCredit that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Lender at any time shall beits Applicable Percentage of the total LC Exposure at such time.“ Lead Arrangers ” means Citibank, N.A. and PNC Capital Markets LLC in their capacities as joint lead arrangers and jointbookrunners hereunder.“ Lenders ” means the Persons listed on the Commitment Schedule and any other Person that shall have become a party heretopursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment andAssumption. Unless the context otherwise requires, the term “Lenders” includes the Issuing Banks.“ Letter of Credit ” means the letters of credit issued pursuant to this Agreement, and the term “Letter of Credit” means any one ofthem or each of them singularly, as the context may require.“ LIBO Rate ” means, with respect to any Eurodollar Borrowing for any applicable Interest Period or for any ABR Borrowing, theLondon interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration ofsuch rate for Dollars) for a period equal in length to such Interest Period as displayed on pages LIBOR01 or LIBOR02 of the Reuters screenthat 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 suchscreen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as shallbe selected by the Administrative Agent in its reasonable discretion (in each case, the “LIBO Screen Rate”) at approximately 11:00 a.m.,London time, two (2) Business Days prior to the commencement of such Interest Period; provided , that (x) if the LIBO Screen Rate shall beless than zero, such rate shall be deemed to be zero for the purposes of this Agreement and (y) if the LIBO Screen Rate shall not be availableat such time for a period equal in length to such Interest Period (an “ Impacted Interest Period ”), then the LIBO Rate shall be the InterpolatedRate at such time, subject to Section 2.14 in the event that the Administrative Agent shall conclude that it shall not be possible to determinesuch Interpolated Rate (which conclusion shall be conclusive and binding absent manifest error); provided , further , that, if any InterpolatedRate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement. In the event that the LIBO Screen Rate doesnot appear on a Reuters page or screen, LIBO Rate (the “ Alternate LIBO Rate ”) shall be the rate displayed on any successor or substitutepage that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time asselected by the Administrative Agent in its reasonable discretion or, if no such page exists at such time, such other page, as published byReuters or another comparable service, that reflects an alternative index rate as designated by the Administrative Agent from time to time inconsultation with the Borrower; provided that any amendment to this Agreement to implement such Alternate LIBO rate shall becomeeffective without any further action or consent of any other party to this Agreement or any other Person (other than the Administrative Agentand the Borrower) so long as, with respect to the Lenders, the Administrative Agent shall not have received, within five (5) Business Daysafter the date that notice of such Alternate LIBO Rate of interest and related modifications is provided to the Lenders, a written notice fromRequired Lenders stating that they object to such amendment (which amendment shall not be effective prior to the end of such five (5)Business Day notice period). Notwithstanding the above, to the extent that “LIBO Rate” or “Adjusted LIBO Rate” is used in connection withan ABR Borrowing, such rate shall be determined as modified by the definition of Alternate Base Rate.“ LIBO Screen Rate ” has the meaning assigned to such term in the definition of “LIBO Rate”.“ Lien ” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge orsecurity interest in, on or of such asset, (b) the interest of a vendor or a lessor underany conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economiceffect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third partywith respect to such securities.“ Loan Documents ” means this Agreement, the Notes, any Letter of Credit applications, the Collateral Documents, the LoanGuaranty and all other agreements, instruments, documents and certificates identified in Section 4.01 executed and delivered to, or in favorof, 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, orany employee of any Loan Party, and delivered to the Administrative Agent or any Lender in connection with this Agreement or thetransactions contemplated hereby. Any reference in this Agreement or any other Loan Document to a Loan Document shall include allappendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications thereto, and shall refer to theAgreement or such Loan Document as the same may be in effect at any and all times such reference becomes operative.“ Loan Guarantor ” means (a) each of the Borrower’s wholly-owned Material Domestic Subsidiaries and (b) with respect to SecuredObligations owed by any other Loan Party, the Borrower; provided , that subject to any administrative requirements of the AdministrativeAgent, the Borrower may elect to add additional domestic Subsidiaries as Loan Guarantors so long as each such added Loan Guarantorcomplies with Section 5.09 of this Agreement as if it were a newly acquired wholly-owned Material Domestic Subsidiary at the time of suchdesignation.“ Loan Guaranty ” means Article X of this Agreement.“ Loan Parties ” means the Borrower and each Loan Guarantor and their respective successors and assigns.“ Loans ” means the loans and advances made by the Lenders pursuant to this Agreement.“ Material Adverse Effect ” means a material adverse effect on (a) the business, assets, operations, or financial condition of theBorrower and its Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform any of its material obligations under the LoanDocuments to which it is a party, (c) any material portion of the Collateral, or the Administrative Agent’s Liens (on behalf of itself and theLenders) on any material portion of the Collateral or the priority of such Liens (in each case subject to Liens permitted pursuant to Section6.02 ), or (d) the rights of or benefits available to the Administrative Agent, the Issuing Banks or the Lenders thereunder.“ Material Domestic Subsidiary ” means (i) any domestic Subsidiary of the Borrower whose total assets, as of any date ofdetermination, have a book value equal to or greater than $30 million, and (ii) any domestic Subsidiary of the Borrower having a directSubsidiary that is a Material Domestic Subsidiary or Material Foreign Subsidiary.“ Material Foreign Subsidiary ” means any foreign Subsidiary of the Borrower whose total assets, as of any date of determination,have a book value equal to or greater than $30 million.“ Material Indebtedness ” means any Indebtedness (other than the Loans and Letters of Credit), or any obligations under SwapAgreements, of any one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding $15 million. For purposesof determining Material Indebtedness, the aggregate principal amount of “obligations” of the Borrower or any Subsidiary in respect of anySwapAgreement at any time shall be the aggregate amount that the Borrower or such Subsidiary would be required to pay if such Swap Agreementwere terminated at such time and after giving effect to any rights available under applicable laws or agreements with regard to collateral,netting, setoff or similar rights.“ Maturity Date ” means the earliest to occur of (a) November 21, 2022, (b) any earlier date on which the Commitments are reducedto zero or otherwise terminated pursuant to the terms hereof and (c) the date that the Loans, if any, are declared due and payable pursuant toArticle VII hereof; provided , that individual Lenders may elect to extend the Maturity Date applicable to their Loans and Commitmentspursuant to the terms and conditions of Section 2.22 .“ Maximum Liability ” has the meaning assigned to such term in Section 10.10 .“ Moody’s ” means Moody’s Investors Service, Inc.“ Multiemployer Plan ” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.“ Net Income ” means, for any period, the consolidated net income (or loss) of the Borrower and its Subsidiaries, determined on aconsolidated basis in accordance with GAAP; provided , that there shall be excluded from such net income (to the extent otherwise includedtherein), without duplication: (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary or is merged into orconsolidated with the Borrower or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary) in which theBorrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Borroweror such Subsidiary in the form of dividends or similar distributions and (c) the undistributed earnings of any Subsidiary to the extent that thedeclaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractualobligation (other than under any Loan Document) or Requirement of Law applicable to such Subsidiary.“ Non-Consenting Lender ” has the meaning assigned to such term in Section 9.02(d) .“ Non-Paying Guarantor ” has the meaning assigned to such term in Section 10.11 .“ Note ” and “ Notes ” have the meanings assigned to such terms in Section 2.10(e) .“ Notice of Increase ” has the meaning assigned to such term in Section 2.23(a)(i) .“ Obligated Party ” has the meaning assigned to such term in Section 10.02 .“ Obligations ” means all unpaid principal of and accrued and unpaid interest on the Loans, all LC Exposure, all accrued and unpaidfees and all expenses, reimbursements, indemnities and other obligations and indebtedness (including interest and fees accruing during thependency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in suchproceeding), obligations and liabilities of any of the Borrower and its Subsidiaries to any of the Lenders, the Administrative Agent, anyIssuing Bank or any indemnified party, individually or collectively, existing on the Effective Date or arising thereafter, direct or indirect, jointor several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation oflaw or otherwise, arising or incurred under this Agreement or any of the other Loan Documents or in respect of any of the Loans made orreimbursement or other obligations incurred or any of the Letters of Credit or other instruments at any time evidencing any thereof.“ OFAC ” means the Office of Foreign Assets Control of the United States Department of the Treasury.“ Off-Balance Sheet Liability ” of a Person means (a) any repurchase obligation or liability of such Person with respect to accounts ornotes receivable sold by such Person (other than any customary repurchase obligations resulting from a breach of representations andwarranties, covenants, servicing obligations and indemnities under a securitization facility), (b) any indebtedness, liability or obligation underany so-called “synthetic lease” transaction entered into by such Person, or (c) any indebtedness, liability or obligation arising with respect toany other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on thebalance sheets of such Person (other than operating leases) but does constitute an off-balance sheet liability under GAAP.“ Other Connection Taxes ” means, with respect to any Recipient, Taxes imposed as a result of a present or former connectionbetween such Recipient and the jurisdiction imposing such Taxes (other than a connection solely arising from such Recipient havingexecuted, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interestunder, engaged in any other transaction pursuant to, or enforced, any Loan Document, or sold or assigned an interest in any Loan, Letter ofCredit or any Loan Document).“ Other Taxes ” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise fromany payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of asecurity interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposedwith respect to an assignment (other than an assignment made pursuant to Section 2.19 ).“ Parent ” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.“ Participant ” has the meaning set forth in Section 9.04 .“ Participant Register ” has the meaning set forth in Section 9.04 .“ Paying Guarantor ” has the meaning assigned to such term in Section 10.11 .“ PBGC ” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performingsimilar functions.“ Permitted Acquisition ” means any Acquisition in which each of the following conditions is satisfied:(a) the Person or business which is the subject of such Acquisition is in a similar or complimentary line of business as those of theBorrower and its Subsidiaries on the Effective Date;(b) all governmental, corporate and material third-party approvals and consents necessary in connection with such Acquisitionshall have been obtained and be in full force and effect;(c) if acquiring a Person, unless such Person is contemporaneously merged with and into the Borrower or a Subsidiary of theBorrower, such Person becomes a wholly owned direct or indirect Subsidiary of the Borrower and, simultaneously with such Acquisition, aLoan Party to the extent required by Section 5.09 , with such Person’s Equity Interests being pledged as Collateral to the extent required bySection 5.09 ;(d) such Acquisition shall be consummated in accordance with the terms of the purchase or acquisition agreement executed inconnection therewith and with all other material agreements, instruments and documents implementing such Acquisition and in compliancewith applicable law and regulatory approvals;(e) no Default or Event of Default shall have occurred and be continuing or would result therefrom and all representations andwarranties contained in this Agreement shall be true and correct in all material respects on the date of the consummation of such Acquisition,except to the extent that any such representation or warranty specifically refers to an earlier date, in which case they shall be true and correctin all material respects as of such earlier date; and(f) after giving effect to such Acquisition (including the incurrence, assumption or acquisition of any Indebtedness in connectiontherewith) the Total Leverage Ratio, calculated on a pro forma basis as if such Acquisition had been consummated at the beginning of suchperiod, shall not exceed 2.50:1.00.“ Permitted Encumbrances ” means:(a) Liens imposed by law for taxes that are not yet due or are being contested in compliance with Section 5.04 ;(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in theordinary course of business and securing obligations that are not overdue by more than 60 days or are being contested in compliance withSection 5.04 ;(c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemploymentinsurance and other social security laws or regulations;(d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performancebonds and other obligations of a like nature, in each case in the ordinary course of business;(e) judgment liens in respect of judgments that do not constitute an Event of Default under clause (k) of Article VII ;(f) easements, covenants, conditions, zoning restrictions, rights-of-way, minor defects or other irregularities in title and/or similarencumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations anddo not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or anySubsidiary; and(g) Liens on any interest or title of a lessor in property leased by the Borrower or any Subsidiary;provided , that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.“ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership,Governmental Authority or other entity.“ Plan ” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISAor Section 412 of the Code or Section 302 of ERISA, and in respect of whichthe Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an“employer” as defined in Section 3(5) of ERISA.“ Prime Rate ” means the rate of interest per annum publicly announced from time to time by Citibank, N.A. as its prime rate in effectat its principal offices in New York City. Each change in the Prime Rate shall be effective from and including the date such change is publiclyannounced as being effective.“ Projections ” has the meaning assigned to such term in Section 5.01(e) .“ Qualified ECP Guarantor ” means, in respect of any Swap Obligation, each Loan Party that has total assets exceeding $10 million atthe time the relevant Loan Guaranty or grant of the relevant security interest becomes or would become effective with respect to such SwapObligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulationspromulgated thereunder and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwellunder Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.“ Recipient ” means, as applicable, (a) the Administrative Agent, (b) any Lender and (c) any Issuing Bank, or any combinationthereof (as the context requires).“ Reference Period ” has the meaning assigned to such term in the definition of “EBITDA”.“ Refinancing ” has the meaning assigned to such term in Section 4.01(m) .“ Register ” has the meaning assigned to such term in Section 9.04 .“ Related Fund ” means with respect to any Person that is an investment fund, any other investment fund that invests in securities andthat is managed or advised by the same investment advisor as such Person or by an Affiliate of such investment advisor.“ Related Parties ” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers,employees, agents and advisors of such Person and such Person’s Affiliates.“ Related Indemnitee Parties ” shall mean with respect to any specified Indemnitee, such Indemnitee’s controlled Affiliates and therespective officers, directors, employees, advisors, agents or other representatives of such Indemnitee or such Indemnitee’s controlledAffiliates acting at the direction of such Indemnitee.“ Release ” means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching,migrating, disposing or dumping of any substance into the environment.“ Requested Increase Amount ” has the meaning assigned to such term in Section 2.23(a)(i) .“ Requested Increase Date ” has the meaning assigned to such term in Section 2.23(a)(i) .“ Required Lenders ” means, at any time, Lenders (other than Defaulting Lenders) having Credit Exposure and unused Commitmentsrepresenting more than 50% of the sum of the total Credit Exposure and unused Commitments at such time.“ Requirement of Law ” means, with respect to any Person, (a) the charter, articles or certificate of organization or incorporation andbylaws or operating, management or partnership agreement, or otherorganizational or governing documents of such Person and (b) any statute, law (including common law), treaty, rule, regulation, code,ordinance, order, decree, writ, judgment, injunction or determination of any arbitrator or court or other Governmental Authority (includingEnvironmental Laws), in each case applicable to or binding upon such Person or any of its property or to which such Person or any of itsproperty is subject.“ Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other property) with respect to anyEquity Interests in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fundor similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests inthe Borrower or any option, warrant or other right to acquire any such Equity Interests in the Borrower.“ S&P ” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business.“ Sanctioned Country ” means, at any time, a country or territory which is the subject or target of any Sanctions.“ Sanctioned Person ” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by theOffice of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State or by the United Nations SecurityCouncil, the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) anyPerson majority-owned or controlled by any such Person or Persons described in the foregoing clause (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 the Office of Foreign Assets Control of the U.S. Department of the Treasury or theU.S. Department of State, or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.“ Secured Obligations ” means all Obligations, together with all (i) Banking Services Obligations and (ii) Swap AgreementObligations owing to any Person that, at the time of entering into such arrangement with a Loan Party or any Subsidiary, was theAdministrative Agent, a Lender or an Affiliate thereof, in each case, with respect to such Swap Agreement Obligations, to the extentdesignated by the Borrower in a written statement (including by way of email) to the Administrative Agent as constituting SecuredObligations (such Swap Agreement Obligations, “ Secured Swap Agreement Obligations ”); provided , however , that the definition of“Secured Obligations” shall not create any guarantee by any Guarantor of (or grant of security interest by any Guarantor to support, asapplicable) any Excluded Swap Obligations of such Guarantor for purposes of determining any obligations of any Guarantor.“ Secured Parties ” means the Administrative Agent, each Lender, each Issuing Bank and each other provider of Secured Obligationsas permitted pursuant to the definition thereof.“ Secured Swap Agreement Obligations ” has the meaning given to such term in the definition of “Secured Obligations.”“ Security Agreement ” means that certain Pledge and Security Agreement, dated as of the date hereof, among the Borrower, eachDomestic Subsidiary of the Borrower party thereto from time to time, and the Administrative Agent, for the benefit of the AdministrativeAgent, the Lenders and the other Secured Parties, and any other pledge or security agreement entered into, after the date of this Agreement byany Loan Party (as required by this Agreement or any other Loan Document), as the same may be amended, restated, amended and restated,supplemented or otherwise modified from time to time.“ Specified Default ” means an Event of Default under clauses (a) , (b) , (h) , (i) or (j) of Article VII.“ Statutory Reserve Rate ” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominatorof which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency orsupplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject with respect to theAdjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Suchreserve percentages shall include those imposed pursuant to such Regulation D of the Board. Eurodollar Loans shall be deemed to constituteeurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that maybe available from time to time to any Lender under such Regulation D of the Board or any comparable regulation. The Statutory Reserve Rateshall be adjusted automatically on and as of the effective date of any change in any reserve percentage.“ Subordinated Indebtedness ” of a Person means any Indebtedness of such Person the payment of which is at all times subordinatedto payment of the Obligations in accordance with the terms set forth on Schedule 1.01.“ subsidiary ” means, with respect to any Person (the “ parent ”) at any date, any corporation, limited liability company, partnership,association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financialstatements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limitedliability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% ofthe equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interestsare, as of such date, owned, controlled or held by the parent, or (b) that is, as of such date, otherwise Controlled, by the parent or one or moresubsidiaries of the parent or by the parent and one or more subsidiaries of the parent.“ Subsidiary ” means any direct or indirect subsidiary of the Borrower or a Loan Party, as applicable.“ Swap Agreement ” means any agreement with respect to any swap, forward, spot, future, credit default or derivative transaction oroption or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments orsecurities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction orany combination of these transactions; provided , that no phantom stock or similar plan providing for payments only on account of servicesprovided by current or former directors, officers, employees or consultants of the Borrower or the Subsidiaries shall be a Swap Agreement.“ Swap Agreement Obligations ” means any and all obligations of the Loan Parties or any Subsidiary, whether absolute or contingentand howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof andsubstitutions therefor), under (a) any and all Swap Agreements permitted hereunder with a Person that, at the time of entering into such SwapAgreement, is the Administrative Agent, a Lender or an Affiliate of a Lender, and (b) any and all cancellations, buy backs, reversals,terminations or assignments of any such Swap Agreement transaction.“ Swap Obligation ” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract ortransaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act or any rules or regulationspromulgated thereunder.“ Taxes ” means any and 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 applicablethereto.“ Total Funded Indebtedness ” means, at any date, the aggregate principal amount of all Funded Indebtedness of the Borrower and itsSubsidiaries at such date, determined on a consolidated basis in accordance with GAAP.“ Total Leverage Ratio ” means, as of any date, the ratio of (a) Total Funded Indebtedness on such date to (b) EBITDA for the periodof four consecutive fiscal quarters ended on such date (or, if such date is not the last day of a fiscal quarter, ended on the last day of the fiscalquarter most recently ended prior to such date).“ Total Net Leverage Ratio ” means, as of any date, the ratio of (a) Total Funded Indebtedness on such date less the aggregate amountof Unrestricted Cash and Cash Equivalents not to exceed $50 million to (b) EBITDA for the period of four consecutive fiscal quarters endedon such date (or, if such date is not the last day of a fiscal quarter, ended on the last day of the fiscal quarter most recently ended prior to suchdate).“ Transactions ” means the execution, delivery and performance by the Borrower of this Agreement, the borrowing of Loans andother credit extensions, the Refinancing, the use of the proceeds thereof and the issuance of Letters of Credit hereunder.“ Transfer Pricing Transactions ” means transactions between the Borrower and/or the Loan Parties and their respective Subsidiariesand Affiliates, pursuant to which the parties to such transactions periodically invoice and remunerate each other for products and servicesprovided to or exchanged among such parties, all upon such terms and prices (and subject to such mark-ups) as are consistent with theBorrower’s and its Subsidiaries’ and their respective Affiliates’ customary transfer pricing methods.“ Type ”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loanscomprising 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 ofwhich 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 orunliquidated at such time, including any Secured Obligation that is: (i) an obligation to reimburse a bank for drawings not yet made under aletter of credit issued by it; (ii) any other obligation (including any guarantee) that is contingent in nature at such time; or (iii) an obligation toprovide collateral to secure any of the foregoing types of obligations.“ Unrestricted Cash and Cash Equivalents ” means, at any date, the cash and Cash Equivalents of the Loan Parties that are (or wouldbe) included on the balance sheet of the Borrower as of such day which are not identified on the balance sheet of the Loan Parties as“restricted” in accordance with GAAP and which are free and clear of all Liens (other than non-consensual liens and liens in favor of theSecured Parties pursuant to the Collateral Documents to secure the Secured Obligations, in each case, permitted under Section 6.02).“ U.S. Tax Compliance Certificate ” has the meaning assigned to such term in Section 2.17(f)(ii) (B)(3).“ USA PATRIOT Act ” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept andObstruct Terrorism Act of 2001.“ Withdrawal Liability ” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from suchMultiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.“ Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversionpowers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, whichwrite-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 toby Type ( e.g ., a “Eurodollar Loan”).SECTION 1.03 Terms Generally . The definitions of terms herein shall apply equally to the singular and plural forms of the termsdefined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words“include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “law” shall be construedas referring to all statutes, rules, regulations, codes and other laws (including official rulings and interpretations thereunder having the forceof law or with which affected Persons customarily comply) and all judgments, orders and decrees of all Governmental Authorities. The word“will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition ofor reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or otherdocument as from time to time amended, restated, amended and restated, supplemented or otherwise modified (subject to any restrictions onsuch amendments, restatements, amendment and restatement, supplements or modifications set forth herein), (b) any definition of orreference to any statute, rule or regulation shall be construed as referring thereto as from time to time amended, supplemented or otherwisemodified (including by succession of comparable successor laws), (c) any reference herein to any Person shall be construed to include suchPerson’s successors and assigns (subject to any restrictions on assignments 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) allreferences herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits andSchedules to, this Agreement, (f) any reference in any definition to the phrase “at any time” or “for any period” shall refer to the same time orperiod for all calculations or determinations within such definition, and (g) the words “asset” and “property” shall be construed to have thesame meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts andcontract rights.SECTION 1.04 Accounting Terms; GAAP . Except as otherwise expressly provided herein, all terms of an accounting or financialnature shall be construed in accordance with GAAP, as in effect from time to time; provided , that, if after the Effective Date there occurs anychange in GAAP or in the application thereof on the operation of any provision hereof and the Borrower notifies the Administrative Agentthat the Borrower requests an amendment to any provision hereof to eliminate the effect of such change in GAAP or in the application thereof(or if the Administrative Agent notifies the Borrower that the Required Lendersrequest an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change inGAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately beforesuch change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.SECTION 1.05 Status of Obligations . In the event that the Borrower or any other Loan Party shall at any time issue or haveoutstanding any Subordinated Indebtedness, the Borrower shall take or cause such other Loan Party to take all such actions as shall benecessary to cause the Secured Obligations to constitute senior indebtedness (however denominated) in respect of such SubordinatedIndebtedness and to enable the Administrative Agent and the Lenders to have and exercise any payment blockage or other remedies availableor potentially available to holders of senior indebtedness under the terms of such Subordinated Indebtedness. Without limiting the foregoing,the Secured Obligations are hereby designated as “senior indebtedness” and as “designated senior indebtedness” and words of similar importunder and in respect of any indenture or other agreement or instrument under which such Subordinated Indebtedness is outstanding and arefurther given all such other designations as shall be required under the terms of any such Subordinated Indebtedness in order that the Lendersmay have and exercise any payment blockage or other remedies available or potentially available to holders of senior indebtedness under theterms of such Subordinated Indebtedness.ARTICLE II THE CREDITSSECTION 2.01 Commitments . Subject to the terms and conditions set forth herein, each Lender severally agrees to make Loans tothe Borrower from time to time during the Availability Period in an aggregate principal amount that will not result in such Lender’s CreditExposure exceeding such Lender’s Commitment. Within the foregoing limits and subject to the terms and conditions set forth herein, theBorrower may borrow, prepay and reborrow Loans.SECTION 2.02 Loans and Borrowings .(a) Each Loan shall be made as part of a Borrowing consisting of Loans of the same Type made by the Lendersratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by itshall not relieve any other Lender of its obligations hereunder; provided , that the Commitments of the Lenders are several and noLender shall be responsible for any other Lender’s failure to make Loans as required.(b) Subject to Section 2.14 , each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as theBorrower may request in accordance herewith. Each Lender at its option may make any Eurodollar Loan by causing any domestic orforeign 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 notaffect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.(c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in anaggregate amount that is an integral multiple of $500,000 and not less than $1 million. At the time that each ABR Borrowing ismade, such Borrowing shall be in an aggregate amount that is an integral multiple of $100,000 and not less than $1 million; provided, that an ABR Borrowing may be in an aggregate amount that is equal to the entire unusedbalance of the total Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated bySection 2.06(e) . Borrowings of more than one Type may be outstanding at the same time; provided , that there shall not at any timebe more than a total of eight (8) Eurodollar Borrowings outstanding.(d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or toelect 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 Borrower shall notify the Administrative Agent of suchrequest either in writing (delivered by hand or fax) in a form approved by the Administrative Agent and signed by the Borrower or bytelephone (such request a “ Borrowing Request ”) (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time,three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 1:00 p.m., New YorkCity time, on the date of the proposed Borrowing; provided , that any such notice of an ABR Borrowing to finance the reimbursement of anLC Disbursement as contemplated by Section 2.06(e) may be given not later than 10:00 a.m., New York City time, on the date of theproposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or faxto the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower.Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.01 :(i) the aggregate amount of the requested Borrowing and a breakdown of the separate wires comprising suchBorrowing;(ii) the date of such Borrowing, which shall be a Business Day;(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and(iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be aperiod contemplated by the definition of the term “Interest Period.”If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no InterestPeriod is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Periodof one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section 2.03 , the Administrative Agentshall 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 [Section intentionally omitted].SECTION 2.05 [Section intentionally omitted].SECTION 2.06 Letters of Credit .(a) General . Subject to the terms and conditions set forth herein, the Borrower may request the issuance of (andthe Issuing Bank shall issue) Letters of Credit denominated in dollars as the applicant thereof for the support of its or itsSubsidiaries’ obligations, in a formreasonably acceptable to the applicable Issuing Bank, at any time and from time to time during the Availability Period. In the eventof any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of creditapplication or other agreement submitted by the Borrower to, or entered into by the Borrower with, any Issuing Bank relating to anyLetter of Credit, the terms and conditions of this Agreement shall control. The Borrower 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 thisclause (a) , the Borrower 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 accountparty in respect of such Letter of Credit (the Borrower hereby irrevocably waiving any defenses that might otherwise be available toit as a guarantor or surety of the obligations of such Subsidiary that is an account party in respect of any such Letter of Credit).Notwithstanding anything herein to the contrary, the Issuing Bank shall have no obligation hereunder to issue, and shall not issue,any Letter of Credit (i) the proceeds of which would be made available to any Person (A) to fund any activity or business of or withany Sanctioned Person, or in any country or territory that, at the time of such funding, is the subject of any Sanctions, in either suchcase, in violation of any such Sanctions or (B) in any manner that would result in a violation of any Sanctions by any party to thisAgreement, (ii) if any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin orrestrain the Issuing Bank from issuing such Letter of Credit, or any Requirement of Law relating to the Issuing Bank or any requestor directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Issuing Bank shallprohibit, or request that the Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particularor shall impose upon the Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for whichthe Issuing Bank is not otherwise compensated hereunder) not in effect on the Effective Date, or shall impose upon the Issuing Bankany unreimbursed loss, cost or expense which was not applicable on the Effective Date and which the Issuing Bank in good faithdeems material to it, or (iii) if the issuance of such Letter of Credit would violate one or more policies of the Issuing Bank applicableto letters of credit generally; provided , that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reformand Consumer Protection Act and all requests, rules, guidelines, requirements or directives thereunder or issued in connectiontherewith or in the implementation thereof, and (y) all requests, rules, guidelines, requirements or directives promulgated by theBank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or theUnited States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed not to be in effect onthe Effective Date for purposes of clause (ii) above, regardless of the date enacted, adopted, issued or implemented(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions . To request the issuance of a Letterof Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or fax (ortransmit by electronic communication, if arrangements for doing so have been approved by the applicable Issuing Bank) to theapplicable Issuing Bank and the Administrative Agent (reasonably in advance of, but in any event no less than three (3) BusinessDays prior to the requested date of issuance, amendment, renewal or extension) 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 orextension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with clause (c)of this Section 2.06 ) and whether such Letter of Credit shall contain automatic extension or renewal provisions, the amount of suchLetter of Credit, thename and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extendsuch Letter of Credit. If requested by the applicable Issuing Bank, the Borrower also shall submit a letter of credit application onsuch Issuing Bank’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended,renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall bedeemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposureshall not exceed $20 million and (ii) the Aggregate Credit Exposure shall not exceed the aggregate Commitments of all Lenders.(c) Expiration Date . Each Letter of Credit shall expire (or be subject to termination or non-renewal by noticefrom the applicable Issuing Bank to the beneficiary thereof) at or prior to the close of business on the earlier of (i) the date one yearafter the date of the issuance of such Letter of Credit (or, in the case of any one-time renewal or extension thereof, including, withoutlimitation, any automatic renewal provision, one year after such renewal or extension) and (ii) the date that is five (5) Business Daysprior to the Maturity Date. Each Letter of Credit with automatic extension or renewal provisions shall, subject to the right of therespective Issuing Bank to terminate such automatic renewal in accordance with the terms of such Letter of Credit upon theoccurrence of an Event of Default, be automatically renewed for a successive one-year period on each anniversary of the date of theissuance of such Letter of Credit, until cancelled by the Borrower by notice to the applicable Issuing Bank in accordance with theterms of such Letter of Credit agreed upon at the time such Letter of Credit is issued; provided , that such Letter of Credit shallexpire at or prior to the close of business on the date that is five (5) Business Days prior to the Maturity Date if not earlier cancelled.(d) Participations . By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing theamount thereof) and without any further action on the part of the applicable Issuing Bank or the Lenders, such Issuing Bank herebygrants to each Lender, and each Lender hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal tosuch Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In considerationand in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent,for the account of such Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by such Issuing Bankand not reimbursed by the Borrower on the date due as provided in clause (e) of this Section 2.06 , or of any reimbursement paymentrequired to be refunded to the Borrower for any reason. Each Lender acknowledges and agrees that its obligation to acquireparticipations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by anycircumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuanceof 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 an Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, theBorrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursementnot later than 12:00 noon, New York City time, on the Business Day immediately following the day that the Borrower receives suchnotice, if such notice is not received prior to such time on the day of receipt; provided , that, if such LC Disbursement is not less than$500,000, the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 thatsuch payment be financed with an ABR Borrowing in an equivalent amount and, to the extent so financed, the Borrower’sobligation to make such payment shall be discharged and replaced by the resulting ABR Borrowing. If the Borrower fails to makesuch payment when due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment thendue from the Borrower in respect thereof and such Lender’s Applicable Percentage thereof. Promptly following receipt of suchnotice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, inthe same manner as provided in Section 2.07 with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatismutandis , to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the applicable IssuingBank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment fromthe Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the applicable Issuing Bank or, tothe extent that Lenders have made payments pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders andsuch Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this paragraph to reimburse any IssuingBank for any LC Disbursement (other than the funding of ABR Loans as contemplated above) shall not constitute a Loan and shallnot relieve the Borrower of its obligation to reimburse such LC Disbursement.(f) Obligations Absolute . The Borrower’s obligation to reimburse LC Disbursements as provided in clause (e) ofthis Section 2.06 shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of thisAgreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter ofCredit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Creditproving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii)payment by an Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with theterms 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 2.06 , constitute a legal or equitable discharge of, or provide a right of setoff against,the Borrower’s obligations hereunder. Neither the Administrative Agent, the Lenders nor any Issuing Bank, nor any of their RelatedParties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit orany payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the precedingsentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communicationunder or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretationof technical terms or any consequence arising from causes beyond the control of any Issuing Bank; provided , that the foregoingshall not be construed to excuse any Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed tospecial, indirect, consequential or punitive damages, claims in respect of which are hereby waived by the Borrower to the extentpermitted by applicable law) suffered by the Borrower that are caused by such Issuing Bank’s failure to exercise care whendetermining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties heretoexpressly agree that, in the absence of gross negligence or willful misconduct on the part of an Issuing Bank (as finally determinedby a court of competent jurisdiction), such Issuing Bank shall be deemed to have exercised care in each such determination. Infurtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presentedwhich appear on their face to be in substantial compliance with the terms of a Letter of Credit, an Issuing Bank may, in its solediscretion, either accept and make payment upon such documents without responsibility for further investigation, regardless ofany notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not instrict compliance with the terms of such Letter of Credit.(g) Disbursement Procedures . The applicable Issuing Bank shall, promptly following its receipt thereof, examineall documents purporting to represent a demand for payment under a Letter of Credit. Such Issuing Bank shall promptly notify theAdministrative Agent and the Borrower by telephone (confirmed by fax) of such demand for payment and whether such IssuingBank has made or will make an LC Disbursement thereunder; provided , that any failure to give or delay in giving such notice shallnot relieve the Borrower of its obligation to reimburse such Issuing Bank and the Lenders with respect to any such LCDisbursement.(h) Interim Interest . If an Issuing Bank shall make any LC Disbursement, then, unless the Borrower shallreimburse 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 Borrower reimburses suchLC Disbursement, at the rate per annum then applicable to ABR Loans and such interest shall be payable on the date when suchreimbursement is due; provided , that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to clause (e) ofthis Section 2.06 , then Section 2.13(c) shall apply. Interest accrued pursuant to this paragraph shall be for the account of theapplicable Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to clause (e) of thisSection 2.06 to reimburse such Issuing Bank shall be for the account of such Lender to the extent of such payment.(i) Replacement of an Issuing Bank . An Issuing Bank may be replaced at any time by written agreement amongthe Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shallnotify the Lenders of any such replacement of an Issuing Bank. At the time any such replacement shall become effective, theBorrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(b) . From and afterthe effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of an Issuing Bankunder 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, asthe context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party heretoand shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Creditthen outstanding and issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.(j) Cash Collateralization . If any Event of Default shall occur and be continuing, on the Business Day that theBorrower receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has beenaccelerated, Lenders with LC Exposure representing greater than 50% of the aggregate LC Exposure) demanding the deposit of cashcollateral pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent, in the name of theAdministrative Agent and for the benefit of the Revolving Lenders (the “ LC Collateral Account ”), an amount in cash equal to105% of the amount of the LC Exposure as of such date plus accrued and unpaid interest thereon; provided , that the obligation todeposit 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 Borrower described inclause (h) or (i) of Article VII . Suchdeposit shall be held by the Administrative Agent as collateral for the payment and performance of the Secured Obligations. TheAdministrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over the LC CollateralAccount and the Borrower hereby grants the Administrative Agent a security interest in the LC Collateral Account. Other than anyinterest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of theAdministrative Agent and at the Borrower’s risk and expense, such deposits shall not bear interest. Interest or profits, if any, on suchinvestments shall accumulate in the LC Collateral Account. Moneys in the LC Collateral Account shall be applied by theAdministrative Agent to reimburse the Issuing Banks for LC Disbursements for which it has not been reimbursed and, to the extentnot so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such timeor, if the maturity of the Loans has been accelerated (but subject to the consent of Lenders with LC Exposure representing greaterthan 50% of the aggregate LC Exposure), be applied to satisfy other Secured Obligations. If the Borrower is required to provide anamount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied asaforesaid) shall be returned to the Borrower within three Business Days after all such Defaults have been cured or waived.(k) Issuing Bank Reports to the Administrative Agent . Unless otherwise agreed by the Administrative Agent,each Issuing Bank shall, in addition to its notification obligations set forth elsewhere in this Section 2.06 , report in writing to theAdministrative Agent (i) periodic activity (for such period or recurrent periods as shall be requested by the Administrative Agent) inrespect of Letters of Credit issued by such Issuing Bank, including all issuances, extensions, amendments and renewals, allexpirations and cancelations and all disbursements and reimbursements, (ii) reasonably prior to the time that such Issuing Bankissues, amends, renews or extends any Letter of Credit, the date of such issuance, amendment, renewal or extension, and the statedamount of the Letters of Credit issued, amended, renewed or extended by it and outstanding after giving effect to such issuance,amendment, renewal or extension (and whether the amounts thereof shall have changed), (iii) on each Business Day on which suchIssuing Bank makes any LC Disbursement, the date and amount of such LC Disbursement, (iv) on any Business Day on which theBorrower fails to reimburse an LC Disbursement required to be reimbursed to such Issuing Bank on such day, the date of suchfailure and the amount of such LC Disbursement, and (v) on any other Business Day, such other information as the AdministrativeAgent shall reasonably request as to the Letters of Credit issued by such Issuing Bank.(l) LC Exposure Determination . For all purposes of this Agreement, the amount of a Letter of Credit that, by itsterms or the terms of any document related thereto, provides for one or more automatic increases in the stated amount thereof shallbe deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not suchmaximum stated amount is in effect at the time of determination.SECTION 2.07 Funding of Borrowings .(a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer ofimmediately available funds by 2:00 p.m., New York City time, to the account of the Administrative Agent most recently designatedby it for such purpose by notice to the Lenders in an amount equal to such Lender’s Applicable Percentage. The AdministrativeAgent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account ofthe Borrower maintained with the AdministrativeAgent and designated by the Borrower in the applicable Borrowing Request; provided , that ABR Loans made to finance thereimbursement of an LC Disbursement as provided in Section 2.06(e) shall be remitted by the Administrative Agent to the IssuingBanks.(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of anyBorrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, theAdministrative Agent may assume that such Lender has made such share available on such date in accordance with clause (a) of thisSection 2.07 and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if aLender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lenderand the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interestthereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date ofpayment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a ratedetermined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case ofthe Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then suchamount 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 ofa Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower mayelect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, mayelect Interest Periods therefor, all as provided in this Section 2.08 . The Borrower may elect different options with respect todifferent portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holdingthe 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 2.08 , the Borrower shall notify the Administrative Agent of suchelection by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting aBorrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic InterestElection Request shall be irrevocable and shall be confirmed promptly by hand delivery or fax to the Administrative Agent of awritten Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower.(c) Each telephonic and written Interest Election Request shall specify the following information in compliancewith Section 2.02 :(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected withrespect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information tobe 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 BusinessDay;(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after givingeffect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shallbe 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 Lenderof the details thereof and of such Lender’s portion of each resulting Borrowing.(e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing priorto the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of suchInterest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Eventof Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies theBorrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as aEurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of theInterest Period applicable thereto.SECTION 2.09 Termination and Reduction of Commitments .(a) Unless previously terminated, all Commitments shall terminate on the Maturity Date.(b) The Borrower may at any time, without (subject to Section 2.16 ) premium or penalty, terminate theCommitments upon (i) the payment in full of all outstanding Loans, together with accrued and unpaid interest thereon and on anyLetters of Credit, (ii) the cancellation and return of all outstanding Letters of Credit (or alternatively, with respect to each such Letterof Credit, the furnishing to the Administrative Agent of a cash deposit (or at the discretion of the Administrative Agent a backupstandby letter of credit satisfactory to the Administrative Agent and the applicable Issuing Bank) in an amount equal to 105% of theLC Exposure as of such date), (iii) the payment in full of the accrued and unpaid fees, and (iv) the payment in full of all reimbursableexpenses and other Obligations together with accrued and unpaid interest thereon.(c) The Borrower may from time to time, without (subject to Section 2.16 ) premium or penalty, reduce theCommitments; provided , that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of $1 millionand not less than $5 million, and (ii) the Borrower shall not reduce the Commitments if, after giving effect to any concurrentprepayment of the Loans in accordance with Section 2.10 , the Aggregate Credit Exposure would exceed the aggregateCommitments of all Lenders.(d) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitmentsunder clause (b) or (c) of this Section 2.09 at least three (3) Business Days prior to the effective date of such termination orreduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agentshall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 2.09 shall beirrevocable; provided , that a notice of termination of the Commitments delivered by the Borrower may state that such notice isconditioned upon the effectiveness of other credit facilities or events, in which case such notice may be revoked by the Borrower (bynotice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination orreduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders inaccordance with their respective Commitments.SECTION 2.10 Repayment of Loans; Evidence of Debt .(a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of eachLender the then unpaid principal amount of each Loan on the Maturity Date.(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing theindebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal andinterest payable and paid to such Lender from time to time hereunder.(c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan madehereunder, the Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable orto become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by theAdministrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.(d) The entries made in the accounts maintained pursuant to clause (b) or (c) of this Section 2.10 shall be primafacie evidence of the existence and amounts of the obligations recorded therein; provided , that the failure of any Lender or theAdministrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower torepay the Loans in accordance with the terms of this Agreement; provided , further , that in the event of a conflict between theentries made in the accounts maintained pursuant to clause (b) or (c) of this Section 2.10 and the Register, the Register shall govern.(e) Any Lender may request that Loans made by it be evidenced by a promissory note (each a “ Note ” and,collectively, the “ Notes ”). In such event, the Borrower shall prepare, execute and deliver to such Lender a Note payable to suchLender and its registered assigns and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced by such Noteand interest thereon shall at all times (including after assignment pursuant to Section 9.04 ) be represented by one or more Notes insuch form payable to such payee and its registered assigns.SECTION 2.11 Prepayment of Loans .(a) The Borrower shall have the right at any time and from time to time, without (subject to Section 2.16 )premium or penalty, to prepay any Borrowing in whole or in part, subject to prior notice in accordance with clause (c) of this Section2.11 .(b) In the event and on such occasion that the Aggregate Credit Exposure exceeds the aggregate Commitments ofall Lenders, the Borrower shall prepay the Loans and/or cash collateralize the LC Exposure in an aggregate amount equal to suchexcess.(c) The Borrower shall notify the Administrative Agent by telephone (confirmed by fax) of any prepaymenthereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three BusinessDays before the date of prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New YorkCity time, one Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepaymentdate and the principal amount of each Borrowing or portion thereof to be prepaid; provided , that, if a notice of prepayment is givenin connection with a conditional notice of termination of the Commitments as contemplated by Section 2.09 , then such notice ofprepayment may be revoked if such notice of termination is revoked in accordance with Section 2.09 . Promptly following receipt ofany such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partialprepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the sameType as provided in Section 2.02 . Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaidBorrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13 .SECTION 2.12 Fees .(a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender (other than aDefaulting Lender, subject to Section 2.20 ) a commitment fee, which shall accrue at the Commitment Fee Rate set forth in thedefinition of Applicable Rate on the average daily amount of the Available Commitment of such Lender during the period from andincluding the Effective Date to but excluding the date on which the Commitments terminate. Accrued commitment fees shall bepayable in arrears on the first Business Day of each January, April, July and October and on the date on which the Commitmentsterminate, commencing on the first such date to occur after the date hereof. All commitment fees shall be computed on the basis of ayear of 360 days and shall be payable for the actual number of days elapsed.(b) The Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender (other than aDefaulting Lender, subject to Section 2.20 ) a participation fee with respect to its participations in Letters of Credit, which shallaccrue at the same Applicable Rate used to determine the interest rate applicable to Eurodollar Loans on the average daily amount ofsuch Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period fromand including the Effective Date to but excluding the later of the date on which such Lender’s Commitment terminates and the dateon which such Lender ceases to have any LC Exposure, and (ii) to the applicable Issuing Bank a fronting fee, which shall accrue atthe rate of 0.125% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable tounreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date oftermination of the Commitments and the date on which there ceases to be any LC Exposure, as well as the applicable Issuing Bank’sstandard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawingsthereunder. Participation fees and fronting fees accrued through and including the last day of each calendar quarter shall be payableon the first Business Day of each of each January, April, July and October following such last day, commencing on the first suchdate to occur after the Effective Date; provided , that all such fees shall be payable on the date on which the Commitments terminateand any such fees accruing after the date on which the Commitments terminate shall be payable on demand. Any other fees payableto any Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand. All participation fees andfronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed.(c) The Borrower agrees to pay to the Administrative Agent, for its own account, and to any Lender, fees payablein the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent or such Lender.(d) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to theAdministrative Agent (or to an Issuing Bank, in the case of fees payable to it) for distribution, in the case of commitment fees andparticipation fees, to the 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 ApplicableRate.(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for theInterest Period in effect for such Borrowing plus the Applicable Rate.(c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payableby the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amountshall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2%plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section 2.13 or (ii) in the case of anyother amount, 2% plus the rate applicable to ABR Loans as provided in clause (a) of this Section 2.13 .(d) Accrued interest on each Loan (for ABR Loans, accrued through the last day of the prior calendar quarter)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 clause (c) of this Section 2.13 shall be payable on demand, (ii) in the event of any repayment orprepayment of any Loan (other than a prepayment of an ABR Loan prior to the end of the Availability Period), accrued interest onthe principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of anyconversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall bepayable on the effective date of such conversion.(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed byreference to the Alternate Base Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in eachcase shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicableAlternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determinationshall be conclusive absent manifest error.SECTION 2.14 Alternate Rate of Interest . If prior to the commencement of any Interest Period for a Eurodollar Borrowing:(a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) thatadequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for suchInterest Period; or(b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate,as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making ormaintaining their Loans (or its Loan) included in such Borrowing for such Interest Period;then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by electronic communication as provided inSection 9.01 as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that thecircumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, orcontinuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and any such Eurodollar Borrowing shall be repaid orconverted on the last day of the then current Interest Period applicable thereto, and (ii) if any Borrowing Request requests a EurodollarBorrowing, such Borrowing shall be made as an ABR Borrowing.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 anycompulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, or creditextended 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 orexpense affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein (exceptfor Taxes which are covered by Sections 2.17 and 10.09 and changes in the rate of tax on the overall net income of such Lender); 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 attributablethereto;and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making or maintaining anyEurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or such Issuing Bank ofparticipating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or suchIssuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or such Issuing Bank, as thecase may be, such additional amount or amounts as will compensate such Lender or such Issuing Bank, as the case may be, for suchadditional costs incurred or reduction suffered.(b) If any Lender or any Issuing Bank determines that any Change in Law regarding capital or liquidityrequirements has or would have the effect of reducing the rate of return on such Lender’s or such Issuing Bank’s capital or on thecapital 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 thatwhich such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company could have achieved but for suchChange in Law (takinginto consideration such Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holdingcompany with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or such Issuing Bank, as thecase may be, such additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender’s or suchIssuing Bank’s holding company for any such reduction suffered.(c) A certificate of a Lender or the applicable Issuing Bank setting forth the amount or amounts necessary tocompensate such Lender or such Issuing Bank or its holding company, as the case may be, as specified in clause (a) or (b) of thisSection 2.15 shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lenderor such Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.(d) Failure or delay on the part of any Lender or any Issuing Bank to demand compensation pursuant to clauses(a) , (b) and (c) of this Section 2.15 shall not constitute a waiver of such Lender’s or such Issuing Bank’s right to demand suchcompensation; provided , that the Borrower shall not be required to compensate a Lender or an Issuing Bank pursuant to this Section2.15 for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or such Issuing Bank, as thecase may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s orsuch Issuing Bank’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to suchincreased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period ofretroactive effect thereof.SECTION 2.16 Break Funding Payments . In the event of (a) the payment of any principal of any Eurodollar Loan other than onthe last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loanother than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loanon the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.09(d) and isrevoked in accordance therewith), or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicablethereto as a result of a request by the Borrower pursuant to Section 2.19 , then, in any such event, the Borrower shall compensate each Lenderfor the loss, cost and expense attributable to such event (which shall not include any loss of margin or Applicable Rate). In the case of aEurodollar Loan, 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 theAdjusted 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 thencurrent Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the InterestPeriod for such Loan), over (ii) the amount of interest (as reasonably determined by such Lender) which would accrue on such principalamount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollardeposits of a comparable amount and period from other banks in the eurodollar market. A certificate of any Lender setting forth, in reasonabledetail, any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.16 shall be delivered to the Borrower and shallbe conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 daysafter receipt thereof.SECTION 2.17 Withholding of Taxes; Gross-Up .(a) Payments Free of Taxes . Any and all payments by or on account of any obligation of any Loan Party underany Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If anyapplicable law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholdingof any Tax from any such payment by a withholding agent, then the applicable withholding agent shall be entitled to make suchdeduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority inaccordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by such Loan Party shall be increasedas necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable toadditional sums payable under this Section 2.17 ) the applicable Recipient receives an amount equal to the sum it would havereceived had no such deduction or withholding been made.(b) Payment of Other Taxes by the Loan Parties . The Loan Parties shall timely pay to the relevant GovernmentalAuthority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for, Other Taxes.(c) Evidence of Payment . As soon as practicable after any payment of Taxes by any Loan Party to aGovernmental Authority pursuant to this Section 2.17 , such Loan Party shall deliver to the Administrative Agent the original or acertified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting suchpayment 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 ten (10) daysafter demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on orattributable to amounts payable under this Section 2.17 ) payable or paid by such Recipient or required to be withheld or deductedfrom a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not suchIndemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to theamount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by theAdministrative 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 ten(10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrowerhas not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of theBorrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04(c) relating tothe maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable orpaid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or withrespect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. Acertificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusiveabsent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any timeowing to such Lender under any Loan Document or otherwise payable by the Administrative Agentto such Lender from any other source against any amount due to the Administrative Agent under this clause (e) .(f) Status of Lenders .(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to paymentsmade under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times prescribed byapplicable law and at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completedand executed documentation prescribed by applicable law or as reasonably requested by the Borrower or the Administrative Agent aswill permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonablyrequested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law orreasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent todetermine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstandinganything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other thansuch 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 reasonablejudgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense orwould materially prejudice the legal or commercial position of such Lender; provided , that in such case the Lender shall indemnifythe Borrower and the Administrative Agent from any and all liabilities arising therefrom.(ii) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person,(A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to thedate on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonablerequest of the Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender isexempt from U.S. Federal backup withholding tax;(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and theAdministrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which suchForeign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of theBorrower 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 Statesis a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN or W-8BEN-E 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 W-8BEN-E establishing an exemption from, or reduction of, U.S. Federal withholding Taxpursuant to the “business profits” or “other income” article of such tax treaty;(2) in the case of a Foreign Lender claiming that its extension of credit will generate U.S. effectivelyconnected income, executed originals of IRS Form W-8ECI;(3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest underSection 881(c) of the Code, (x) a certificate substantially in the form of Exhibit E-1 to the effect that such ForeignLender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of theBorrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described inSection 881(c)(3)(C) of the Code (a “ U.S. Tax Compliance Certificate ”) and (y) executed originals of IRS Form W-8BEN or W-8BEN-E; or(4) to the extent a Foreign Lender is not the Beneficial Owner, executed originals of IRS Form W-8IMY,accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, a U.S. Tax Compliance Certificatesubstantially in the form of Exhibit E-2 or Exhibit E-3, IRS Form W-9, and/or other certification documents fromeach Beneficial Owner, as applicable; provided , that if the Foreign Lender is a partnership and one or more direct orindirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender mayprovide a U.S. Tax Compliance Certificate substantially in the form of Exhibit E-4 on behalf of each such direct andindirect partner;(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and theAdministrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which suchForeign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of theBorrower or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis forclaiming exemption from or a reduction in U.S. Federal withholding Tax, duly completed, together with such supplementarydocumentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine thewithholding 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 Taximposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (includingthose contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and theAdministrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borroweror the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent asmay be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and todetermine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deductand withhold from such payment. Solely for purposes of this clause (D) , “FATCA” shall include any amendments made toFATCA 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, itshall update such form or certification or promptly notify the Borrower 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 hasreceived a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.17 (including by the payment ofadditional amounts pursuant to this Section 2.17 ), it shall pay to the indemnifying party an amount equal to such refund (but only tothe 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 relevantGovernmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shallrepay to such indemnified party the amount paid over pursuant to this clause (g) (plus any penalties, interest or other chargesimposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to suchGovernmental Authority. Notwithstanding anything to the contrary in this clause (g) , in no event will the indemnified party berequired to pay any amount to an indemnifying party pursuant to this clause (g) the payment of which would place the indemnifiedparty in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnificationand giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additionalamounts giving rise to such refund had never been paid. This clause (g) shall not be construed to require any indemnified party tomake available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party orany other Person.(h) Survival . Each party’s obligations under this Section 2.17 shall survive the resignation or replacement of theAdministrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and therepayment, satisfaction or discharge of all obligations under any Loan Document.(i) Defined Terms . For purposes of this Section 2.17 , the term “Lender” includes any Issuing Bank and the term“applicable law” includes FATCA.(j) Without Duplication . For the avoidance of doubt, no Loan Party shall be required to gross-up or indemnify aRecipient pursuant to this Section 2.17 for any Taxes to the extent another Loan Party has already grossed-up or indemnified suchRecipient, or pay any Other Taxes to the extent another Loan Party has already paid such Other Taxes to the relevant GovernmentalAuthority.SECTION 2.18 Payments Generally; Allocation of Proceeds; Sharing of Setoffs .(a) The 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 3:00p.m., New York City time, on the date when due, in immediately available funds, without setoff or counterclaim. Any amountsreceived after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the nextsucceeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agentto one or more accounts as it may designate to the Borrower in writing from time to time, except payments to be made directly to anIssuing Bank as expressly provided herein and except that payments pursuant to Sections 2.15 , 2.16 , 2.17 and 9.03 shall be madedirectly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account ofany other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day thatis not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any paymentaccruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in dollars.(b) Any proceeds of Collateral received by the Administrative Agent (i) not constituting a specific payment ofprincipal, interest, fees or other sum payable under the Loan Documents (which shall be applied as specified by the Borrower), or (ii)after an Event of Default has occurred and is continuing, shall be applied ratably first , to pay any fees, indemnities, or expensereimbursements including amounts then due to the Administrative Agent and the Issuing Banks from the Borrower (other than inconnection with Banking Services Obligations or Swap Agreement Obligations), second , to pay any fees or expensereimbursements then due to the Lenders from the Borrower (other than in connection with Banking Services Obligations or SwapAgreement Obligations), third , to pay interest then due and payable on the Loans ratably, fourth , to prepay principal on the Loansand unreimbursed LC Disbursements, fifth , to pay an amount to the Administrative Agent equal to one hundred five percent (105%)of the aggregate undrawn face amount of all outstanding Letters of Credit, to be held as cash collateral for such Obligations, sixth ,to payment of any amounts owing with respect to Banking Services Obligations and Secured Swap Agreement Obligations, andseventh , to the payment of any other Secured Obligation due to the Administrative Agent or any Lender by the Borrower.Notwithstanding the foregoing, amounts received from any Loan Party shall not be applied to any Excluded Swap Obligation of suchLoan Party. Notwithstanding anything to the contrary contained in this Agreement, unless so directed by the Borrower, or unless aDefault is in existence, neither the Administrative Agent nor any Lender shall apply any payment which it receives to any EurodollarLoan, except (a) on the expiration date of the Interest Period applicable to any such Eurodollar Loan or (b) in the event, and only tothe extent, that there are no outstanding ABR Loans and, in any such event, the Borrower shall pay the break funding paymentrequired in accordance with Section 2.16 . The Administrative Agent and the Lenders shall have the continuing and exclusive rightto apply and reverse and reapply any and all such proceeds and payments to any portion of the Secured Obligations.Notwithstanding the foregoing, Obligations arising under Banking Services Obligations or Swap Agreement Obligations shallbe excluded from the application described above and paid in clause sixth if the Administrative Agent has not received written notice thereof,together with such supporting documentation as the Administrative Agent may have reasonably requested from the applicable provider ofsuch Banking Services or Swap Agreements.(c) At the election of the Borrower but subject to the conditions set forth in Section 4.02 , all payments ofprincipal, interest, LC Disbursements, fees, premiums, reimbursable expenses (including, without limitation, all reimbursement forfees, costs and expenses pursuant to Section 9.03 ), and other sums payable under the Loan Documents, may be paid from theproceeds of Borrowings made hereunder whether made following a request by the Borrower pursuant to Section 2.03 or a deemedrequest as provided in this Section 2.18 or may be deducted from any deposit account of the Borrower maintained with theAdministrative Agent.(d) If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respectof any principal of or interest on any of its Loans orparticipations in LC Disbursements resulting in such Lender receiving payment of a greater proportion of the aggregate amount of itsLoans and participations in LC Disbursements and accrued interest thereon than the proportion received by any other Lender, thenthe Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans and participations inLC Disbursements of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lendersratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and participations inLC Disbursements; provided , that (i) if any such participations are purchased and all or any portion of the payment giving risethereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, withoutinterest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant toand in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for theassignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, otherthan to (A) the Borrower or any Subsidiary (as to which the provisions of this paragraph shall apply) or (B) to the extent suchpayment is made directly by the Borrower or any Subsidiary (and is not otherwise permitted by this Agreement), any Affiliatethereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent itmay effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements mayexercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were adirect creditor of the Borrower in the amount of such participation.(e) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which anypayment is due to the Administrative Agent for the account of the Lenders or any Issuing Bank hereunder that the Borrower will notmake such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordanceherewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Banks, as the case may be, the amountdue. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Banks, as the casemay be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or suchIssuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the dateof payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by theAdministrative Agent in accordance with banking industry rules on interbank compensation.(f) If any Lender shall fail to make any payment required to be made by it hereunder, then the AdministrativeAgent may, in its discretion (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received by theAdministrative Agent for the account of such Lender to satisfy such Lender’s obligations hereunder until all such unsatisfiedobligations are fully paid and/or (ii) hold any such amounts in a segregated account as cash collateral for, and apply any suchamounts to, any future funding obligations of such Lender hereunder; application of amounts pursuant to (i) and (ii) above shall bemade in such order as may be determined by the Administrative Agent in its discretion.”(g) The Administrative Agent may from time to time provide the Borrower with billing statements or invoiceswith respect to any of the Secured Obligations (the “ Billing Statements ”). The Administrative Agent is under no duty or obligationto provide Billing Statements, which, if provided, will be solely for the Borrower’s convenience. The Billing Statements may containestimates of the amounts owed during the relevant billing period, whetherof principal, interest, fees or other Secured Obligations. If the Borrower pays the full amount indicated on a Billing Statement on orbefore the due date indicated on such Billing Statement, the Borrower shall not be in default; provided , that acceptance by theAdministrative Agent, on behalf of the Lenders, of any payment that is less than the payment due at that time shall not constitute awaiver of the Administrative Agent’s or the Lenders’ right to receive payment in full at another time.SECTION 2.19 Mitigation Obligations; Replacement of Lenders .(a) If any Lender requests compensation under Section 2.15 , or if the Borrower or the Loan Guarantors arerequired to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of anyLender pursuant to Section 2.17 or 10.09 , then such Lender shall use reasonable efforts to designate a different lending office forfunding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches oraffiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuantto Section 2.15 , 2.17 or 10.09 , as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost orexpense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable anddocumented out-of-pocket 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 Lender fails to consent to a requestedamendment, waiver or modification to any Loan Document in which Required Lenders have already consented to such amendment,waiver or modification but the consent of each Lender (or each Lender directly affected thereby, as applicable) is required withrespect thereto, (iii) the Borrower or the Loan Guarantors are required to pay any Indemnified Taxes or additional amounts to anyLender or any Governmental Authority for the account of any Lender) pursuant to Section 2.17 or Section 10.09 , or (iv) any Lenderbecomes a Defaulting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and theAdministrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to therestrictions contained in Section 9.04 ), all its interests, rights (other than its existing rights to payments pursuant to Section 2.15 or2.17 ) and obligations under this Agreement and other Loan Documents to an assignee that shall assume such obligations (whichassignee may be another Lender, if a Lender accepts such assignment); provided , that (A) the Borrower shall have received the priorwritten consent of the Administrative Agent (and if a Commitment is being assigned, the Issuing Banks), which consent shall notunreasonably be withheld, (B) such Lender shall have received payment of an amount equal to the outstanding principal of its Loansand participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, fromthe assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all otheramounts) and (C) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or paymentsrequired to be made pursuant to Sections 2.17 or 10.09 , such assignment will result in a reduction in such compensation orpayments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver bysuch Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.SECTION 2.20 Defaulting Lenders . Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes aDefaulting 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 toSection 2.12(a) ;(b) such Defaulting Lender shall not have the right to vote on any issue on which voting is required (other than tothe extent expressly provided in Section 9.02(b) ) and the Commitment and Credit Exposure of such Defaulting Lender shall not beincluded in determining whether all Lenders or the Required Lenders have taken or may take any action hereunder (including anyconsent to any amendment, waiver or other modification pursuant to Section 9.02 ) or under any other Loan Document; provided ,that, except as otherwise provided in Section 9.02 , this clause (b) shall not apply to the vote of a Defaulting Lender in the case of anamendment, waiver or other modification requiring the consent of such Lender or each Lender directly affected thereby;(c) if any LC Exposure exists at the time a 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-DefaultingLenders in accordance with their respective Applicable Percentages but only to the extent that the sum of all non-Defaulting Lenders’Credit Exposures plus such Defaulting Lender’s LC Exposure does not exceed the total of all non-Defaulting Lenders’ Commitments;and(ii) if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shallwithin one Business Day following notice by the Administrative Agent, cash collateralize for the benefit of the Issuing Banks only theBorrower’s obligations corresponding to such Defaulting Lender’s LC Exposure (after giving effect to any partial reallocationpursuant to clause (i) above) in accordance with the procedures set forth in Section 2.06(j) for so long as such LC Exposure isoutstanding;(iii) if the Borrower cash collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to Section2.20(c) , the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.12(b) with respect to suchDefaulting 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 Section 2.20(c) , then the feespayable to the Lenders pursuant to Section 2.12(a) and Section 2.12(b) shall be adjusted in accordance with such non-DefaultingLenders’ Applicable Percentages; or(v) if all or any portion of such Defaulting Lender’s LC Exposure is neither cash collateralized nor reallocatedpursuant to Section 2.20(c) , then, without prejudice to any rights or remedies of any Issuing Bank or any other Lender hereunder, allfacility fees that otherwise would have been payable to such Defaulting Lender (solely with respect to the portion of such DefaultingLender’s Commitment that was utilized by such LC Exposure) and letter of credit fees payable under Section 2.12(b) with respect tosuch Defaulting Lender’s LC Exposure shall be payable to the Issuing Banks until such LC Exposure is cash collateralized and/orreallocated;(d) so long as such Lender is a Defaulting Lender, no Issuing Bank shall be required to issue or increase anyLetter of Credit, unless it is reasonably satisfied that the related exposure and the Defaulting Lender’s then outstanding LC Exposurewill be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by theBorrower in accordance with Section 2.20(c) , and participating interests in any such newly issued or increased Letter of Credit shallbe allocated among non-Defaulting Lenders in a manner consistent with Section 2.20(c)(i) (and such Defaulting Lender shall notparticipate therein);(e) if (i) a Bankruptcy Event with respect to a Parent of any Lender shall occur following the date hereof and forso long as such event shall continue or (ii) an Issuing Bank has a good faith belief that any Lender has defaulted in fulfilling itsobligations under one or more other agreements in which such Lender commits to extend credit, such Issuing Bank shall not berequired to issue or increase any Letter of Credit unless such Issuing Bank shall have entered into arrangements with the Borrower orsuch Lender, reasonably satisfactory to such Issuing Bank, as the case may be, to defease any risk to it in respect of such Lenderhereunder; and(f) in the event and on the date that each of the Administrative Agent, the Borrower, and each Issuing Bank agreesthat a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the LCExposure of the other Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date suchLender shall purchase at par such of the Loans of the other Lenders as the Administrative Agent shall determine may be necessary inorder for such Lender to hold such Loans in accordance with its Applicable Percentage.SECTION 2.21 Returned Payments . If after receipt of any payment which is applied to the payment of all or any part of theObligations (including a payment effected through exercise of a right of setoff), the Administrative Agent or any Lender is for any reasoncompelled to surrender such payment or proceeds to any Person because such payment or application of proceeds is invalidated, declaredfraudulent, set aside, determined to be void or voidable as a preference, impermissible setoff, or a diversion of trust funds, or for any otherreason (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion), then the Obligationsor part thereof intended to be satisfied shall be revived and continued and this Agreement shall continue in full force as if such payment orproceeds had not been received by the Administrative Agent or such Lender. The provisions of this Section 2.21 shall be and remain effectivenotwithstanding any contrary action which may have been taken by the Administrative Agent or any Lender in reliance upon such payment orapplication of proceeds. The provisions of this Section 2.21 shall survive the termination of this Agreement.SECTION 2.22 Amend and Extend Transactions .(a) The Borrower may, by written notice to the Administrative Agent from time to time, request an extension(each, an “ Extension ”) of the Maturity Date to the extended maturity date specified in such notice. Such notice shall (i) set forth theamount of Commitments that will be subject to the Extension (which request shall be in minimum increments of $1 million and aminimum amount of $5 million), and (ii) set forth the date on which such Extension is requested to become effective (which shall benot less than ten (10) Business Days nor more than sixty (60) days after the date of such Extension notice (or such longer or shorterperiods as the Administrative Agent shall agree in its sole discretion)). The Lenders shall be offered (an “ Extension Offer ”) anopportunity to participate in such Extension on a pro rata basis and on the same terms and conditions as each other Lender pursuantto procedures established by, or reasonably acceptable to, the Administrative Agent and Borrower. If the aggregate principal amountof Commitments in respect of which Lenders shall have accepted the relevant Extension Offer shall exceed the maximum aggregateprincipal amount of Commitments subject to the Extension Offer as set forth in the Extension notice, then the Commitments of theLenders shall be extended ratably up to suchmaximum amount based on the respective principal amounts with respect to which such Lenders have accepted such ExtensionOffer.(b) The following shall be conditions precedent to the effectiveness of any Extension: (i) no Default or Event ofDefault shall have occurred and be continuing immediately prior to and immediately after giving effect to such Extension, (ii) therepresentations and warranties set forth in Article III and in each other Loan Document shall be deemed to be made and shall be trueand correct in all material respects on and as of the effective date of such Extension, (iii) each relevant Issuing Bank shall haveconsented to any Extension of the Commitments, to the extent that such Extension provides for the issuance or extension of Lettersof Credit at any time during the extended period and (iv) the terms of such Extended Revolving Credit Commitments shall complywith clause (c) of this Section 2.22 .(c) The terms of each Extension shall be determined by the Borrower and the applicable extending Lenders andset forth in an Extension Amendment; provided , that (i) the final maturity date of any Extended Revolving Credit Commitment shallbe no earlier than the Maturity Date, (ii) there shall be no scheduled amortization of the loans or reductions of commitments underany Extended Revolving Credit Commitments, (iii) the Extended Loans will rank pari passu in right of payment and security withthe existing Loans and the borrower, guarantors and collateral of the Extended Revolving Credit Commitments shall be the same asthe borrower, Guarantors and Collateral with respect to the existing Loans, (iv) the interest rate margin and any fees applicable toany Extended Revolving Credit Commitment (and the Extended Loans thereunder) shall be determined by Borrower and theapplicable extending Lenders, (v) borrowing and prepayment of Extended Loans, or reductions of Extended Revolving CreditCommitments, and participation in Letters of Credit, shall be on a pro rata basis with the other Loans or Commitments (other thanupon the maturity of the non-extended Loans and Commitments) and (vi) the terms of the Extended Revolving Credit Commitmentsshall be substantially identical to the terms set forth herein.(d) In connection with any Extension, the Borrower, the Administrative Agent and each applicable extendingLender shall execute and deliver to the Administrative Agent an Extension Amendment and such other documentation as theAdministrative Agent shall reasonably specify to evidence the Extension. The Administrative Agent shall promptly notify eachLender as to the effectiveness of each Extension. Any Extension Amendment may, without the consent of any other Lender, effectsuch amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion ofthe Administrative Agent and the Borrower, to implement the terms of any such Extension, including any amendments necessary toestablish Extended Revolving Credit Commitments as tranche of Commitments and such other technical amendments as may benecessary or appropriate in the reasonable opinion of the Administrative Agent and the Borrower in connection with theestablishment of such new tranche (including to preserve the pro rata treatment of the extended and non-extended tranches and toprovide for the reallocation of Credit Exposure upon the expiration or termination of the commitments under any tranche), in eachcase on terms consistent with this Section 2.22 .SECTION 2.23 Increase of Commitments .(a) The Borrower shall have the right at any time after the Effective Date to request that the aggregateCommitments hereunder be increased (a “ Commitment Increase ”) in accordance with the following provisions and subject to thefollowing conditions:(i) The Borrower shall give the Administrative Agent, which shall promptly deliver a copy thereof to each of theLenders, at least ten (10) Business Days’ prior written notice (a “ Notice of Increase ”) of any such requested increase specifying theaggregate amount by which the Commitments are to be increased (the “ Requested Increase Amount ”), which shall be at least $10million, the requested date of increase (the “ Requested Increase Date ”) and the date by which the Lenders wishing to participate inthe Commitment Increase must commit to an increase in the amount of their respective Credit Commitments (the “ Commitment Date”). Each Lender that is willing in its sole discretion to participate in such requested Commitment Increase (each an “ IncreasingLender ”) shall give written notice to the Administrative Agent on or prior to the Commitment Date of the amount by which it iswilling to increase its Commitment.(ii) Promptly following each Commitment Date, the Administrative Agent shall notify the Borrower as to theamount, if any, by which the Lenders are willing to participate in the requested Commitment Increase. In addition, the Borrower mayextend offers to one or more Eligible Assignees, each of which must be reasonably satisfactory to the Administrative Agent, (suchconsent not to be unreasonably withheld) to participate in any portion of the requested Commitment Increase; provided , however ,that the Commitment of each such Eligible Assignee shall be in an amount of not less than $1 million or an integral multiple of $1million in excess thereof. Any such Eligible Assignee that agrees to acquire a Commitment pursuant hereto is herein called an “Additional Lender ”.(iii) Effective on the Requested Increase Date, subject to the terms and conditions hereof, (x) the CommitmentSchedule shall be deemed to be amended to reflect the increases contemplated hereby, (y) the Commitment of each Increasing Lendershall be increased by an amount determined by the Administrative Agent and the Borrower (but in no event greater than the amountby which such Lender is willing to increase its Commitment), and (z) each Additional Lender shall enter into an agreement in formand substance reasonably satisfactory to the Borrower and the Administrative Agent pursuant to which it shall undertake, as of suchRequested Increase Date, a new Commitment in an amount determined by the Administrative Agent and the Borrower (but in noevent greater than the amount by which such Lender is willing to participate in the requested Commitment Increase), and suchAdditional Lender shall thereupon be deemed to be a Lender for all purposes of this Agreement.(iv) If on the Requested Increase Date there are any Loans outstanding hereunder, the Borrower shall borrow fromall or certain of the Lenders and/or prepay Loans of all or certain of the Lenders such that, after giving effect thereto, the Loans(including, without limitation, the Types and Interest Periods thereof) and such participations shall be held by the Lenders (includingfor such purposes the Increasing Lenders and the Additional Lenders) ratably in accordance with their respective Commitments. Onand after each Increase Date, the ratable share of each Lender’s participation in Letters of Credit and Loans from draws under Lettersof Credit shall be calculated after giving effect to each such Commitment Increase.(b) Anything in this Section 2.23 to the contrary notwithstanding, no increase in the aggregate Commitmentshereunder pursuant to this Section 2.23 shall be effective unless:(i) as of the date of the relevant Notice of Increase and on the relevant Requested Increase Date and after givingeffect to such increase, (x) no Default or Event of Default shall have occurred and be continuing and (y) the condition set forth inSection 4.02(a) shall be required to be satisfied;(ii) to the extent reasonably requested by the Administrative Agent, receipt by the Administrative Agent of (A)customary legal opinions, board resolutions and officers’ certificates consistent with the documentation delivered on the EffectiveDate (conformed as appropriate) other than changes to such legal opinions resulting from a change in law, change in fact or change tocounsel’s form of opinion reasonably satisfactory to the Administrative Agent and (B) any reaffirmation or similar documentation asreasonably requested by the Administrative Agent in order to ensure that such Increasing Lender or Additional Lender is providedwith the benefit of the applicable Loan Documents; and(iii) after giving effect to any such increase the aggregate amount of the Commitments shall not exceed $300million.SECTION 2.24 Banking Services and Swap Agreements . Each Lender or Affiliate thereof providing Banking Services for, orhaving Swap Agreements with, the Borrower or any of its Subsidiaries shall deliver to the Administrative Agent, promptly after entering intosuch Banking Services or Swap Agreements, written notice thereof, in each case, to the extent such Banking Services or Swap Agreementsrelate to Secured Obligations. In furtherance of that requirement, each such Lender or Affiliate thereof shall furnish the Administrative Agent,from time to time promptly upon a request therefor, a summary of the amounts due or to become due in respect of such Banking ServicesObligations and Swap Agreement Obligations that constitute Secured Obligations, together with such supporting documentation as theAdministrative Agent may have reasonably requested from the applicable provider of such Banking Services or Swap Agreement. The mostrecent information provided to the Administrative Agent shall be used in determining which tier of the waterfall, contained in Section 2.18(b), such Banking Services Obligations and/or Swap Agreement Obligations will be placed.ARTICLE III REPRESENTATIONS AND WARRANTIESEach Loan Party represents and warrants to the Lenders that:SECTION 3.01 Organization; Powers . Each of the Loan Parties and each of its Subsidiaries is duly organized, validly existing andin good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as nowconducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a MaterialAdverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.SECTION 3.02 Authorization; Enforceability . The Transactions are within each Loan Party’s corporate or limited liabilitycompany powers, as the case may be, and have been duly authorized by all necessary corporate or limited liability company and, if required,stockholder or member action. Each Loan Document to which each Loan Party is a party has been duly executed and delivered by such LoanParty and constitutes a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicablebankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles ofequity, regardless of whether considered in a proceeding in equity or at law.SECTION 3.03 Governmental Approvals; No Conflicts . The Transactions (a) do not, on the part of any Loan Party or any of itsSubsidiaries, require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except suchas have been obtained or made andare in full force and effect and except for filings necessary to perfect Liens created pursuant to the Loan Documents, (b) will not violate anyRequirement of Law applicable to any Loan Party or any of its Subsidiaries or any order of any Governmental Authority, (c) will not violateor result in a default under, or give rise to a right to require any payment to be made by any Loan Party or any of its Subsidiaries under, (i)any indenture or loan agreement, in each case, evidencing Indebtedness in excess of $2 million, (ii) any Swap Agreement or (iii) any othermaterial agreement, in each case which is binding upon any Loan Party or any of its Subsidiaries or its assets, and (d) will not result in thecreation or imposition of any Lien on any asset of any Loan Party or any of its Subsidiaries, except Liens created pursuant to the LoanDocuments, in each case of clauses (a) , (b) or (c)(iii) , except as would not reasonably be expected to result in a Material Adverse Effect.SECTION 3.04 Financial Condition; No Material Adverse Change .(a) The Borrower has heretofore furnished to the Lenders its consolidated balance sheet and statements of income,stockholders equity and cash flows (i) as of and for the fiscal year ended December 31, 2016, reported on by Ernst & Young LLP,independent public accountants, and (ii) as of and for the fiscal quarter and the portion of the fiscal year ended September 30, 2017,certified by its chief financial officer. Such financial statements present fairly, in all material respects, the financial position andresults of operations and cash flows of the Borrower and its consolidated Subsidiaries as of such dates and for such periods inaccordance with GAAP, subject to year‑end audit adjustments and the absence of footnotes in the case of the statements referred toin clause (ii) above.(b) No event, change or condition has occurred that has had, or could reasonably be expected to have, a MaterialAdverse Effect, since December 31, 2016.SECTION 3.05 Properties .(a) Each of the Loan Parties and its Subsidiaries has good title to, or valid leasehold interests in, all its real andpersonal property, except for defects in title that, individually or in the aggregate, could not reasonably be expected to result in aMaterial Adverse Effect.(b) Each of the Loan Parties and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames,copyrights, patents and other intellectual property material to its business, and the use thereof by the Loan Parties and itsSubsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in theaggregate, could not reasonably be expected to result in a Material Adverse Effect.SECTION 3.06 Litigation and Environmental Matters .(a) There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pendingagainst or, to the knowledge of any Loan Party, threatened against or affecting the Loan Parties or any of its Subsidiaries (i) thatcould reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that involve thisAgreement or the Transactions.(b) No Loan Party nor any of its Subsidiaries (i) has failed to comply with any Environmental Law or to obtain,maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to anyEnvironmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows ofany basis for any Environmental Liability that, in each case, individually in the aggregate, could reasonably be expected to result in aMaterial Adverse Effect.SECTION 3.07 Compliance with Laws and Agreements . Each Loan Party and its Subsidiaries is in compliance with allRequirements of Law applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property,except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. NoDefault has occurred and is continuing.SECTION 3.08 Investment Company Status . No Loan Party nor any of its Subsidiaries is an “investment company” as defined in,or subject to regulation under the Investment Company Act of 1940.SECTION 3.09 Taxes . Each Loan Party and its Subsidiaries has timely filed or caused to be filed all Tax returns and reportsrequired to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are beingcontested in good faith by appropriate proceedings and for which such Loan Party or such Subsidiary, as applicable, has set aside on its booksadequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.SECTION 3.10 ERISA .(a) No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other suchERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material AdverseEffect. Except as could not reasonably be expected to result in a Material Adverse Effect, with respect to each Plan, the “fundingtarget,” as defined in Section 430(d)(1) of the Code, with respect to such Plan, does not exceed the fair market value of all suchPlan’s assets, as determined pursuant to Section 430(g) of the Code, all determined as of the then-most recent valuation date for suchPlan using the actuarial assumptions used to determine the Plan’s “funding target attainment” percentage as defined in Section430(d) of the Code.(b) The Borrower represents and warrants as of the Effective Date that the Borrower is not and will not be using“plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans inconnection with the Loans, the Letters of Credit or the Commitments.SECTION 3.11 Disclosure . The Borrower has disclosed to the Lenders all agreements, instruments and corporate or otherrestrictions to which it or any Subsidiary is subject, and all other matters known to it, that, individually or in the aggregate, could reasonablybe expected to result in a Material Adverse Effect. None of the reports, financial statements, certificates or other written information (otherthan any projected financial information or other forward-looking information or information of a general economic or general industryspecific nature) furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the negotiation ofthis Agreement or any other Loan Document (as modified or supplemented by other information so furnished) contains any materialmisstatement of fact or omits to state any material fact necessary to make the statements therein (taken as a whole), in the light of thecircumstances under which they were made, not materially misleading; provided , that, with respect to projected financial information orother forward-looking information or information of a general economic or general industry specific nature, the Borrower represents only thatsuch information was prepared in good faith based upon assumptions believed to be reasonable at the time (it being understood that any suchinformation may differ from actual results and such differences may be material).SECTION 3.12 Capitalization and Subsidiaries . Schedule 3.12 sets forth, as of the date hereof, (a) a correct and complete list ofthe name and relationship to the Borrower of each and all of the Borrower’s Subsidiaries, (b) the type of entity and jurisdiction oforganization of the Borrower and each of its Subsidiaries, and (c) which of the Borrower’s Subsidiaries are Material Domestic Subsidiariesand Material Foreign Subsidiaries. All of the issued and outstanding Equity Interests owned by any Loan Party has been (to the extent suchconcepts are relevant with respect to such ownership interests) duly authorized and issued and is fully paid and non‑assessable.SECTION 3.13 Security Interest in Collateral . The provisions of this Agreement and the other Loan Documents create legal andvalid Liens on all of the Collateral in favor of the Administrative Agent, for the benefit of the Secured Parties, and, upon filing a UCCfinancing statement in the Loan Parties’ applicable jurisdiction of organization such Liens, will constitute perfected and continuing Liens onthe Collateral in which a security interest can be perfected by filing a UCC financing statement, securing the Secured Obligations, enforceableagainst the applicable Loan Party and all third parties, and having priority over all other Liens on the Collateral except in the case of (a)Permitted Encumbrances, to the extent any such Permitted Encumbrances would have priority over the Liens in favor of the AdministrativeAgent pursuant to any applicable law or agreement, and (b) Liens perfected only by possession (including possession of any certificate oftitle), to the extent the Administrative Agent has not obtained or does not maintain possession of such Collateral.SECTION 3.14 Federal Reserve Regulations . No part of the proceeds of any Loan or Letter of Credit has been used or will beused, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, Uand X.SECTION 3.15 Anti-Corruption Laws and Sanctions . Each Loan Party has implemented and maintains in effect policies andprocedures designed to ensure compliance by such Loan Party, its Subsidiaries and their respective directors, officers, employees and agentswith Anti-Corruption Laws and applicable Sanctions, and such Loan Party, its Subsidiaries and their respective officers and employees and,to the knowledge of such Loan Party, its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in allmaterial respects. None of (a) any Loan Party, any Subsidiary or, to the knowledge of any such Loan Party or Subsidiary, any of theirrespective directors, officers or employees, or (b) to the knowledge of any such Loan Party or Subsidiary, any agent of such Loan Party orany 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, Transaction or other transaction contemplated by this Agreement or the other LoanDocuments will violate Anti-Corruption Laws or applicable Sanctions.SECTION 3.16 Common Enterprise . The successful operation and condition of each of the Loan Parties is dependent on thecontinued successful performance of the functions of the group of the Loan Parties as a whole and the successful operation of each of theLoan Parties is dependent on the successful performance and operation of each other Loan Party. Each Loan Party expects to derive benefit(and its board of directors or other governing body has determined that it may reasonably be expected to derive benefit), directly andindirectly, from (i) successful operations of each of the other Loan Parties and (ii) the credit extended by the Lenders to the Borrowerhereunder, both in their separate capacities and as members of the group of companies. Each Loan Party has determined that execution,delivery, and performance of this Agreement and any other Loan Documents to be executed by such Loan Party is within its purpose, infurtherance of its direct and/or indirect business interests, will be of direct and/or indirect benefit to such Loan Party, and is in its best interest.SECTION 3.17 Not an EEA Financial Institution . No Loan Party is an EEA Financial Institution.ARTICLE IV CONDITIONSSECTION 4.01 Conditions to Initial Loans . The obligations of the Lenders to make Loans and of the Issuing Banks to issueLetters of Credit hereunder shall not become effective until each of the following conditions is satisfied (or waived in accordance withSection 9.02 ):(a) Credit Agreement and Other Loan Documents . 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 evidencesatisfactory to the Administrative Agent (which may include fax or other electronic transmission of a signed signature page of thisAgreement) that such party has signed a counterpart of this Agreement and (ii) duly executed copies of any other Loan Documents tobe entered into as of the date hereof and such other certificates, documents, instruments and agreements as the Administrative Agentshall reasonably request in connection with the transactions contemplated by this Agreement and the other Loan Documents,including any Notes requested by a Lender pursuant to Section 2.10 payable to the order of each such requesting Lender and awritten opinion of the Loan Parties’ counsel, addressed to the Administrative Agent, the Issuing Banks and the Lenders and in formand substance reasonably satisfactory to the Administrative Agent.(b) Financial Statements and Projections . The Lenders shall have received (i) audited consolidated financialstatements of the Borrower and its Subsidiaries for the 2014, 2015, and 2016 fiscal years, (ii) unaudited interim consolidatedfinancial statements of the Borrower and its Subsidiaries for each fiscal quarter ended after the date of the latest applicable financialstatements delivered pursuant to clause (i) of this paragraph as to which such financial statements are available, and (iii) projectionsthrough 2020.(c) Closing Certificates . The Administrative Agent shall have received (i) a certificate of each Loan Party, datedthe Effective Date and executed by its Secretary or Assistant Secretary, which shall (A) certify the resolutions of its Board ofDirectors, members or other body authorizing the execution, delivery and performance of the Loan Documents to which it is a party,(B) identify by name and title and bear the signatures of the Financial Officers and any other officers of such Loan Party authorizedto sign the Loan Documents to which it is a party, and (C) contain appropriate attachments, including the certificate or articles ofincorporation or organization of each Loan Party certified by the relevant authority of the jurisdiction of organization of such LoanParty and a true and correct copy of its by‑laws or operating, management or partnership agreement, and (ii) a long form goodstanding certificate for each Loan Party from its jurisdiction of organization.(d) No Default Certificate . The Administrative Agent shall have received a certificate, signed by the chieffinancial officer of the Borrower on the initial Borrowing date (i) stating that no Default has occurred and is continuing and (ii)stating that the representations and warranties contained in Article III are true and correct in all material respects as of such dateexcept that any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correctin all respects.(e) Fees . The Lenders and the Administrative Agent shall have received all fees required to be paid, and allexpenses (including the reasonable fees and expenses of outsidelegal counsel) for which invoices have been presented no later than three Business Days prior to the Effective Date (or a shorterperiod as agreed to by the Borrower).(f) Lien Searches . The Administrative Agent shall have received the results of a recent customary lien search, andsuch search shall reveal no liens on any of the assets of the Loan Parties except for liens permitted by Section 6.02 or discharged onor prior to the Effective Date pursuant to a pay-off letter or other documentation reasonably satisfactory to the Administrative Agent.(g) Pledged Stock; Stock Powers; Pledged Notes . The Administrative Agent shall have received (i) thecertificates representing the shares of Equity Interests pledged pursuant to the Security Agreement, together with an undated stockpower for each such certificate executed in blank by a duly authorized officer of the pledgor thereof and (ii) to the extent required tobe delivered pursuant to the Security Agreement, each promissory note (if any) pledged to the Administrative Agent pursuant to theSecurity Agreement endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgorthereof; provided , that the certificates representing the equity interest of Overland Solutions, Inc., Overland Holdings, Inc. andDatasource Consulting LLC shall instead be delivered to the Administrative Agent not later than November 28, 2017 (or such laterdate as the Administrative Agent may agree in its reasonable discretion).(h) Filings, Registrations and Recordings . Each document (including any Uniform Commercial Code financingstatement) required by the Collateral Documents or under law or reasonably requested by the Administrative Agent to be filed,registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a perfected Lienon the Collateral described therein (but only to the extent required therein), prior and superior in right to any other Person (other thanwith respect to Liens expressly permitted by Section 6.02 ), shall be in proper form for filing, registration or recordation.(i) Insurance . The Administrative Agent shall have received evidence of insurance coverage in form, scope, andsubstance reasonably satisfactory to the Administrative Agent and otherwise in compliance with the terms of Section 5.05 andSection 4.10 of the Security Agreement.(j) Solvency . The Administrative Agent shall have received a solvency certificate from a Financial Officersubstantially in the form attached hereto as Exhibit D.(k) Tax Withholding . The Administrative Agent shall have received a properly completed and signed IRS FormW-8 or W-9, as applicable, for each Loan Party.(l) USA PATRIOT Act, Etc . At least three Business Days prior to the Effective Date, the Borrower and each ofthe other Loan Parties shall have provided to the Administrative Agent or the Lenders the documentation and other informationtheretofore requested in writing by the Administrative Agent or the Lenders at least five business days prior to the Effective Datethat is required by regulatory authorities under applicable “know your customer” and anti-money-laundering rules and regulations,including the USA PATRIOT Act.(m) Existing Credit Agreement . Prior to or substantially contemporaneously with the Effective Date, all principal,premium, if any, interest, fees and other amounts due or outstanding under the Existing Credit Agreement, shall have been or shallbe satisfied in full, thecommitments thereunder shall have been or shall be terminated and all guarantees and Liens existing in connection therewith shallhave been or shall be discharged and released (the “ Refinancing ”), and the Administrative Agent shall have received reasonablysatisfactory evidence thereof.(n) Letter of Credit Application . The Administrative Agent shall have received a properly completed letter ofcredit application (whether standalone or pursuant to a master agreement, as applicable), and, to the extent required by the relevantIssuing Bank, the Borrower shall have executed the Issuing Bank’s master agreement for the issuance of commercial Letters ofCredit, in each case if the issuance of a Letter of Credit will be required on the Effective Date.The Administrative Agent shall notify the Borrower, the Lenders and the Issuing Banks of the Effective Date, and such notice shall beconclusive and binding.SECTION 4.02 Each Credit Event . The obligation of each Lender to make any Loan, and of the Issuing Banks to issue or increaseany Letter of Credit, is subject to the satisfaction of the following conditions:(a) The representations and warranties of the Borrower set forth in this Agreement shall be true and correct in allmaterial respects on and as of the date of such Loan or the date of issuance or increase of such Letter of Credit, as applicable, exceptthat (i) to the extent that such representations and warranties specifically refer to an earlier date, such representations and warrantiesshall be true and correct in all material respects as of such earlier date, (ii) any representation and warranty that is qualified as to“materiality” or “Material Adverse Effect” shall be true and correct in all respects.(b) At the time of and immediately after giving effect to such Loan or the issuance or increase of such Letter ofCredit, as applicable, no Default shall have occurred and be continuing.Each Loan and each issuance or increase of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower onthe date thereof as to the matters specified in clauses (a) and (b) of this Section 4.02 .ARTICLE V AFFIRMATIVE COVENANTSUntil the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereundershall have been paid in full and all Letters of Credit shall have expired or terminated or been cash collateralized and all LC Disbursementsshall have been reimbursed (or cash collateralized on terms reasonably acceptable to the Administrative Agent), each Loan Party executingthis Agreement covenants and agrees, jointly and severally with all of the Loan Parties, with the Lenders that:SECTION 5.01 Financial Statements and Other Information . The Borrower will furnish to the Administrative Agent and eachLender:(a) within 90 days after the end of each fiscal year of the Borrower, (i) its audited consolidated balance sheet andrelated statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case incomparative form the figures for the previous fiscal year, all reported on by Ernst & Young LLP or other independentpublic accountants of recognized national standing (without a “going concern” or like qualification or exception and without anyqualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in allmaterial respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidatedbasis in accordance with GAAP consistently applied, and (ii) unaudited consolidating balance sheets and related statements ofoperations, stockholders’ equity and cash flows as of the end of and for such year, certified by one of the Borrower’s FinancialOfficers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and itsconsolidated Subsidiaries on a consolidating basis in accordance with GAAP;(b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, itsconsolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for suchfiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for thecorresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by oneof its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrowerand its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-endaudit adjustments and the absence of footnotes;(c) concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of aFinancial Officer of the Borrower in substantially the form of Exhibit B (i) certifying as to whether a Default has occurred and, if aDefault has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) settingforth reasonably detailed calculations demonstrating compliance with the Financial Covenants and compliance with Sections 6.04(c)and (d) , and (iii) stating whether any change in GAAP or in the application thereof has occurred since the later of December 31,2016 and the end date of the financial statements most recently delivered pursuant to Section 5.01(a) and, if any such change hasoccurred, specifying the effect of such change on the financial statements accompanying such certificate;(d) [Reserved];(e) as soon as available, but in any event within sixty (60) days after the start of each fiscal year of the Borrower, acopy of the plan and forecast (including a projected consolidated balance sheet, income statement and funds flow statement) of theBorrower for each month of such fiscal year (the “ Projections ”) in form reasonably satisfactory to the Administrative Agent;(f) promptly after the same become publicly available, copies of all periodic and other reports, proxy statementsand other materials filed by the Borrower or any Subsidiary with the Securities and Exchange Commission, or any GovernmentalAuthority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed bythe Borrower to its shareholders generally, as the case may be; and(g) promptly following any request therefor, such other information regarding the operations, business affairs andfinancial condition of the Borrower or any Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agentor any Lender may reasonably request.Notwithstanding anything to the contrary in this Section 5.01 , (x) the Borrower shall be deemed to have complied with the terms of Sections5.01(a) and (b) , as applicable, with respect to the financial statements required to be delivered pursuant thereto if the Borrower delivers to theAdministrative Agent and the Lenders, within the same time frame required under the Securities Act and the rules and regulations of theSecurities Exchange Commission its annual report on Form 10-K for the applicable fiscal year or its quarterly report in Form 10-Q for theapplicable fiscal quarter, respectively, that it has filed with the Securities and Exchange Commission, and (y) any documents required to bedelivered pursuant to Sections 5.01(a) , (b) and (f) shall be deemed to have been delivered on the date on which the Borrower provides noticeto the Administrative Agent that such information has been posted on the Borrower’s website on the Internet (with such notice containing thelink thereto), or posted on Borrower’s behalf on IntraLinks/‌IntraAgency or another relevant website, if any, to which each Lender and theAdministrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent).SECTION 5.02 Notices of Material Events . The Borrower will furnish to the Administrative Agent and each Lender promptwritten notice of the following:(a) the occurrence of any Default;(b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or GovernmentalAuthority against or affecting the Borrower or any Affiliate thereof that, if adversely determined, could reasonably be expected toresult in a Material Adverse Effect;(c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred,could reasonably be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $5 million;(d) within two (2) Business Days (or such longer period as the Administrative Agent may agree) after theoccurrence thereof, any Loan Party entering into a Swap Agreement or an amendment to a Swap Agreement, in each case, to theextent such Swap Agreement relates to Secured Swap Obligations, together with copies of all agreements evidencing such SwapAgreement or amendment; and(e) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.Each notice delivered under this Section 5.02 (other than clause (d) above) shall be accompanied by a statement of a Financial Officer orother executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken orproposed to be taken with respect thereto.SECTION 5.03 Existence; Conduct of Business . Each Loan Party will, and will cause each Subsidiary to, (a) do or cause to bedone all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, qualifications, licenses,permits, franchises, governmental authorizations, intellectual property rights, licenses and permits material to the conduct of its business;provided , that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03 and (b)carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presentlyconducted or in fields which are, in the good faith judgment of the Board of Directors, similar, complimentary or substantially related theretoor are reasonable extensions thereof.SECTION 5.04 Payment of Taxes . Each Loan Party will, and will cause each Subsidiary to, pay or discharge all material Taxes,before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith byappropriate proceedings, (b) such Loan Party or such Subsidiary has set aside on its books adequate reserves with respect thereto inaccordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a MaterialAdverse Effect.SECTION 5.05 Maintenance of Properties; Insurance; Casualty and Condemnation .(a) Each Loan Party will, and will cause each Subsidiary to, (i) keep and maintain all property material to theconduct of its business in good working order and condition, ordinary wear and tear excepted, and (ii) maintain, with financiallysound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained bycompanies engaged in the same or similar businesses operating in the same or similar locations.(b) The Borrower will furnish to the Administrative Agent and the Lenders prompt written notice of any casualtyor other insured damage to any material portion of the Collateral or the commencement of any action or proceeding for the taking ofany material portion of the Collateral or interest therein under power of eminent domain or by condemnation or similar proceeding.SECTION 5.06 Books and Records; Inspection Rights . Each Loan Party will, and will cause each Subsidiary to, (i) keep properbooks of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business andactivities and (ii) permit any representatives designated by the Administrative Agent (or following any Event of Default, any Lender)(including employees of the Administrative Agent, such Lender or any consultants, accountants, lawyers, appraisers and field examinersretained by the Administrative Agent), upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from itsbooks and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable timesand as often as reasonably requested; provided , that the Borrower shall not be required to reimburse the Administrative Agent or any Lenderfor the cost of more than one such visit during any year, except during the occurrence and continuation of an Event of Default. The LoanParties acknowledge that the Administrative Agent, after exercising its rights of inspection, may prepare and distribute to the Lenders certainreports pertaining to the Loan Parties’ assets for internal use by the Administrative Agent and the Lenders. Notwithstanding anything to thecontrary in this Section 5.06 , neither the Borrower nor any other Loan Party will be required to disclose, permit the inspection, examinationor making copies or abstracts of, or discussion of, any document, information or other matter in respect of which disclosure to theAdministrative Agent or any Lender (or their respective representatives or contractors) is prohibited by applicable law or any bindingagreement (not entered into in contemplation of any request for disclosure or otherwise to evade the disclosure requirements contained in thisSection 5.06 ), or is subject to attorney client privilege or that constitutes attorney work product (in each case, as determined in good faith bylegal counsel to any Loan Party and not in contemplation of any request for disclosure or otherwise to evade the disclosure requirementscontained in this Section 5.06 ); it being understood that the Borrower shall use its commercially reasonable efforts to communicate anyrequested information in a way that would not violate the applicable law or agreement or waive the applicable privilege.SECTION 5.07 Compliance with Laws . Each Loan Party will, and will cause each Subsidiary to, comply with all Requirements ofLaw applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected toresult in a Material Adverse Effect.SECTION 5.08 Use of Proceeds .(a) The proceeds of the Loans will be used on the Effective Date to consummate the Refinancing and otherwiseused for working capital and general corporate purposes including Permitted Acquisitions. No part of the proceeds of any Loan andno Letter of Credit will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations ofthe Board, including Regulations T, U and X.(b) The Borrower will not request any Borrowing or Letter of Credit, and the Borrower shall not use, and shallprocure that its Subsidiaries and its and their respective directors, officers, employees and agents shall not use, the proceeds of anyBorrowing or Letter of Credit (a) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving ofmoney, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (b) for the purpose of funding, financingor facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (c) in anymanner that would result in the violation of any Sanctions applicable to any party hereto.SECTION 5.09 Additional Collateral; Further Assurances .(a) Subject to applicable law, the Borrower and each other Loan Party shall cause each of its wholly-ownedMaterial Domestic Subsidiaries formed or acquired on or after the date of this Agreement in accordance with the terms of thisAgreement to become a Loan Party, within 30 days (or such later date as the Administrative Agent may agree) after the date of suchformation or acquisition, by executing the Joinder Agreement set forth as Exhibit C hereto (the “ Joinder Agreement ”). Uponexecution and delivery thereof, each such Person shall automatically become a Loan Guarantor hereunder and thereupon shall haveall of the rights, benefits, duties, and obligations in such capacity under the Loan Documents.(b) Subject to applicable law, the Borrower and other Loan Party shall cause each of its wholly-owned MaterialDomestic Subsidiaries formed or acquired after the date of this Agreement in accordance with the terms of this Agreement and eachSubsidiary who hereafter becomes a Material Domestic Subsidiary, in each case, within 30 days (or such later date as theAdministrative Agent may agree) after the date of such formation or acquisition (or after the date on which such Subsidiary becomesa Material Domestic Subsidiary, as applicable) to execute a joinder to the Security Agreement, pursuant to which such MaterialDomestic Subsidiary shall grant Liens to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders, inany property of such Loan Party which constitutes Collateral.(c) Subject to the foregoing clauses (a) and (b) , the Borrower and each other Material Domestic Subsidiary willcause (i) 100% of the issued and outstanding Equity Interests of each of its domestic Subsidiaries and (ii) 65% of the issued andoutstanding Equity Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued andoutstanding Equity Interests not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) in each Material ForeignSubsidiary (including any Subsidiary who becomes a Material Foreign Subsidiary after the Effective Date) directly owned by theBorrower or any Material Domestic Subsidiary to be subject at all times to a first priority, perfected Lien in favor of theAdministrative Agent pursuant to the terms and conditions of the Loan Documents or other security documents as the AdministrativeAgent shall reasonably request.(d) Without limiting the foregoing, each Loan Party will, and will cause each Subsidiary to, execute and deliver,or cause to be executed and delivered, to the Administrative Agent such documents, agreements and instruments, and will take orcause to be taken such further actions (including the filing and recording of financing statements and other documents and such otheractions or deliveries of the type required by Section 4.01 , as applicable), which may be required by law or which the AdministrativeAgent may, from time to time, reasonably request to carry out the terms and conditions of this Agreement and the other LoanDocuments and, to the extent required by the Security Agreement, to ensure perfection and priority of the Liens created or intendedto be created by the Collateral Documents, all at the expense of the Loan Parties.ARTICLE VI NEGATIVE COVENANTSUntil the Commitments have expired or terminated and the principal of and interest on each Loan and all fees, expenses and otheramounts payable under any Loan Document have been paid in full and all Letters of Credit have expired or terminated or been cashcollateralized and all LC Disbursements shall have been reimbursed (or cash collateralized on terms reasonably acceptable to theAdministrative Agent), the Loan Parties covenant and agree, jointly and severally, with the Lenders that:SECTION 6.01 Indebtedness . No Loan Party will, nor will it permit any Subsidiary to, create, incur or suffer to exist anyIndebtedness, except:(a) the Secured Obligations;(b) Indebtedness existing on the date hereof and set forth in Schedule 6.01 and extensions, renewals andreplacements of any such Indebtedness that do not increase the outstanding principal amount thereof;(c) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to the Borrower or any otherSubsidiary; provided , that (i) Indebtedness of any Subsidiary that is not a Loan Party to the Borrower or to any Subsidiary that is aLoan Party shall be subject to Section 6.04 and (ii) Indebtedness of the Borrower to any Subsidiary and Indebtedness of anySubsidiary that is a Loan Party to any Subsidiary that is not a Loan Party shall be subordinated to the Secured Obligations inaccordance with the terms set forth on Schedule 1.01 or otherwise on terms reasonably satisfactory to the Administrative Agent;(d) Guarantees by the Borrower of Indebtedness of any Subsidiary and by any Subsidiary of Indebtedness of theBorrower or any other Subsidiary; provided , that (i) the Indebtedness so Guaranteed is permitted by this Section 6.01 , (ii)Guarantees by the Borrower or any Subsidiary that is a Loan Party of Indebtedness of any Subsidiary that is not a Loan Party shallbe subject to Section 6.04 and (iii) Guarantees permitted under this clause (d) shall be subordinated to the Obligations on the sameterms as the Indebtedness so Guaranteed is subordinated to the Obligations;(e) Indebtedness of the Borrower or any Subsidiary incurred to finance the acquisition, construction orimprovement of any fixed or capital assets (whether or not constituting purchase money Indebtedness), including Capital LeaseObligations and any Indebtedness assumed in connection with the acquisition (including by way of any Permitted Acquisition) ofany such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions,renewals and replacements of any such Indebtedness in accordance with clause (f) hereof; provided , that, (i) such Indebtedness isincurred prior to or within 90 days after such acquisition or the completion of such construction or improvement and (ii) theaggregate principal amount of Indebtedness permitted by this clause (e) (including any refinancing thereof permitted by clause (f) )shall not exceed $20 million at any time outstanding;(f) Indebtedness which represents an extension, refinancing, or renewal of any of the Indebtedness described inclauses (b) and (e) hereof; provided , that, (i) the aggregate principal amount of such Indebtedness does not exceed the principalamount of such Indebtedness being refinancing plus the amount of any interest, premiums or penalties required to be paid plus feesand expenses associated therewith, (ii) any Liens securing such Indebtedness are not extended to any additional property of any LoanParty, (iii) no Loan Party that is not originally obligated (or required to become obligated) with respect to repayment of suchIndebtedness is required to become obligated with respect thereto, (iv) such extension, refinancing or renewal does not result in ashortening of the average weighted maturity of the Indebtedness so extended, refinanced or renewed, (v) the terms of any suchextension, refinancing, or renewal are not materially less favorable to the obligor thereunder than the original terms of suchIndebtedness, taken as a whole, and (vi) if the Indebtedness that is refinanced, renewed, or extended was subordinated in right ofpayment to the Secured Obligations, then the terms and conditions of the refinancing, renewal, or extension Indebtedness mustinclude subordination terms and conditions that are at least as favorable to the Administrative Agent and the Lenders as those thatwere applicable to the refinanced, renewed, or extended Indebtedness;(g) Indebtedness owed to any person providing workers’ compensation, health, disability or other employeebenefits or property, casualty or liability insurance, pursuant to reimbursement or indemnification obligations to such person, in eachcase incurred in the ordinary course of business;(h) Indebtedness of the Borrower or any Subsidiary in respect of performance bonds, bid bonds, appeal bonds,surety bonds and similar obligations, in each case provided in the ordinary course of business;(i) Subordinated Indebtedness of any Loan Party in an aggregate principal amount not exceeding $25 million atany time outstanding;(j) Indebtedness or Guarantees of the Borrower or any Subsidiary in connection with any Swap Agreementpermitted under Section 6.06 ;(k) Indebtedness arising from customary agreements providing for indemnification, adjustment of purchase price,earnout, deferred purchase price or similar obligations in connection with acquisitions or dispositions of any business or assets by orof the Borrower or any Subsidiary permitted hereunder;(l) Judgments entered against the Borrower or any Subsidiary to the extent not constituting an Event of Default;(m) Indebtedness or Guarantees incurred in the ordinary course of business in connection with cash pooling,netting and cash management arrangements consisting of overdrafts or similar arrangements, providing that any such Indebtednessdoes not consist of Indebtedness for borrowed money and is owed to the financial institutions providing such arrangements and suchIndebtedness is extinguished within five (5) Business Days following the Borrower or any Subsidiary becoming aware of theincurrence thereof;(n) Indebtedness of foreign Subsidiaries to finance the working capital needs of such foreign Subsidiaries;provided , that the aggregate outstanding principal amount of such Indebtedness shall not exceed $20 million (or the equivalentthereof) at any time;(o) Indebtedness owed to sellers constituting consideration for Permitted Acquisitions;(p) Indebtedness of a Person or Indebtedness attaching to assets of a Person that, in either case, becomes aSubsidiary or Indebtedness attaching to assets that are acquired by Borrower or any of its Subsidiaries, in each case as the result of aPermitted Acquisition; provided , that such Indebtedness existed at the time such Person became a Subsidiary or at the time suchassets were acquired and, in each case, was not created in anticipation thereof;(q) Indebtedness or Guarantees in an aggregate amount not exceeding $1 million consisting of reimbursementobligations owed to banks providing the Borrower or any of its Subsidiaries with backstop, letter of credit, guarantee or equivalentservices in connection with its leased properties;(r) Indebtedness of the Borrower or any Subsidiary in connection with any Guarantees given by them, or anyletters of credit or bank guarantees issued by any bank or financial institution, in favor of any Governmental Authority to secure thepayment of Taxes owed by the Borrower or any Subsidiary to such Governmental Authorities;(s) Indebtedness of the Borrower or any Subsidiary owed to sublessees in respect of security deposits or advancesheld by the Borrower or any Subsidiary in connection with the subletting to such sublessees of any leasehold interests of theBorrower or any Subsidiary;(t) Indebtedness of the Borrower or any Subsidiary in respect of Capital Lease Obligations incurred in connectionwith employee vehicle financing arrangements in India; and(u) other Indebtedness in an aggregate principal amount not exceeding $20 million at any time outstanding.SECTION 6.02 Liens . No Loan Party will, nor will it permit any Subsidiary to, create, incur, assume or permit to exist any Lienon any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) orrights in respect of any thereof, except:(a) Liens created pursuant to any Loan Document;(b) Permitted Encumbrances;(c) any Lien on any property or asset of the Borrower or any Subsidiary existing on the date hereof and set forth inSchedule 6.02 ; provided , that (i) such Lien shall not apply to any other property or asset of the Borrower or such Subsidiary and (ii)such Lien shall secure only those obligations which it secures on the date hereof and extensions, renewals and replacements thereofthat do not increase the outstanding principal amount thereof;(d) any Lien existing on any property or asset prior to the acquisition thereof (including by way of any PermittedAcquisition) by the Borrower or any Subsidiary or existing on any property or asset of any Person that becomes a Subsidiary afterthe date hereof prior to the time such Person becomes a Subsidiary; provided , that (i) such Lien is not created in contemplation of orin connection with such acquisition or such Person becoming a Subsidiary , as the case may be, (ii) such Lien shall not apply to anyother property or assets of the Borrower or any Subsidiary and (iii) such Lien shall secure only those obligations which it secures onthe date of such acquisition or the date such Person becomes a Subsidiary, as the case may be and extensions, renewals andreplacements thereof that do not increase the outstanding principal amount thereof;(e) Liens on fixed or capital assets acquired, constructed or improved by the Borrower or any Subsidiary;provided , that (i) such security interests secure Indebtedness permitted by clause (e) or clause (t) of Section 6.01 , (ii) such securityinterests and the Indebtedness secured thereby are incurred prior to or within 90 days after such acquisition or the completion of suchconstruction or improvement, (iii) the Indebtedness secured thereby does not exceed 110% of the cost of acquiring, constructing orimproving such fixed or capital assets and (iv) such security interests shall not apply to any other property or assets of the Borroweror Subsidiary;(f) Liens of a collecting bank arising in the ordinary course of business under Section 4‑208 of the UniformCommercial Code in effect in the relevant jurisdiction covering only the items being collected upon;(g) Liens granted by a Subsidiary that is not a Loan Party in favor of the Borrower or another Loan Party inrespect of Indebtedness owed by such Subsidiary;(h) Liens arising by operation of law under Article 2 of the Uniform Commercial Code in favor of a reclaimingseller of goods or buyer of goods;(i) broker’s Liens, bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash andCash Equivalents on deposit in one or more accounts maintained by the Borrower or any Subsidiary, in each case, granted in theordinary course of business in favor of the bank or banks with which such accounts are maintained, including any such Liens orrights of setoff securing amounts owing in the ordinary course of business to such bank with respect to cash management andoperating account arrangements, including those involving pooled accounts and netting arrangements;(j) licenses, sub-licenses and other similar encumbrances incurred in the ordinary course of business that do notmaterially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business ofthe Borrower or any Subsidiary;(k) Liens on assets of foreign Subsidiaries to secure Indebtedness of such foreign Subsidiaries permitted underSection 6.01(n) ;(l) Liens on cash or Cash Equivalents constituting earnest money deposits made by the Borrower or anySubsidiary in connection with any letter of intent or purchase agreement for a Permitted Acquisition;(m) Liens on cash collateral securing the Indebtedness described in Section 6.01(q) ;(n) Liens on cash collateral of foreign Subsidiaries securing the Indebtedness described in Section 6.01(r) ; and(o) Liens on cash collateral to secure any Swap Agreement permitted under Section 6.06 , so long as the aggregateamount of such cash collateral does not, as of any date of determination, exceed $20 million.SECTION 6.03 Fundamental Changes .(a) No Loan Party will, nor will it permit any Subsidiary to, merge into or consolidate with any other Person, orpermit any other Person to merge into or consolidate with it, sell, transfer, lease or otherwise dispose of (in one transaction or in aseries of transactions) all or substantially all of its assets, or all or substantially all of the stock of any of its Subsidiaries (in eachcase, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately aftergiving effect thereto no Event of Default shall have occurred and be continuing (i) any Subsidiary of the Borrower may merge intothe Borrower in a transaction in which the Borrower is the surviving corporation, (ii) any Subsidiary may merge into any Loan Partyin a transaction in which the surviving entity is a Loan Party, (iii) any Person may merge into any Loan Party or any of itsSubsidiaries in connection with a Permitted Acquisition so long as, in the case of a merger involving any Loan Party or MaterialForeign Subsidiary, such Loan Party or Material Foreign Subsidiary is the surviving entity, (iv) any Subsidiary may sell, transfer,lease or otherwise dispose of its assets to the Borrower or to another Subsidiary and (v) any Subsidiary that is not a Loan Party mayliquidate or dissolve if the Loan Party which owns such Subsidiary determines in good faith that such liquidation or dissolution is inthe best interests of such Loan Party and is not materially disadvantageous to the Lenders; provided , that any such merger involvinga Person that is not a wholly owned Subsidiary immediately prior to such merger shall not be permitted unless also permitted bySection 6.04 .Notwithstanding anything to the contrary in the foregoing, each Loan Party and each of its Subsidiaries shall be permitted to enterinto an agreement to effect any transaction of merger or consolidation that is not otherwise permitted under this Section 6.03 at a future time;provided , that such agreement shall be conditioned on (i) obtaining requisite approvals permitting the respective transaction (and any relatedfinancing or other transactions) in accordance with the requirements of Section 9.02 or (ii) the satisfaction and discharge of all outstandingObligations under this Agreement and the other Loan Documents; provided further that such agreement shall (x) not contain any provisionimposing fees or damages on any Loan Party or its Subsidiary for failure to meet the conditions set forth above and (y) contain terminationprovisions which will provide for the termination of the agreement within a reasonable time if the conditions described in the precedingproviso have not been satisfied by such time.(b) No Loan Party will, nor will it permit any of its Subsidiaries to, engage to any material extent in any businessother than businesses of the type conducted by the Borrower and its Subsidiaries on the date of execution of this Agreement andbusinesses which are, in the good faith judgment of the Board of Directors, similar, complimentary or substantially related thereto orare reasonable extensions thereof.(c) The Borrower will not change its fiscal year which currently ends on December 31 of each year.SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions . No Loan Party will, nor will it permit any Subsidiaryto, purchase, hold or acquire (including pursuant to any merger withany Person that was not a Loan Party and a wholly owned Subsidiary prior to such merger) any capital stock, evidences of indebtedness orother securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advancesto, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person, or purchase or otherwiseacquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit, except:(a) investments in cash and Cash Equivalents;(b) investments in existence on the date of this Agreement and described in Schedule 6.04 ;(c) investments by the Borrower and its Subsidiaries in the capital stock of their respective Subsidiaries; provided, that the aggregate amount of investments (together with the aggregate amount of loans and advances described in Section 6.04(d) ),as of any date of determination, made by the Borrower or the other Loan Parties in the capital stock of their respective Subsidiarieswho are not Loan Parties does not at any time exceed an amount equal to 50% of the EBITDA for the period of four consecutivefiscal quarters having most recently ended prior to such date of determination and for which financial statements are available (withthe amount of any such investments being the original cost of such investment, less all repayments, returns, dividends anddistributions, in each case received in cash in respect of such investment and less all liabilities effectively assumed by a person otherthan any Loan Party or any Subsidiary thereof in connection with the sale of any such investment);(d) loans or advances made by the Borrower or any of its Subsidiaries to the Borrower or any other Subsidiary;provided , that the aggregate amount of loans and advances (together with the aggregate amount of investments described in Section6.04(c) ) made by the Borrower or the other Loan Parties to Subsidiaries who are not Loan Parties that are at any time outstandingdoes not, as of any date of determination, exceed an amount equal to 50% of the EBITDA for the period of four consecutive fiscalquarters having most recently ended prior to such date of determination and for which financial statements are available;(e) Guarantees constituting Indebtedness permitted by Section 6.01 ;(f) Permitted Acquisitions;(g) loans and advances to employees of the Borrower or any Subsidiaries in the ordinary course of business(including for travel, entertainment and relocation expenses and to finance the purchase of Equity Interests of the Borrower) in anaggregate amount for the Borrower and its Subsidiaries not to exceed $5 million at any time outstanding;(h) investments received in connection with the bankruptcy or reorganization of any Person or in settlement ofobligations of, or disputes with, any Person arising in the ordinary course of business;(i) Swap Agreements permitted by Section 6.06 ;(j) Transfer Pricing Transactions;(k) investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arisingfrom the grant of trade credit in the ordinary course of business;(l) to the extent constituting investments, performance guarantees of obligations of the Borrower’s Subsidiaries inthe ordinary course of business; and(m) in addition to investments otherwise expressly permitted by this Section 6.04 , investments, loans andadvances by the Borrower or any of its Subsidiaries in an aggregate amount (valued at cost) not to exceed $30 million during theterm of this Agreement.SECTION 6.05 Asset Dispositions; Sale and Leaseback Transactions .(a) No Loan Party will, nor will it permit any Subsidiary to, make any Disposition except:(i) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary courseof business;(ii) Dispositions (including non-exclusive licenses) of inventory in the ordinary course of business;(iii) Dispositions of equipment or real property to the extent that (A) such property is exchanged for credit againstthe purchase price of similar replacement property or (B) the proceeds of such Disposition are reasonably promptly applied to thepurchase price of such replacement property;(iv) Dispositions of property by Borrower to any Subsidiary and by any Subsidiary to Borrower or any otherSubsidiary; provided , that if such property is subject to any Lien under any Collateral Document prior to any such Disposition, suchproperty shall remain subject to valid and perfected Liens under the Collateral Documents after such Disposition;(v) Dispositions permitted by Sections 6.03 , 6.04 , 6.05(b) , 6.07 and 6.08 ;(vi) Dispositions of overdue accounts receivable solely in connection with the collection or compromise thereof;(vii) Dispositions pursuant to operating leases (not in connection with any sale and leaseback transactions or otherCapital Lease Obligations) entered into in the ordinary course of business;(viii) Dispositions of property and assets subject to condemnation and casualty events;(ix) Dispositions of cash and Cash Equivalents in the ordinary course of business;(x) Dispositions by Borrower and any Subsidiary not otherwise permitted under this Section 6.05(a) ; provided ,that (A) at the time of such Disposition, no Default shall exist or would result from such Disposition, and (B) the aggregate fairmarket value of all property Disposed of in reliance on this subclause (x) in any fiscal year (or in the case of any Disposition forwhich thefair market value cannot reasonably be determined, the aggregate purchase price therefor) shall not exceed $10 million; and(xi) Dispositions pursuant to any Transfer Pricing Transactions;provided , however , that any Disposition pursuant to Section 6.05(a)(i) through (a)(iii), Section 6.05(a)(v) (except insofar as it relates to anytransaction solely between the Borrower and any Subsidiary or Section 6.07 ), Section 6.05(a)(vi) (except to the extent determined by theapplicable Person making such Disposition in good faith to be appropriate in accordance with its usual practice), Section 6.05(a)(vii) andSection 6.05(a)(x) shall be for fair market value (or, in respect of Section 6.05(a)(x) , where the fair market value cannot reasonably bedetermined, such disposition shall otherwise be in accordance with the terms of Section 6.05(a)(x) ).(b) No Loan Party will, nor will it permit any Subsidiary to, enter into any arrangement, directly or indirectly,whereby it shall sell or transfer any owned property, real or personal, used or useful in its business, whether now owned or hereafteracquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose orpurposes as the property sold or transferred, except for any such sale of any fixed or capital assets by any Borrower or anySubsidiary that is made for cash consideration in an amount not less than the fair market value of such fixed or capital asset and isconsummated within 90 days after such Borrower or such Subsidiary acquires or completes the construction of such fixed or capitalasset.SECTION 6.06 Swap Agreements . No Loan Party will, nor will it permit any Subsidiary to, enter into any Swap Agreement,except (a) Swap Agreements entered into to hedge or mitigate risks (including foreign currency exchange risks) to which the Borrower or anySubsidiary has actual or reasonably anticipated exposure (other than those in respect of Equity Interests of the Borrower or any of itsSubsidiaries), and (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates,from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of the Borrower or anySubsidiary.SECTION 6.07 Restricted Payments . No Loan Party will, nor will it permit any Subsidiary to, declare or make, or agree to pay ormake, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except:(a) the Borrower may declare and pay dividends with respect to its common stock payable solely in additionalshares of its common stock, and, with respect to its preferred stock, payable solely in additional shares of such preferred stock or inshares of its common stock, and (ii) Subsidiaries may declare and pay dividends ratably with respect to their Equity Interests;(b) without limitation of the exception in clause (c) of this Section 6.07 , so long as the Total Leverage Ratio isless than 1.50 to 1.00 after giving effect thereto, and no Event of Default has occurred and is continuing, other Restricted Paymentspaid to shareholders of the Borrower;(c) Restricted Payments paid in cash to shareholders of the Borrower, whether in connection with a share buybackplan or otherwise, so long as (i) no Event of Default has occurred and is continuing, (ii) the aggregate annual amount of suchRestricted Payments after the Effective Date does not exceed 50% of the previous fiscal year’s EBITDA for any fiscal year, and (iii)the aggregate annual amount of such Restricted Payments (together with (A) the aggregate outstandingamount of investments described in Section 6.04(c) and (B) the aggregate outstanding amount of loans and advances described inSection 6.04(d) ) does not exceed 75% of the previous fiscal year’s EBITDA for any fiscal year;(d) issuances of Equity Interests to sellers of Permitted Acquisitions in satisfaction of obligations of the typedescribed in Section 6.01(k) ; and(e) the Borrower may repurchase, redeem, retire or otherwise acquire for value Equity Interests (including anystock appreciation rights in respect thereof) of the Borrower from current or former employees or directors; provided , that theaggregate annual cash payments in respect of such repurchases, redemptions, retirements and acquisitions shall not exceed $10million.SECTION 6.08 Transactions with Affiliates . No Loan Party will, nor will it permit any Subsidiary to, sell, lease or otherwisetransfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any othertransactions with, any of its Affiliates, except (a) transactions that (i) are in the ordinary course of business and (ii) are at prices and on termsand conditions not less favorable to such Loan Party or such Subsidiary than could be obtained on an arm’s-length basis from unrelated thirdparties, (b) transactions between or among the Borrower and any Subsidiary not involving any other Affiliate, (c) any Restricted Paymentpermitted by Section 6.07 , (d) reasonable and customary director, officer and employee compensation (including bonuses) and other benefits(including retirement, health, stock option and other benefit plans) and indemnification arrangements, (e) Transfer Pricing Transactions, and(f) transactions described in Schedule 6.08 .SECTION 6.09 Restrictive Agreements . No Loan Party will, nor will it permit any Subsidiary to, directly or indirectly, enter into,incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of such LoanParty or any of its Subsidiaries to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of anySubsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to theBorrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other Subsidiary; except for: (i) such encumbrances orrestrictions existing under or by reason of applicable law or any Loan Document; (ii) restrictions and conditions existing on the date hereofidentified on Schedule 6.09 (but not including any extension or renewal of, or any amendment or modification expanding the scope of, anysuch restriction or condition); (iii) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary or otherproperty pending such sale, provided such restrictions and conditions apply only to the Subsidiary or other property that is to be sold and suchsale is permitted hereunder; (iv) restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by thisAgreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness; (v) customary provisions inleases and other contracts restricting the assignment thereof; (vi) customary restrictions contained in any software licenses; (vii) withoutaffecting the Loan Parties’ obligations under Section 5.09 , customary provisions in the organizational documents of a Person or asset sale orstock sale agreements or similar agreements which restrict the transfer of ownership in such Person; (viii) in the case of any joint venturepermitted hereunder with a Person that is not a Loan Party, restrictions in such Person’s organizational documents or pursuant to any jointventure agreement or stockholders agreement solely to the extent of the Equity Interests of or property held in the subject joint venture; (ix)restrictions imposed by any holder of a Lien permitted by Section 6.02 restricting the transfer of the property subject thereto; (x) withoutaffecting the Loan Parties’ obligations under Section 5.09 , any agreement in effect at the time a Person becomes a Subsidiary of theBorrower (including any amendments thereto that are otherwise permitted by the Loan Documents and that are no more materially restrictivewith respect to such encumbrances and restrictions than those prior to such amendment or refinancing), so long as such agreement was notenteredinto in connection with or in contemplation of such person becoming a Subsidiary of Borrower and imposes restrictions only on such Personand its assets; (xi) restrictions on cash or other deposits required by suppliers or landlords under contracts entered into in the ordinary courseof business; or (xii) without affecting the Loan Parties’ obligations under Section 5.09 , restrictions imposed solely on foreign Subsidiariespursuant to any Swap Agreement entered into by the Borrower or any Subsidiary and permitted pursuant to Section 6.06 .SECTION 6.10 Amendment of Material Documents . No Loan Party will, nor will it permit any Subsidiary to, amend, modify orwaive any of its rights under its certificate of incorporation, by-laws, operating, management or partnership agreement or other organizationaldocuments, to the extent any such amendment, modification or waiver would be materially adverse to the Lenders as reasonably determinedby the Administrative Agent.SECTION 6.11 Financial Covenants .(a) Interest Coverage Ratio . The Borrower will not permit the Interest Coverage Ratio, determined for the fourconsecutive fiscal quarter period ending on the last day of each fiscal quarter, to be less than 3.50 to 1.00.(b) Total Net Leverage Ratio . The Borrower will not permit the Total Net Leverage Ratio, determined for thefour consecutive fiscal quarter period ending on the last day of each fiscal quarter, to be greater than 3.00 to 1.00.ARTICLE VII EVENTS OF DEFAULTIf any of the following events (each an “ Event of Default ”) shall occur and be continuing:(a) the Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LCDisbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepaymentthereof or otherwise;(b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amountreferred to in clause (a) of this Article VII ) payable under this Agreement, when and as the same shall become due and payable, andsuch failure shall continue unremedied for a period of five Business Days;(c) any representation or warranty made or deemed made by or on behalf of any Loan Party or any Subsidiary inor in connection with this Agreement or any Loan Document or any amendment or modification thereof or waiver thereunder, or inany report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any LoanDocument or any amendment or modification thereof or waiver thereunder, shall prove to have been materially incorrect when madeor deemed made (unless, in the case of any such representation and warranty made pursuant to Section 3.13 of this Agreement orSection 3.1 of the Security Agreement, such misstatement was made with respect to Collateral having a book value not exceeding $2million);(d) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained inSection 5.02(a) , 5.03 (with respect to maintaining a Loan Party’s existence), 5.08 , 5.09(a) or 5.09(b) or in Article VI ;(e) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in thisAgreement (other than those which constitute a default under another Section of this Article VII ), and such failure shall continueunremedied for a period of 30 days after the earlier of any Loan Party’s knowledge of such breach or notice thereof from theAdministrative Agent (which notice will be given at the request of any Lender) if such breach relates to terms or provisions of anyother Section of this Agreement;(f) any Loan Party or any Subsidiary shall fail to make any payment (whether of principal or interest andregardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable;(g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduledmaturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of anyMaterial Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to requirethe prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided , that this clause (g) shall notapply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing suchIndebtedness;(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation,reorganization or other relief in respect of a Loan Party or any Material Foreign Subsidiary or its debts, or of a substantial part of itsassets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) theappointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or any Material ForeignSubsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for60 days (or 90 days in the case of any Material Foreign Subsidiary) or an order or decree approving or ordering any of the foregoingshall be entered;(i) any Loan Party or any Material Foreign Subsidiary shall (i) voluntarily commence any proceeding or file anypetition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership orsimilar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, anyproceeding or petition described in clause (h) of this Article VII , (iii) apply for or consent to the appointment of a receiver, trustee,custodian, sequestrator, conservator or similar official for such Loan Party or Material Foreign Subsidiary or for a substantial part ofits assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make ageneral assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;(j) any Loan Party or any Subsidiary of any Loan Party shall become unable, admit in writing its inability or failgenerally to pay its debts as they become due;(k) one or more judgments for the payment of money in an aggregate amount in excess of $10 million (not paid orfully covered by insurance company as to which the relevant insurance company has acknowledged coverage) shall be renderedagainst any Loan Party, anySubsidiary of any Loan Party or any combination thereof and the same shall remain undischarged for a period of 30 consecutivedays during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach orlevy upon any assets of any Loan Party or any Subsidiary of any Loan Party to enforce any such judgment;(l) an ERISA Event shall have occurred that, when taken together with all other ERISA Events that have occurred,could reasonably be expected to result in aggregate liability of the Borrower and its Subsidiaries in excess of $10 million;(m) a Change in Control shall occur;(n) the occurrence of any “default”, as defined in any Loan Document (other than this Agreement) or the breachof any of the terms or provisions of any Loan Document (other than this Agreement), which default or breach continues beyond anyperiod of grace therein provided;(o) the Loan Guaranty shall fail to remain in full force or effect or any action shall be taken to discontinue or toassert the invalidity or unenforceability of the Loan Guaranty or any Loan Guarantor shall deny that it has any further liability underthe Loan Guaranty to which it is a party, or shall give notice to such effect;(p) any Collateral Document shall for any reason fail to create a valid and perfected first priority security interestin any Collateral purported to be covered thereby (other than with respect to Collateral having a book value not exceeding $2million), except (A) as permitted by the terms of any Collateral Document or other Loan Document or (B) as a result of theAdministrative Agent’s failure to (1) maintain possession of any stock certificates, promissory notes or other instruments deliveredto it under the Collateral Documents, or (2) file Uniform Commercial Code continuation statements, (ii) any material provision ofany Collateral Document shall fail to remain in full force or effect or (iii) any action shall be taken to discontinue or to assert theinvalidity or unenforceability of any Collateral Document; or(q) any material provision of any Loan Document for any reason ceases to be valid, binding and enforceable inaccordance with its terms (or any Loan Party shall challenge the enforceability of any Loan Document or shall assert in writing, orengage in any action or inaction based on any such assertion, that any provision of any of the Loan Documents has ceased to be orotherwise is not valid, binding and enforceable in accordance with its terms)then, and in every such event (other than an event with respect to the Borrower described in clause (h) or (i) of this Article VII ), and at anytime thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, bynotice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, andthereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or inpart, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon theprincipal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of theBorrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind,all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (h) or (i) of thisArticle VII , the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interestthereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, withoutpresentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. Upon the occurrence and thecontinuance of an Event of Default, the Administrative Agent may, and at the request of the Required Lenders shall, exercise any rights andremedies provided to the Administrative Agent under the Loan Documents or at law or equity, including all remedies provided under theUCC.ARTICLE VIII THE ADMINISTRATIVE AGENTSECTION 8.01 Appointment . Each of the Lenders, on behalf of itself and any of its Affiliates that are Secured Parties and theIssuing Banks hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actionson its behalf, including execution of the other Loan Documents, and to exercise such powers as are delegated to the Administrative Agent bythe terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. In addition, to the extentrequired under the laws of any jurisdiction other than the U.S., each of the Lenders and the Issuing Bank hereby grants to the AdministrativeAgent any required powers of attorney to execute any Collateral Document governed by the laws of such jurisdiction on such Lender’s orIssuing Bank’s behalf. The provisions of this Article VIII are solely for the benefit of the Administrative Agent and the Lenders (includingthe Issuing Bank), and the Loan Parties shall not have rights as a third party beneficiary of any of such provisions. It is understood and agreedthat the use of the term “agent” as used herein or in any other Loan Documents (or any similar term) with reference to the AdministrativeAgent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law.Instead, such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship betweenindependent contracting parties.SECTION 8.02 Rights as a Lender . The bank serving as the Administrative Agent hereunder shall have the same rights andpowers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and suchbank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Loan Parties or anySubsidiary of a Loan Party or other Affiliate thereof as if it were not the Administrative Agent hereunder.SECTION 8.03 Duties and Obligations . The Administrative Agent shall not have any duties or obligations except those expresslyset forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to anyfiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not haveany duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplatedby the Loan Documents that the Administrative Agent is required to exercise in writing as directed by the Required Lenders (or such othernumber or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02 ), and (c) except as expresslyset forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure todisclose, any information relating to any Loan Party or any of its Subsidiaries that is communicated to or obtained by the bank serving asAdministrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken byit with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary underthe circumstances as provided in Section 9.02 ) or in the absence of its own gross negligence or willful misconduct as determined by a finalnonappealable judgment of a court of competent jurisdiction. The Administrative Agent shall be deemed not to have knowledge of anyDefault unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the AdministrativeAgent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warrantyor representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document deliveredhereunder or in connection with any Loan Document, (iii) the performance or observance of any of the covenants, agreements or other termsor conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or anyother agreement, instrument or document, (v) the creation, perfection or priority of Liens on the Collateral or the existence of the Collateral,or (vi) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of itemsexpressly required to be delivered to the Administrative Agent. None of the Lenders or other Persons identified on the facing page orsignature pages of this Agreement as a “syndication agent,” “documentation agent,” “lead arranger,” “bookrunner” or other similar term shallhave any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such.Without limiting the foregoing, none of the Lenders or other Persons so identified shall have or be deemed to have any fiduciary relationshipwith any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders or other Persons so identified indeciding to enter into this Agreement or in taking or not taking action hereunder.SECTION 8.04 Reliance . The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relyingupon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have beensigned or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone andbelieved by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consultwith legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liablefor any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.SECTION 8.05 Actions through Sub-Agents . The Administrative Agent may perform any and all of its duties and exercise itsrights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any suchsub-agent may perform any and all of its duties and exercise its rights and powers through their respective Related Parties. The exculpatoryprovisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any suchsub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well asactivities as Administrative Agent.SECTION 8.06 Resignation . Subject to the appointment and acceptance of a successor Administrative Agent as provided in thisparagraph, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing Banks and the Borrower. Upon any suchresignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor. If no successor shall havebeen so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agentgives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Banks, appoint asuccessor Administrative Agent which shall be a commercial bank or an Affiliate of any such commercial bank. Upon the acceptance of itsappointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights,powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its dutiesand obligations hereunder and under the other Loan Documents. The fees payable by the Borrower to a successor Administrative Agent shallbe the same as those payable to its predecessor, unless otherwise agreed by the Borrower and such successor. Notwithstanding the foregoing,in the event no successor Administrative Agent shall have been so appointed and shall have accepted such appointment within thirty (30)days after the retiring Administrative Agent gives notice of its intent to resign, the retiring Administrative Agent may give notice of theeffectiveness of its resignation to the Lenders, the Issuing Banks and the Borrower, whereupon, on the date of effectiveness of suchresignationstated in such notice, (a) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the otherLoan Documents; provided , that, solely for purposes of maintaining any security interest granted to the Administrative Agent under anyCollateral Document for the benefit of the Secured Parties, the retiring Administrative Agent shall continue to be vested with such securityinterest as collateral agent for the benefit of the Secured Parties and, in the case of any Collateral in the possession of the AdministrativeAgent, shall continue to hold such Collateral, in each case until such time as a successor Administrative Agent is appointed and accepts suchappointment in accordance with this paragraph (it being understood and agreed that the retiring Administrative Agent shall have no duty orobligation to take any further action under any Collateral Document, including any action required to maintain the perfection of any suchsecurity interest), and (b) the Required Lenders shall succeed to and become vested with all the rights, powers, privileges and duties of theretiring Administrative Agent; provided , that (i) all payments required to be made hereunder or under any other Loan Document to theAdministrative Agent for the account of any Person other than the Administrative Agent shall be made directly to such Person and (ii) allnotices and other communications required or contemplated to be given or made to the Administrative Agent shall also directly be given ormade 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 , Section 2.17(d) and Section 9.03 , as well as any exculpatory, reimbursement and indemnificationprovisions set forth in any other Loan Document, shall continue in effect for the benefit of such retiring Administrative Agent, its sub‑agentsand their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as AdministrativeAgent and in respect of the matters referred to in the proviso under clause (a) above.SECTION 8.07 Non-Reliance .(a) Each Lender acknowledges and agrees that the extensions of credit made hereunder are commercial loans andletters of credit and not investments in a business enterprise or securities. Each Lender further represents that it is engaged inmaking, acquiring or holding commercial loans in the ordinary course of its business and has, independently and without relianceupon the Administrative Agent or any other Lender 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 shall, independently and without reliance upon the Administrative Agent or any other Lender and based on suchdocuments and information (which may contain material, non-public information within the meaning of the United States securitieslaws concerning the Borrower and its Affiliates) as it shall from time to time deem appropriate, continue to make its own decisionsin taking or not taking action under or based upon this Agreement, any other Loan Document, any related agreement or anydocument furnished hereunder or thereunder and in deciding whether or to the extent to which it will continue as a Lender or assignor otherwise transfer its rights, interests and obligations hereunder.(b) Each Lender hereby agrees that (i) it has requested a copy of each Report prepared by or on behalf of theAdministrative Agent; (ii) the Administrative Agent (A) makes no representation or warranty, express or implied, as to thecompleteness or accuracy of any Report or any of the information contained therein or any inaccuracy or omission contained in orrelating to a Report and (B) shall not be liable for any information contained in any Report; (iii) the Reports are not comprehensiveaudits or examinations, and that any Person performing any field examination will inspect only specific information regarding theLoan Parties and will rely significantly upon the Loan Parties’ books and records, as well as on representations of the Loan Parties’personnel and that the Administrative Agent undertakes no obligation to update, correct or supplement the Reports; (iv) it will keepall Reports confidential and strictly for its internal use, not share the Reportwith any Loan Party or any other Person except as otherwise permitted pursuant to this Agreement; and (v) without limiting thegenerality of any other indemnification provision contained in this Agreement, (A) it will hold the Administrative Agent and anysuch other Person preparing a Report harmless from any action the indemnifying Lender may take or conclusion the indemnifyingLender may reach or draw from any Report in connection with any extension of credit that the indemnifying Lender has made ormay make to the Borrower, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a Loan orLoans; and (B) it will pay and protect, and indemnify, defend, and hold the Administrative Agent and any such other Personpreparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts(including reasonable attorneys’ fees) incurred by the Administrative Agent or any such other Person as the direct or indirect resultof any third parties who might obtain all or part of any Report through the indemnifying Lender.SECTION 8.08 Not Partners or Co-Venturers; Administrative Agent as Representative of the Secured Parties .(a) The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or(except as otherwise set forth herein in case of the Administrative Agent) authorized to act for, any other Lender. The AdministrativeAgent shall have the exclusive right on behalf of the Lenders to enforce the payment of the principal of and interest on any Loanafter the date such principal or interest has become due and payable pursuant to the terms of this Agreement.(b) In its capacity, the Administrative Agent is a “representative” of the Secured Parties within the meaning of theterm “secured party” as defined in the New York Uniform Commercial Code. Each Lender (and other Secured Party by itsacceptance of the benefits of the Loan Documents) authorizes the Administrative Agent to enter into each of the CollateralDocuments to which it is a party and to take all action contemplated by such documents. Each Lender (and other Secured Party by itsacceptance of the benefits of the Loan Documents) agrees that no Secured Party (other than the Administrative Agent) shall have theright individually to seek to realize upon the security granted by any Collateral Document, it being understood and agreed that suchrights and remedies may be exercised solely by the Administrative Agent for the benefit of the Secured Parties upon the terms of theCollateral Documents. In the event that any Collateral is hereafter pledged by any Person as collateral security for the SecuredObligations, the Administrative Agent is hereby authorized, and hereby granted a power of attorney, to execute and deliver on behalfof the Secured Parties any Loan Documents necessary or appropriate to grant and perfect a Lien on such Collateral in favor of theAdministrative Agent on behalf of the Secured Parties.SECTION 8.09 Lenders Not Subject to ERISA . Each Lender as of the Effective Date represents and warrants to theAdministrative Agent, the Lead Arrangers and their respective Affiliates, and not, for the avoidance of doubt, for the benefit of the Borroweror any other Loan Party, that such Lender is not and will not be (a) an employee benefit plan subject to Title I of ERISA, (b) a plan or accountsubject to Section 4975 of the Code; (c) an entity deemed to hold “plan assets” of any such plans or accounts for purposes of ERISA or theCode; or (d) a “governmental plan” within the meaning of ERISA.ARTICLE IX MISCELLANEOUSSECTION 9.01 Notices .(a) Except in the case of notices and other communications expressly permitted to be given by telephone orElectronic Systems (and subject in each case to clause (b) below), all notices and other communications provided for herein shall bein writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by fax, asfollows:(i) if to any Loan Party, to the Borrower at:ExlService Holdings, Inc. 280 Park Avenue, 38th Floor New York, New York Attention: Executive Vice President General Counsel, Chief Compliance Officer E-mail Address: Nancy.Saltzman@exlservice.com Fax Number: (212) 624-5933with a copy to: Ropes & Gray LLP 1211 Avenue of the Americas New York, New York 10036 Attention: Sunil Savkar E-mail Address: Sunil.Savkar@ropesgray.com Fax Number: (646) 728-1533Ropes & Gray LLP 1211 Avenue of the Americas New York, New York 10036 Attention: Michael R. Littenberg E-mail Address: Michael.Littenberg@ropesgray.com Fax Number: (646) 728-2554(ii) if to the Administrative Agent or to Citi, in its capacity as Issuing Bank, to Citibank, N.A. at:Citibank, N.A. 1 Sansome Street, 22nd Floor San Francisco, CA 94104 Attention: Jim Haack, Technology, Media and Telecom Banking Group E-mail Address: James.Haack@citi.comwith a copy to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10036 Attention: Daniel S. Dokos E-mail Address: Daniel.Dokos@weil.com Fax Number: (212) 310-6862(iii) if to any other Lender, to it at its address or fax number set forth in its Administrative Questionnaire.All such notices and other communications (i) sent by hand or overnight courier service, or mailed by certified or registered mail, shall bedeemed to have been given when received, (ii) sent by fax shall be deemed to have been given when sent; provided , that if not given duringnormal business hours of the recipient, such notice or communication shall be deemed to have been given at the opening of business on thenext Business Day for the recipient or (iii) delivered through Electronic Systems to the extent provided in clause (b) below shall be effectiveas provided in such clause (b) .(b) Notices and other communications to the Lenders hereunder may be delivered or furnished by ElectronicSystems pursuant to procedures approved by the Administrative Agent; provided , that the foregoing shall not apply to noticespursuant to Article II or to compliance and no Event of Default certificates delivered pursuant to Section 5.01(d) unless otherwiseagreed by the Administrative Agent and the applicable Lender. Each of the Administrative Agent and the Borrower (on behalf of theLoan Parties) may, in its discretion, agree to accept notices and other communications to it hereunder by Electronic Systemspursuant to procedures approved by it; provided , that approval of such procedures may be limited to particular notices orcommunications. Unless the Administrative Agent otherwise proscribes, such notices and other communications (i) sent to an e-mailaddress shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the“return receipt requested” function, as available, return e-mail or other written acknowledgement); provided , that if not given duringthe normal business hours of the recipient, such notice or communication shall be deemed to have been given at the opening ofbusiness on the next Business Day for the recipient, and (ii) posted to an Internet or intranet website shall be deemed received uponthe deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (b)(i) of notification that suchnotice or communication is available and identifying the website address therefor; provided , that, for both clauses (i) and (ii) above,if such notice, e-mail or other communication is not sent during the normal business hours of the recipient, such notice orcommunication shall be deemed to have been sent at the opening of business on the next Business Day of the recipient.(c) Any party hereto may change its address, fax number or e-mail address for notices and other communicationshereunder by notice to the other parties hereto.(d) Electronic Systems .(i) Each Loan Party agrees that the Administrative Agent may, but shall not be obligated to, make Communications(as defined below) available to the Issuing Bank and the other Lenders by posting the Communications on Debt Domain, Intralinks,Syndtrak, ClearPar or a substantially similar Electronic System.(ii) Any Electronic System used by the Administrative Agent is provided “as is” and “as available.” The AgentParties (as defined below) do not warrant the adequacy of such Electronic Systems and expressly disclaim liability for errors oromissions in 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 anyAgent Party in connection with the Communications or any Electronic System. In no event shall the Administrative Agent or any ofits Related Parties (collectively, the “ Agent Parties ”) have any liability to the Borrower or the other Loan Parties, anyLender, the Issuing Bank or any other Person or entity for damages of any kind, including direct or indirect, special, incidental orconsequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of the Borrower’s, any Loan Party’s, orthe Administrative Agent’s transmission of communications through an Electronic System. “ Communications ” means, collectively,any notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant toany Loan Document or the transactions contemplated therein which is distributed by the Administrative Agent, any Lender or theIssuing Bank by means of electronic communications pursuant to this Section 9.01 , including through an Electronic System.SECTION 9.02 Waivers; Amendments .(a) No failure or delay by the Administrative Agent, any Issuing Bank or any Lender in exercising any right orpower hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of anysuch right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or furtherexercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Issuing Banksand the Lenders hereunder and under any other Loan Document are cumulative and are not exclusive of any rights or remedies thatthey would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Partytherefrom shall in any event be effective unless the same shall be permitted by clause (b) of this Section 9.02 , and then such waiveror consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of theforegoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless ofwhether 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 2.23 (with respect to any commitment increase), neither this Agreement nor anyother Loan Document nor any provision hereof or thereof may be waived, amended or modified except (i) in the case of thisAgreement, pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or, (ii) in thecase of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent andthe Loan Party or Loan Parties that are parties thereto, with the consent of the Required Lenders; provided , that no such agreementshall (i) increase the Commitment of any Lender without the written consent of such Lender (including any such Lender that is aDefaulting Lender), (ii) reduce or forgive the principal amount of any Loan or LC Disbursement or reduce the rate of interestthereon, or reduce or forgive any interest or fees payable hereunder, without the written consent of each Lender (including any suchLender that is a Defaulting Lender) directly affected thereby, (iii) postpone any scheduled date of payment of the principal amount ofany Loan or LC Disbursement, or any date for the payment of any interest, fees or other Obligations payable hereunder, or reducethe amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without thewritten consent of each Lender (including any such Lender that is a Defaulting Lender) directly affected thereby, (iv) change Section2.18(b) or (d) in a manner that would alter the manner in which payments are shared, without the written consent of each Lender(other than any Defaulting Lender), (v) change any of the provisions of this Section 9.02 or the definition of “Required Lenders” orany other provision of any Loan Document specifying the number or percentage of Lenders required to waive, amend or modify anyrights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (other thanany Defaulting Lender) directly affected thereby, (vi) change Section 2.20 , without the consent of each Lender (other than anyDefaulting Lender), (vii) release any Loan Guarantor from its obligation under its Loan Guaranty (except as otherwise permittedherein or in the other Loan Documents), without the written consent of each Lender (other than any Defaulting Lender), (ix) exceptas provided in clauses (d) and (e) of this Section 9.02 or in any Collateral Document, release all or substantially all of the Collateral,without the written consent of each Lender, or (x) increase the aggregate Commitments in excess of $100 million, without thewritten consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or dutiesof the Administrative Agent or the Issuing Banks hereunder without the prior written consent of the Administrative Agent or theIssuing Banks, as the case may be (it being understood that any change to Section 2.20 shall require the consent of theAdministrative Agent and the Issuing Banks). The Administrative Agent may also amend the Commitment Schedule to reflectassignments entered into pursuant to Section 9.04(c) The Lenders hereby irrevocably authorize the Administrative Agent, at its option and in its sole discretion, torelease any Liens granted to the Administrative Agent by the Loan Parties on any Collateral (i) upon the termination of the allCommitments, payment and satisfaction in full in cash of all Secured Obligations (other than Unliquidated Obligations), and the cashcollateralization of all Unliquidated Obligations in a manner satisfactory to each affected Lender, (ii) constituting property beingsold or disposed of if the Loan Party disposing of such property certifies to the Administrative Agent that the sale or disposition ismade in compliance with the terms of this Agreement (and the Administrative Agent may rely conclusively on any such certificate,without further inquiry), and to the extent that the property being sold or disposed of constitutes 100% of the Equity Interest of aSubsidiary, the Administrative Agent is authorized to release any Loan Guaranty provided by such Subsidiary, (iii) constitutingproperty leased to a Loan Party 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 theAdministrative Agent and the Lenders pursuant to Article VII . Except as provided in the preceding sentence, the AdministrativeAgent will not release any Liens on Collateral without the prior written authorization of the Required Lenders; provided , that theAdministrative Agent may, in its discretion, release its Liens on Collateral valued in the aggregate not in excess of $1 million duringany calendar year without the prior written authorization of the Required Lenders (it being agreed that the Administrative Agent mayrely conclusively on one or more certificates of the Borrower as to the value of any Collateral to be so released, without furtherinquiry). Any such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than thoseexpressly being released) upon (or obligations of the Loan Parties in respect of) all interests retained by the Loan Parties, includingthe proceeds of any sale, all of which shall continue to constitute part of the Collateral. Any execution and delivery by theAdministrative Agent of documents in connection with any such release shall be without recourse to or warranty by theAdministrative Agent.(d) If, in connection with any proposed amendment, waiver or consent requiring the consent of “each Lender” or“each Lender affected thereby,” the consent of the Required Lenders is obtained, but the consent of other necessary Lenders is notobtained (any such Lender whose consent is necessary but has not been obtained being referred to herein as a “ Non-ConsentingLender ”), then the Borrower 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 Borrower, theAdministrative Agent and the Issuing Bank shall agree, as of such date, to purchase for cash the Loans and other Obligations due tothe Non-Consenting Lender pursuant to an Assignment and Assumption and to become a Lender for all purposes under thisAgreement and to assume all obligations of the Non-Consenting Lender to beterminated as of such date and to comply with the requirements of clause (b) of Section 9.04 , and (ii) the Borrower shall pay to suchNon-Consenting Lender in same day funds on the day of such replacement (1) all interest, fees and other amounts then accrued butunpaid to such Non-Consenting Lender by the Borrower hereunder to and including the date of termination, including withoutlimitation payments due to such Non-Consenting Lender under Sections 2.15 and 2.17 , and (2) an amount, if any, equal to thepayment 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.(e) Notwithstanding anything to the contrary herein the Administrative Agent may, with the consent of theBorrower 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 Borrower shall pay (i) all reasonable and documented out‑of‑pocket expenses incurred by theAdministrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of outside counsel for theAdministrative Agent, in connection with the syndication and distribution (including, without limitation, via the internet or throughan Electronic System) of the credit facilities provided for herein, the preparation and administration of the Loan Documents or anyamendments, modifications or waivers of the provisions of the Loan Documents (whether or not the transactions contemplatedhereby or thereby shall be consummated), (ii) all reasonable and documented out-of-pocket expenses incurred by any Issuing Bankin connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and(iii) all documented out-of-pocket expenses incurred by the Administrative Agent, any Issuing Bank or any Lender, including thefees, charges and disbursements of any outside counsel for the Administrative Agent, any Issuing Bank or any Lender, in connectionwith the enforcement, collection or protection of its rights in connection with the Loan Documents, including its rights under thisSection 9.03 , or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of‑pocket expensesincurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit. Expenses being reimbursedby the Borrower under this Section 9.03 include, without limiting the generality of the foregoing, costs and expenses incurred inconnection with:(i) taxes, fees and other charges for (A) lien searches and (B) filing financing statements and continuations, andother actions to perfect, protect, and continue the Administrative Agent’s Liens;(ii) sums paid or incurred to take any action required of any Loan Party under the Loan Documents that such LoanParty fails to pay or take; and(iii) forwarding loan proceeds, collecting checks and other items of payment, and costs and expenses of preservingand protecting the Collateral.All of the foregoing costs and expenses may be charged to the Borrower as Loans or to another deposit account, all as described inSection 2.18(c) .(b) The Borrower shall indemnify the Administrative Agent, each Issuing Bank and each Lender, and eachRelated Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemniteeharmless from, any and all losses, claims,damages, penalties, liabilities and related expenses (except for taxes, which shall be covered by Sections 2.17 and 10.09 ), includingthe fees, charges and disbursements of any counsel for any Indemnitee (except during the continuation of an event of default and/orin connection with the enforcement of the Loan Documents, such legal expenses shall be limited to one counsel for all Indemniteestaken as a whole and, if reasonably necessary, a single local counsel for all Indemnitees taken as a whole in each relevant jurisdictionand, solely in the case of a conflict of interest, one additional counsel (and, if reasonably necessary, one firm of local counsel in eachrelevant jurisdiction) to each group of affected Indemnitees similarly situated taken as a whole), incurred by or asserted against anyIndemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of the Loan Documents or any agreementor instrument contemplated thereby, the performance by the parties hereto of their respective obligations thereunder or theconsummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of theproceeds therefrom (including any refusal by any Issuing Bank to honor a demand for payment under a Letter of Credit if thedocuments presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actualor alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of itsSubsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, (iv) the failure of theBorrower to deliver to the Administrative Agent the required receipts or other required documentary evidence with respect to apayment made by the Borrower for Indemnified Taxes or Other Taxes pursuant to Section 2.17 , or (v) any actual or prospectiveclaim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory andregardless of whether any Indemnitee is a party thereto; provided , that such indemnity shall not, as to any Indemnitee, be availableto the extent that such losses, claims, damages, penalties, liabilities or related expenses (x) are determined by a court of competentjurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of suchIndemnitee or any Related Indemnitee Party of such Indemnitee or (y) result from a claim brought by the Borrower or any of itsSubsidiaries against an Indemnitee or any Related Indemnitee Party of such Indemnitee for breach in bad faith of such Indemnitee’sobligations hereunder or under any other Loan Document, if the Borrower or such Subsidiary has obtained a final and non-appealable judgment in its favor on such claim as determined by a court of competent jurisdiction.(c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agentor any Issuing Bank under clause (a) or (b) of this Section 9.03 , each Lender severally agrees to pay to the Administrative Agent orsuch Issuing Bank, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicableunreimbursed expense or indemnity payment is sought) of such unpaid amount; provided , that the unreimbursed expense orindemnified loss, claim, damage, penalty, liability or related expense, as the case may be, was incurred by or asserted against theAdministrative Agent or such Issuing Bank in its capacity as such.(d) To the extent permitted by applicable law, no Loan Party shall assert, and each hereby waives, any claimagainst any Indemnitee for any damages arising from the use by unintended recipients of information or other materials obtainedthrough telecommunications, electronic or other information transmission systems (including the Internet), except as determined by acourt of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willfulmisconduct of such Indemnitee or any Related Indemnitee Party of such Indemnitee.(e) No Indemnitee nor any Loan Party shall be liable on any theory of liability, for special, indirect, consequentialor punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, anyother Loan Document, or any agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or Letter ofCredit or the use of the proceeds thereof; provided , that nothing in this clause (e) shall relieve any Loan Party of any obligation itmay have to indemnify an Indemnitee against special, indirect, consequential or punitive damages asserted against such Indemniteeby a third party.(f) All amounts due under this Section 9.03 shall be payable promptly 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 theirrespective successors and assigns permitted hereby (including any Affiliate of an Issuing Bank that issues any Letter of Credit),except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior writtenconsent of each Lender (and any attempted assignment or transfer by the 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 9.04 .Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, theirrespective successors and assigns permitted hereby (including any Affiliate of an Issuing Bank that issues any Letter of Credit),Participants (to the extent provided in clause (c) of this Section 9.04 ) and, to the extent expressly contemplated hereby, the RelatedParties of each of the Administrative Agent, the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim underor by reason of this Agreement.(b) (i) Subject to the conditions set forth in clause (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 ofits Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld)of:(A) the Borrower; provided , that the Borrower shall be deemed to have consented to any such assignment unless itshall object thereto by written notice to the Administrative Agent within ten (10) Business Days after having received noticethereof, and provided further that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of aLender, an Approved Fund or, if a Specified 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 anassignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitmentor Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment andAssumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5 million unlesseach of the Borrower and the Administrative Agent otherwise consent; provided , that no such consent of the Borrower shallbe required if a Specified 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’srights and obligations under this Agreement;(C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment andAssumption, together with a processing and recordation fee of $3,500 and the tax forms required by Section 2.17(f) ; and(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an AdministrativeQuestionnaire in which the assignee designates one or more credit contacts to whom all syndicate-level information (whichmay contain material non-public information about the Borrower, the Loan Parties and their Related Parties or their respectivesecurities) will be made available and who may receive such information in accordance with the assignee’s complianceprocedures and applicable laws, including Federal and state securities laws.(iii) Subject to acceptance and recording thereof pursuant to clause (b)(iv) of this Section 9.04 , from and after theeffective date specified in each Assignment and Assumption (A) the assignee thereunder shall be a party hereto and, to the extent ofthe interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement and (B)the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from itsobligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rightsand obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits ofSections 2.15 , 2.16 , 2.17 and 9.03 ). Any assignment or transfer by a Lender of rights or obligations under this Agreement that doesnot comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in suchrights and obligations in accordance with clause (c) of this Section 9.04 .(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain atone of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names andaddresses of the Lenders, and the Commitment of, and principal amount of and stated interest on the Loans and LC Disbursementsowing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall beconclusive, and the Borrower, the Administrative Agent, the Issuing Banks and the Lenders may treat each Person whose name isrecorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding noticeto the contrary. The Register shall be available for inspection by the Borrower, the Issuing Banks and any Lender, at any reasonabletime 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 anassignee or (y) to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to anyapplicable electronic platform as to which the Administrative Agent and the parties to the Assignment and Assumption areparticipants, the assignee’s completed Administrative Questionnaire (unless the assignee shallalready be a Lender hereunder), the processing and recordation fee and tax forms referred to in clause (b) of this Section 9.04 and anywritten consent to such assignment required by clause (b) of this Section 9.04 , the Administrative Agent shall accept suchAssignment and Assumption and record the information contained therein in the Register; provided , that if either the assigningLender or the assignee shall have failed to make any payment required to be made by it pursuant to Section 2.05 , 2.06(d) or (e) ,2.07(b) , 2.18(d) or 9.03(c) , the Administrative Agent shall have no obligation to accept such Assignment and Assumption and recordthe information therein in the Register unless and until such payment shall have been made in full, together with all accrued interestthereon. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided inthis paragraph.(c) Any Lender may, without the consent of the Borrower, the Administrative Agent or any Issuing Bank, sellparticipations to one or more banks or other entities (a “ Participant ”) other than an Ineligible Institution in all or a portion of suchLender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it);provided , that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solelyresponsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent, theIssuing Banks and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’srights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shallprovide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiverof any provision of this Agreement; provided , that such agreement or instrument may provide that such Lender will not, without theconsent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) thataffects such Participant. Subject to clause (c)(ii) of this Section 9.04 , the Borrower agrees that each Participant shall be entitled tothe benefits of Sections 2.15 , 2.16 and 2.17 (subject to the requirements and limitations therein, including the requirements underSection 2.17(f) (it being understood that the documentation required under Section 2.17(f) shall be delivered to the participatingLender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to clause (b) of this Section9.04 . To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were aLender, provided such Participant agrees to be subject to the provisions of Sections 2.18 and 2.19 as if it were an assignee underclause (b) of this Section 9.04 ; and shall not be entitled to receive any greater payment under Section 2.15 or 2.17 , with respect toany participation, than its participating Lender would have been entitled to receive, except (i) to the extent such entitlement toreceive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation or (ii)such participating Lender failed to deliver the tax forms required by Section 2.17(f) .Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with theBorrower to effectuate the provisions of Section 2.19(b) with respect to any Participant. To the extent permitted by law, each Participant alsoshall 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(c) asthough it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrower, maintain aregister on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’sinterest in the Loans or other obligations under this Agreement or any other Loan Document (the “ Participant Register ”); provided , that noLender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or anyinformation relating to a Participant’s interest in any Commitments, Loans, Lettersof Credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establishthat such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States TreasuryRegulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whosename is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any noticeto the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility formaintaining 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 thisAgreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to aFederal Reserve Bank, and this Section 9.04 shall not apply to any such pledge or assignment of a security interest; provided , thatno such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any suchpledgee 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 LoanDocuments and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other LoanDocument shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the LoanDocuments and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other partyor on its behalf and notwithstanding that the Administrative Agent, any Issuing Bank or any Lender may have had notice or knowledge of anyDefault or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as longas the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding andunpaid 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 transactionscontemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or thetermination of this Agreement or any other Loan Document or any provision hereof or thereof.SECTION 9.06 Counterparts; Integration; Effectiveness; Electronic Execution .(a) 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 fees payable to the Administrative Agent constitute theentire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements andunderstandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01 , this Agreement shallbecome effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall havereceived counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shallbe binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.(b) Delivery of an executed counterpart of a signature page of this Agreement by telecopy, emailed .pdf or anyother electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manuallyexecuted counterpart of this Agreement. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in orrelating to any document to be signed in connection with this Agreement and the transactionscontemplated hereby or thereby shall be deemed to include Electronic Signatures, deliveries or the keeping of records in electronicform, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical deliverythereof 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 andRecords 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 jurisdictionshall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legalityand enforceability of the remaining provisions thereof; and the invalidity of a particular provision in a particular jurisdiction shall notinvalidate 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 itsAffiliates 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 alldeposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender orAffiliate to or for the credit or the account of the Borrower or such Loan Guarantor against any of and all the Secured Obligations held bysuch Lender, irrespective of whether or not such Lender shall have made any demand under the Loan Documents and although suchobligations may be unmatured. The applicable Lender shall notify the Borrower and the Administrative Agent of such setoff or application;provided , that any failure to give or any delay in giving such notice shall not affect the validity of any such setoff or application under thisSection 9.08 . The rights of each Lender under this Section 9.08 are in addition to other rights and remedies (including other rights of setoff)which such Lender may have.SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process .(a) The Loan Documents (other than those containing a contrary express choice of law provision) shall begoverned by and construed in accordance with the laws of the State of New York.(b) Each Loan Party hereby irrevocably and unconditionally submits, for itself and its property, to the exclusivejurisdiction of any U.S. Federal or New York State court sitting in New York, New York in any action or proceeding arising out ofor relating to any Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto herebyirrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined insuch New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgmentin any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in anyother manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the AdministrativeAgent, any Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or anyother Loan Document against any Loan Party or its properties in the courts of any jurisdiction.(c) Each Loan Party hereby irrevocably and unconditionally waives, to the fullest extent it may legally andeffectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arisingout of or relating to this Agreement or any other Loan Document in any court referred to in clause (b) of this Section 9.09 . Each oftheparties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to themaintenance of such action or proceeding in any such court.(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices inSection 9.01 . Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serveprocess in any other manner permitted by law.SECTION 9.10 WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENTPERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDINGDIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT ORTHE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHERTHEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, OTHER AGENT (INCLUDING ANYATTORNEY) OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTYWOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGESTHAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONGOTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10 .SECTION 9.11 Headings . Article and Section headings and the Table of Contents used herein are for convenience of referenceonly, 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 theconfidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ respective officers,directors, employees, legal counsel, independent auditors and other experts or agents who need to know such information in connection withthe transactions contemplated hereby and are informed of the confidential nature of such information, (b) upon the request or demand of anyregulatory authority having jurisdiction over it or any of its Affiliates (in which case (except with respect to any audit or examinationconducted by bank accountants or any bank or other regulatory authority exercising examination or regulatory authority), it, to the extentpracticable and permitted by law, rule or regulation, agrees to inform the Borrower promptly thereof), (c) pursuant to the order of any court oradministrative agency, in any pending legal, judicial or administrative proceeding or as otherwise required by applicable law or regulation oras requested by a governmental authority (in which case (except with respect to any audit or examination conducted by bank accountants orany bank or other regulatory authority exercising examination or regulatory authority), it, to the extent practicable and permitted by law, ruleor regulation, agrees to inform the Borrower promptly thereof), (d) to any other party to this Agreement, (e) in connection with the exercise ofany remedies under this Agreement or any other Loan Document or any suit, action or proceeding relating to this Agreement or any otherLoan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the sameas those of this Section 9.12 or otherwise reasonably acceptable to the Borrower, to (i) any assignee of or Participant in, or any prospectiveassignee of or Participant in, any of its rights or obligations under this Agreement (and any of their respective advisors) or (ii) any actual orprospective counterparty (or its advisors) to any swap or derivative transaction relating to the Loan Parties and their obligations, (g) with theconsent of the Borrower, (h) to holders of Equity Interests in the Borrower, (i) to the extent that such information is independently developedby it or its Affiliates, in each case, so long as not based on information obtained in a manner that would otherwise violate this Section 9.12 ,(j) for purposes of establishing a “due diligence”defense, (k) to ratings agencies or (l) to the extent such Information (i) becomes publicly available other than as a result of a breach of thisSection 9.12 or (ii) becomes available to the Administrative Agent, any Issuing Bank or any Lender on a non-confidential basis from a sourceother than the Borrower. For the purposes of this Section 9.12 , “ Information ” means all information received from the Borrower relating tothe Borrower or their business, other than any such information that is available to the Administrative Agent, any Issuing Bank or any Lenderon a non-confidential basis prior to disclosure by the Borrower; provided , that, in the case of information received from the Borrower afterthe date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain theconfidentiality of Information as provided in this Section 9.12 shall be considered to have complied with its obligation to do so if such Personhas exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidentialinformation.EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 9.12 FURNISHED TO ITPURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THEBORROWER AND ITS AFFILIATES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, ANDCONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION INACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIESLAWS.ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THEBORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THISAGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLICINFORMATION ABOUT THE BORROWER, THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIRRESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THEADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDITCONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION INACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATESECURITIES LAWS.SECTION 9.13 Several Obligations; Nonreliance; Violation of Law . The respective obligations of the Lenders hereunder areseveral and not joint and the failure of any Lender to make any Loan or perform any of its obligations hereunder shall not relieve any otherLender from any of its obligations hereunder. Each Lender hereby represents that it is not relying on or looking to any margin stock (asdefined in Regulation U of the Board) for the repayment of the Borrowings provided for herein. Anything contained in this Agreement to thecontrary notwithstanding, no Issuing Bank nor any Lender shall be obligated to extend credit to the Borrower in violation of any Requirementof Law.SECTION 9.14 USA PATRIOT Act . Each Lender that is subject to the requirements of the USA PATRIOT Act hereby notifieseach Loan Party that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information thatidentifies such Loan Party, which information includes the name and address of such Loan Party and other information that will allow suchLender to identify such Loan Party in accordance with the USA PATRIOT Act.SECTION 9.15 Disclosure . Each Loan Party, each Lender and the Issuing Bank hereby acknowledges and agrees that theAdministrative Agent and/or its Affiliates from time to time may holdinvestments in, make other loans to or have other relationships with any of the Loan Parties and their respective Affiliates.SECTION 9.16 Appointment for Perfection . Each Lender hereby appoints each other Lender as its agent for the purpose ofperfecting Liens, for the benefit of the Administrative Agent and the other Secured Parties, in assets which, in accordance with Article 9 ofthe UCC or any other applicable law can be perfected only by possession or control. Should any Lender (other than the Administrative Agent)obtain possession or control of any such Collateral, such Lender shall notify the Administrative Agent thereof, and, promptly upon theAdministrative Agent’s request therefor shall deliver such Collateral to the Administrative Agent or otherwise deal with such Collateral inaccordance with the Administrative Agent’s instructions.SECTION 9.17 Interest Rate Limitation . Notwithstanding anything herein to the contrary, if at any time the interest rate applicableto any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectivelythe “ Charges ”), shall exceed the maximum lawful rate (the “ Maximum Rate ”) which may be contracted for, charged, taken, received orreserved 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 Chargesthat would have been payable in respect of such Loan but were not payable as a result of the operation of this Section 9.17 shall be cumulatedand the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Ratetherefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall havebeen received by such Lender.SECTION 9.18 No Advisory or Fiduciary Responsibility . In connection with all aspects of each transaction contemplated hereby(including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borroweracknowledges and agrees that: (i) (A) the arranging and other services regarding this Agreement provided by the Lenders are arm’s-lengthcommercial transactions between the Borrower and its Affiliates, on the one hand, and the Lenders and their Affiliates, on the other hand, (B)the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) theBorrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby andby the other Loan Documents; (ii) (A) each of the Lenders and their Affiliates is and has been acting solely as a principal and, except asexpressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for theBorrower or any of its Affiliates, or any other Person and (B) no Lender or any of its Affiliates has any obligation to the Borrower or any ofits Affiliates with respect to the transactions contemplated hereby except, in the case of a Lender, those obligations expressly set forth hereinand in the other Loan Documents; and (iii) each of the Lenders and their respective Affiliates may be engaged in a broad range of transactionsthat involve interests that differ from those of the Borrower and its Affiliates, and no Lender or any of its Affiliates has any obligation todisclose any of such interests to the Borrower or its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives andreleases any claims that it may have against each of the Lenders and their Affiliates with respect to any breach or alleged breach of agency orfiduciary duty in connection with any aspect of any transaction contemplated hereby.SECTION 9.19 Acknowledgement and Consent to Bail-In of EEA Financial Institutions . Notwithstanding anything to the contraryin any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges thatany liability of any Lender that is an EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured (allsuch liabilities, the “ Covered Liabilities ”), may be subject to the Write-Down and Conversion Powers and agrees and consents to, andacknowledges and agrees to be bound by:(a) the application of any Write-Down and Conversion Powers to any such Covered Liability arising hereunderwhich may be payable to it by any Lender that is an EEA Financial Institution;(b) the effects of any Bail-In Action on any such Covered Liability, including, if applicable:(i) A reduction in full or in part or cancellation of any such Covered Liability;(ii) A conversion of all, or a portion of, such Covered Liability into shares or other instruments of ownership insuch EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, andthat such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such CoveredLiability under this Agreement or any other Loan Document; or(iii) The variation of the terms of such Covered Liability in connection with the exercise of the Write-Down andConversion Powers.ARTICLE X LOAN GUARANTYSECTION 10.01 Guaranty . Each Loan Guarantor (other than those that have delivered a separate Guaranty) hereby agrees that it isjointly and severally liable for, and, as a primary obligor and not merely as surety, absolutely, unconditionally and irrevocably guarantees tothe Secured Parties, the prompt payment when due, whether at stated maturity, upon acceleration or otherwise, and at all times thereafter, ofthe Secured Obligations and all costs and expenses including, without limitation, all court costs and attorneys’ and paralegals’ fees (includingallocated costs of in-house counsel and paralegals) and expenses paid or incurred by the Administrative Agent, the Issuing Banks and theLenders in endeavoring to collect all or any part of the Secured Obligations from, or in prosecuting any action against, the Borrower, anyLoan Guarantor or any other guarantor of all or any part of the Secured Obligations (such costs and expenses, together with the SecuredObligations, collectively the “ Guaranteed Obligations ”; provided , however , that the definition of “Guaranteed Obligations” shall not createany guarantee by any Loan Guarantor of (or grant of security interest by any Loan Guarantor to support, as applicable) any Excluded SwapObligations of such Loan Guarantor for purposes of determining any obligations of any Loan Guarantor). Each Loan Guarantor further agreesthat the Guaranteed Obligations may be extended or renewed in whole or in part without notice to or further assent from it, and that it remainsbound upon its guarantee notwithstanding any such extension or renewal. All terms of this Loan Guaranty apply to and may be enforced by oron behalf of any domestic or foreign branch or Affiliate of any Lender that extended any portion of the Guaranteed Obligations.SECTION 10.02 Guaranty of Payment . This Loan Guaranty is a guaranty of payment and not of collection. Each Loan Guarantorwaives any right to require the Administrative Agent, any Issuing Bank or any Lender to sue the Borrower, any Loan Guarantor, any otherguarantor, or any other Person obligated for all or any part of the Guaranteed Obligations (each, an “ Obligated Party ”), or otherwise toenforce its payment against any collateral securing all or any part of the Guaranteed Obligations.SECTION 10.03 No Discharge or Diminishment of Loan Guaranty .(a) Except as otherwise provided for herein, the obligations of each Loan Guarantor hereunder are unconditionaland absolute and not subject to any reduction, limitation,impairment or termination for any reason (other than the indefeasible payment in full in cash of the Guaranteed Obligations (otherthan Unliquidated Obligations), and the cash collateralization of all Unliquidated Obligations in a manner satisfactory to eachaffected Lender), including: (i) any claim of waiver, release, extension, renewal, settlement, surrender, alteration, or compromise ofany of the Guaranteed Obligations, by operation of law or otherwise; (ii) any change in the corporate existence, structure orownership of the Borrower or any other Obligated Party liable for any of the Guaranteed Obligations; (iii) any insolvency,bankruptcy, reorganization or other similar proceeding affecting any Obligated Party, or their assets or any resulting release ordischarge of any obligation of any Obligated Party; or (iv) the existence of any claim, setoff or other rights which any LoanGuarantor may have at any time against any Obligated Party, the Administrative Agent, any Issuing Bank, any Lender, or any otherPerson, whether in connection herewith or in any unrelated transactions.(b) The obligations of each Loan Guarantor hereunder are not subject to any defense or setoff, counterclaim,recoupment, or termination whatsoever by reason of the invalidity, illegality, or unenforceability of any of the GuaranteedObligations or otherwise, or any provision of applicable law or regulation purporting to prohibit payment by any Obligated Party, ofthe Guaranteed Obligations or any part thereof.(c) Further, the obligations of any Loan Guarantor hereunder are not discharged or impaired or otherwise affectedby: (i) the failure of the Administrative Agent, any Issuing Bank or any Lender to assert any claim or demand or to enforce anyremedy with respect to all or any part of the Guaranteed Obligations; (ii) any waiver or modification of or supplement to anyprovision of any agreement relating to the Guaranteed Obligations; (iii) any release, non-perfection, or invalidity of any indirect ordirect security for the obligations of the Borrower for all or any part of the Guaranteed Obligations or any obligations of any otherObligated Party liable for any of the Guaranteed Obligations; (iv) any action or failure to act by the Administrative Agent, anyIssuing Bank or any Lender with respect to any collateral securing any part of the Guaranteed Obligations; or (v) any default, failureor delay, willful or otherwise, in the payment or performance of any of the Guaranteed Obligations, or any other circumstance, act,omission or delay that might in any manner or to any extent vary the risk of such Loan Guarantor or that would otherwise operate asa discharge of any Loan Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of the GuaranteedObligations).SECTION 10.04 Defenses Waived . To the fullest extent permitted by applicable law, each Loan Guarantor hereby waives anydefense based on or arising out of any defense of the Borrower or any Loan Guarantor or the unenforceability of all or any part of theGuaranteed Obligations from any cause, or the cessation from any cause of the liability of the Borrower, any Loan Guarantor or any otherObligated Party, other than the indefeasible payment in full in cash of the Guaranteed Obligations. Without limiting the generality of theforegoing, each Loan Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and, to the fullest extent permitted bylaw, any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against any ObligatedParty, or any other Person. Each Loan Guarantor confirms that it is not a surety under any state law and shall not raise any such law as adefense to its obligations hereunder. The Administrative Agent may, at its election, foreclose on any Collateral held by it by one or morejudicial or nonjudicial sales, accept an assignment of any such Collateral in lieu of foreclosure or otherwise act or fail to act with respect toany collateral securing all or a part of the Guaranteed Obligations, compromise or adjust any part of the Guaranteed Obligations, make anyother accommodation with any Obligated Party or exercise any other right or remedy available to it against any Obligated Party, withoutaffecting or impairing in any way the liability of such Loan Guarantor underthis Loan Guaranty except to the extent the Guaranteed Obligations have been fully and indefeasibly paid in cash. To the fullest extentpermitted by applicable law, each Loan Guarantor waives any defense arising out of any such election even though that election may operate,pursuant to applicable law, to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Loan Guarantoragainst any Obligated Party or any security.SECTION 10.05 Rights of Subrogation . No Loan Guarantor will assert any right, claim or cause of action, including, withoutlimitation, a claim of subrogation, contribution or indemnification that it has against any Obligated Party, or any collateral, until the LoanParties and the Loan Guarantors have fully performed all their obligations to the Administrative Agent, the Issuing Banks and the Lenders.SECTION 10.06 Reinstatement; Stay of Acceleration . If at any time any payment of any portion of the Guaranteed Obligations(including a payment effected through exercise of a right of setoff) is rescinded or must otherwise be restored or returned upon theinsolvency, bankruptcy, or reorganization of the Borrower or otherwise (including pursuant to any settlement entered into by a Secured Partyin its discretion), each Loan Guarantor’s obligations under this Loan Guaranty with respect to that payment shall be reinstated at such time asthough the payment had not been made and whether or not the Administrative Agent, the Issuing Banks and the Lenders are in possession ofthis Loan Guaranty. If acceleration of the time for payment of any of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy orreorganization of the Borrower, all such amounts otherwise subject to acceleration under the terms of any agreement relating to theGuaranteed Obligations shall nonetheless be payable by the Loan Guarantors forthwith on demand by the Administrative Agent.SECTION 10.07 Information . Each Loan Guarantor assumes all responsibility for being and keeping itself informed of theBorrower’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligationsand the nature, scope and extent of the risks that each Loan Guarantor assumes and incurs under this Loan Guaranty, and agrees that neitherthe Administrative Agent nor any Issuing Bank nor any Lender shall have any duty to advise any Loan Guarantor of information known to itregarding those circumstances or risks.SECTION 10.08 Termination . Each of the Lenders and the Issuing Bank may continue to make loans or extend credit to theBorrower based on this Loan Guaranty until five days after it receives written notice of termination from any Loan Guarantor.Notwithstanding receipt of any such notice, each Loan Guarantor will continue to be liable to the Lenders for any Guaranteed Obligationscreated, assumed or committed to prior to the fifth day after receipt of the notice, and all subsequent renewals, extensions, modifications andamendments with respect to, or substitutions for, all or any part of that Guaranteed Obligations. Nothing in this Section 10.08 shall be deemedto constitute a waiver of, or eliminate, limit, reduce or otherwise impair any rights or remedies the Administrative Agent or any Lender mayhave in respect of, any Default or Event of Default that shall exist under clause (o) of Article VII hereof as a result of any such notice oftermination.SECTION 10.09 Taxes . Each payment of the Guaranteed Obligations will be made by each Loan Guarantor without withholdingfor any Taxes, unless such withholding is required by law. If any Loan Guarantor determines, in its sole discretion exercised in good faith,that it is so required to withhold Taxes, then such Loan Guarantor may so withhold and shall timely pay the full amount of withheld Taxes tothe relevant Governmental Authority in accordance with applicable law. If such Taxes are Indemnified Taxes, then the amount payable bysuch Loan Guarantor shall be increased as necessary so that, net of such withholding (including such withholding applicable to additionalamounts payable under this Section 10.09 ),the Administrative Agent, Lender or Issuing Bank (as the case may be) receives the amount it would have received had no such withholdingbeen made.SECTION 10.10 Maximum Liability . Notwithstanding any other provision of this Loan Guaranty, the amount guaranteed by eachLoan Guarantor hereunder shall be limited to the extent, if any, required so that its obligations hereunder shall not be subject to avoidanceunder Section 548 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent ConveyanceAct or similar statute or common law. In determining the limitations, if any, on the amount of any Loan Guarantor’s obligations hereunderpursuant to the preceding sentence, it is the intention of the parties hereto that any rights of subrogation, indemnification or contributionwhich such Loan Guarantor may have under this Loan Guaranty, any other agreement or applicable law shall be taken into account.SECTION 10.11 Contribution .(a) To the extent that any Loan Guarantor shall make a payment under this Loan Guaranty (a “ GuarantorPayment ”) which, taking into account all other Guarantor Payments then previously or concurrently made by any other LoanGuarantor, exceeds the amount which otherwise would have been paid by or attributable to such Loan Guarantor if each LoanGuarantor had paid the aggregate Guaranteed Obligations satisfied by such Guarantor Payment in the same proportion as such LoanGuarantor’s “Allocable Amount” (as defined below) (as determined immediately prior to such Guarantor Payment) bore to theaggregate Allocable Amounts of each of the Loan Guarantors as determined immediately prior to the making of such GuarantorPayment, then, following indefeasible payment in full in cash of the Guarantor Payment and the Guaranteed Obligations (other thanUnliquidated Obligations that have not yet arisen), and all Commitments and Letters of Credit have terminated or expired or, in thecase of all Letters of Credit, are fully collateralized on terms reasonably acceptable to the Administrative Agent and the IssuingBank, and this Agreement, the Swap Agreement Obligations and the Banking Services Obligations have terminated, such LoanGuarantor shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each other LoanGuarantor for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to suchGuarantor Payment.(b) As of any date of determination, the “Allocable Amount” of any Loan Guarantor shall be equal to the excessof the fair saleable value of the property of such Loan Guarantor over the total liabilities of such Loan Guarantor (including themaximum amount reasonably expected to become due in respect of contingent liabilities, calculated, without duplication, assumingeach other Loan Guarantor that is also liable for such contingent liability pays its ratable share thereof), giving effect to all paymentsmade by other Loan Guarantors as of such date in a manner to maximize the amount of such contributions.(c) This Section 10.11 is intended only to define the relative rights of the Loan Guarantors, and nothing set forthin this Section 10.11 is intended to or shall impair the obligations of the Loan Guarantors, jointly and severally, to pay any amountsas and when the same shall become due and payable in accordance with the terms of this Loan Guaranty.(d) The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constituteassets of the Loan Guarantor or Loan Guarantors to which such contribution and indemnification is owing.(e) The rights of the indemnifying Loan Guarantors against other Loan Guarantors under this Section 10.11 shallbe exercisable upon the full and indefeasible payment of the Guaranteed Obligations in cash (other than Unliquidated Obligationsthat have not yet arisen) and the termination or expiry (or, in the case of all Letters of Credit, full cash collateralization), on termsreasonably acceptable to the Administrative Agent and the Issuing Bank, of the Commitments and all Letters of Credit issuedhereunder and the termination of this Agreement, the Swap Agreement Obligations and the Banking Services Obligations.SECTION 10.12 Liability Cumulative . The liability of each Loan Party as a Loan Guarantor under this Article X is in addition toand shall be cumulative with all liabilities of each Loan Party to the Administrative Agent, the Issuing Banks and the Lenders under thisAgreement and the other Loan Documents to which such Loan Party is a party or in respect of any obligations or liabilities of the other LoanParties, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specificallyprovides to the contrary.SECTION 10.13 Keepwell . Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally andirrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Loan Party or LoanGuarantor to honor all of its obligations under this Guarantee in respect of a Swap Obligation ( provided , however , that each Qualified ECPGuarantor shall only be liable under this Section 10.13 for the maximum amount of such liability that can be hereby incurred withoutrendering its obligations under this Section 10.13 or otherwise under this Loan Guaranty voidable under applicable law relating to fraudulentconveyance or fraudulent transfer, and not for any greater amount). Except as otherwise provided herein, the obligations of each QualifiedECP Guarantor under this Section 10.13 shall remain in full force and effect until the termination of all Swap Obligations. Each QualifiedECP Guarantor intends that this Section 10.13 constitute, and this Section 10.13 shall be deemed to constitute, a “keepwell, support, or otheragreement” for the benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.[Signature Pages Follow.]IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respectiveauthorized officers as of the day and year first above written.BORROWER:EXLSERVICE HOLDINGS, INC. , a Delaware corporationBy: /s/ Vishal Chhibbar Name: Vishal Chhibbar Title: Chief Financial Officer[Signature Page to EXL Credit Agreement]LOAN GUARANTORS:EXLSERVICE.COM, LLC , a Delaware limited liability company By: /s/ Vishal Chhibbar Name: Vishal Chhibbar Title: Chief Financial OfficerEXLSERVICE TECHNOLOGY SOLUTIONS, LLC , a Delaware limited liabilitycompany By: /s/ Vishal Chhibbar Name: Vishal Chhibbar Title: Chief Financial OfficerBUSINESS PROCESS OUTSOURCING, LLC , a Delaware limited liability company By: /s/ Vishal Chhibbar Name: Vishal Chhibbar Title: Chief Financial OfficerOUTSOURCE PARTNERS INTERNATIONAL INC , a Delaware corporation By: /s/ Vishal Chhibbar Name: Vishal Chhibbar Title: Chief Financial OfficerRPM DIRECT, LLC , a New Jersey limited liability company By: /s/ Vishal Chhibbar Name: Vishal Chhibbar Title: Chief Financial OfficerOVERLAND HOLDINGS, INC , a Delaware corporation By: /s/ Vishal Chhibbar [Signature Page to EXL Credit Agreement] Name: Vishal Chhibbar Title: Chief Financial OfficerOVERLAND SOLUTIONS, INC , a Delaware corporation By: /s/ Vishal Chhibbar Name: Vishal Chhibbar Title: Chief Financial Officer[Signature Page to EXL Credit Agreement]CITIBANK, N.A. , individually as a Lender, as Administrative Agent and an Issuing Bank By: /s/ Michael Berry Name: Michael Berry Title: Senior Vice President[Signature Page to EXL Credit Agreement]PNC BANK, N.A. , as a Lender By: /s/ Michael Richards Name: Michael Richards Title: Senior Vice President, Managing Director[Signature Page to EXL Credit Agreement]JPMorgan Chase Bank, N.A. , individually as a Lender By: /s/ Matthew Landry Name: Matthew Landry Title: Authorized Officer[Signature Page to EXL Credit Agreement]BANK OF AMERICA, N.A. , as a Lender By: /s/ Jana L. Baker Name: Jana L. Baker Title: Senior Vice President[Signature Page to EXL Credit Agreement][Signature Page to EXL Credit Agreement][Signature Page to EXL Credit Agreement]COMMITMENT SCHEDULELenderTotal CommitmentCitibank, N.A.$60,000,000PNC Bank, N.A.$55,000,000JPMorgan Chase Bank, N.A.$50,000,000Bank of America, N.A.$35,000,000Total$200,000,000Commitment ScheduleSCHEDULE 1.01SUBORDINATION TERMSUnless otherwise defined on this Schedule, capitalized terms used in this Schedule shall have the meanings given to such terms in theCredit Agreement to which this Schedule is attached.1. The payment (by setoff, redemption, repurchase or otherwise) of all principal, premium and interest in respect of theSubordinated Indebtedness (including with respect to any repurchases of any notes evidencing such Subordinated Indebtedness (the “Subordinated Notes ”)) shall be subordinated in right of payment to the prior payment in full in cash of all Obligations, but solely to the extentset forth in paragraphs 2, 3 and 4 below, whether outstanding on the date hereof or hereafter incurred.2. Upon any distribution to creditors of the applicable Loan Party upon any liquidation, dissolution or winding up of such LoanParty or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to such Loan Party or its property, whethervoluntary or involuntary, an assignment for the benefit of creditors or any marshalling of such Loan Party’s assets and liabilities, the CreditParties will be entitled to receive payment in full in cash of all Obligations due or to become due (including interest after the commencementof any such proceeding, at the rate specified in the Credit Agreement) before the holders of the Subordinated Indebtedness will be entitled toreceive any payment of principal, premium or interest in respect thereof, and until all Obligations are paid in full in cash, any distribution ofany kind or character to which the holders of the Subordinated Indebtedness would be entitled shall be made to the Administrative Agent, forthe benefit of the Credit Parties.3. No Loan Party shall, directly or indirectly, (x) make any payment of principal, premium or interest in respect of theSubordinated Indebtedness, (y) acquire any of the Subordinated Notes for cash or property or (z) otherwise make any other distribution withrespect to the Subordinated Indebtedness if:(a) any Event of Default occurs and is continuing under clause (a) or (b) of Article VII of this Agreement, or(b) (i) any other Event of Default occurs and is continuing that permits the Administrative Agent or the Lenders toaccelerate the Obligations and (ii) the holders of the Subordinated Indebtedness (or any agent or trustee therefor) receive a notice of suchdefault from the Administrative Agent.4. In the event that any holder of Subordinated Indebtedness (or any agent or trustee therefor) receives any payment of anyprincipal, premium or interest in respect of the Subordinated Indebtedness at a time when such payment is prohibited by the foregoing, suchpayment shall be held by such recipient, in trust for the benefit of, and shall be paid forthwith over and delivered to the Administrative Agent,for the benefit of the Credit Parties, for application to the payment of all Obligations remaining unpaid to the extent necessary to pay suchObligations in full in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the Credit Parties.Schedule 1.01EXHIBIT AASSIGNMENT AND ASSUMPTIONThis Assignment and Assumption (the “ Assignment and Assumption ”) is dated as of the Effective Date set forth below and isentered into by and between [ Insert name of Assignor ] (the “ Assignor ”) and [ Insert name of Assignee ] (the “ Assignee ”). Capitalizedterms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, restated,amended and restated or otherwise modified from time to time, the “ Credit Agreement ”), receipt of a copy of which is hereby acknowledgedby the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein byreference 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 irrevocablypurchases 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 itscapacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related tothe amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respectivefacilities identified below (including any letters of credit and guarantees included in such facilities) and (ii) to the extent permitted to beassigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against anyPerson, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments deliveredpursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including contractclaims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold andassigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred toherein collectively as the “ Assigned Interest ”). Such sale and assignment is without recourse to the Assignor and, except as expresslyprovided in this Assignment and Assumption, without representation or warranty by the Assignor.1.Assignor: 2.Assignee: [and is an Affiliate/Approved Fund of [ identify Lender ]]3.Borrower: ExlService Holdings, Inc.4.Administrative Agent: Citibank, N.A., as the administrative agent under the Credit Agreement5.Credit Agreement: The $200 million Credit Agreement dated as of November 21, 2017 among ExlService Holdings, Inc., theother Loan Parties party thereto, the Lenders parties thereto, and Citibank, N.A., asAdministrative Agent6. Assigned Interest:Exhibit AFacility AssignedAggregate Amount ofCommitment/‌Loans for allLendersAmount of Commitment/LoansAssignedPercentage Assigned ofCommitment/‌Loans $$ % $$ % $$ %Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THEEFFECTIVE 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 oneor more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Borrower, theLoan Parties and their Related Parties or their respective securities) will be made available and who may receive such information inaccordance 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:Exhibit AConsented to and Accepted: CITIBANK, N.A., as Administrative Agent By: Title:Consented to: [REQUIRED LENDERS] By: Title:[Consented to:] EXLSERVICE HOLDINGS, INC. By: Title:Exhibit AANNEX 1STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND ASSUMPTION1. 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) theAssigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken allaction 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 CreditAgreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the LoanDocuments or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Personobligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or anyother Person of any of their respective obligations under any Loan Document.1.2 Assignee . The Assignee (a) represents and warrants (i) that 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 Lenderunder the Credit Agreement, (ii) that it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied byit in order to acquire the Assigned Interest and become a Lender, (iii) that from and after the Effective Date, it shall be bound by theprovisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lenderthereunder, (iv) that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements deliveredpursuant to Section 5.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own creditanalysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has madesuch analysis and decision independently and without reliance on the Administrative Agent or any other Lender, (v) that if it is a ForeignLender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the CreditAgreement, duly completed and executed by the Assignee, and (vi) to the Administrative Agent, the Lead Arrangers and their respectiveAffiliates, and not, for the avoidance of doubt, for the benefit of the Borrower or any other Loan Party, that from and after the Effective Dateit is not and will not be (A) an employee benefit plan subject to Title I of ERISA, (B) a plan or account subject to Section 4975 of the Code,(C) an entity deemed to hold “plan assets” of any such plans or accounts for purposes of ERISA or the Code, or (D) a “governmental plan”within the meaning of ERISA; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor orany other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own creditdecisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of theobligations 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 AssignedInterest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excludingthe Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.Exhibit A3. General Provisions . This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto andtheir respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which togethershall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by fax shall beeffective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall begoverned by, and construed in accordance with, the law of the State of New York.Exhibit AEXHIBIT BCOMPLIANCE CERTIFICATETo:The Lenders parties to the Credit Agreement Described BelowDate: [●]This Compliance Certificate is furnished pursuant to that certain Credit Agreement dated as of November 21, 2017 (as amended,restated, amended and restated or otherwise modified from time to time, the “ Credit Agreement ”) among ExlService Holdings, Inc. (the “Borrower ”), the other Loan Parties, the Lenders party thereto, the Issuing Banks party thereto and Citibank, N.A., as Administrative Agentfor the Lenders. Unless otherwise defined herein, capitalized terms used in this Compliance Certificate have the meanings ascribed thereto inthe Credit Agreement.THE UNDERSIGNED HEREBY CERTIFIES THAT:1. I am the duly elected [●] of the Borrower;2. I have reviewed the terms of the Credit Agreement and I have made, or have caused to be made under my supervision, a detailedreview of the transactions and conditions of the Borrower and its Subsidiaries during the accounting period covered by the attached financialstatements [ for quarterly financial statements add: and such financial statements present fairly in all material respects the financialcondition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAPconsistently applied, subject to normal year-end audit adjustments and the absence of footnotes] [ for annual financial statements add: andsuch financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and itsconsolidated Subsidiaries on a consolidating basis in accordance with GAAP consistently applied];3. The examinations described in paragraph 2 did not disclose, except as set forth below, and I have no knowledge of (i) theexistence of any condition or event which constitutes a Default during or at the end of the accounting period covered by the attached financialstatements or as of the date of this Certificate or (ii) any change in GAAP or in the application thereof that has occurred since [December 31,2016] [the end date of the financial statements most recently delivered pursuant to Section 5.01(a) of the Credit Agreement];4. I hereby certify that no Loan Party has changed (i) its name, (ii) its chief executive office, (iii) principal place of business, (iv)the type of entity it is or (v) its state of incorporation or organization without having given the Agent the notice required by Section 4.11 ofthe Security Agreement;5. Schedule I attached hereto sets forth financial data and computations evidencing the Borrower’s compliance with the FinancialCovenants and Sections 6.11(a) and (b) of the Credit Agreement, all of which data and computations are true, complete and correct; and6. Schedule II hereto sets forth the computations necessary to determine the Applicable Rate commencing on the Business Day thiscertificate is delivered.Exhibit BDescribed below are the exceptions, if any, to paragraph 3 by listing, in detail, the (i) nature of the condition or event, the periodduring which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition orevent or (i) the change in GAAP or the application thereof and the effect of such change on the attached financial statements:[●]Exhibit BThe foregoing certifications, together with the computations set forth in Schedule I and Schedule II hereto and the financialstatements delivered with this Certificate in support hereof, are made and delivered as of the first date written above.EXLSERVICE HOLDINGS, INC. By: Name: Title:Exhibit BSCHEDULE ICompliance as of _________, ____ with the Financial CovenantsExhibit BSCHEDULE IIBorrower’s Applicable Rate CalculationExhibit BEXHIBIT CJOINDER AGREEMENTTHIS JOINDER AGREEMENT (this “ Agreement ”), dated as of [●] is entered into between [●], a [●] (the “ New Subsidiary ”) andCITIBANK, N.A., in its capacity as administrative agent (the “ Administrative Agent ”) under that certain Credit Agreement, dated as ofNovember 21, 2017 among ExlService Holdings, Inc. (the “ Borrower ”), the Loan Parties party thereto, the Lenders party thereto and theAdministrative Agent (as amended, restated, amended and restated or otherwise modified from time to time, the “ Credit Agreement ”). Allcapitalized terms used herein and not otherwise defined shall have the meanings set forth in the Credit Agreement.The New Subsidiary and the Administrative Agent, for the benefit of the Lenders, hereby agree as follows:1. The New Subsidiary hereby acknowledges, agrees and confirms that, by its execution of this Agreement, the New Subsidiarywill be deemed to be a Loan Party under the Credit Agreement and a “Loan Guarantor” for all purposes of the Credit Agreement and shallhave all of the obligations of a Loan Party and a Loan Guarantor thereunder as if it had executed the Credit Agreement. The New Subsidiaryhereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the CreditAgreement, including without limitation (a) all of the representations and warranties of the Loan Parties set forth in Article III of the CreditAgreement, *[ and ]* (b) all of the covenants set forth in Articles V and VI of the Credit Agreement *[ and (c) all of the guaranty obligationsset forth in Article X of the Credit Agreement. Without limiting the generality of the foregoing terms of this paragraph 1, the New Subsidiary,subject to the limitations set forth in Section 10.10 of the Credit Agreement, hereby guarantees, jointly and severally with the other LoanGuarantors, to the Administrative Agent and the Lenders, as provided in Article X of the Credit Agreement, the prompt payment andperformance of the Guaranteed Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration orotherwise) strictly in accordance with the terms thereof and agrees that if any of the Guaranteed Obligations are not paid or performed in fullwhen due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise), the New Subsidiary will, jointly andseverally together with the other Loan Guarantors, promptly pay and perform the same, without any demand or notice whatsoever, and that inthe case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full whendue (whether at extended maturity, as a mandatory prepayment, by acceleration or otherwise) in accordance with the terms of such extensionor renewal. ]* *[ The New Subsidiary has delivered to the Administrative Agent an executed Loan Guaranty. ]*2. If required, the New Subsidiary is, simultaneously with the execution of this Agreement, executing and delivering suchCollateral Documents (and such other documents and instruments) as requested by the Administrative Agent in accordance with the CreditAgreement.3. The address of the New Subsidiary for purposes of Section 9.01 of the Credit Agreement is as follows:[●]4. The New Subsidiary hereby waives acceptance by the Administrative Agent and the Lenders of the guaranty by the NewSubsidiary upon the execution of this Agreement by the New Subsidiary.Exhibit C5. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be anoriginal, but all of which shall constitute one and the same instrument.6. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNEDBY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.IN WITNESS WHEREOF, the New Subsidiary has caused this Agreement to be duly executed by its authorized officer, and theAdministrative Agent, for the benefit of the Lenders, has caused the same to be accepted by its authorized officer, as of the day and year firstabove written.[NEW SUBSIDIARY] By: Name: Title:Acknowledged and accepted: CITIBANK, N.A., as Administrative Agent By: Name: Title:Exhibit CEXHIBIT DSOLVENCY CERTIFICATEThe undersigned, being the [●] of EXLSERVICE HOLDINGS, INC . , a Delaware corporation (“ Borrower ”), pursuant to thatcertain Credit Agreement, dated as of November 21, 2017 (as amended, restated, amended and restated or otherwise modified from time totime, the “ Credit Agreement ”; capitalized terms not defined herein shall have the meanings set forth in the Credit Agreement), betweenBorrower, the other Loan Parties thereto, the Lenders party thereto and CITIBANK, N.A., as Administrative Agent, DOES HEREBYCERTIFY on behalf of Borrower that:1. I am familiar with the properties, business and assets of the Borrower and am authorized to execute this Certificate on behalf ofthe Borrower.2. I have carefully reviewed the contents of this Certificate and have made such investigations and inquiries as I deem necessaryand prudent in connection with the matters set forth herein. Among other things, I have reviewed the Credit Agreement, together with theother Loan Documents executed or to be executed by the Borrower pursuant to the Credit Agreement.3. For purposes of this Certificate: (a) the term “Transactions” means (1) the fulfillment of all conditions precedent to the Loansbeing made under the Credit Agreement and the funding of such Loans, and (2) the execution and delivery of all Loan Documents under theCredit Agreement in connection with such Loans, and (b) the term “indebtedness” means all obligations and liabilities of Borrower and itsSubsidiaries, whether matured or unmatured, liquidated or unliquidated, disputed or undisputed, secured or unsecured, subordinated, absolute,fixed or contingent. For purposes of the definition of “indebtedness,” the amount of any contingent liability at any time shall be computed asthe amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected tobecome an actual or matured liability.4. As of the date hereof, assuming each of the Transactions is consummated on and as of the date hereof and taking into accountthe effect thereof, it is my opinion that:(a) The fair value of the assets and property of the Borrower and its Subsidiaries on a consolidated basis exceeds the totalamount of their indebtedness;(b) On a going concern basis, the present fair saleable value of the assets and property of the Borrower and its Subsidiarieson a consolidated basis exceeds the amount that will be required to pay the probable liability of the Borrower and its Subsidiaries’indebtedness as such indebtedness becomes absolute and matured;(c) The Borrower and its Subsidiaries on a consolidated basis are able to realize upon their assets and pay theirindebtedness as such indebtedness matures in the normal course of business; and(d) The Borrower and its Subsidiaries on a consolidated basis do not have an unreasonably small capital nor will be leftwith an unreasonably small capital to conduct their business.5. In consummating the Transactions contemplated by the Credit Agreement, to the best of my knowledge (after due inquiry), theBorrower and its Subsidiaries on a consolidated basis do not intend to disturb, delay, hinder or defraud either present or future creditors orother persons to which they are or will become, on or after the date hereof, indebted.Exhibit DIN WITNESS WHEREOF, the undersigned has executed this Certificate this [●] day of November, 2017.EXLSERVICE HOLDINGS, INC. By: Name: Title:Exhibit DEXHIBIT E-1[FORM OF]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 Credit Agreement dated as of November 21, 2017 (as amended, restated, amended and restated orotherwise modified from time to time, the “ Credit Agreement ”) among _______________ (the “ Borrower ”), the other Loan Parties partythereto, the Lenders party thereto and Citibank, N.A., in its capacity as Administrative Agent for the Lenders.Pursuant to the provisions of Section 2.17 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record andbeneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it isnot a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaningof Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRSForm W-8BEN or W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificatechanges, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all timesfurnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar yearin 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 theCredit Agreement.[NAME OF LENDER] By: Name: Title:Date: ________ __, 20[ ]Exhibit E-1EXHIBIT E-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 Credit Agreement dated as of November 21, 2017 (as amended, restated, amended and restated orotherwise modified from time to time, the “ Credit Agreement ”) among _______________ (the “ Borrower ”), the other Loan Parties partythereto, the Lenders party thereto and Citibank, N.A., in its capacity as Administrative Agent for the Lenders.Pursuant to the provisions of Section 2.17 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record andbeneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, and(iv) it is not a controlled foreign corporation related to the 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 W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersignedshall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properlycompleted and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in eitherof 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 theCredit Agreement.[NAME OF PARTICIPANT] By: Name: Title:Date: ________ __, 20[ ]Exhibit E-2EXHIBIT E-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 Credit Agreement dated as of November 21, 2017 (as amended, restated, amended and restated orotherwise modified from time to time, the “ Credit Agreement ”) among _______________ (the “ Borrower ”), the other Loan Parties partythereto, the Lenders party thereto and Citibank, N.A., in its capacity as Administrative Agent for the Lenders.Pursuant to the provisions of Section 2.17 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record ownerof the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial ownersof such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bankextending 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 the Borrower within the meaning ofSection 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to theBorrower 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 fromeach of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-8BEN-E or (ii) an IRS FormW-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming theportfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificatechanges, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with aproperly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, orin 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 theCredit Agreement.[NAME OF PARTICIPANT] By: Name: Title:Date: ________ __, 20[ ]Exhibit E-3EXHIBIT E-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 Credit Agreement dated as of November 21, 2017 (as amended, restated, amended and restated orotherwise modified from time to time, the “ Credit Agreement ”) among _____________________ (the “ Borrower ”), the other Loan Partiesparty thereto, the Lenders party thereto and Citibank, N.A., in its capacity as Administrative Agent for the Lenders.Pursuant to the provisions of Section 2.17 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record ownerof the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirectpartners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to theextension of credit pursuant to the Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirectpartners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business withinthe 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 theBorrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlledforeign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of thefollowing forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-8BEN-Eor (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E from each of such partner’s/member’s beneficial ownersthat is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided onthis certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shallhave at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in eitherthe 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 theCredit Agreement.[NAME OF LENDER] By: Name: Title:Date: ________ __, 20[ ]Exhibit E-4EXHIBIT F[FORM OF]BORROWING REQUEST_____________ ___, 20__Citibank, N.A.1 Sansome Street, 22 nd floorSan Francisco, CA 94104Attention: Jim Haack, Technology, Media and Telecom Banking GroupLadies and Gentlemen:This borrowing request (this “ Borrowing Request ”) is furnished pursuant to Section 2.03 of that certain Credit Agreement, dated asof November 21, 2017 (as amended, restated, amended and restated or otherwise modified from time to time, the “ Credit Agreement ”)among EXLSERVICE HOLDINGS, INC., a Delaware corporation (the “ Borrower ”), the other Loan Parties party thereto, the Lenders partythereto, and Citibank, N.A. as Administrative Agent for the Lenders. Unless otherwise defined herein, capitalized terms used in thisBorrowing Request have the meanings ascribed thereto in the Credit Agreement. The Borrower hereby notifies the Administrative Agent of its request for the following Borrowing (the “ Proposed Borrowing ”):(1) Aggregate principal amount of Borrowing: $[_____] .(2) The Borrowing shall be a [_____] .(3) The date of the Proposed Borrowing (must be a Business Day): [_____] .(4) If a Eurodollar Borrowing, the duration of Interest Period shall be: [_____] .The Borrower hereby directs the Administrative Agent to disburse all proceeds of the Proposed Borrowing on the Borrowing Datespecified above by wire transfer to the account indicated on Schedule 1 hereto.The Borrower certifies that the following statements are true on the date hereof, and will be true on the date of the ProposedBorrowing:(a) The representations and warranties of the Borrower set forth in the Credit Agreement are true and correct in allmaterial respects on and as of the date of the Proposed Borrowing with the same effect as though such representations and warrantieshad been made on and as of the date of such Borrowing, except that (i) to the extent that such representations and warrantiesspecifically refer to an earlier date, such representations and warranties are true and correct in all material respects as of such earlierdate, and (ii) any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” are true and correct inall respects.(b) At the time of and immediately after giving effect to the Proposed Borrowing, no Default has occurred and iscontinuing.Exhibit FEXLSERVICE HOLDINGS, INC.By Name:Title:Exhibit FSCHEDULE 1 TO BORROWING REQUESTPAYEE:WIRE INSTRUCTIONSAMOUNT $[__________]TOTAL $[__________]Exhibit FEXHIBIT G[FORM OF]NOTICE OF CONTINUATION/CONVERSION_____________ ___, 20__Citibank, N.A.1 Sansome Street, 22 nd floorSan Francisco, CA 94104Attention: Jim Haack, Technology, Media and Telecom Banking GroupLadies and Gentlemen:Reference is hereby made to that certain Credit Agreement, dated as of November 21, 2017 (as amended, restated, amended andrestated or otherwise modified from time to time, the “ Credit Agreement ”) among EXLSERVICE HOLDINGS, INC., a Delawarecorporation (the “ Borrower ”), the other Loan Parties party thereto, the Lenders party thereto, and Citibank, N.A. as Administrative Agent forthe Lenders. Unless otherwise defined herein, capitalized terms used in this Notice have the meanings ascribed thereto in the CreditAgreement. The Borrower hereby notifies the Administrative Agent of an interest rate election and in that connection sets forth below the termsthereof:(1) [on _____________ ___, 20__ (which is a Business Day), the Borrower will convert $[●] of the aggregate outstanding principalamount of the Loans, bearing interest at the [Alternate Base Rate][LIBO Rate], into a [Eurodollar][ABR] Loan [and, in the case of aEurodollar Loan, having an Interest Period of [●] month(s)][; and][.]](2) [on _____________ ___, 20__ (which is a Business Day), the Borrower will continue $[●] of the aggregate outstandingprincipal amount of the Loans bearing interest at the Eurodollar Rate, as Eurodollar Loans having an Interest Period of [●] month(s).]EXLSERVICE HOLDINGS, INC.By Name:Title:Exhibit GExhibit 21.1Subsidiaries of the RegistrantName of SubsidiaryJurisdictionBusiness Process Outsourcing (India) Private LimitedIndiaBusiness Process Outsourcing Ltd.MauritiusBusiness Process Outsourcing, LLCDelawareDatasource Consulting, LLCColoradoexl Service.com (India) Private LimitedIndiaExlService (UK) LimitedUnited KingdomExlService Australia Pty Ltd.AustraliaExlService Bulgaria EADBulgariaExlService Colombia, S.A.S.ColombiaExlService Czech Republic S.R.O.Czech RepublicExlService Germany GmbHGermanyExlService Mauritius LimitedMauritiusExlService Philippines, Inc.PhilippinesExlService Romania Private Limited S.R.L.RomaniaExl Service South Africa (PTY) Ltd.South AfricaExlService Switzerland GmbHSwitzerlandExlService Technology Solutions, LLCDelawareExlService.com, LLCDelawareInductis (India) Private LimitedIndiaInductis (Singapore) PTE LimitedSingaporeInsight Solutions, LLCKansasIQR Analytics Private LimitedIndiaIQR Consulting Inc.CaliforniaJCG New Media, LLCPennsylvaniaLiss Systems LimitedUnited KingdomOPI LimitedMauritiusOutsource Partners International LimitedUnited KingdomOutsource Partners International, Inc.DelawareOutsource Partners International Private LimitedIndiaOverland Holdings, Inc.DelawareOverland Solutions, Inc.DelawareRPM Data Solutions, LLCNew JerseyRPM Direct, LLCNew Jersey Exhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in the following Registration Statements: (1) Registration Statement on Form S-3 (No. 333-179098) of ExlService Holdings, Inc.; and(2) Registration Statements on Form S-8 (Nos. 333-139211; 333-157076; and 333-206022) of ExlService Holdings, Inc.of our reports dated February 27, 2018 , with respect to the consolidated financial statements of ExlService Holdings, Inc., and the effectiveness of internal controlover financial reporting of ExlService Holdings, Inc. included in this Annual Report (Form 10-K) of ExlService Holdings, Inc. for the year ended December 31,2017 ./s/ Ernst & Young LLPNew York, New YorkFebruary 27, 2018Exhibit 31.1SECTION 302 CERTIFICATIONI, Rohit Kapoor, certify that:1.I have reviewed this annual report of ExlService Holdings, Inc. for the year ended December 31, 2017 ;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 statementsmade, 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 financialcondition, 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 ActRules 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 andhave:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterial information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe 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 fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely toadversely 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 overfinancial reporting. Date: February 27, 2018/s/ Rohit Kapoor Rohit Kapoor Vice-Chairman and Chief Executive OfficerExhibit 31.2SECTION 302 CERTIFICATIONI, Vishal Chhibbar, certify that: 1.I have reviewed this annual report of ExlService Holdings, Inc. for the year ended December 31, 2017 ;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 statementsmade, 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 financialcondition, 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 ActRules 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 andhave:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterial information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe 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 fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely toadversely 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 overfinancial reporting.Date: February 27, 2018/s/ Vishal Chhibbar Vishal Chhibbar Chief Financial OfficerExhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of ExlService Holdings, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2017 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Rohit Kapoor, Vice-Chairman and 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: (a)the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(b)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company./s/ Rohit Kapoor Rohit Kapoor Vice-Chairman and Chief Executive Officer February 27, 2018 Exhibit 32.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of ExlService Holdings, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2017 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Vishal Chhibbar, 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:(a)the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(b)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Vishal Chhibbar Vishal Chhibbar Chief Financial Officer February 27, 2018

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