KLDI KLDiscovery Com (PK)

 

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

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 8, 2024 (July 03, 2024)

 

 

KLDiscovery Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware			001-38789	61-1898603
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
9023 Columbine Road
Eden Prairie, Minnesota				55347
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 888 811-3789

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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Item 1.01 Entry into a Material Definitive Agreement.

The Restructuring

On July 3, 2024, KLDiscovery Inc. and its direct and indirect affiliated entities (collectively, the “Company”) entered into a Transaction Support Agreement (including the exhibits, term sheets, and schedules thereto, the “TSA”) with: (1) the holders of all of the Company’s convertible debentures due January 10, 2025 (the “Debentures”): an affiliate of Ontario Teachers’ Pension Plan Board (“OTPP”) and certain affiliates of MGG Investment Group LP (“MGG”) that hold Debentures (collectively, the “Debenture Holders”); (2) the Company’s term loan lenders and revolving credit facility lender under the Credit Agreement (defined below); and (3) certain holders of equity interests in the Company including, among others: affiliates of Carlyle Equity Opportunity GP, L.P. (“Carlyle”), Pivotal SPAC Funding LLC and Christopher Weiler, that collectively with OTPP and certain MGG affiliates hold over 62% of the Company’s outstanding common stock, par value $0.0001 (the “Existing Common Stock”) (all parties to the TSA other than the Company, collectively, the “Consenting Stakeholders”). The TSA contemplates a series of transactions (the “Transactions”) that, upon the satisfaction of applicable conditions to closing, will effectuate a financial restructuring of the Company’s capital structure and reduce the Company’s indebtedness (the “Restructuring”).

On July 3, 2024, as contemplated by the TSA, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with the Debenture Holders pursuant to which the Debenture Holders agreed to exchange the Debentures for an aggregate number of new shares of the Company’s common stock representing 96% of the Fully-Diluted Shares (as defined in the Exchange Agreement) (such exchange, the “Debenture Exchange”). As a condition to the Debenture Exchange, the Company agreed to hold a special meeting of its stockholders (the “Special Stockholders Meeting”) as soon as practicable following the date of the Exchange Agreement, at which Company stockholders will vote on a proposal to amend and restate the Company’s Second Amended and Restated Certificate of Incorporation (the “Current Certificate” and, as so amended and restated, the “New Certificate”). As described further below, the New Certificate will, among other things, increase the number of authorized shares of the Company’s common stock so that the Company may issue the shares contemplated by the Debenture Exchange. The Company intends to hold the Special Stockholders Meeting no later than August 12, 2024.

In addition to the actions described above, the TSA, the Exchange Agreement and the Restructuring contemplate, among other things, the following transactions, agreements and changes to the Company’s capital structure and corporate governance:

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The TSA

The TSA requires the Company to provide to Broadridge Financial Solutions, Inc. (“Broadridge”) on or prior to July 20, 2024, materials regarding the stockholder approval to be sought at the Special Stockholder Meeting for distribution to the Company’s stockholders, and the Company to obtain such approval on or prior to the twentieth business day following such date (each of these events, a “Milestone”). The Company also agreed to certain customary covenants in the TSA including, among others, to:

The Milestones also contemplate, and the TSA requires, that the Closing occur:

The Consenting Stakeholders agreed to certain customary covenants in the TSA including, among others, to:

The TSA and the Exchange Agreement both require the Company to conduct its businesses and operations in the ordinary course and refrain from taking certain enumerated actions prior to the Closing. In addition, while the TSA is in effect and following its termination (other than as a result of the occurrence of the Closing), the Company agreed to be bound by certain restrictive covenants that limit the Company’s ability to take certain actions without the consent of its lenders under the Company’s Credit Agreement, including, among others:

The TSA provides that, notwithstanding anything to the contrary therein, it does not require the Company’s Board of Directors (the “Board”), any Board committee, or any director or officer of the Company, after consultation with counsel, to take or refrain from taking any action inconsistent with its, his or her fiduciary duties to the Company (the “Fiduciary Out”).

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The consummation of the Transactions (the “Closing”) is subject to the satisfaction or waiver of certain customary conditions set forth in the TSA, including, among others, the Company’s payment of the transaction fees and expenses of the Consenting Stakeholders and their advisors, and of the Company’s advisors, in connection with the Transactions.

The TSA may be terminated by parties other than the Company with respect to themselves or in its entirety, in each case, as described in the TSA, upon the occurrence of certain events, including, among others:

The Company may terminate the TSA in its entirety upon the occurrence of certain events as described therein, including, among others:

The Exchange Agreement

The Exchange Agreement requires the Company to conduct its businesses and operations in the ordinary course and refrain from taking certain enumerated actions prior to the Closing. Like the TSA, the Exchange Agreement provides that, notwithstanding anything to the contrary therein, it does not require the Board, any Board committee, or any director or officer of the Company, after consultation with counsel, to take or refrain from taking any action inconsistent with its, his or her fiduciary duties to the Company.

Closing of the transactions contemplated by the Exchange Agreement, including the Debenture Exchange, is subject to:

The Exchange Agreement may be terminated by either the Company or the Debenture Holders upon the occurrence of certain events as described therein, including, among others:

The other agreements and documents referred to above are described in more detail below.

 

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Mutual Release Agreement

 

The Mutual Release Agreement will be entered into at the Closing. It includes customary mutual releases provided by the parties thereto in favor of the Company, the Consenting Stakeholders, and each of their respective related parties of any claims arising before or on the Closing date relating to any act or omission, agreement or event existing immediately prior to the Closing in connection with the management, ownership, or operation of the Company, the purchase or sale of any Company security, the subject matter of, or the events giving rise to, any claim or equity interest that is treated in the transactions contemplated by the TSA, the business or contractual arrangements among the parties thereto, the Company’s restructuring efforts, intercompany transactions, the TSA and any restructuring transaction, contract, instrument, release, or other agreement or document created or entered into in connection with the TSA, with customary exceptions for, among other things:

 

Financing Term Sheets

In connection with the TSA, the Company and the Consenting Stakeholders agreed to the Credit Agreement Term Sheet.

The Credit Agreement Term Sheet contemplates, inter alia, the following terms:

Additionally, the Company and the Consenting Stakeholders also agreed to the Second Lien Term Sheet.

The Second Lien Term Sheet contemplates, inter alia, the following terms:

 

New Stockholders Agreement

 

The Stockholders Agreement will be entered into as of the Closing by the Company, OTPP and certain affiliates of MGG that hold Common Stock (collectively, the “MGG Stockholders,” and together with OTPP, the “Major Stockholders,” and each, a “Major Stockholder”). It provides, among other things, that, effective as of the Closing:

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New Certificate

The New Certificate will materially amend the Current Certificate as follows:

The number of authorized shares of all classes of stock of the Company will be increased from 201,000,000 to 4,501,000,000, including 2,500,000,000 shares of Class A Common Stock, par value $0.0001 per share (the “Class A Common Stock”), 1,000,000,000 shares of Class B-1 Common Stock, par value $0.0001 per share (the “Class B-1 Common Stock”), 1,000,000,000 shares of Class B-2 Common Stock, par value $0.0000001 per share (the “Class B-2 Common Stock”, and together with the Class A Common Stock and Class B-1 Common Stock, the “Common Stock”), and 1,000,000 shares of Preferred Stock, par value $0.0001 per share.

The Existing Common Stock will be reclassified into three classes under the New Certificate:

Subject to the rights of any holders of any outstanding shares of Preferred Stock, in the event of any liquidation, dissolution or winding up of the Company, the Company shall distribute its assets to holders of shares of Common Stock as follows:

Shares of Class A Common Stock will be convertible by the holder thereof at any time into an equal number of shares of Class B-1 Common Stock and an equal number of shares of Class B-2 Common Stock if, at such time, such holder of Class A Common Stock is the record owner of shares of Class B-1 Common Stock or Class B-2 Common Stock. Shares of Class B-1 Common Stock will be convertible at any time by the holder thereof into an equal number of shares of Class A Common Stock if, contemporaneously with such conversion, an equal number of shares of Class B-2 Common Stock are redeemed by the Company for nominal consideration.

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The establishment of the Class B-1 Common Stock and Class B-2 Common Stock is necessary to facilitate OTPP’s compliance with certain regulations under the Pension Benefits Act Regulations (Ontario) that restrict OTPP from directly or indirectly investing in securities of a corporation that carry more than 30% of the votes that may be cast for the election of directors of the corporation. At the Closing, the Company will issue OTPP a combination of Class A Common Stock and Class B-1 Common Stock such that, following the Closing, OTPP holds (i) Class A Common Stock representing no more than 30% of the total number of shares of Class A Common Stock and Class B-1 Common Stock then outstanding, and (ii) the remainder of its ownership in shares of Class B-1 Common Stock. The Company does not expect that there will be any holders of Class B-1 Common Stock as of the Closing other than OTPP.

A third party designated by OTPP will be issued a number of shares of Class B-2 Common Stock equal to the number of shares of Class B-1 Common Stock issued to OTPP at the Closing.

The New Certificate will provide that the management of the business and the conduct of the affairs of the Company shall be vested in the Board and shall be conducted in accordance with the New Bylaws and, prior to the termination of the New Stockholders Agreement, the New Stockholders Agreement. The New Certificate will also provide that notwithstanding anything in the New Certificate to the contrary, prior to the termination of the New Stockholders Agreement, the Company may not engage in any act or activity that would breach the Stockholders Agreement and any such act or activity shall be void ab initio unless such act or activity is approved, or ratified after such act or activity occurs, by the consent of the Major Stockholders.

The Current Certificate classifies the Board into three classes of directors, which each class serving a term of three years. The New Certificate will declassify the Board. The New Certificate will provide that vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled only by stockholders and not by directors.

The Current Certificate does not permit the Company stockholders to take action by written consent of stockholders in lieu of a meeting of stockholders. The New Certificate will provide that any action that is required or permitted to be taken by the Company stockholders at any annual or special meeting of stockholders may be effected by written consent in lieu of a meeting of stockholders.

The New Certificate will exempt each Major Stockholder and its affiliates, successors, directly or indirectly managed funds or vehicles, partners, principals, directors, officers, members, managers and employees, including any of the foregoing who serve as officers or directors of the Company (collectively, the “Exempted Persons”), from the doctrine of corporate opportunity, or any other analogous doctrine. To the fullest extent permitted by law, the Exempted Persons shall not have any fiduciary duty to refrain from and shall not be liable to the Company or its stockholders for breach of any fiduciary duty solely by, engaging, directly or indirectly, in the same or similar business activities as the Company or in business with a competitor of the Company or otherwise competing with the Company. In addition, the New Certificate will provide that a corporate opportunity shall not be deemed to belong to the Company if it is a business opportunity that the Company is not financially or legally able or contractually permitted to undertake, or that is, from its nature, not in the line of the Company’s business or is of no practical advantage to it or that is one in which the Company has no interest or reasonable expectancy.

The New Certificate also incorporates various other updates and technical, clarifying and conforming changes.

 

New Bylaws

 

The New Bylaws will, among other things, provide that:

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The New Bylaws also incorporate various other updates and technical, clarifying and conforming changes.

The foregoing descriptions of the TSA and Exchange Agreement are not complete and are qualified in their entirety by reference to the full text of the TSA and the Exchange Agreement, copies of which are attached hereto as Exhibits 10.1 and 10.2, respectively. The foregoing descriptions of the Mutual Release Agreement, Amended Credit Agreement Term Sheet and Second Lien Credit Agreement Term Sheet are not complete and are qualified in their entirety by reference to the full text of the Mutual Release Agreement included as Schedule 3 to the TSA, and the Amended Credit Agreement Term Sheet and the Second Lien Term Sheet included as Annex A and Annex B, respectively, to the Transaction Term Sheet attached as Exhibit A to the TSA, a copy of which is attached hereto as Exhibit 10.1. The foregoing descriptions of the forms of New Stockholders Agreement, New Certificate and New Bylaws, are not complete and are qualified in their entirety by reference to the forms thereof which are attached as Exhibits to the Exchange Agreement, a copy of which is attached hereto as Exhibit 10.2.

Item 7.01 Regulation FD Disclosure.

On July 8, 2024, the Company issued a press release announcing that the Company had entered into the TSA. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

10.1	Transaction Support Agreement, dated July 3, 2024, by and among KLDiscovery Inc. and its direct and indirect affiliated entities, and the Consenting Stakeholders party thereto including the Debenture Holders, the Company’s term loan lenders and revolving credit facility lender under the Credit Agreement and certain holders of equity interests in the Company including: affiliates of Carlyle Equity Opportunity GP, L.P., Pivotal SPAC Funding LLC, Westview Capital Partners III, L.P., Conifer Partners, Radcliff Principal Holdings LLC and Christopher Weiler.
10.2	Exchange Agreement, dated July 3, 2024, by and among KLDiscovery Inc. and the Debenture holders listed on Schedule 1 attached thereto.
99.1	KLDiscovery Press Release dated July 8, 2024

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			KLDiscovery Inc.
Date:	July 8, 2024	By:	/s/ Dawn Wilson
		Name: Title:	Dawn Wilson Chief Financial Officer

 

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THIS TRANSACTION SUPPORT AGREEMENT IS NOT AN OFFER, ACCEPTANCE OR SOLICITATION WITH RESPECT TO ANY SECURITIES, LOANS OR OTHER INSTRUMENTS. ANY SUCH OFFER OR SOLICITATION WILL COMPLY WITH ALL APPLICABLE SECURITIES LAWS. Nothing contained in thIS TRANSACTION SUPPORT AGREEMENT shall be an admission of fact or liability OR, UNTIL THE OCCURRENCE OF THE AGREEMENT EFFECTIVE DATE ON THE TERMS DESCRIBED HEREIN, DEEMED BINDING ON ANY OF THE PARTIES HERETO.

THIS TRANSACTION SUPPORT AGREEMENT IS THE PRODUCT OF SETTLEMENT DISCUSSIONS AMONG THE PARTIES HERETO. ACCORDINGLY, THIS TRANSACTION SUPPORT AGREEMENT IS PROTECTED BY RULE 408 OF THE FEDERAL RULES OF EVIDENCE AND ANY OTHER APPLICABLE STATUTES OR DOCTRINES PROTECTING THE USE OR DISCLOSURE OF CONFIDENTIAL SETTLEMENT DISCUSSIONS.

THIS TRANSACTION SUPPORT AGREEMENT DOES NOT PURPORT TO SUMMARIZE ALL OF THE TERMS, CONDITIONS, REPRESENTATIONS, WARRANTIES, AND OTHER PROVISIONS WITH RESPECT TO THE TRANSACTIONS DESCRIBED HEREIN, WHICH TRANSACTIONS WILL BE SUBJECT TO THE COMPLETION AND EXECUTION OF DEFINITIVE DOCUMENTS INCORPORATING THE TERMS SET FORTH HEREIN AND THE CLOSING OF ANY TRANSACTION SHALL BE SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN SUCH DEFINITIVE DOCUMENTS AND THE APPROVAL RIGHTS OF THE PARTIES SET FORTH HEREIN AND IN SUCH DEFINITIVE DOCUMENTS, IN EACH CASE, SUBJECT TO THE TERMS HEREOF.

TRANSACTION SUPPORT AGREEMENT

This TRANSACTION SUPPORT AGREEMENT (including all exhibits, annexes, and schedules hereto in accordance with Section ‎15.02, as amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms hereof, this “Agreement”) is made and entered into as of July 3, 2024 (the “Execution Date”), by and among the following parties, each solely in the capacity set forth on its respective signature page to this Agreement (each of the following parties described in clauses ‎(i) through ‎(vi) of this preamble, collectively, the “Parties”):

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RECITALS

WHEREAS, the Company and the Consenting Stakeholders have in good faith and at arms’ length negotiated or been apprised of certain out-of-court restructuring and recapitalization transactions with respect to the Company’s capital structure on the terms and conditions set forth in this Agreement and as specified in the term sheet attached as Exhibit A hereto (the “Transaction Term Sheet,” and such transactions as described in this Agreement, the Transaction Term Sheet, and the Definitive Documents, in each case, as may be amended, supplemented, or otherwise modified from time to time in accordance with the terms of this Agreement, collectively, the “Transactions”);

WHEREAS, on the date hereof, the Company and the Consenting Stakeholders have agreed to the Transaction Term Sheet, which sets forth the principal economic terms of the Transactions that shall be consummated upon the execution of the Definitive Documents containing terms consistent with those set forth in the Transaction Term Sheet and such other terms as agreed to by the Parties in accordance with this Agreement and the Transaction Term Sheet;

WHEREAS, the Parties have agreed to support the Transactions, subject to and in accordance with the terms of this Agreement (including the Transaction Term Sheet) and desire to work together to complete the negotiation of the terms of the Definitive Documents and the completion of each of the actions necessary or desirable to effect the Transactions; and

WHEREAS, the Parties have agreed to take certain actions in support of the Transactions on the terms and conditions set forth in this Agreement and the Transaction Term Sheet.

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NOW, THEREFORE, in consideration of the covenants and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Party, intending to be legally bound hereby, agrees as follows:

AGREEMENT

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This Agreement shall be effective from the Agreement Effective Date until validly terminated pursuant to the terms set forth in ‎Section 12. To the extent that a signatory to this Agreement holds, as of the date hereof or thereafter, multiple Company Claims/Interests, such Party shall be deemed to have executed this Agreement in its capacity as a holder of all such Company Claims/Interests, and this Agreement shall apply severally to such Party with respect to each such Company Claims/Interest held by such Party.

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The Company shall notify the Required Parties at least two (2) Business Days prior to the expected Transaction Effective Date.

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Notwithstanding anything to the contrary herein, nothing in this Agreement shall create or impose any additional fiduciary obligations upon any Company Party or any of the Consenting Stakeholders, or any members, partners, managers, managing members, officers, directors, employees, advisors, principals, attorneys, professionals, accountants, investment bankers, consultants, agents or other representatives of the same or their respective affiliated entities, in such person’s capacity as a member, partner, manager, managing member, officer, director, employee, advisor, principal, attorney, professional, accountant, investment banker, consultant, agent or other representative of such Party, that such entities did not have prior to the Agreement Effective Date.

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KLDiscovery Inc.

9023 Columbine Road

Eden Prairie, MN 55347

 

Attention: Andrew Southam, General Counsel

Email: andrew.southam@kldiscovery.com

with copies to (which shall not constitute notice):

 

Gibson, Dunn & Crutcher LLP

200 Park Ave.

New York, NY 10016

Attention: Scott J. Greenberg
Joe Zujkowski
AnnElyse Scarlett Gains
Michael G. Farag

Email: SGreenberg@gibsondunn.com
JZujkowski@gibsondunn.com
AGains@gibsondunn.com
MFarag@gibsondunn.com

 

The Carlyle Group Inc.

1001 Pennsylvania Avenue NW

Washington, DC 20004

Attention: Louise Dumican

Email: louise.dumican@carlyle.com

 

with copies to (which shall not constitute notice):

 

Latham & Watkins LLP

555 Eleventh Street, NW, Suite 1000

Washington, D.C. 20004

Attention: Paul Sheridan

Email: paul.sheridan@lw.com

 

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Use the notice information provided on the applicable signature page.

 

Morrison & Foerster LLP

250 West 55th Street

New York, NY 10019-9601

Attention: James A. Newton

Aly El Hamamsy

Email: jnewton@mofo.com

aelhamamsy@mofo.com

 

Blackstone Alternative Credit Advisors LP

345 Park Avenue, 31st Floor

New York, NY 10154

Attention: Brad Colman

Email: Brad.Colman@Blackstone.com

 

with copies to (which shall not constitute notice):

 

King & Spalding LLP

1185 Avenue of the Americas, 34th Floor

New York, NY 10036

Attention: Jeff Dutson

Todd Holleman

Email: jdutson@kslaw.com

tholleman@kslaw.com

 

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Ally Bank

300 Park Avenue, 4th Floor

New York, NY 10022

Attention: SFD Portfolio Manager

Email: rob.shusterman@ally.com

erica.ninesteel@ally.com

john.buff@ally.com

jorge.wagner@ally.com

 

with copies to (which shall not constitute notice):

 

Holland & Knight LLP

One Arts Plaza

1722 Routh Street, Suite 1500

Dallas, TX 75201

Attention: Eric Kimball

Tyson Wanjura

Email: eric.kimball@hklaw.com

Tyson.wanjura@hklaw.com

 

Any notice given by delivery, mail, or courier shall be effective when received or if sent by electronic mail, when sent to the extent that an undeliverable message is not promptly received by the sender thereof.

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[Signature Pages Follow]

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day and year first above written.

 

KLDiscovery Inc., on behalf of itself and the entities listed below

 

By:

Name:

Title:

 

Entity

Ibas Ontrack AB

Ibas Ontrack ApS

Ibas Ontrack AS

Ibas Ontrack OY

KLDiscovery Franchising, LLC

KLDiscovery Holdings, Inc.

KLDiscovery Limited

KLDiscovery Limited

KLDiscovery Ontrack (HK) Limited

KLDiscovery Ontrack (Switzerland) GmbH

KLDiscovery Ontrack AS

KLDiscovery Ontrack BV

KLDiscovery Ontrack Canada Co.

KLDiscovery Ontrack GmbH

KLDiscovery Ontrack Information Technology Service (Shanghai) Co Ltd

KLDiscovery Ontrack K.K.

KLDiscovery Ontrack Limited

KLDiscovery Ontrack Pte Ltd

KLDiscovery Ontrack Pty Ltd.

KLDiscovery Ontrack S.L.

KLDiscovery Ontrack S.p z.o.o.

KLDiscovery Ontrack S.r.l.

KLDiscovery Ontrack Sarl

KLDiscovery Ontrack Single Member P.C.

KLDiscovery Ontrack, LLC

LD International Holdings Limited

LD International Holdings SRL

LD Topco, Inc.

Ontrack Data Recovery, LLC

KLDiscovery India Technology Services Private Limited

 

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[Consenting Stakeholder Signature Pages on File]

 

 

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Schedule 2

Exchange Agreement

 

 

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Confidential

 

 

EXCHANGE AGREEMENT

by and among

KLDISCOVERY INC.

and

THE PARTICIPATING HOLDER PARTIES NAMED HEREIN

dated as of

July [●], 2024

 

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TABLE OF CONTENTS

Page

ARTICLE 1 EXCHANGE OF DEBENTURES		1
1.01	Exchange of Debentures	1
1.02	Pre-Closing Revisions to Schedule I Allocations	2
1.03	Adjustments	2
1.04	Withholding	3
ARTICLE 2 CLOSING		3
2.01	Closing	3
2.02	Restructuring Transactions	4
2.03	Further Assurances	4
2.04	Closing Tax Document Deliverables	4
ARTICLE 3 REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY ENTITIES		4
3.01	Organization; Power and Authority	4
3.02	Authorization; Non-Contravention	5
3.03	Capitalization and Related Matters	6
3.04	Litigation	7
3.05	Brokerage	7
3.06	Disclaimer; Acknowledgment; Non-Reliance	7
3.07	Compensation Plans	8
3.08	Opinion of Financial Advisor	8
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PARTICIPATING HOLDERS		8
4.01	Organization; Power and Authority	8
4.02	Authorization; No Breach	8
4.03	Title to Existing Debentures	9
4.04	Litigation	10
4.05	Investment Representations	10
4.06	Disclaimer; Acknowledgment; Non-Reliance	10
ARTICLE 5 COVENANTS AND AGREEMENTS		11
5.01	Covenants of the	11
5.02	Negative Covenants of the Company Entities	13
5.03	Company Stockholders’ Meeting	14
5.04	Amendment of Charter and Bylaws	14
5.05	Mutual Releases	14

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5.06	Publicity; Press Releases and Announcements	14
5.07	Additional Provisions Regarding Company’s Commitments.	15
ARTICLE 6 CONDITIONS TO CLOSING		15
6.01	Conditions to the Obligations of All Parties	15
6.02	Additional Conditions to the Obligations of the Company	15
6.03	Additional Conditions to the Obligations of the Participating Holders	16
ARTICLE 7 TERMINATION		18
7.01	Termination	18
7.02	Effect of Termination	19
ARTICLE 8 DEFINITIONS		19
8.01	Definitions	19
8.02	Usage	26
ARTICLE 9 MISCELLANEOUS		27
9.01	Expenses	27
9.02	Notices	27
9.03	Complete Agreement	28
9.04	Amendment and Waiver	28
9.05	Assignment	28
9.06	Severability	29
9.07	Captions	29
9.08	Counterparts	29
9.09	Third Party Beneficiaries	29
9.10	Specific Performance	29
9.11	Governing Law	30
9.12	CONSENT TO JURISDICTION	30
9.13	WAIVER OF JURY TRIAL	30
9.14	No Strict Construction	31
9.15	Non-Recourse	31
9.16	Survival	31
9.17	Securities Purchase Agreement Amendment	31

 

 

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EXHIBITS AND SCHEDULES

Exhibit A – Form of Amended Charter

Exhibit B – Form of Amended Bylaws

Exhibit C – Form of New Stockholders’ Agreement

Exhibit D – Form of OTPP Designee Subscription Agreement

Exhibit E – Form of RRA Termination Agreement

 

Schedule I – Allocation of Consideration Shares

Disclosure Letter

Schedule 5.01(c)(ii) – Covenants

Schedule 5.02 – Exceptions to Negative Covenants
Schedule 6.03(c)(vi) – Form of Letter Agreement

 

 

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EXCHANGE AGREEMENT

THIS EXCHANGE AGREEMENT (this “Agreement”) is made and entered into as of July [●], 2024, by and among (i) KLDiscovery Inc. (the “Company”), and (ii) the Participating Holder parties listed on the signature pages hereto (the “Participating Holders”). Capitalized terms used and not otherwise defined herein have the meanings set forth in Article 8 or as set forth in the Transaction Support Agreement (as defined herein).

WHEREAS, the Company and certain consenting stakeholders have, in good faith and at arms’-length, negotiated or been apprised of certain restructuring and recapitalization transactions with respect to the Company’s capital structure on the terms and subject to the conditions of that certain Transaction Support Agreement dated as of the date hereof, by and among the Company, its direct and indirect affiliated entities and the various other consenting stakeholders identified therein (including all exhibits, annexes, and schedules thereto, as amended, restated, amended and restated, supplemented, or otherwise modified from time to time in accordance with its terms, the “Transaction Support Agreement”);

WHEREAS, the Company previously issued its 8.00% Convertible Debentures due 2024 (the “Debentures”) pursuant to that certain Securities Purchase Agreement dated December 16, 2019 (as the same has been or may be amended, supplemented, modified and/or waived, the “Securities Purchase Agreement”);

WHEREAS, the undersigned Participating Holders collectively hold 100% of the issued and outstanding Debentures; and

WHEREAS, pursuant to the Transaction Support Agreement, the Company and the undersigned Participating Holders have agreed that the Participating Holders will exchange their Debentures for newly-issued Common Stock of the Company through a series of related transactions, all on the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements herein contained, and intending to be legally bound, the parties hereto hereby agree as follows:

ARTICLE 1
EXCHANGE OF DEBENTURES

1.01 Exchange of Debentures. On the terms and subject to the conditions contained in this Agreement, at the Closing and simultaneously with the consummation of the other Transactions, the Company and the Participating Holders shall consummate the following transactions (collectively, the “Debenture Exchange”): (i) each Participating Holder shall deliver to the Company a signed statement attesting to its ownership of the Debentures set forth on Schedule I and confirming that its Debentures may be cancelled on the Company’s Debenture Registry in connection with the Debenture Exchange, and (ii) in exchange for the surrendered Debentures, the Company shall issue, convey and deliver to such Participating Holder the number and class of new shares of Common Stock set forth opposite such Participating Holder’s name on Schedule I, as it may be revised from time to time prior to the Closing Date in accordance with Section 1.02 and Section 1.03 hereto (the new shares of Common Stock to be issued to all

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Participating Holders in the aggregate, the “Consideration Shares”); provided, that the OTPP Holder may direct that any number of its Consideration Shares be issued to the OTPP Designee pursuant to the OTPP Designee Subscription Agreement, as indicated on Schedule I, in exchange for the payment of nominal consideration by the OTPP Designee to the Company as further set forth in the OTPP Designee Subscription Agreement. As promptly as practicable following the issuance of the Consideration Shares, the Company shall deliver to the Participating Holders reasonable evidence of the issuance thereof. On the terms and subject to the conditions contained in this Agreement, effective upon consummation of the Debenture Exchange at the Closing, all Debentures held by the Participating Holders shall automatically be cancelled, and all obligations of any Company Entities with respect thereto shall be fully and forever terminated and extinguished. Each exchange of Debentures by each Participating Holder as contemplated by this Section 1.01 shall constitute a separate transaction hereunder.

1.02 Pre-Closing Revisions to Schedule I Allocations. Notwithstanding anything in this Agreement to the contrary, any Affiliated Holders may, by providing written notice to the Company at least two (2) Business Days prior to the Closing Date and without the consent of any other party to this Agreement, revise the number of Consideration Shares to be received by each of such Affiliated Holders (and, in the case of the OTPP Holder, by the OTPP Designee pursuant to the OTPP Designee Subscription Agreement), in each case as set forth on Schedule I hereto; provided, that such revision shall not change the aggregate amount of Consideration Shares to be received by such Affiliated Holders (including, in the case of the OTPP Holder, the OTPP Designee).

1.03 Adjustments.

(a) It is the intention of the parties that the Consideration Shares shall represent 96% of the Fully-Diluted Shares as of immediately following the Closing (the “Target Percentage”); provided, that for purposes of such calculation, shares of Class B-2 Common Stock shall not be included in the number of Consideration Shares. Accordingly, and notwithstanding anything to the contrary in this Agreement or any other Transaction Agreement, the number of Consideration Shares issuable pursuant to this Agreement shall be equitably adjusted as mutually agreed by the parties hereto, acting reasonably, to the extent necessary or appropriate to cause the Consideration Shares to represent the Target Percentage as of immediately following the Closing, after taking into account (i) the effect of any issuance of shares of capital stock or other Equity Securities, stock split, reverse stock split, stock dividend (including any dividend or distribution of shares of capital stock), division or subdivision of shares, consolidation of shares, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to the Company’s Equity Securities that occurs during the period on or after the date of this Agreement and ending on the Closing Date, (ii) any exercise of options or settlement of restricted stock units under the Company’s 2019 Incentive Award Plan, whether occurring prior to, at or following the Closing, to the extent the shares issued upon such exercise or settlement were not included in the Fully-Diluted Shares as of immediately prior to the Closing, (iii) any exercise of 2024 Warrants, whether occurring prior to, at or following the Closing, (iv) the application of any contractual provisions, obligations or other facts relating to Equity Securities of the Company that exist as of the Closing (including contractual provisions that provide for equitable adjustments in connection with

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recapitalizations, reorganizations or other transactions affecting the Company’s Equity Securities) where such application results in a change to the Fully-Diluted Shares, whether occurring prior to, at or following the Closing, and (v) any other change or correction to the number of Fully-Diluted Shares as of immediately following the Closing as compared to the number of Fully-Diluted Shares set forth on Schedule 3.03(a)(2).

(b) If prior to the Closing the provisions of Section 1.03(a) result in an adjustment to the number of Consideration Shares required to be issued in order to achieve the Target Percentage, then the number of shares issuable to the Participating Holders at the Closing pursuant to Section 1.01 shall be increased or decreased (as applicable), with such adjustment applied pro rata among the Participating Holders listed on Schedule I (or as otherwise directed by the Participating Holders in writing at such time).

(c) If following the Closing the provisions of Section 1.03(a) result in an adjustment to the number of Consideration Shares required to be issued in order to achieve the Target Percentage, then (i) if the number of Consideration Shares is increased, the Company shall issue the necessary number of additional Consideration Shares to the Participating Holders at such time, with such adjustment applied pro rata among the Participating Holders listed on Schedule I (or as otherwise directed by the Participating Holders in writing at such time), and (ii) if the number of Consideration Shares is decreased, the Participating Holders shall surrender the necessary number of Consideration Shares to the Company for cancellation at such time, with such adjustment applied pro rata among the Participating Holders listed on Schedule I (or as otherwise directed by the Participating Holders in writing at such time).

(d) On the date that is three (3) Business Days prior to the Closing, the Company shall deliver to the Participating Holders a detailed schedule showing the anticipated capitalization of the Company as of immediately prior to the Closing, and showing the anticipated number of Fully-Diluted Shares. The Company shall promptly notify the Participating Holders of any subsequent changes to such information prior to the Closing.

1.04 Withholding. The Company and any other applicable withholding agent shall be entitled to deduct and withhold, or cause to be deducted and withheld, from any amounts otherwise payable pursuant to this Agreement such amounts as it determines it is required to deduct and withhold by applicable U.S. federal, state, local and non-U.S. Law. Notwithstanding the foregoing, the parties agree that no withholding shall be required if the Participating Holders provide the information required in Section 2.04.

ARTICLE 2
CLOSING

2.01 Closing. On the terms and subject to the conditions set forth in this Agreement, the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place (a) remotely via the electronic exchange of documents and signatures on the third (3rd) Business Day following the satisfaction or (to the extent permitted by applicable Law) waiver of the conditions set forth in Article 6 (other than those conditions that by their terms are to be satisfied at the

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Closing, provided that such conditions are satisfied or (to the extent permitted by applicable Law) waived at the Closing) or (b) at such other place, time or date as the parties hereto may mutually agree in writing. The date on which the Closing shall occur is referred to herein as the “Closing Date.”

2.02 Restructuring Transactions. At the Closing, the parties hereto shall consummate the Debenture Exchange and each of the other Transactions described in the Transaction Support Agreement.

2.03 Further Assurances. In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, each of the parties hereto shall take such further action (including the execution and delivery of such further instruments and documents) as any other party may reasonably request, all at the sole cost and expense of the requesting party.

2.04 Closing Tax Document Deliverables. On or before the Closing Date, each Participating Holder shall provide the Company with a properly completed and validly executed Internal Revenue Service Form W-9 or appropriate Form W-8 evidencing such Participating Holder’s exemption from withholding under an applicable double tax treaty with the United States and/or a statement certifying such Participating Holder’s eligibility to claim the portfolio interest exemption, in each case with respect to any accrued interest that is exchanged for the Consideration Shares.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY ENTITIES

Except as set forth in the disclosure letter delivered by the Company to the Participating Holders concurrently with the execution of this Agreement (the “Disclosure Letter”) (it being understood that any disclosure in the Company Disclosure Letter shall qualify the corresponding section or subsection of this Article 3 and each other section or subsection as to which the relevance of such disclosure is reasonably apparent on its face) and as otherwise provided in this Article 3, as of the date of this Agreement and as of the Closing Date (in each case, except to the extent that any representation or warranty by its terms is made as of a specified date or time), the Company hereby represents and warrants to the Participating Holders that:

3.01 Organization; Power and Authority.

(a) Each of the Company Entities is duly incorporated or organized, as applicable, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation (in the case of good standing, to the extent such jurisdiction recognizes such concept). Each of the Company Entities is qualified to do business in every jurisdiction in which the ownership of its properties or the conduct of its business requires it to be so qualified, except in such jurisdictions where the failure to be so qualified, individually or in the aggregate, has not been and would not reasonably be expected to be material to Company and its Subsidiaries, taken as a whole, or to affect the Company’s ability to consummate the Transactions in any material respect.

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(b) Each of the Company Entities possesses all requisite corporate (or equivalent) power and authority to enter into this Agreement and the other Transaction Agreements and, subject to obtaining the Company Stockholder Approval, to carry out the Transactions.

3.02 Authorization; Non-Contravention.

(a) The execution, delivery and performance of this Agreement and the other Transaction Agreements by such Company Entity and the consummation by such Company Entity of the Transactions have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of such Company Entity are necessary to authorize such agreements or to consummate the Transactions (other than, with respect to the filing of the Amended Charter, the Company Stockholder Approval, and with respect to the Debenture Exchange, the Company Stockholder Approval and the filing of the Amended Charter pursuant to the DGCL). This Agreement has been duly and validly executed and delivered by such Company Entity and, assuming the due authorization, execution and delivery by the Participating Holders, constitutes a legal, valid and binding obligation of such Company Entity, enforceable against such Company Entity in accordance with its terms, except as limited by the application of bankruptcy, moratorium and other Laws affecting creditors’ rights generally and as limited by the availability of specific performance and the application of equitable principles.

(b) The Company Board, at a meeting duly called and held on or prior to the date hereof, adopted resolutions approving and declaring advisable this Agreement, the Amended Charter and the Transactions (such approval and declaration having been made in accordance with the DGCL) and resolving to make the Company Board Recommendation.

(c) Except as set forth on Schedule 3.02(c), the execution, delivery and performance of this Agreement and the other Transaction Agreements, the consummation of the Transactions and the fulfillment of and compliance with the respective terms hereof and thereof by the Company Entities do not and shall not (i) conflict with or result in a breach or violation of, (ii) constitute a default under (whether with or without the passage of time, the giving of notice or both), (iii) result in the creation of any Lien upon, or the grant, assignment or transfer to any other Person of any license or other right or interest under, to or in, any Equity Securities of any Company Entity or any of the Company Entities’ assets pursuant to, (iv) give any third party the right to modify, terminate or accelerate, or cause or result in any modification, termination or acceleration of, any obligation under, or (v) create any right to payment or any other right (concurrently or with the passage of time and/or upon the occurrence of one or more events or conditions) pursuant to, the Organizational Documents of any of the Company Entities, any Law to which any Company Entity is subject, or any contract to which any Company Entity is a party or bound (including, for the avoidance of doubt, the Credit Agreement after giving effect to the Transactions), except where such violations, conflicts, breaches or defaults, other than with respect to the Organizational Documents of any of the Company Entities or applicable Laws, has not been and would not reasonably be expected to be material to

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Company and its Subsidiaries, taken as a whole, or to affect the Company’s ability to consummate the Transactions in any material respect.

(d) Except for the filing of the Amended Charter pursuant to the DGCL and the filing of a Notice of Exempt Offering on Form D with the Securities and Exchange Commission (the “SEC”) with respect to the issuance of the Consideration Shares and the notices described in Sections 5.01(a)(iii) and (iv), no authorization, consent, approval, exemption or other action by, notice to or filing with any Governmental Entity is required in connection with the execution, delivery and performance of this Agreement, the consummation of the Transactions and the fulfillment of and compliance with the respective terms hereof and thereof.

(e) Except as expressly provided by this Agreement and the Transaction Agreements, none of the Company Entities are a party to any restructuring or similar agreements or arrangements with the other parties to this Agreement or any other Person that have not been disclosed to all parties to this Agreement.

3.03 Capitalization and Related Matters.

(a) (1) As of the opening of business on the date of this Agreement, and from the opening of business on such date until immediately prior to the Closing on the Closing Date, the capitalization of the Company shall be as set forth on Schedule 3.03(a)(1); and (2) as of immediately following the Closing and the Debenture Exchange, the capitalization of the Company (including the number of Fully-Diluted Shares as of immediately following the Closing and the Debenture Exchange) shall be as set forth on Schedule 3.03(a)(2); in each case, assuming that during the period beginning as of immediately prior to the opening of business on the date of this Agreement and ending on the Closing Date: (i) none of the Debentures are converted; (ii) none of the 2024 Warrants and none of the options outstanding under the Company’s 2019 Incentive Award Plan are exercised; (iii) none of the restricted stock units outstanding under the Company’s 2019 Incentive Award Plan vest; and (iv) no awards outstanding under the Company’s 2019 Incentive Award Plan are forfeited.

(b) Except as set forth on Schedule 3.03(b) and as contemplated by the Transaction Agreements, (i) other than the 2024 Warrants, the Debentures and the Contingent Shares, no Company Entity has outstanding any securities (including options, warrants, purchase rights, subscription rights, conversion rights or similar rights) convertible or exchangeable for any of its Equity Securities or containing any profit participation features, nor any rights or options to subscribe for or to purchase its Equity Securities or any securities convertible into or exchangeable for its Equity Securities or any equity appreciation rights or phantom equity plan, nor any promises to issues any such securities, rights or options, (ii) none of the Company Entities are, and immediately following the Closing none will be, subject to any obligation (contingent or otherwise) to repurchase, redeem or otherwise acquire or retire any Equity Securities or make or pay any dividends or distributions in respect of any Equity Securities, (iii) there are no, and immediately following the Closing there will not be, any, statutory or contractual preemptive rights, co-sale rights, rights of first refusal or similar rights or restrictions with

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respect to the Equity Securities of any Company Entity, (iv) no Company Entity has violated any applicable federal, provincial or state securities Laws in connection with the offer, sale or issuance of any of its Equity Securities, and (v) other than the Stockholders’ Agreement, dated December 19, 2019, by and among Pivotal Acquisition Corp., affiliates of Carlyle Equity Opportunity GP, L.P. and Revolution Growth III, LP and certain other signatories thereto, as amended and the Existing RRA, there are no agreements among the Company and the holders of Equity Securities of the Company Entities, or among the Company and any other Persons, or, to the actual knowledge of the Company’s management, among holders of Equity Securities of the Company, in each case, with respect to the voting or transfer of the Company Entities’ Equity Securities or with respect to any other aspect of the Company Entities’ governance. All of the outstanding Equity Securities of each Company Entity are, and immediately following the Closing shall be, duly authorized, validly issued, fully paid and non-assessable. Subject only to the Company Stockholder Approval, the Consideration Shares to be issued at the Closing have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will have been validly issued and will be fully paid and nonassessable and the issuance thereof is not subject to any preemptive or other similar right.

(c) Schedule 3.03(c) sets forth each Subsidiary of the Company, including the name of each Subsidiary of the Company, the jurisdiction of its incorporation or organization, as applicable, and the Person(s) owning the outstanding Equity Securities of such Subsidiary. No Company Entity has any obligation to make any Investment (whether by loan, capital contribution, purchase of securities or otherwise, and including any additional Investments) in any Person.

3.04 Litigation. There are no Actions pending or, to the Company’s knowledge, threatened in writing against any of the Company Entities or any of their respective assets, at law or in equity, or before or by any Governmental Entity that (i) individually or in the aggregate, would reasonably be expected to have an adverse effect on the Company’s ability to consummate the Transactions, or (ii) seek to restrain or prohibit or to obtain damages or other relief in connection with the Transactions. There are no outstanding Orders against any of the Company Entities or any of their respective assets that (x) individually or in the aggregate, have been or would reasonably be expected to be material to Company and its Subsidiaries, taken as a whole, or to have an adverse effect on the Company’s ability to consummate the Transactions, or (y) seek to restrain or prohibit or to obtain damages or other relief in connection with the Transactions.

3.05 Brokerage. Except for the claims set forth on Schedule 3.05 (for which the Company shall be solely liable), there are and shall be no claims for brokerage commissions, finders’ fees or similar compensation in connection with the Transactions based on any arrangement or agreement to which any Company Entity is a party or by which any Company Entity is bound.

3.06 Disclaimer; Acknowledgment; Non-Reliance. Except for the representations and warranties expressly and specifically set forth in Article 3 of this Agreement and in the other Transaction Agreements, no Company Entity makes any express or implied representation or warranty in connection with the Transactions, and the Company Entities hereby disclaim any such representations or warranties in connection with the Transactions. The Company acknowledges

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that the representations and warranties to the Company expressly and specifically set forth in Article 4 of this Agreement and in the other Transaction Agreements constitute the sole and exclusive representations and warranties being made to the Company in connection with the Transactions, and the Company understands, acknowledges and agrees that the Company is not relying on any other representations or warranties of any kind or nature expressed or implied.

3.07 Compensation Plans. Except for the adoption of the non-insider and the insider KERP, an increase of 2,154,313 shares in the shares available for issuance under the 2019 Incentive Award Plan, and as otherwise set forth on Schedule 3.07, since December 31, 2023, none of the Company Entities have (i) adopted, amended, restated, supplemented, modified, replaced, assigned, or renewed or otherwise extended the term of, any of the Company Incentive Plans, or (ii) made any payments under any of the Company Incentive Plans, except as required by applicable Law or as required by the terms of any of the foregoing.

3.08 Opinion of Financial Advisor. Prior to the execution of this Agreement, the Company Board received a fairness opinion from Ducera Partners LLC to the effect that, as of the date thereof and based upon and subject to the various qualifications and assumptions set forth therein, the Debenture Exchange is fair to the Company from a financial point of view. The Company has made available to the Participating Holders a copy of such opinion.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PARTICIPATING HOLDERS

Except as otherwise provided in this Article 4, each Participating Holder (on an individual, several basis solely with respect to itself), hereby represents and warrants to the Company that:

4.01 Organization; Power and Authority.

(a) Such Participating Holder is duly incorporated or organized, as applicable, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation (in the case of good standing, to the extent such jurisdiction recognizes such concept). Such Participating Holder is qualified to do business in every jurisdiction in which the ownership of its properties or the conduct of its business requires it to be so qualified, except in such jurisdictions where the failure to be so qualified, individually or in the aggregate, would reasonably be expected to affect the Participating Holder’s ability to consummate the Transactions in any material respect.

(b) Such Participating Holder possesses all requisite corporate (or equivalent) power and authority to enter into this Agreement and the other Transaction Agreements and to carry out the Transactions.

4.02 Authorization; No Breach.

(a) The execution, delivery and performance of this Agreement and the other Transaction Agreements by such Participating Holder and the consummation by such Participating Holder of the Transactions have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of such Participating Holder are necessary to authorize such agreements or to consummate the

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Transactions. This Agreement has been duly and validly executed and delivered by such Participating Holder and, assuming the due authorization, execution and delivery by the Company Entities and the other Participating Holders, constitutes a legal, valid and binding obligation of such Participating Holder, enforceable against such Participating Holder in accordance with its terms, except as limited by the application of bankruptcy, moratorium and other Laws affecting creditors’ rights generally and as limited by the availability of specific performance and the application of equitable principles.

(b) The execution, delivery and performance of this Agreement and the other Transaction Agreements, the consummation of the Transactions and the fulfillment of and compliance with the respective terms hereof and thereof by such Participating Holder do not and shall not (i) conflict with or result in a breach or violation of, (ii) constitute a default under (whether with or without the passage of time, the giving of notice or both), (iii) result in the creation of any Lien upon, or the grant, assignment or transfer to any other Person of any license or other right or interest under, to or in, any Equity Securities of such Participating Holder or any of the assets of such Participating Holder pursuant to, (iv) give any third party the right to modify, terminate or accelerate, or cause or result in any modification, termination or acceleration of, any obligation under, or (v) create any right to payment or any other right (concurrently or with the passage of time and/or upon the occurrence of one or more events or conditions) pursuant to, the Organizational Documents of such Participating Holder, any Law to which such Participating Holder is subject, or any contract to which such Participating Holder is a party or bound, except where such violations, conflicts, breaches or defaults, other than with respect to the Organizational Documents of such Participating Holder or applicable Laws, has not affected and would not reasonably be expected to affect the Participating Holder’s ability to consummate the Transactions in any material respect.

(c) Except for the notices described in Sections 5.01(a)(iii) and (iv), no authorization, consent, approval, exemption or other action by, notice to or filing with any Governmental Entity is required in connection with the execution, delivery and performance of this Agreement, the consummation of the Transactions and the fulfillment of and compliance with the respective terms hereof and thereof.

(d) Except as expressly provided by this Agreement and the Transaction Agreements, neither such Participating Holder nor any of its direct or indirect Subsidiaries is a party to any restructuring or similar agreements or arrangements with the other parties to this Agreement or any other Person that relate to the Company and that have not been disclosed to all parties to this Agreement.

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4.03 Title to Existing Debentures. (a) Such Participating Holder is the sole beneficial owner of, and has good and marketable title to, Debentures having an aggregate principal amount set forth opposite such Participating Holder’s name on Schedule I and (b) such Participating Holder will be the sole beneficial owner of, and have good and marketable title to, any Debentures issued as PIK interest with respect to the Debentures described in Section 4.03(a). At the Closing, such Participating Holder shall transfer, convey and deliver to the Company good and marketable title to Debentures having an aggregate initial principal amount set forth opposite such Participating Holder’s name on Schedule I, and any Debentures issued as PIK interest with respect thereto, free and clear of all Liens (except for restrictions on transfer under applicable securities Laws).

4.04 Litigation. There are no Actions pending or, to such Participating Holder’s knowledge, threatened in writing against such Participating Holder or any of its direct and indirect Subsidiaries or any of their respective assets, at law or in equity, or before or by any Governmental Entity that (i) individually or in the aggregate, would reasonably be expected to have an adverse effect on such Participating Holder’s ability to consummate the Transactions or (ii) seek to restrain or prohibit or to obtain damages or other relief in connection with the Transactions. There are no outstanding Orders against such Participating Holder or any of its direct and indirect Subsidiaries or any of their respective assets that (x) individually or in the aggregate, would reasonably be expected to have an adverse effect on such Participating Holder’s ability to consummate the Transactions or (y) seek to restrain or prohibit or to obtain damages or other relief in connection with the Transactions.

4.05 Investment Representations.

(a) The representations and warranties in Section 9(d) of the Transaction Support Agreement are hereby incorporated by reference, mutatis mutandis, and each Participating Holder, for the benefit of the Company (including for the benefit of Guggenheim Securities, LLC, who is acting as a financial advisor to the Company (the “Financial Advisor”)), makes the same such representations and warranties here as it does in its capacity as a “Consenting Stakeholder” (as defined in the Transaction Support Agreement) in Section 9(d) of the Transaction Support Agreement.

(b) The OTPP Holder hereby represents and warrants, solely as to itself, for the benefit of the Company (including for the benefit of the Financial Advisor), that it is an “accredited investor” within the meaning of section 73.3 of the Securities Act (Ontario), was not created or is not used solely to purchase or hold securities as an accredited investor described in paragraph (m) of the applicable definition, and is acquiring the Consideration Shares as principal.

(c) The office or offices of such Participating Holder in which it has its principal place of business are identified in the address or addresses of such Participating Holder set forth on such Participating Holder’s signature page.

4.06 Disclaimer; Acknowledgment; Non-Reliance. Except for the representations and warranties expressly and specifically set forth in Article 4 of this Agreement and in the other Transaction Agreements, none of such Participating Holder or any of its direct and indirect

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Subsidiaries makes any express or implied representation or warranty in connection with the Transactions, and such Participating Holder and its direct and indirect Subsidiaries hereby disclaim any such representations or warranties in connection with the Transactions. Such Participating Holder acknowledges, for the benefit of the Company (including for the benefit of the Financial Advisor), that (w) it has the requisite knowledge and experience in financial and business matters so that it is capable of evaluating the merits and risks of the acquisition of the Consideration Shares contemplated hereby and has had such opportunity as it has deemed adequate to obtain such information as is necessary to permit such Participating Holder to evaluate the merits and risks of the acquisition of the Consideration Shares contemplated hereby; (x) it is aware and understands that an investment in the Consideration Shares involves a considerable degree of risk, that it is able to bear the economic risk, and sustain a complete loss, of such investment in the Consideration Shares, and that no U.S. federal or state or non-U.S. agency has made any finding or determination as to the fairness for investment or any recommendation or endorsement of any such investment; (y) it has made its own independent assessment, to its satisfaction, concerning any and all legal, regulatory, tax, credit, economic, business and financial considerations with respect to the Company and the Consideration Shares in connection with its acquisition of the Consideration Shares contemplated hereby; and (z) the representations and warranties being made to such Participating Holder expressly and specifically set forth in Article 3 of this Agreement and in the other Transaction Agreements constitute the sole and exclusive representations and warranties to such Participating Holder in connection with the Transactions, and such Participating Holder understands, acknowledges and agrees that such Participating Holder is not relying on any other representations or warranties of any kind or nature, expressed or implied.

ARTICLE 5
COVENANTS AND AGREEMENTS

5.01 Covenants of the Parties. During the period from the date of this Agreement until the earlier of (i) the date of the termination of this Agreement in accordance with Article 7 or (ii) the Closing, each party agrees to, and to cause its Subsidiaries to, comply with Section 5.01(a) and (b), and the Company agrees to, and to cause its Subsidiaries to, comply with Section 5.01(c):

(a) use commercially reasonable efforts to:

(i) satisfy the conditions of the other parties hereto set forth in Article 6 or otherwise comply with this Agreement and to consummate the Transactions;

(ii) obtain any and all required regulatory and/or third-party approvals required to consummate the Transactions;

(iii) in the case of the Participating Holders, procure that a voluntary notice in accordance with section 18(2) of the NSIA is submitted to the ISU in respect of the Transactions as soon as reasonably practicable after the date of this Agreement with a view to satisfying the ISU that the Transactions do not give rise to a “notifiable acquisition” pursuant to section 6 of the NSIA;

(iv) in the event that such voluntary notification is rejected in accordance with section 18(6)(a) of the NSIA and the Transactions are considered by the ISU

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to give rise to a “notifiable acquisition” pursuant to section 6 of the NSIA, in the case of the Participating Holders, submit a mandatory notice in accordance with section 14(1) of the NSIA as soon as practicable upon receipt of notice of such rejection from the ISU;

(v) cooperate and provide any information as may reasonably be required or requested in connection with any and all regulatory and/or third party approvals for the Transactions or to respond to any information requests from any Governmental Entity in order to satisfy the conditions precedent set forth in Section 6.01 of this Agreement. In the case of the Participating Holders this shall include (a) providing the Company with a reasonable opportunity to review and comment on all draft filings, notices, responses, communications, documents or other submissions intended to be submitted to any Governmental Entity in order to obtain regulatory approvals, including the ISU, in advance of such submission and shall take any such comments into reasonable consideration; (b) providing the Company with copies of any written communication and a summary of any oral communication from any Governmental Entity, including the ISU, promptly after receiving such communication; and (c) providing the Company prior notice of and the opportunity to attend any meetings or calls arranged with any Governmental Entity, including the ISU; and

(vi) in the case of the Company, upon reasonable prior notice, provide the Participating Holders with any information reasonably requested regarding the Company Entities (including access to the books and records of the Company Entities), and reasonable access to management and advisors of the Company Entities, for the purposes of evaluating the Company Entities’ assets, liabilities, operations, businesses, finances, strategies, prospects and affairs;

(b) negotiate in good faith and execute and deliver the other agreements, documents and instruments that may be required to effectuate and consummate the Transactions; and

(c) except as set forth in Schedule 5.02, as expressly contemplated by this Agreement or the other Transaction Agreements, as required by applicable Law or as otherwise agreed in writing by the Participating Holders, such agreement not to be unreasonably withheld, conditioned or delayed:

(i) conduct its business and operations in the ordinary course in all material respects and in substantially the same manner as such business and operations have been conducted prior to the date of this Agreement;

(ii) except as set forth in Schedule 5.01(c)(ii), use commercially reasonable efforts to preserve intact, in all material respects, its current business organization, keep available the services of its current Company officers, employees and other service providers, and maintain its relations and goodwill with all customers, landlords, employees, lenders, vendors, and other Persons having beneficial business relationships with the Company; provided, however, that no

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action by the Company or any of its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.02 shall be deemed a breach of this Section 5.01(c)(ii) unless such action constitutes a breach of such provision of Section 5.02; and

(iii) conduct its business and operations in compliance with Law, including without limitation all applicable Anti-Corruption Laws, Global Trade Laws and Regulations, Anti-Money Laundering Laws, and Modern Slavery Laws and Regulations.

5.02 Negative Covenants of the Company Entities. Except as set forth in Schedule 5.02 or in Section 5.07, during the period from the date of this Agreement until the earlier of (i) the date of the termination of this Agreement in accordance with Article 7 or (ii) the Closing, except as expressly contemplated by this Agreement or the other Transaction Agreements, as required by applicable Law or as otherwise agreed in writing by the Participating Holders, such agreement not to be unreasonably withheld, the Company shall not, and shall cause its Subsidiaries not to:

(a) split, combine, reduce or reclassify any of its share capital, except for any such transaction with respect to a direct or indirect wholly owned Company Subsidiary that results in such Company Subsidiary remaining a direct or indirect wholly owned Subsidiary of the Company after consummation of such transaction;

(b) other than as required by the terms of the Contingent Shares, the Debentures, the 2024 Warrants and the options and restricted stock units outstanding under the 2019 Incentive Award Plan, issue, purchase or redeem any of its Common Stock or any other Equity Securities;

(c) make any material change in its financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes;

(d) amend the Organizational Documents of any Company Entity;

(e) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, recapitalization, restructuring or other reorganization of any Company Entity, or alter through merger, liquidation, reorganization or restructuring the corporate structure of the Company Entities;

(f) take any actions to pay any dividends, redeem any securities, or otherwise cause assets of the Company Entities to be distributed to its stockholders or other equityholders;

(g) allow to lapse, encumber, sell, lease, license, covenant not to assert, transfer, assign, exchange, swap, abandon, pledge or otherwise waive or dispose of, or subject to any Lien, any properties, rights or assets that are material to the Company Entities, taken as a whole, except for transactions between or among the Company Entities;

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(h) (1) make, change or revoke any material Tax election; (2) change any material method of Tax accounting or accounting period; (3) file any amended income or other material Tax Return; (4) settle or compromise any audit, claim, assessment or proceeding relating to a material amount of Taxes; (5) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of state, local, or non-U.S. Tax Law) with respect to any material Tax; or (6) request or agree to any extension or waiver of the statutes of limitation applicable to any material Tax claim or assessment;

(i) other than the termination of awards under the Company’s 2019 Incentive Award Plan in accordance with the terms of such plan, enter into, amend or modify in any material respect or terminate any contract or agreement between any Company Entity, on the one hand, and any officer, director, stockholder, employee or Affiliate of any Company Entity on the other hand; or

(j) offer or agree, in writing or otherwise, to take any or authorize any of the foregoing actions.

5.03 Company Stockholders’ Meeting. The Company will take all action necessary under all applicable Laws and in accordance with its Organizational Documents to call, give notice of and hold a special meeting of the holders of Common Stock to vote on the adoption and approval of the Amended Charter (the “Company Stockholders’ Meeting”) as soon as practicable following the date of this Agreement. Each Participating Holder will furnish to the Company the information relating to it required by applicable Law to be set forth in the proxy statement for the Company Stockholders’ Meeting (the “Proxy Statement”) and each party hereto agrees to correct any information provided by it for use in the Proxy Statement that shall have become false or misleading. The Company Stockholders’ Meeting will be held as promptly as reasonably practicable, provided that (i) it shall not be held earlier than ten (10) days after the day on which the distribution of the Proxy Statement (in accordance with applicable Law) to the Company stockholders of record as of the record date for the Company Stockholders’ Meeting has been completed (the “Mailing Date”), and (ii) it shall not be held later than twenty (20) Business Days (subject to extension by mutual agreement of the Company and the Participating Holders) following the Mailing Date. The Company will cause all proxies solicited in connection with the Company Stockholders’ Meeting to be solicited in compliance with all applicable Laws. The Proxy Statement will include a statement to the effect that the Company Board has determined that the Amended Charter is advisable and recommends that the Company’s stockholders vote to approve the Amended Charter at the Company Stockholders’ Meeting (collectively, the “Company Board Recommendation”). The Company Board Recommendation will not be withdrawn or modified in a manner adverse to the Participating Holders, and no resolution by the Company Board or any committee thereof to withdraw or modify the Company Board Recommendation in a manner adverse to the Participating Holders will be adopted or proposed.

5.04 Amendment of Charter and Bylaws.

(a) Prior to the Closing, subject to the receipt by the Company of the Company Stockholder Approval, the Company shall amend and restate the Second Amended and

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Restated Certificate of Incorporation of the Company, as amended, by filing the Amended Charter with the Delaware Secretary of State.

(b) Effective as of the Closing, the Company Board shall adopt the Amended Bylaws as the bylaws of the Company.

5.05 Mutual Releases. From and after the Closing and the execution, delivery and effectiveness of the Mutual Release Agreement, the terms of the Mutual Release Agreement shall be incorporated by reference in their entirety.

5.06 Publicity; Press Releases and Announcements. The terms of Section 15.21 of the Transaction Support Agreement (Publicity) are hereby incorporated by reference in their entirety, mutatis mutandis.

5.07 Additional Provisions Regarding Company’s Commitments. The terms of Section 7 of the Transaction Support Agreement (Additional Provisions Regarding Company’s Commitments) are hereby incorporated by reference in their entirety, mutatis mutandis.

ARTICLE 6
CONDITIONS TO CLOSING

6.01 Conditions to the Obligations of All Parties. The obligation of each of the parties hereto to consummate the Debenture Exchange at the Closing is subject to the satisfaction, or waiver by each of the Company and the Participating Holders, of each of the following conditions as of immediately prior to the Closing:

(a) The Company shall have obtained the Company Stockholder Approval;

(b) No Law or Order of, or request to file a notice to review the Transactions by, any Governmental Entity of competent jurisdiction shall be pending or in effect as of the Closing that restrains, prohibits or makes illegal the consummation of the Transactions;

(c) The other Transactions shall have closed (or be closed substantially concurrently herewith), in each case in accordance with the terms of the Transaction Support Agreement, the other Transaction Agreements, and the various other documents and agreements giving effect to the other Transactions; and

(d) The voluntary notification has been submitted to the ISU in accordance with Section 5.01(a)(iii) and the parties have been informed in writing by the ISU that either the voluntary notification has been accepted, or that a mandatory notice is required to be submitted to the ISU in connection with one or more of the Transactions in accordance with Section 5.01(a)(iv), and if such mandatory notice is so required, such mandatory notice has been submitted and:

(i) the UK Secretary of State shall have notified the parties in accordance with section 14(8)(b)(ii) of the NSIA that no further action will be taken in relation to the Transactions; or

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(ii) in the event that a call-in notice is given by the UK Secretary of State in relation to the Transactions, the Secretary of State shall:

(A) have issued a final notification in accordance with section 26(2)(a) of the NSIA confirming that no further action will be taken in relation to the Transactions under the NSIA; or

(B) have issued a final order in accordance with section 26(2)(b) of the NSIA permitting the Transactions to proceed subject only to such remedies or requirements that are acceptable to the parties, acting reasonably.

6.02 Additional Conditions to the Obligations of the Company. The obligation of the Company to consummate the transactions contemplated by this Agreement to be consummated at the Closing is subject to the satisfaction, or waiver by the Company, of each of the following additional conditions as of immediately prior to the Closing:

(a) (i) The representations and warranties of the Participating Holders contained in Section 4.01 (Organization; Power and Authority), Section 4.02(a) (Authorization) and Section 4.03 (Title to Existing Debentures) shall be true and correct in all respects as of the date hereof and as of the Closing (except to the extent that any such representation or warranty by its terms is made as of an earlier date or time, in which case such representation or warranty shall be true and correct in all respects as of such earlier date or time); and (ii) the representations and warranties of the Participating Holders contained in Article 4 other than those listed in Section 6.02(a)(i) shall be true and correct as of the date hereof and as of the Closing (except to the extent that any such representation or warranty by its terms is made as of an earlier date or time, in which case such representation or warranty shall be true and correct as of such earlier date or time) except for such inaccuracies that, individually or in the aggregate, have not and would not reasonably be expected to, prevent, materially delay or materially impede the performance by the Participating Holders of their obligations under this Agreement or the Transaction Agreements; provided, that for purposes of determining the accuracy of such representations and warranties, all materiality and similar qualifications limiting the scope of such representations and warranties shall be disregarded;

(b) Each of the covenants and agreements of the Participating Holders to be performed as of or prior to the Closing shall have been performed in all material respects; and

(c) The Participating Holders shall have delivered to the Company:

(i) the New Stockholders’ Agreement, duly executed by the Participating Holders and their Affiliates that are parties thereto;

(ii) the OTPP Designee Subscription Agreement, duly executed by the OTPP Designee; and

(iii) one or more certificates, dated as of the Closing Date and duly executed by the Participating Holder(s), to the effect that each of the conditions

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specified above in Section 6.02(a) and Section 6.02(b) has been satisfied with respect to the representations and warranties, and the performance of covenants and agreements, of the applicable Participating Holder(s).

6.03 Additional Conditions to the Obligations of the Participating Holders. The obligation of the Participating Holders to consummate the transactions contemplated by this Agreement is subject to the satisfaction, or waiver by the Participating Holders, of each of the following additional conditions as of immediately prior to the Closing:

(a) (i) The representations and warranties of the Company contained in Article 3 (other than the representations and warranties of the Company contained in Section 3.01 (Organization; Power and Authority), Section 3.02(a)-(b) (Authorization), Section 3.03 (Capitalization and Related Matters), and Section 3.05 (Brokerage)) shall be true and correct of the date hereof and as of the Closing (except to the extent that any such representation or warranty by its terms is made as of an earlier date or time, in which case such representation or warranty shall be true and correct as of such earlier date or time) except for such inaccuracies that, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect; provided, that for purposes of determining the accuracy of such representations and warranties, all materiality and similar qualifications limiting the scope of such representations and warranties shall be disregarded; and (ii) the representations and warranties of the Company contained in Section 3.01 (Organization; Power and Authority), Section 3.02(a)-(b) (Authorization), Section 3.03 (Capitalization and Related Matters), and Section 3.05 (Brokerage) shall be true and correct in all respects (except, with respect to Section 3.03, for de minimis deviations) as of the date hereof and as of the Closing (except to the extent that any such representation or warranty by its terms is made as of an earlier date or time, in which case such representation or warranty shall be true and correct in all respects (except, with respect to Section 3.03, for de minimis deviations) as of such earlier date or time);

(b) Each of the covenants and agreements of the Company Entities be performed as of or prior to the Closing shall have been performed in all material respects; and

(c) the Company shall have delivered to the Participating Holders:

(i) a certificate dated as of the Closing Date and executed by the Company (1) to the effect that each of the conditions specified above in Section 6.03(a), Section 6.03(b), and Section 6.01(a) has been satisfied, and (2) certifying as complete and accurate a copy of the written consent or meeting resolutions of the Company Board approving and adopting this Agreement, the Amended Charter, the Amended Bylaws and the other Transactions;

(ii) a certificate of good standing (or equivalent document) of the Company, issued not earlier than three (3) Business Days prior to the Closing Date;

(iii) a file-stamped copy of the Amended Charter evidencing its filing with the Delaware Secretary of State;

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(iv) the New Stockholders’ Agreement, duly executed by the Company; and

(v) the RRA Termination Agreement, duly executed by all parties thereto;

(vi) the letter agreement substantially in the form attached hereto as Schedule 6.03(c)(vi), duly executed by the Company and the counterparty thereto; and

(vii) the OTPP Designee Subscription Agreement, duly executed by the Company.

ARTICLE 7
TERMINATION

7.01 Termination. Notwithstanding anything to the contrary contained herein, this Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing:

(a) by the mutual written consent of the Company and the Participating Holders;

(b) by the Company, if there has been a violation or breach by the Participating Holders of any covenant, representation or warranty contained in this Agreement which, if not cured, would prevent the satisfaction of any condition to the obligations of the Company at the Closing set forth in Section 6.01 or Section 6.02 (and such violation or breach has not been waived by the Company) and such violation or breach is not capable of being cured or, if capable of being cured, shall not have been cured prior to the earlier of (i) fifteen (15) days after written notice thereof from the Company and (ii) the Outside Date; provided, that the right to terminate this Agreement pursuant to this Section 7.01(b) shall not be available to the Company at any time that the Company has violated, or is in breach of, any covenant, representation or warranty hereunder, if such breach by the Company would, if not cured, prevent satisfaction of any of conditions to Closing of the Participating Holders hereunder (and has not been waived by the Participating Holders);

(c) by the Participating Holders, if there has been a violation or breach by the Company of any covenant, representation or warranty contained in this Agreement which would, if not cured, prevent the satisfaction of any condition to the obligations of the Participating Holders at the Closing set forth in Section 6.01 or Section 6.03 (and such violation or breach has not been waived by the Participating Holders) and such violation or breach is not capable of being cured or, if capable of being cured, shall not have been cured prior to the earlier of (i) fifteen (15) days after written notice thereof from the Participating Holders and (ii) the Outside Date; provided that the right to terminate this Agreement pursuant to this Section 7.01(c) shall not be available to the Participating Holders at any time that any of the Participating Holders have violated, or are in breach of, any covenant, representation or warranty hereunder if such breach by the Participating

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Holders would, if not cured, prevent satisfaction of any of the conditions to Closing of the Company Entities hereunder (and has not been waived by the Company);

(d) by the Company or the Participating Holders, if a Governmental Entity of competent jurisdiction shall have issued a non-appealable final Order, having the effect of permanently restraining, enjoining or otherwise prohibiting any of the Transactions;

(e) by the Company or the Participating Holders, if the transactions contemplated by this Agreement have not been consummated on or before the Outside Date; provided, that none of the Company or the Participating Holders shall be entitled to terminate this Agreement pursuant to this Section 7.01(e) if such party’s breach of this Agreement has prevented the consummation of the transactions contemplated hereby prior to the Outside Date; or

(f) by the Company or the Participating Holders, if the Transaction Support Agreement has been terminated by any party thereto in accordance with Section 12 thereof.

7.02 Effect of Termination. In the event of any termination of this Agreement as provided in Section 7.01, this Agreement shall forthwith become void and of no further force or effect, and there shall be no further liability or obligation on the part of any party hereto to any other party hereto with respect to this Agreement; provided, that (a) this Section 7.02 and Article 9 shall survive the termination of this Agreement and shall be enforceable by the parties hereto, and (b) no such termination shall relieve any party hereto from liability for any Fraud, intentional misrepresentation, or willful and material breach of this Agreement prior to termination.

ARTICLE 8
DEFINITIONS

8.01 Definitions. For the purposes of this Agreement, capitalized terms used herein and not otherwise defined herein have the meanings given to such terms as set forth below:

“2024 Warrants” means the warrants issued by the Company to purchase up to an aggregate of 29,350,000 shares of Common Stock at an exercise price of $11.50 per share that expire on December 19, 2024.

“Action” means any action (by any private right of action of any Person or by any Governmental Entity), suit, litigation, claim, complaint, grievance, charge, audit, investigation, hearing, inquiry, or other proceeding (including any administrative, criminal or arbitration or mediation proceedings).

“Affiliate” of any particular Person means any other Person controlling, controlled by or under common control or common investment management with such particular Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of voting securities, contract or otherwise,

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and such “control” will be conclusively presumed if any Person owns ten percent (10%) or more of the voting capital stock or other Equity Securities, directly or indirectly, of any other Person.

“Affiliated Holders” means Participating Holders and their respective Affiliates; provided, for the avoidance of doubt, Participating Holders with investments managed by separate Persons shall be deemed to be Affiliated Holders if the Persons who manage their investments are themselves under common control as defined within the definition of Affiliate.

“Amended Bylaws” means the amended and restated bylaws of the Company in the form attached hereto as Exhibit B.

“Amended Charter” means the third amended and restated certificate of incorporation of the Company in the form attached hereto as Exhibit A.

“Anti-Corruption Laws” means laws, regulations or orders relating to anti-bribery or anti-corruption including, without limitation, the Prevention of Corruption Act 1988, the Foreign Contribution (Regulation) Act 2010, The Indian Penal Code 1860, the PRC Criminal Law (revised in 2020), the PRC Anti Unfair Competition Law (revised in 2019) the Interim Rules of the State Administration for Industry and Commerce on Prohibition of Commercial Bribery, the U.S. Foreign Corrupt Practices Act of 1977, as amended from time to time (the “FCPA”), the UK Bribery Act of 2010, the Canadian Corruption of Foreign Public Officials Act, relevant provisions of the Canadian Criminal Code, and all applicable national and international laws enacted to implement the OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions.

“Anti-Money Laundering Laws” means laws, regulations, rules, or guidelines relating to money laundering, countering the financing of terrorism, and financial recordkeeping, including, without limitation, those implemented and administered by competent authorities in the European Union and its Member States, the United Kingdom, the United States, Canada, China, India and all other jurisdictions in which the Company and its subsidiaries conduct business or own assets.

“Business Day” means any day of the year that is not a Saturday or a Sunday on which national banking institutions in New York, New York, United States and Toronto, Ontario, Canada are open to the public for conducting business and are not required or authorized to close.

"Child Labour” means: (i) “Child Labour” as defined in the Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act; or (ii) any employment below the minimum age as established in national legislation (as set forth in ILO Convention 138 on the Minimum Age for Admission to Employment), hazardous unpaid household services, and the worst forms of child labour (as set forth in ILO Convention 182 on the Worst Forms of Child Labour).

“Chosen Courts” has the meaning set forth in Section 9.12.

“Closing” has the meaning set forth in Section 2.01.

“Closing Date” has the meaning set forth in Section 2.01.

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“Code” means the Internal Revenue Code of 1986, as amended.

“Common Stock” means shares of common stock of the Company.

“Company” has the meaning set forth in the Preamble.

“Company Board” means the board of directors of the Company or the Special Review Committee thereof, as applicable.

“Company Board Recommendation” has the meaning set forth in Section 5.03(b) of the Agreement.

“Company Entity” means each of the Company and its direct and indirect Subsidiaries.

“Company Incentive Plans” means the Company’s 2019 Incentive Award Plan and any other employee bonus, incentive, retention or similar benefit plans or programs of the Company Entities.

“Company Stockholder Approval” means the affirmative vote of the holders of a majority of the outstanding shares of Common Stock in favor of the approval of the Amended Charter.

“Company Stockholders’ Meeting” has the meaning set forth in Section 5.03(b) of the Agreement.

“Contingent Shares” has the meaning given in that certain Agreement and Plan of Reorganization, dated as of May 20, 2019, by and among Pivotal Acquisition Corp., Pivotal Merger Sub Corp., LD Topco, Inc., and Carlyle Equity Opportunity GP, L.P., as subsequently amended from time to time; provided, that Contingent Shares shall not include any such shares that holders thereof affiliated with Carlyle Group Inc. agree will not be issued to them.

“Credit Agreement” means that certain Credit Agreement, dated as of February 8, 2021, by and among KLDiscovery Holdings, Inc., LD Topco, Inc., the Lenders party thereto, Wilmington Trust, National Association, as Administrative Agent and Collateral Agent, Ally Bank, and certain other parties thereto, as amended on March 3, 2023 and March 8, 2024, and as may be subsequently amended from time to time.

“Debenture Exchange” has the meaning set forth in Section 1.01.

“Debentures” has the meaning set forth in the Recitals.

“DGCL” means the Delaware General Corporation Law, as amended from time to time.

“Disclosure Letter” has the meaning set forth in Article 3.

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“Equity Securities” means with respect to any Person, all (i) units, capital stock, shares, partnership interests or other equity interests (including classes, groups or series thereof having such relative rights, powers or obligations as may from time to time be established by the issuer thereof or the governing body of its Affiliate, as the case may be, including rights, powers or duties different from, senior to or more favorable than existing classes, groups and series of units, stock and other equity interests and including any so-called “profits interests”) or securities or agreements providing for profit participation features, equity appreciation rights, phantom equity or similar rights to participate in profits, (ii) warrants, options, puts, calls, rights of first refusal, subscription rights, preemptive rights, conversion rights, exchange rights or other rights to purchase or otherwise acquire, or contracts or binding commitments that require the issuance of, securities described in the foregoing clause of this definition and (iii) obligations, evidences of indebtedness or other securities or interests convertible or exchangeable into securities described in the foregoing clauses of this definition.

“Existing RRA” means that certain Registration Rights Agreement, dated as of December 19, 2019, by and among the Company (f/k/a Pivotal Acquisition Corp.), each of the Controlling Holders (as defined therein), and certain other persons.

“Financial Advisor” has the meaning set forth in Section 4.05(a).

“Forced Labour” means: (i) “Forced Labour” as defined in the Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act; or (ii) any work or service that is exacted from a person under the threat of penalty, and for which that person has not offered himself or herself voluntarily.

“Fraud” means, with respect to any Person, intentional (and not constructive) misrepresentation of a fact by such Person with respect to the making of the representations and warranties in Article 3 or 4 (as applicable) with the actual knowledge (as opposed to imputed or constructive knowledge or knowledge that could have been obtained after inquiry, or recklessness or negligence) of such Person that such representation was false when made and which was made with the specific intent to induce the Person to whom such representation was made (the “Recipient”) to enter into or consummate the transactions contemplated by this Agreement and upon which the Recipient has reasonably relied to its detriment.

“Fully-Diluted Shares” means the sum (without duplication), as of immediately following the Closing, of (i) the aggregate number of shares of Common Stock or other capital stock of the Company then issued and outstanding (including, for the avoidance of doubt, the Consideration Shares and the Contingent Shares), and (ii) the aggregate number of shares of Common Stock or other capital stock of the Company that are or may become issuable in connection with agreements or outstanding Equity Securities of the Company or its Subsidiaries that could require the issuance of shares of capital stock of the Company, including, without limitation, all options (to the extent outstanding as of immediately following the Closing) and restricted stock units then outstanding under the Company’s 2019 Incentive Award Plan and all outstanding warrants of the Company other than the 2024 Warrants; provided, that the Fully-Diluted Shares shall not include (1) shares of Common Stock that are or may become issuable in connection with awards made under the MIP, (2) shares of Class B-2 Common Stock, (3) shares of Class A Common Stock that are issuable upon conversion of Class B-1 Common Stock and automatic redemption of Class B-2 Common

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Stock or (4) shares of Class B-1 Common Stock (and, for the avoidance of doubt, shares of Class B-2 Common Stock) that are issuable upon conversion of Class A Common Stock; provided, further, that notwithstanding the foregoing, the Fully-Diluted Shares shall include any shares of Common Stock that are issued pursuant to exercise of the 2024 Warrants subsequent to the Closing (in which case, the Fully-Diluted Shares as of immediately following the Closing shall be deemed to include such shares of Common Stock issued in respect of the 2024 Warrants, regardless of when such exercise occurs).

“Global Trade Laws and Regulations” means export controls, and trade, economic and financial sanctions laws, regulations, embargoes, and restrictive measures administered or enforced by the United States, including without limitation the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) and the U.S. Department of Commerce, the United Kingdom, the European Union, Canada, United Nations, India and all relevant regulations made under any of the foregoing; and other similar applicable economic and trade sanctions, export or import control laws.

“Governmental Entity” means any applicable federal, state, local, or foreign government or any agency, bureau, board, commission, court, or arbitral body, department, political subdivision, regulatory or administrative authority, tribunal, or other instrumentality thereof, or any self-regulatory organization, including the UK Secretary of State.

“Investment” as applied to any Person means (i) any direct or indirect purchase or other acquisition (whether by loan, contribution of capital, exchange or otherwise) by such Person of any notes, obligations, instruments, units, securities or other ownership interests (including partnership interests and joint venture interests) of any other Person and (ii) any capital contribution by such Person to any other Person. For the avoidance of doubt, “Investment” does not include intercompany loans between the Company and a wholly-owned direct or indirect Subsidiary of the Company, or between wholly-owned direct or indirect Subsidiaries of the Company, made in the ordinary course of business.

“ISU” means the Investment Security Unit within the United Kingdom Cabinet Office, the operational unit which administers the NSIA.

“Law” means any U.S. federal, state, local, or foreign law (including common law), statute, code, ordinance, rule, regulation, decree, injunction, order, ruling, assessment, writ, or other legal requirement, or judgment, in each case, that is validly adopted, promulgated, issued, or entered by a Governmental Entity of competent jurisdiction.

“Lien” means any mortgage, pledge, security interest, license, encumbrance, lien (statutory or otherwise), hypothecation, assignment, easement or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof), any sale of receivables with recourse against any Company Entity or any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar statute.

“Material Adverse Effect” means any event, change, occurrence or effect, either individually or in the aggregate, that (i) has had or would reasonably be expected to have a material adverse effect on the business, assets and liabilities, financial condition or results of operations of

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the Company and its Subsidiaries, taken as a whole, or (ii) would prevent, materially delay or materially impede the performance by the Company of its obligations under this Agreement or the Transaction Agreements; provided, however, that in the case of clause (i) only, none of the following, alone or in combination, shall be deemed to constitute, or be taken into account in determining whether there has been or would or could be, a Material Adverse Effect: (1) any changes in general economic or business conditions or in the financial, debt, banking, capital, credit or securities markets, or in interest or exchange rates, in each case, in the United States or elsewhere in the world, (2) any changes or developments generally affecting any of the industries in which the Company or its Subsidiaries operate, (3) any actions required under this Agreement to obtain any approval or authorization under applicable Laws for the consummation of the Transactions, (4) any adoption, implementation, modification, repeal, interpretation, proposal of or other changes in any applicable Laws, decrees, Orders or other directives of any Governmental Entity or any changes in applicable accounting regulations or principles (including United States generally accepted accounting principles), or in interpretations of any of the foregoing, (5) any change in the price or trading volume of the Common Stock, in and of itself (provided, that the facts or occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of “Material Adverse Effect” may be taken into account in determining whether there has been a Material Adverse Effect), (6) any failure by the Company to meet internal or published projections, forecasts or revenue or earnings predictions, in and of itself (provided, that the facts or occurrences giving rise to or contributing to such failure that are not otherwise excluded from the definition of “Material Adverse Effect” may be taken into account in determining whether there has been a Material Adverse Effect), (7) political, geopolitical, social or regulatory conditions, including any outbreak, continuation or escalation of any military conflict, declared or undeclared war, armed hostilities, civil unrest, public demonstrations, acts of sabotage, acts of foreign or domestic terrorism, malicious cyber-enabled activities (including hacking, data loss, ransomware and other unauthorized cyber intrusions that seek to compromise the confidentiality, integrity or availability of computer or communication systems or information therein), or governmental shutdown or slowdown, or any escalation or worsening of any such conditions, (8) any natural or manmade disasters or calamities, weather conditions including hurricanes, floods, tornados, tsunamis, earthquakes and wild fires, cyber outages, or other force majeure events, or any escalation or worsening of such conditions, (9) any epidemic, pandemic or outbreak of disease (including, for the avoidance of doubt, COVID-19), or any escalation or worsening of such conditions, (10) any other regional, national or international calamity, crisis or emergency, (11) the announcement of this Agreement and the Transactions, including the initiation of litigation by any Person with respect to this Agreement, and including any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any customers, suppliers, distributors, partners or employees of the Company and its Subsidiaries due to the announcement of this Agreement or the identity of the parties to this Agreement, or the performance of this Agreement and the Transactions, (12) any action taken by the Company, or which the Company causes to be taken by any of its Subsidiaries, in each case, which is required by this Agreement or (13) any actions taken (or omitted to be taken) at the written request of, or with the written consent of, the Participating Holders; provided, in the case of clauses (1), (2), (4), (7), (8), (9) and (10), to the extent that the impact of such event, change, occurrence or effect is not disproportionately adverse to the Company and its Subsidiaries, taken as a whole, as compared to other participants in the industries in which the Company and its Subsidiaries operate (and provided further, that in

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such event, only the incremental disproportionate adverse impact shall be taken into account when determining whether there has been a “Material Adverse Effect”).

“MIP” has the meaning given in the Transaction Term Sheet attached as Exhibit A to the Transaction Support Agreement.

“Modern Slavery” means Forced Labour, debt bondage, involuntary servitude, Child Labour, and human trafficking.

“Modern Slavery Laws and Regulations” means laws and regulations related to Modern Slavery.

“Mutual Release Agreement” means that certain Mutual Release Agreement to be entered into in connection with the consummation of the Transactions, in the form attached as Schedule 3 to the Transaction Support Agreement.

“New Stockholders’ Agreement” means the stockholders’ agreement to be executed and delivered at the Closing by the Company, the Participating Holders and certain Affiliates of the Participating Holders, in the form attached hereto as Exhibit C.

“NSIA” means the UK National Security and Investment Act 2021, as amended from time to time, together with its secondary legislation.

“Order” means any order, judgment, injunction, decree, notice, ruling, decision, determination, verdict, sentence, subpoena, writ or award issued, made, entered, rendered or otherwise put into effect by or under the authority of any Governmental Entity or arbitrator (whether public or private).

“Organizational Documents” means, with respect to any Person that is an entity, such Person’s organizational documents, including the certificate or articles of organization, incorporation or partnership, bylaws, operating agreement, stockholders’ agreement or partnership agreement, joint venture and trust agreements, and any similar governing documents of any such Person, in each case including amendments, supplements and certificates of designation thereto.

“OTPP Designee” means any third party entity to be designated by OTPP and which has entered into an agreement with OTPP under which OTPP has the right to direct the voting and transfer of the shares held by such third party.

“OTPP Designee Subscription Agreement” means the subscription agreement by and between the OTPP Designee and the Company, pursuant to which the OTPP Designee will subscribe for certain shares of Class B-2 Common Stock of the Company, in the form attached to this Agreement as Exhibit D.

“OTPP Holder” means 1397225 Ontario Limited.

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“Outside Date” means the “Outside Effective Date” as such term is defined in the Transaction Support Agreement, as such date may be extended from time to time in accordance with Section 4(d) of the Transaction Support Agreement.

“Participating Holder” has the meaning set forth in the Preamble.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a Governmental Entity or any department, agency or political subdivision thereof.

“RRA Termination Agreement” means the agreement by and among the Company and the Controlling Holders (as defined in the Existing RRA), terminating the Existing RRA in its entirety concurrently with the Closing, in the form attached to this Agreement as Exhibit E.

“Securities Act” means the Securities Act of 1933, as amended.

“Securities Purchase Agreement” has the meaning set forth in the Recitals.

“Subsidiary” means, with respect to any Person, any corporation, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons shall be allocated a majority of partnership, association or other business entity gains or losses or shall be or control the managing director or general partner of such partnership, association or other business entity.

“Target Percentage” has the meaning set forth in Section 1.03.

“Tax” means any U.S. federal, state, municipal, county, local, non-U.S. or other income, gross receipts, ad valorem, franchise, profits, sales or use, transfer, registration, excise, utility, environmental, communications, real or personal property, capital unit, license, payroll, wage or other withholding, employment, social security (or similar), severance, stamp, occupation, premium, windfall profits, customs duties, unemployment, disability, value added, alternative or add on minimum, estimated or other tax of any kind whatsoever (including deficiencies, penalties, additions to tax and interest attributable thereto), whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other Person under Law (including Treasury Regulation 1.1502-6 or any other similar provision of state, local or non-U.S. Law), by contract, as a transferee or successor or otherwise.

“Tax Return” means any return, declaration, report, claim for refund or information return or statement relating to Taxes filed or required to be filed with a Governmental Entity, including any schedule or attachment thereto, and including any amendment thereof.

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“Transaction Agreements” means this Agreement, the Transaction Support Agreement, the OTPP Designee Subscription Agreement, the RRA Termination Agreement, and the other agreements and documents contemplated herein and therein, each as may be amended from time to time.

“Transactions” means the transactions contemplated by this Agreement and the other Transaction Agreements.

“UK Secretary of State” means the Secretary of State, as referred to in the NSIA.

8.02 Usage.

(a) Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

(b) Words denoting any gender shall include all genders (including the neutral gender). Where a word is defined herein, references to the singular shall include references to the plural and vice versa.

(c) A reference to any party to this Agreement or any other agreement or document shall include such party’s successors and permitted assigns.

(d) All references to “$” and dollars shall be deemed to refer to United States currency unless otherwise specifically provided.

(e) All references to a day or days shall be deemed to refer to a calendar day or calendar days, as applicable, unless otherwise specifically provided.

(f) The phrase “to the extent” means “the degree by which” and not “if”.

(g) All references to an Article, Section or Exhibit shall be deemed to refer to such Article, Section or Exhibit of this Agreement, unless otherwise specified.

(h) The terms “hereof,” “herein,” “hereunder” and derivative words refer to this entire Agreement, unless the context otherwise requires.

(i) The words “either,” “or,” “neither,” “nor” and “any” are not exclusive.

ARTICLE 9
MISCELLANEOUS

9.01 Expenses.

(a) The parties hereto shall pay all fees and expenses incurred by such party in connection with this Agreement and the Transactions or otherwise required by applicable Law; provided, that, the Company shall comply with its obligations under the Transaction Support Agreement with respect to “Transaction Fees and Expenses”, as defined therein.

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(b) If any Action relating to this Agreement, the Transactions or the enforcement of any provision of this Agreement is brought against any party hereto, the prevailing party in such Action shall be entitled to recover all reasonable expenses relating thereto (including attorneys’ fees and expenses) from the party against which such Action is brought in addition to any other relief to which such prevailing party may be entitled.

9.02 Notices. All notices hereunder shall be deemed given if in writing and delivered, by electronic mail, courier, or registered or certified mail (return receipt requested), to the following addresses (or at such other addresses as shall be specified by like notice):

(a) if to the Company, to:

KLDiscovery Inc.

9023 Columbine Road

Eden Prairie, MN 55347

Attention: Andrew Southam, General Counsel

Email: andrew.southam@kldiscovery.com

 

with copies to (which shall not constitute notice):

 

Gibson, Dunn & Crutcher LLP

200 Park Ave.

New York, NY 10016

Attention: Scott J. Greenberg
Joe Zujkowski
AnnElyse Scarlett Gains
Michael G. Farag

Email: SGreenberg@gibsondunn.com
JZujkowski@gibsondunn.com
AGains@gibsondunn.com
MFarag@gibsondunn.com
 

(b) if to a Participating Holder, to the address or e-mail addresses set forth on such Participating Holder’s signature page to this Agreement, and with a copy to:

Morrison & Foerster LLP

250 West 55th Street

New York, NY 10019-9601

Attention: James A. Newton

Aly El Hamamsy

Leo Martin

Email: jnewton@mofo.com

aelhamamsy@mofo.com

lmartin@mofo.com

 

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Any notice given by delivery, mail, or courier shall be effective when received or if sent by electronic mail, when sent to the extent that an undeliverable message is not promptly received by the sender thereof.

 

9.03 Complete Agreement. This Agreement, together with the other Transaction Agreements, contains the complete agreement among the parties hereto with respect to the subject matter hereof and supersedes any prior understandings, agreements or representations by or between such parties, whether written or oral, or any prior course of dealing among them, which may have related to the subject matter hereof in any way.

9.04 Amendment and Waiver. This Agreement may be amended or any provision of this Agreement may be waived; provided, that (i) any amendment (other than any revision to Schedule I pursuant to Section 1.02 hereto) shall be binding only if such amendment is set forth in a writing executed by the party against whom such amendment shall be enforced and (ii) any waiver of any rights (but not obligations) of any party hereto under this Agreement may be waived by such party on its own behalf without the prior consent of any other party hereto and will only be effective against the party that executes such waiver. No course of dealing between or among any Persons having any interest in this Agreement shall be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any Person under or by reason of this Agreement. No waiver of any of the provisions of this Agreement shall be effective unless in writing and no waiver shall be deemed to, nor shall any waiver, constitute a waiver of any other provisions, regardless of whether similar, nor shall any waiver constitute a continuing waiver.

9.05 Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned (including by operation of law) without the prior written consent of each of other party hereto. Any purported assignment of rights or delegation of performance obligations in violation of this Section 9.05 is void.

9.06 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Agreement. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

9.07 Captions. The captions, headers and titles used in this Agreement are for convenience of reference only and do not constitute a part of this Agreement and shall not be deemed to limit, characterize or in any way affect any provision of this Agreement, and all provisions of this Agreement shall be enforced and construed as if no such caption, header or title had been used in this Agreement.

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9.08 Counterparts. This Agreement may be executed in multiple counterparts (including by means of facsimile or electronically transmitted (including in .pdf or .tif formats) signature pages), all of which, taken together, shall constitute one and the same Agreement.

9.09 Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Except as expressly stated herein (including, for purposes of Section 9.15, the Non-Recourse Parties), nothing in this Agreement, express or implied, is intended to or shall confer upon any Person other than the parties hereto or their respective successors and permitted assigns, any rights, remedies or liabilities under or by reason of this Agreement (such third party Persons specifically including employees and creditors of the Company).

9.10 Specific Performance. The parties hereto agree that irreparable damage, for which monetary relief, even if available, would not be an adequate remedy, would occur in the event that any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached, including if the parties hereto fail to take any action required of them hereunder to consummate the transactions contemplated by this Agreement. It is accordingly agreed that, prior to any valid termination of this Agreement pursuant to Section 7.01, (i) the parties hereto shall be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in the courts described in Section 9.12 without proof of damages or otherwise, this being in addition to any other remedy to which they are entitled under this Agreement, and (ii) the right of specific performance and other equitable relief is an integral part of the transactions contemplated by this Agreement and without that right, none of the parties hereto would have entered into this Agreement. The parties hereto agree not to assert that a remedy of specific performance or other equitable relief is unenforceable, invalid, contrary to law or inequitable for any reason, and not to assert that a remedy of monetary damages would provide an adequate remedy or that the parties otherwise have an adequate remedy at law. The parties hereto acknowledge and agree that any party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 9.10 shall not be required to provide any bond or other security in connection with any such order or injunction.

9.11 Governing Law. This Agreement, and all claims or causes of action (whether at law or in equity, in contract or in tort) that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance hereof, or the transactions contemplated in this Agreement, shall be governed by and construed in accordance with the laws of the State of New York, including its statutes of limitations, without giving effect to any conflict-of-laws or other rule that would result in the application of the laws of a different jurisdiction.

9.12 CONSENT TO JURISDICTION. THE PARTIES AGREE THAT JURISDICTION AND VENUE IN ANY SUIT, ACTION, OR PROCEEDING BROUGHT BY ANY PARTY PURSUANT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY SHALL PROPERLY AND EXCLUSIVELY LIE IN THE STATE AND FEDERAL COURTS SITTING IN THE BOROUGH OF MANHATTAN, NEW YORK, NEW YORK, AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT THEREFROM (THE

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“CHOSEN COURTS”). EACH PARTY ALSO AGREES NOT TO BRING ANY SUIT, ACTION OR PROCEEDING, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY OTHER COURT (OTHER THAN UPON THE APPEAL OF ANY JUDGMENT, DECISION OR ACTION OF ANY SUCH CHOSEN COURT OR, AS APPLICABLE, ANY FEDERAL APPELLATE COURT THAT INCLUDES THE STATE OF NEW YORK WITHIN ITS JURISDICTION). BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE CHOSEN COURTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY WITH RESPECT TO SUCH SUIT, ACTION OR PROCEEDING. THE PARTIES IRREVOCABLY AGREE THAT VENUE WOULD BE PROPER IN ANY CHOSEN COURT, AND HEREBY WAIVE ANY OBJECTION THAT ANY SUCH CHOSEN COURT IS AN IMPROPER OR INCONVENIENT FORUM FOR THE RESOLUTION OF SUCH SUIT, ACTION OR PROCEEDING. EACH OF THE PARTIES FURTHER IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

9.13 WAIVER OF JURY TRIAL. THE PARTIES TO THIS AGREEMENT EACH HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE IRREVOCABLE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

9.14 No Strict Construction. Notwithstanding the fact that this Agreement has been drafted or prepared by one of the parties, each of the parties hereto confirms that they and their respective counsel have reviewed, negotiated and adopted this Agreement as the joint agreement and understanding of the parties hereto and the language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any Person. In the event an ambiguity or question of intent or interpretation arises with respect to this Agreement, the terms and provisions of the execution version of this Agreement shall control and prior drafts of this Agreement shall not be considered or analyzed for any purpose (including in support of parol evidence proffered by any Person in connection with this Agreement).

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9.15 Non-Recourse. All claims, obligations, liabilities, or causes of action that may be based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any manner to this Agreement, the negotiation, execution or performance of this Agreement (including any representation or warranty made in connection with or as an inducement to this Agreement) or the transactions contemplated hereby may be made only against (and are those solely of) the Persons that are expressly identified as parties to this Agreement. No other party, including any of the parties’ Affiliates or any of the parties’ or their Affiliates’ directors, officers, employees, incorporators, members, partners, managers, stockholders, agents, attorneys, or representatives, or any of their respective investment bankers, financial advisors or lenders (collectively, the “Non-Recourse Parties”), shall have any liabilities for any claims, causes of action, obligations, or liabilities arising under, out of, in connection with, or related in any manner to this Agreement or based on, in respect of, or by reason of this Agreement or its negotiation, execution, performance, or breach. Notwithstanding anything to the contrary in this Section ‎9.15, nothing in this Section ‎9.15 shall be deemed to limit any liabilities or obligations of, or claims against, (a) any party to any other Transaction Agreement or serve as a waiver of any right on the part of any party to such other Transaction Agreement to make any claim or take any action permitted by, pursuant to, and in accordance with the specific terms of such other Transaction Agreement or (b) any Person in respect of Fraud.

9.16 Survival. The representations and warranties set forth in Article 3 and Article 4 of this Agreement, and in any certificate delivered pursuant to this Agreement, shall terminate at the earlier of the Closing or at the time of termination of this Agreement pursuant to Section 7.01, and thereafter, subject to Section 7.02, none of the parties or any of their Affiliates shall have any liability whatsoever with respect to any such representation or warranty, and no claim for breach of any such representation or warranty, detrimental reliance or other right or remedy (whether in contract, in tort or at law or in equity) may be brought after the Closing with respect thereto against any of the parties or their Affiliates. Notwithstanding anything to the contrary in this Section ‎9.16, nothing in this Section ‎9.16 shall be deemed to limit any liabilities or obligations of, or claims against, any Person in respect of Fraud.

9.17 Securities Purchase Agreement Amendment. This Agreement shall constitute the “exchange agreement” referenced in that certain Third Amendment to Securities Purchase Agreement, dated as of July 2, 2024, by and among the Company and the purchasers identified on the signature pages thereto.

 

[Remainder of Page Intentionally Left Blank]

 

 

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IN WITNESS WHEREOF, the parties hereto have executed this Exchange Agreement as of the date first written above.

[Signatures]

 

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Exhibit A

 

Form of Amended Charter

 

(See attached)

 

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Exhibit B

 

Form of Amended Bylaws

 

(See attached)

 

 

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Exhibit C

 

Form of New Stockholders’ Agreement

 

(See attached)

 

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Exhibit D

 

Form of OTPP Designee Subscription Agreement

 

(See attached)

 

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Exhibit E

 

Exhibit E – Form of RRA Termination Agreement

 

(See attached)

 

 

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Schedule 3

Mutual Release Agreement

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MUTUAL RELEASE

This Mutual Release Agreement (this “Release Agreement”) is entered into as of [·], 2024, by and among:[1]

 

 

 

 

[1] Capitalized terms used but not defined in the preamble and recitals to this Release Agreement have the meanings ascribed to them in Section 1 or in that certain Transaction Support Agreement, dated as of July 3, 2024, by and among the Company and the Consenting Stakeholders (the “Transaction Support Agreement”), as applicable.

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RECITALS

WHEREAS, the Company and its Consenting Stakeholders (collectively, the “Parties” and each signatory hereto, a “Party”) have in good faith and at arms’ length negotiated or been apprised of certain out-of-court restructuring and recapitalization efforts and transactions with respect to the Company’s capital structure on the terms set forth in this Release Agreement and as specified in the Transaction Support Agreement and that certain Transaction Term Sheet, attached as Exhibit A to the Transaction Support Agreement (the “Transaction Term Sheet” and such transactions as described in the Transaction Support Agreement and the Transaction Term Sheet, the “Transactions”);

WHEREAS, the Company and the Consenting Stakeholders intend to implement the Transactions through the Exchange Agreement dated as of July 3, 2024, by and among the Company and certain of the Consenting Stakeholders (the “Exchange Agreement”), the Definitive Documents (as defined below), and this Release Agreement;

WHEREAS, subject to the terms of the Transaction Support Agreement and the Exchange Agreement, the Parties have agreed to take certain actions with respect to and in support of the Transactions;

WHEREAS, for example, Carlyle has agreed that, in exchange for the releases, exculpations, and other consideration set forth in the Transaction Support Agreement and Transaction Term Sheet (including payment of the Latham Fees and Expenses), all fees and expenses due to Carlyle or its Affiliates and principals (including any “broker” or “financing” fees, but excluding the Latham Fees and Expenses), and all Existing Equity Interests (including Contingent Shares) held by Carlyle other than KLD Common Stock, shall be cancelled, released, and discharged in exchange for no additional consideration other than as provided in the Transaction Term Sheet (the “Carlyle Settlement”);

WHEREAS, the approval by the Company Parties of the Transactions and related negotiations and agreements has been broadly delegated to the Special Review Committee of the board of directors of KLD (the “Special Review Committee”); and

WHEREAS, in exchange for the Consenting Stakeholders’ covenants, agreements, and support with respect to the Transactions (and solely with respect to Carlyle, including but not limited to the Carlyle Settlement), the Special Review Committee has determined (following lengthy discussions, including with KLD’s outside counsel and financial advisors) that is in the best interests of the Company Parties and other stakeholders to enter into this Release Agreement.

NOW, THEREFORE, in consideration of the covenants and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Party, severally and not jointly, intending to be legally bound hereby, agrees as follows:

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AGREEMENT

Section 1. Definitions.

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Section 2. Conditions to Release Effective Date.

 

This Release Agreement and the Parties’ respective rights, covenants, and obligations hereunder shall become automatically and immediately effective upon the following: (i) each Party has executed and delivered its signature page to the Transaction Support Agreement and this Release Agreement and (ii) the closing of the Transactions has occurred in accordance with the Transaction Support Agreement (the “Effective Date”).

Section 3. Releases.

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Notwithstanding anything herein to the contrary, it is agreed that (x) nothing herein shall affect the Liens (as defined in the Credit Agreement) and security interests of the Secured Parties (as defined in the Credit Agreement) or the Lenders (as defined in the Credit Agreement) on any of the Collateral (as defined in the Credit Agreement) and (y) the Secured Parties may exercise their respective rights and remedies with respect to the Collateral in the future from time to time in accordance with the terms of the Loan Documents and applicable law.

Section 4.

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A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

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Section 5. Miscellaneous.

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(i) Specific Performance. Each Party recognizes and acknowledges that a breach by such Party of any covenants or agreements contained in this Release Agreement will cause the

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other Parties to sustain damages for which such other Parties would not have an adequate remedy at law for money damages, and therefore each Party agrees that in the event of any such breach, the other Parties shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which such other Parties may be entitled, at law or in equity.

IN WITNESS WHEREOF, this Release Agreement has been duly executed as of the date first above written.

[COMPANY PARTIES]

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By: ___________________________

Name:

Title:

Address for Notices:

9023 Columbine Road

Eden Prairie, MN 55347

Attention: Andy Southam

Email: andrew.southam@kldiscovery.com

with a copy to (which shall not constitute notice):

Gibson, Dunn & Crutcher, LLP

1050 Connecticut Avenue, N.W.

Washington, DC 20036-5306

Attention: Stephen I. Glover

Email: siglover@gibsondunn.com

 

 

 

 

 

 

 

 

 

 

[Consenting STAKEHOLDER]

By: ___________________________

Name:

Title:

Address:

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E-mail address(es):

Aggregate Amounts Beneficially Owned or Managed on Account of:
Term Loan Claims	$
Revolving Credit Claims	$
Debenture Claims	$
Existing Equity Interests

 

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Exhibit A

Transaction Term Sheet

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KLDISCOVERY INc., et al.

TRANSACTION TERM SHEET July 3, 2024

This term sheet (this “Term Sheet”) describes the principal terms of proposed transactions (each, a “Transaction” and, collectively, the “Transactions”) to restructure the existing indebtedness of, and equity interests in, KLDiscovery Inc. (“KLD”) and its direct and indirect affiliated entities (collectively, the “Company” or the “Company Parties”). The Transactions will be consummated on the terms, and subject to the conditions, set forth in the Transaction Support Agreement to which this Term Sheet is attached (together with the exhibits and schedules attached to such agreement, including this Term Sheet, each as may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms thereof, the “TSA”). Terms used herein but not defined shall have the meanings ascribed to such terms in the TSA.

 

THIS TERM SHEET IS NOT AN OFFER OR A SOLICITATION WITH RESPECT TO ANY SECURITIES OR DEBT OF THE COMPANY PARTIES. aNY SUCH OFFER OR SOLICITATION SHALL COMPLY WITH ALL APPLICABLE SECURITIES LAWs.

 

THIS TERM SHEET IS PROVIDED IN CONFIDENCE AND MAY BE DISTRIBUTED ONLY WITH THE EXPRESS WRITTEN CONSENT OF THE COMPANY.

 

 

Transaction Overview
Transaction Summary	The restructuring of the outstanding indebtedness of, and equity interests in, the Company shall be implemented through an out-of-court privately negotiated exchange, with certain beneficial holders of, or holders otherwise having discretionary management authority with respect to, the Debentures agreeing that the Debenture Holders (each as defined below) will exchange their Debentures for their respective pro rata share of newly issued Company common stock (the “New Common Stock”) such that the Debenture Holders will own, as of the Transaction Effective Date, in respect of their Debentures, not less than 96% of the outstanding common stock (including the Contingent Shares (as defined below) and a number of shares equal to the number of Vested TRSUs (as defined below), in each case, to be issued in connection with the closing), as provided herein (the “KLD Common Stock”), of Reorganized KLD, subject to dilution by the MIP Equity (as defined below), and otherwise on a fully-diluted basis; provided, that (1) neither shares subject to the then-outstanding warrants issued by the Company to purchase shares of common stock at an exercise price of $11.50 per share that expire on December 19, 2024 (the “Warrants”) nor the MIP Equity will be considered in determining the fully-diluted shares, and (2) the Outstanding TRSUs (as defined below) will be included in determining the fully-diluted shares. The terms of the KLD Common Stock outstanding on and after the Transaction Effective Date (as

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	defined below) shall be as set forth in the governance term sheet attached hereto as Annex C (the “Governance Term Sheet”). The Transactions will be supported by (i) the Company; (ii) the Consenting Term Loan Lenders; (iii) the Consenting Revolving Lenders; (iv) Consenting Debenture Holders; (v) the Sponsors; and (vi) certain other holders of Existing Equity Interests (together with the Consenting Term Loan Lenders, the Consenting Revolving Lenders, the Consenting Debenture Holders, and the Sponsors, the “Consenting Stakeholders”); in each case, that are signatories to the TSA. The “Transaction Effective Date” shall be the date on which all the transactions described in this Term Sheet are consummated.
Claims and Interests	Claims against and interests in the Company Parties are as follows: (a) Term loan indebtedness under that certain Credit Agreement, dated as of February 8, 2021 (as amended, supplemented, amended and restated, or otherwise modified from time to time, the “Credit Agreement”), by and among KLDiscovery Holdings, Inc. (f/k/a LD Lower Holdings, Inc.), as Borrower, LD Topco, Inc., as Holdings Topco, the Lenders party thereto, Ally Bank, as a lender and an L/C Issuer, and Wilmington Trust, National Association, as Administrative Agent and Collateral Agent, comprised of the principal amount of all outstanding term loans (the “Term Loans”), plus any accrued and unpaid interest, fees, costs and expenses as of the Transaction Effective Date (the “Term Loan Claims” and, the holders thereof, the “Term Loan Lenders”); (b) Revolving credit indebtedness under the Credit Agreement, comprised of the principal amount of all outstanding revolving loans (the “Revolving Credit Loans”), plus any accrued and unpaid interest, fees, costs and expenses as of the Transaction Effective Date (the “Revolving Credit Claims” and, the holders thereof, the “Revolving Lenders”); (c) Indebtedness under that certain Securities Purchase Agreement, dated as of December 16, 2019 (as amended, supplemented, amended and restated, or otherwise modified from time to time, the “Debentures Purchase Agreement”), among KLD (f/k/a Pivotal Acquisition Corp.) and the purchasers party thereto, comprised of 8.00% convertible debentures due 2024 (the “Debentures” and the holders thereof, the “Debenture Holders”), including all principal amounts outstanding, plus any accrued and unpaid interest, fees, costs and expenses as of the Transaction Effective Date (the “Debenture Claims”);

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	(d) All other claims against the Company Parties arising prior to the Transaction Effective Date that are not Term Loan Claims, Revolving Credit Claims, Debenture Claims, or claims that are secured (the “General Unsecured Claims”); (e) Equity Interests existing prior to the Transaction Effective Date (the “Existing Equity Interests”), including, without limitation, (i) rights of former LD Topco, Inc. stockholders under the Agreement and Plan of Reorganization, dated as of May 20, 2019, as amended on December 16, 2019, by and among Pivotal Acquisition Corp., Pivotal Merger Sub Corp., LD Topco, Inc., and Carlyle Equity Opportunity GP, L.P., as amended, to receive up to 2,200,000 shares of Company common stock (such shares, the “Contingent Shares”), (ii) time-based restricted stock units (“RSUs”) issued under the Company’s 2019 Incentive Award Plan (the “Award Plan”) that will vest upon the Transaction Effective Date (the “Vested TRSUs”), (iii) time-based RSUs issued under the Award Plan that will remain outstanding after the Transaction Effective Date (the “Outstanding TRSUs”), (iv) options (the “Options”) and performance-based RSUs (the “PRSUs”) issued under the Award Plan, and (v) the Warrants; and (f) Existing Equity Interests in the Company and its direct and indirect subsidiaries and affiliates that are owned by KLD or its subsidiaries (such interests, the “Intercompany Interests”).
Implementation	The Transactions shall be implemented through the following: (a) a transaction privately negotiated with the Consenting Debenture Holders, comprised of certain beneficial holders (or holders otherwise having discretionary management authority with respect to such Debentures) representing 100% of the outstanding Debentures (the “Exchanged Debentures”), each of which will certify that such holder is an “institutional” accredited investor within the meaning of Rule 501(a) (1), (2), (3), (7), (8), (9), (12), or (13) of the Securities Act of 1933 (as amended, the “Securities Act”) or a “qualified institutional buyer” (as defined in Rule 144A (“Rule 144A”) under the Securities Act), to exchange 100% of its respective Debentures for its pro rata share of New Common Stock such that the Debenture Holders will own, in respect of their Debentures, not less than 96% of the outstanding KLD Common Stock (including the Contingent Shares to be issued in connection with closing and a number of shares equal to the number of Vested TRSUs), subject to dilution by the MIP Equity, and otherwise on a fully diluted basis; provided, that (1) neither shares subject to the Warrants

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	nor the MIP Equity will be considered in determining the fully-diluted shares and (2) the Outstanding TRSUs will be included in determining the fully-diluted shares (the “Exchange”); (b) the amendment or amendment and restatement of the Credit Agreement (the “Amended Credit Agreement”) in form and substance consistent with the term sheet attached hereto as Annex A (the “1L Term Sheet”); (c) entry into a second lien credit agreement (the “Second Lien Credit Agreement”) in form and substance consistent with the term sheet attached hereto as Annex B (the “2L Term Sheet”); (d) entry into an intercreditor agreement in form and substance consistent with the term sheet attached hereto as Annex E (the “Intercreditor Term Sheet”) and the Third Amendment Agreement Among Lenders; (e) General Unsecured Claims shall be paid in the ordinary course of business in accordance with the terms and conditions of the particular transaction giving rise to such General Unsecured Claim (including as provided in the TSA and this Term Sheet); and (f) as to the Existing Equity Interests, actions, including cancellation of the Options and PRSUs, such that holders of outstanding KLD Common Stock will own, as of the Transaction Effective Date, not more than 4%, in the aggregate, of the KLD Common Stock (including the Contingent Shares to be issued in connection with closing and a number of shares equal to the number of Vested TRSUs and a number of shares equal to the number of Outstanding TRSUs) outstanding immediately following the Transaction Effective Date, subject to dilution by the MIP Equity and the Warrants, and otherwise on a fully diluted basis.
Fiduciary Out	Notwithstanding anything to the contrary herein, the terms of this Term Sheet shall be subject to the “fiduciary out” provisions set forth in the TSA.
Other Terms
Board Members/Governance	The New Corporate Governance Documents shall be in compliance with all applicable laws and subject to the consent rights contained in the TSA. The board of directors of Reorganized KLD (the “New Board”) shall be composed of seven (7) directors, six (6) of whom shall be designated for nomination to the New Board by the Consenting

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	Debenture Holders in a manner to be agreed among such holders and one (1) of whom shall be the Company’s then-current CEO. The Term Loan Lenders shall have the right to appoint a New Board observer. This right will terminate when the Term Loan Claims are repaid in full and is otherwise subject to customary rights of the New Board to exclude the observer as described in the Amended Credit Agreement. All other governance rights shall be provided for in the Governance Term Sheet, including on-going information rights for reorganized equity holders.
KERP	A KERP for non-insiders was implemented on terms consistent with the term sheet circulated by AlixPartners on April 19, 2024. A KERP for insiders was implemented on June 6, 2024 (the non-insider and insider KERP, collectively, the “KERP”). The Company Parties, Reorganized KLD, and the Consenting Debenture Holders (in their capacity as Debenture Holders pre-Transaction Effective Date and majority shareholders in Reorganized KLD post-Transaction Effective Date) agree to implement the KERP and continue such programs according to their terms following the Transaction Effective Date.
Management Incentive Plan	Effective as of the Transaction Effective Date, the Company shall adopt a management incentive plan (the “MIP”), as provided for in Annex D attached hereto (the “MIP Term Sheet”), and otherwise on terms to be determined by the New Board after the Transaction Effective Date, reserving a number of shares representing 7.5% of (1) the KLD Common Stock outstanding at closing (including the Contingent Shares and New Common Stock and a number of shares equal to the number of Vested TRSUs, in each case, issued in connection with the closing, and a number of shares equal to the number of Outstanding TRSUs) plus (2) all of the shares reserved for the MIP (the “MIP Equity”). Equity awards representing two-thirds of the MIP Equity shall be issued effective as of the Transaction Effective Date. No further awards will be granted under the Company’s existing equity plans either before or after the Transaction Effective Date.
Warrant Exercise	To the extent any Warrants are exercised following the Transaction Effective Date, (i) the Debenture Holders shall receive additional shares of New Common Stock and (ii) additional MIP Equity shall be allocated pursuant to the MIP, in each case in a sufficient number or amount to fully offset the dilution resulting from such exercise of Warrants, as set forth more fully in the Exchange Agreement.

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Tax Matters	The parties will work together in good faith and will use commercially reasonable efforts to structure and implement the Transactions in a tax efficient and cost-effective manner, as reasonably determined by the Company, the Required Consenting Debenture Holders, and the Sponsors, in consultation with the Required Consenting Term Loan Lenders and the Required Revolving Lenders. The parties will cooperate in good faith to implement the intended tax treatment, including forming any new entities, converting existing entities, and making any tax elections.
Indemnification Obligations	The Company Parties and Reorganized KLD shall (and the Consenting Debenture Holders (in their capacity as Debenture Holders pre-Transaction Effective Date and majority shareholders in Reorganized KLD post-Transaction Effective Date) agree to) honor and perform, and shall not seek to terminate, discharge, or impair any currently-existing obligations of the Company Parties pursuant to corporate charters, bylaws, limited liability company agreements, written deeds of indemnity, indemnification agreements, or other organizational documents to indemnify current and former officers, directors, managers, members, agents, or employees with respect to present and future actions, suits, and proceedings against the Company Parties or such directors, officers, managers, members, agents, or employees, based upon any act or omission for or on behalf of the Company Parties prior to the Transaction Effective Date (the “Indemnification Obligations”), and neither the Company Parties, Reorganized KLD, nor the Consenting Debenture Holders (in their capacity as Debenture Holders pre-Transaction Effective Date and majority shareholders in Reorganized KLD post-Transaction Effective Date), as applicable, will take any action after the Transaction Effective Date to limit such Indemnification Obligations.
Employee Matters	In connection with the Transactions and upon the Transaction Effective Date, pursuant to the TSA and this Term Sheet, the Company Parties, Reorganized KLD, and the Consenting Debenture Holders (in their capacity as Debenture Holders pre-Transaction Effective Date and majority shareholders in Reorganized KLD post-Transaction Effective Date) consent to the continuation of the Company Parties’ wages, compensation, and benefits programs (including the KERP and MIP) unless otherwise modified herein; provided that the New Board and Reorganized KLD shall have the right to modify or amend such wages, compensation, and benefits programs (including the MIP) in accordance with their terms and applicable law. The Company Parties and Reorganized KLD shall not (and the Consenting Debenture Holders ((in their capacity as Debenture Holders pre-Transaction Effective Date and majority shareholders in Reorganized KLD post-Transaction Effective Date) agree not to)

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	terminate or otherwise reduce the coverage under any directors’ and officers’ insurance policies in effect prior to the Transaction Effective Date (including, without limitation, any tail policy), and any directors and officers of the Company Parties who served in such capacity at any time before or after the Transaction Effective Date shall be entitled to the full benefits of any such policy for the full term of such policy regardless of whether such directors and/or officers remain in such positions after the Transaction Effective Date. Notwithstanding anything to the contrary herein, the Company shall retain the ability to supplement such directors’ and officers’ insurance policies as the Company deems necessary, including by purchasing any tail coverage (including, without limitation, a tail policy).
Conditions Precedent to Closing	The occurrence of the Transaction Effective Date shall be subject to the satisfaction of the following conditions precedent to closing in addition to any “closing” conditions in any applicable Definitive Document: (i) Each document or agreement constituting the Definitive Documents required to implement the Transactions shall (a) be in form and substance consistent with the TSA and this Term Sheet, (b) have been duly executed, delivered, acknowledged, filed, and/or effectuated, as applicable, and (c) be in full force and effect. (ii) All Transaction Fees and Expenses shall have been paid in full in cash. (iii) The holders of the Exchanged Debentures representing 100% of the outstanding Debentures shall have exchanged their Exchanged Debentures in the Exchange. (iv) The Credit Agreement shall have been either amended or amended and restated in form and substance consistent with the 1L Term Sheet (with all conditions precedent to the effectiveness thereof being satisfied or waived in accordance with the terms of such amendment). (v) The Second Lien Credit Agreement, the Third Amendment Intercreditor Agreement, and the Third Amendment Agreement Among Lenders shall have been executed and be in full force and effect (with all conditions precedent to the effectiveness thereof being satisfied or waived in accordance with the terms of such amendment). (vi) All Options and PRSUs issued under the Award Plan shall have been cancelled. (vii) The Mutual Release Agreement shall have been executed.

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	(viii) Due authorization of the Transactions by the Company’s existing stockholders in accordance with applicable law shall have occurred. (ix) The TSA shall remain in full force and effect and shall not have been terminated in accordance with its terms and there shall be no breach or default with respect to such agreements that would, with notice and/or passage of time, result in termination. (x) By the Transaction Effective Date, to the extent necessary, any required third party or governmental authorizations, licenses, rulings, documents, approvals, or consents shall have been obtained. (xi) No court of competent jurisdiction or other competent governmental or regulatory authority shall have enacted any law or issued any final and non-appealable order making illegal or otherwise restricting, preventing, or prohibiting the consummation of the Transactions, the TSA, or any of the definitive documentation contemplated thereby. Any of the foregoing conditions may be waived by the joint agreement of (a) KLD, (b) the Required Consenting Debenture Holders, (c) the Required Consenting Term Loan Lenders, (d) the Required Consenting Revolving Lenders, and (e) the Sponsors (in each case, which consent shall not be unreasonably withheld, and may be by email in writing between counsel to the applicable Parties, and which waiver shall apply solely to such waiving party).
Carlyle Settlement	In exchange for the releases, exculpations, and other consideration set forth herein and in the other Definitive Documents, as applicable, The Carlyle Group Inc. and its affiliates and principals (collectively, “Carlyle”) agrees to the following: (i) The Company shall pay the reasonable and documented fees and expenses of Latham & Watkins LLP, as counsel to Carlyle, that are due and owing after receipt of applicable invoices, that were incurred as a result of services performed in connection with the Transactions, and to the extent consistent with its engagement letter (the “Latham Fees and Expenses”); and (ii) All other fees and expenses due to Carlyle (including any “broker” or “financing” fees), and all Existing Equity Interests (including any Contingent Shares) held by Carlyle (other than KLD Common Stock), shall be

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	cancelled, released, and discharged in exchange for no consideration other than as provided in this Term Sheet. In exchange and as consideration for the foregoing, the Company and Carlyle shall enter the Mutual Release Agreement.

 

 

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Annex A

1L Term Sheet

 

 

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KLDiscovery Holdings, Inc.

Third Amendment Transactions

 

Summary of Principal Terms and Conditions

 

This Summary of Principal Terms and Conditions (this “1L Term Sheet”) is provided for indicative purposes only, does not constitute a commitment to extend or arrange credit or to waive or forbear with respect to any default and is non-binding in all respects and does not purport to summarize all of the terms of the Amendment (as defined below) and any of the related definitive documentation. Further, as the Amendment and any such related definitive documentation are not fully negotiated, the terms in this 1L Term Sheet are subject to change. All capitalized terms used in this 1L Term Sheet but not defined in the Term Sheet or in this 1L Term Sheet shall have the meanings provided in the Amendment or the Credit Agreement.

 

Sponsors:	Debenture Holders.
Borrower:	Same as existing.
Guarantors:	Same as existing.
Administrative Agent and Collateral Agent:	Wilmington Trust, National Association.
Lenders:	100% of the Lenders party to the Credit Agreement.
Amendments:	The following amendments, and such other amendments to the Credit Agreement and the other Loan Documents relating to such amendments, will be made to the Credit Agreement pursuant to a third amendment to the Credit Agreement (the “Amendment”): (i) amend the definition of “Applicable Rate” to (1) replace “6.50%” and “5.50% in clause (a) with “7.50%” and “6.50%”, respectively and (2) replace “4.00%” and “3.00%” in clause (b) with “5.00%” and “4.00%”, respectively. (ii) amend the definition of “Applicable Commitment Fee” to delete clauses (x) and (y) and replace them with a reference to 0.75%. (iii) amend the definition of “Change of Control” to (i) clarify that consummation of the Transaction does not constitute a Change of Control and (ii) amend sub-clause (i) and (ii) to provide for (x) a new prong requiring collective retention by the Permitted Holders of no less than 50.1% of the voting and economic interests in Parent and (y) additional prongs requiring minimum economic and voting interest retention in Parent of (1) 27.9% in the case of MGG Investment Group LP and its Controlled Investment Affiliates and (2) 22.2% in the case of 1397225 Ontario Limited and its Controlled Investment Affiliates; provided

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the director voting rights (not the economic rights) of the Ontario Teachers’ Pension Plan (“OTPP”) may be transferred to a friendly third party of OTPP (which shall be Ferndale3 Corp., an Ontario corporation, at closing or any other person that OTPP may designate in its sole discretion with the contractual right to direct the voting and transfer of shares held by such person) (“OTPP FTP”) as OTPP may deem necessary to comply with the Pension Benefits Standards Regulations, 1985 (Canada), as incorporated by reference in Section 79 of regulation 909 under Section 62 of the Pension Benefits Act (Ontario), and for the avoidance of doubt, any such transfer to or exercise of voting rights by the OTPP FTP shall not result in a Change of Control; (iv) amend the definition of (i) “Default Rate” and (ii) Section 2.08 to (x) refer to all Obligations rather than references “overdue amounts” and “overdue Obligations” therein and (y) provide that interest shall accrue at the Default Rate following the occurrence of any Event of Default rather than upon any payment default or acceleration; (v) amend the definition of “Excluded Property” to (1) delete sub-clauses (C) and (D) from sub-clause (f), (2) delete clause (i) , (3) delete clause (j) and (4) delete clause (k) and (3) add a new subclause to include a reference such that “any property or right to use property to the extent that the burden or cost (including any materially adverse tax consequences) of obtaining or perfecting such security interest exceeds the practical benefit or value of the security afforded to the Lenders thereby as determined among the Borrower, the Blackstone Credit Representative and the Ally Representative”; (vi) amend the definition of “Excluded Subsidiary” to delete clauses (b), (d) and (l) and to reflect the deletion of such clauses in other sections of the Credit Agreement (including Section 9.11 as it relates to clause (b)) and provide for a 60 day post-closing period (or such longer period as determined by the Blackstone Credit Representative) after the Third Amendment Effective Date for the Loan Parties to comply with this change; (vii) add the defined term “Liquidity” which will be defined to include the average of the sum of (i) availability under the Revolving Credit Facility (which shall be deemed $0 at any time a Default or an Event of Default exists) and (ii) unrestricted cash of the Loan Parties (other than Holdings) which is held in accounts subject to control agreements in favor of the Collateral Agent, measured in each case for the

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five business day period prior to testing; (viii) amend the definition of “Loan Documents” to include the Third Amendment; (ix) amend the definition of “Maturity Date” to (i) replace “February 8, 2026” in subclause (b)(i) with August 9, 2027 and (ii) remove subclauses (a)(ii) and (b)(ii) respectively; (x) amend the definition of “Perfection Exceptions” to delete clause (iv) therein and provide for a 60 day post-closing period (or such longer period as determined by the Blackstone Credit Representative) after the Third Amendment Effective Date to enter into any applicable security documents to be governed by the law of any jurisdiction in which assets are located other than the United States, any state thereof or the District of Columbia; (xi) prohibit any refinancing or replacement of the Revolving Credit Facility unless (x) such refinancing is provided by a financial institution reasonably acceptable to the Blackstone Credit Representative, excluding any “Disqualified Revolving Lender” (to be identified by the Blackstone Credit Representative in writing prior to the Third Amendment Effective Date; provided, that such definition shall include the Debenture Holders) (the “Refinancing Revolving Lender”), (y) such refinancing is on terms that shall be on no more favorable terms than those set forth in the Credit Agreement (as amended by the Third Amendment) and (z) the Refinancing Revolving Lender shall become party to the Agreement Among Lenders (or such other agreement acceptable to the Blackstone Credit Representative in its sole discretion); provided, without the prior written consent of the Required Revolving Lenders, there shall be no partial refinancing or replacement of the Revolving Credit Facility; (xii) amend the definition of “Permitted Holders” to delete the existing definition in its entirely and replace with a reference to (i) the Sponsors and (ii) with regard to the OTPP FTP (x) a special purpose vehicle designated by OTPP to hold securities in the Company; (y) any successor and assigns in interest thereto; or (z) any other person, provided that OTPP and such persons are parties to a shareholders agreement that affords OTPP an enforceable contractual right to, directly or indirectly, in each case, vote or direct the voting of the votes capable of being cast in general meetings of the Company for the election and removal of directors of the Company; (xiii) delete the term “Specified Change of Control” and all

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references and related provisions thereto; (xiv) amend the definition of “Sponsor” to (i) replace CEOF II DE AIV, LP with the Debenture Holders and (ii) delete clause (b) in its entirety; (xv) add the defined terms “Third Amendment”, “Third Amendment Effective Date”, and “Third Amendment Transactions” (which shall be defined as the Transactions); (xvi) amend Section 2.05(b)(ii) to provide for 100% prepayment with Net Cash Proceeds of Asset Sales and Casualty Events with no materiality thresholds and no reinvestment rights applicable thereto (for the avoidance of doubt, for purposes of Section 2.05(b)(ii), the existing carveouts to the definition of Asset Sales which are listed on Schedule I as being removed shall not be carved out and shall be subject to prepayment requirements); (xvii) amend Section 2.05(b) to add clause (iv) that shall provide for 100% prepayment of the Revolving Credit Facility with any fundings under the 2L Credit Agreement (other than the prepayment of the Term Loan required on the Third Amendment Effective Date), but without a corresponding commitment reduction (unless such commitment reduction is selected by Borrower); (xviii) amend Section 5.12 [Subsidiaries/Capital Stock] to bring down this rep as to the Third Amendment Effective Date; (xix) amend Section 6.01(b) to provide for delivery of financial reporting also for the fourth quarter of each fiscal year; (xx) amend Section 6.01(c) to provide for delivery of a consolidated balance sheet of Parent (or of any Parent Holding Company or Subsidiary of a Parent Holding Company allowed to be delivered pursuant to the terms hereof) and its Subsidiaries as at the end of such fiscal month, and the related consolidated statements of operations and income (loss) for such fiscal month, unless and until amended or waived by the Required Lenders and the Required Revolving Lenders; (xxi) amend Section 6.01(d) to require delivery of a 13-week cash flow report following any week in which Liquidity is less than $12.5 million, unless and until amended or waived by the Required Lenders and the Required Revolving Lenders; (xxii) add a new Section 6.01(f) which shall provide for customary board observation rights for a board observer to

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be appointed by Blackstone Credit (the “Board Observer”). Such rights will include the right to (i) attend any meeting of the board of directors of Parent or any of the other Loan Parties (the “Board”), (ii) delivery of all notices and other materials provided to the members of the Parent’s board of directors, including, without limitation, copies of records of proceedings or minutes of such meeting and (iii) reimbursement of documented, reasonable out of pocket costs and expenses incurred in connection with its participation in any such meeting. The Board Observer will agree to customary confidentiality covenants. For the avoidance of doubt, (x) the Board Observer shall not be entitled to vote at such meetings and the Observer’s presence shall not be taken into account or required to establish a quorum, (y) the Board Observer may be excluded from attending meetings or receiving certain information if the Parent reasonably determines that such exclusion is necessary to comply with applicable law, avoid a conflict of interest or potential conflict of interest or to protect attorney client privilege, in each case, upon advice of counsel and (z) the Board Observer rights shall terminate once the Term Loans have been repaid in full; (xxiii) (i) permit the incurrence of 2L Term Loans (defined below) to be funded by the Debenture Holders (or their respective successors and permitted assigns) , provided, that such 2L Term Loans shall be junior in lien priority and subordinated in right of payment to the Term Loans and Revolving Credit Facility as set forth under the terms of the ICA (defined below); provided, further, that the 2L Term Loans shall be documented under a standalone credit agreement substantially consistent with the terms of the Credit Agreement, as amended hereby, except that such credit agreement shall be cross-accelerated (and not cross-defaulted) to the Credit Agreement (with appropriate modifications to effectuate the 2L Term Loan facility), shall not require or permit any cash payments except as permitted by the ICA (as defined below) before the stated maturity date thereof, shall mature not earlier than six (6) months after the Term Loans (as extended by the Amendment (such credit agreement, the “2L Credit Agreement” and the term loans thereunder, the “2L Term Loans”)) and shall reflect a 15% cushion relative to the negative covenant baskets and related definitions and to the financial covenant), (ii) [reserved], (iii) [reserved], (iv) amend the definition of “Affiliate Lender” to specify that all Debenture Holders and their respective Affiliates and Approved Funds shall be deemed to be Affiliate Lenders, (v) delete the term “Debt Fund Affiliate” and remove all references throughout, (v) [reserved], and (vi) amend Section 10.07 and such other provisions as necessary to (x)

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restrict the direct or indirect holding of any Loans or Commitments (including by participation) or any other Indebtedness by any Affiliate Lenders (other than the indebtedness under the 2L Credit Agreement that is subject to the ICA), without the prior written consent of Blackstone Credit and Ally Representative and (y) [reserved]; (xxiv) (1) amend the sub-clauses listed on Schedule I hereto in accordance with the terms thereof and (2) retain all other sub-clauses not otherwise listed on Schedule I to the extent not otherwise referenced as being amended under this 1L Term Sheet; (xxv) amend Section 7.08 and the related First Lien Net Leverage Ratio definition and the related Control Trigger definition under the Agreement Among Lenders as follows: (i) [reserved], (ii) commence the First Lien Net Leverage Ratio testing for the test period ending March 31, 2025 and each test period ending on the last day of each calendar quarter thereafter, (iii) reflect the maximum First Lien Net Leverage Ratio for the test period ending March 31, 2025 as 8.50:1.00, June 30, 2025 as 7.50:1.00, September 30, 2025 as 7:25:1.00 and each calendar quarter ending thereafter 7.00:1.00, and (iv) require a minimum Liquidity covenant of $5.0 million, which shall be tested as of the last day of each calendar month, commencing on July 31, 2024 and continuing thereafter for the last day of each calendar month until (and including as a test date) February 28, 2025. For the avoidance of any doubt, the 2L Term Loans shall be excluded from the calculation of the First Lien Net Leverage Ratio. (xxvi) amend Section 7.11 to require that absent the consent of the Required Lenders and Required Revolving Lenders, (i) all material intellectual property of any Holdings or any Subsidiary shall be held only by a Loan Party (other than Holdings) and (ii) such material intellectual property shall not be sold, transferred (by distribution, contribution or otherwise) or otherwise assigned to any other Person which is not a Loan Party (except that in no event may such sale, transfer or assignment be to Holdings); (xxvii) block the availability and use of the term “Immaterial Subsidiaries” and all related provisions and reference thereto, unless elected in writing by the Required Lenders and the Required Revolving Lenders and provide for a 60 day(or such longer period as determined by the Blackstone Credit Representative) post-closing period after the Third Amendment Effective Date for the Loan Parties to comply with this change;

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(xxviii) block the availability and use of the term “Unrestricted Subsidiaries” and all related provisions and references thereto (including clause (18) of the definition of Permitted Lien), unless elected in writing by the Required Lenders and the Required Revolving Lenders; (xxix) while the Revolving Credit Facility remains outstanding (absent the prior written consent of the Required Revolving Lenders), limit the aggregate voluntary prepayments, mandatory prepayments, purchases, refinancings (provided or held by the Borrower or its Affiliates) or exchanges (including by any liability management exercise, but excluding the payment of any existing scheduled amortization payment and excess cash flow mandatory prepayments, in each case as in effect on the Third Amendment Effective Date) that may be made with respect to the Term Loan to $0.00 during the remainder of the term (and any excess payments otherwise required to be paid down with respect to the Term Loan (but for this clause) shall instead be applied as follows: (x) to prepay (without a corresponding permanent commitment reduction) the Revolving Credit Facility at any time an Event of Default exists and (y) with Ally Representative’s and Blackstone Credit’s consent and at their election, to thereafter prepay the Term Loan); (xxx) amend Section 10.01 or the Agreement Among Lenders to provide that (i) Last Out Lender Representative consent shall be required for (x) any increase to the interest rate paid in cash with respect to the Revolving Loan (other than by implementation of the existing default rate as to all Obligations) and (y) decrease to the Weighted-Average Life to Maturity of the Revolving Loan or that definition and (ii) each of the following modifications/waivers or other actions (in addition to those other provisions referenced in this 1L Term Sheet as expressly requiring the consent of the Required Revolving Lenders) shall also require the prior written consent of the Required Revolving Lenders at all times: i. decrease the Weighted-Average Life to Maturity of the Term Loan or that definition, ii. increase the interest rate paid in cash with respect to the Term Loan (other than by implementation of the existing default rate as to all Obligations), iii. use of the Revolving Credit Facility to fund any assignment or other purchase of the Term Loan, iv. to the extent not already covered, waive, postpone,

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reduce or forgive any principal, interest, fees or other amount from time to time payable with respect to the Revolving Credit Facility, or extend, reinstate or increase any commitment related to the Revolving Credit Facility, v. change the definitions of Excluded Property, Excluded Subsidiary, Perfection Exceptions, Threshold Amount, Collateral, Indebtedness, Investments or Permitted Investments, vi. implement any increase to any debt or commitments that upon implementation would be included in the determination of Required Revolving Lenders (whether as a Revolving Credit Commitment Increase or otherwise), vii. permit the Sponsor or its Affiliates or Approved Funds to acquire or otherwise hold the benefit of any Lien or right of payment that is prior (whether contractually or structurally) to, or pari passu with, the payment or Lien priority of the Revolving Credit Facility, viii. for the avoidance of doubt, reduce or otherwise satisfy any portion of the Revolving Credit Facility in connection with any acceptance of all or part of the Collateral in consideration of (whether in whole or in part) the satisfaction of all or any portion of the Obligations reduction or satisfaction of the Revolving Credit Facility in furtherance of any strict foreclosure effected under the Uniform Commercial Code), and ix. permit the existence of any Indebtedness (when taken together with all other Indebtedness incurred on or after the Third Amendment Effective Date, but excluding the Term Loans outstanding on the Third Amendment Effective Date and excluding any Indebtedness incurred for the concurrent refinancing in full of the Revolving Credit Facility) in excess of the Threshold Amount that would have any principal payments coming due (whether by scheduled commitment reductions or otherwise) before the 91st day after the stated maturity of the Revolving Credit Facility; and x. to the extent not already covered, change any other negative covenant. (xxxi) delete the term “Holdco Notes” and all related provisions

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	and references thereto (including the Restricted Payment basket); (xxxii) amend the Agreement Among Lenders to require the application of any payment or distributions turned-over pursuant to the ICA to be applied in accordance with the priorities of the AAL waterfall therein, to address the changes contemplated herein to the Control Trigger definition, to require the consent of the Last Out Lender Representative and the Required First Out Lenders for any increase in the protective advances, and to allow the Last Out Lender Representative to waive or change any provisions related to the Right of First Offer (without the need to obtain the consent of any other Last Out Lender or Agent) (collectively, the “AAL Amendment”); (xxxiii) make such other ministerial or immaterial amendments as necessary to effectuate the foregoing terms and make other required legal form updates (including, if applicable, to KYC related provisions); and (xxxiv) such other amendments as mutually agreed between the Borrower and Ally and consented to by Blackstone Credit.
Conditions Precedent:	The effectiveness of the Amendment shall be subject to the satisfaction of the following conditions precedent (unless waived by the Administrative Agent, Blackstone Credit and Ally Representative) and such other conditions as the Loan Parties, the Lenders or the Administrative Agent shall otherwise agree: (i) execution and delivery by all Loan Parties, the Lenders and the Administrative Agent of the Amendment and the AAL Amendment; (ii) consummation of the Transaction (including receipt of all regulatory approvals required in connection with the Transactions) and delivery of all definitive documents related thereto; (iii) delivery of updated lien and UCC searches; (iv) the receipt by the Administrative Agent of $50.0 million (net of transaction expenses) in 2L Term Loan cash proceeds funded by the Debenture Holders in accordance to the terms of the 2L Credit Agreement, of which (i) $20.0 million of proceeds shall be concurrently applied as a dollar-for-dollar principal prepayment of the Term Loans and (ii) $30.0 million in an aggregate principal amount (which proceeds shall be net of the transaction expenses) shall be concurrently applied as a dollar-for-dollar prepayment of the outstanding principal under the

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Revolving Credit Facility (without a corresponding commitment reduction) in each case in accordance with a letter of direction among the Borrower, the lenders and agents under the 2L Credit Agreement and the Lenders; and the remainder, if any, to the Borrower; (v) receipt by the Administrative Agent and each Lender of a customary omnibus secretary’s certificate, inclusive of (a) charter documents, (b) governing documents, (c) written consent, (d) incumbency and (e) good standings, for each of clauses (a) through (e), for each Loan Party; (vi) delivery of a 13-week cash flow report of Parent and its Subsidiaries; (vii) receipt by the Administrative Agent and each Lender of customary legal opinions in favor of the Administrative Agent, the Collateral Agent and the Lenders by the primary counsel and applicable local counsels to the Loan Parties; (viii) receipt by the Administrative Agent and each Lender of a customary updated perfection certificate, including with respect to deposit accounts and those that constitute Perfection Exceptions; (ix) receipt by the Administrative Agent of updated insurance certificates and endorsements; (x) confirm that the initial post-closing items on Schedule 6.16 have been previously satisfied; (xi) no Default or Event of Default shall have occurred or be continuing after giving effect to the Amendment; (xii) completion of management call among Ally, the Sponsors and the CEO of the Borrower; (xiii) receipt of an updated beneficial ownership certificate and the completion of all KYC and related requirements; (xiv) completion by Ally of its final review and agreement of the closing capitalization, projections, and the proforma allocation of the equity interests of the Borrower, as well as the board governance including the composition and voting parameters of the revised board; (xv) payment by the Borrower of all invoiced fees and expenses due and payable to the Administrative Agent and the Lenders in connection with the Amendment and as may otherwise be due and payable under and pursuant to the

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	Credit Agreement; (xvi) execution and delivery of the 2L Credit Agreement and an intercreditor agreement (which shall include an acknowledgement by the Borrower and Guarantors), reflecting both payment and lien subordination of the 2L Term Loans, the other terms set forth in that certain intercreditor term sheet between the Lenders and prospective holders of the 2L Term Loans attached to the Transaction Term Sheet as Exhibit E, which is attached as Exhibit A to the Transaction Support Agreement, dated as of July 3, 2024, and otherwise being satisfactory to the Lenders (such intercreditor agreement, the “ICA”); and (xvii) customary release of claims by the Loan Parties in favor of the Agents and Lenders.
Governing Law:	New York.
Other Terms:	Except as set forth in the Amendment, all other terms and conditions as presently set forth in the Credit Agreement, the other Loan Documents and the Agreement Among Lenders referenced therein shall remain in full force and effect and shall be ratified by the Borrower and the Guarantors.
Counsel to Term Lenders:	King & Spalding LLP.
Counsel to Revolving Credit Lenders:	Holland & Knight LLP.
Counsel to Administrative Agent:	Arnold & Porter Kaye Scholer LLP.
Counsel to the Loan Parties:	Gibson Dunn & Cruchter LLP.

 

 

 

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Schedule I

Amended Baskets

Section	Sub-Clause	Relevant Basket	Amendment
“Asset Sales”	Immaterial Asset Sales [clause (d)]	$5,000,000	$100,000
	Transfers to Subsidiaries [clause (e)]	Restricted Subsidiary dispositions to the Borrower or another Restricted Subsidiary	Revise “to another Restricted Subsidiary” to “to another direct or indirect Restricted Subsidiary of the Borrower”
	Transfers to Subsidiaries [clause (e)]	Includes $10mm/1.5% asset basket for dispositions to NLPs	Remove capacity for sales to non-Guarantors
	Receivables Assets [clause (j)]	Sales of receivables to Receivables Subsidiaries or other Persons pursuant a to Qualified Receivables Financing or a Qualified Receivables Factoring	Delete
	Sales by Receivables Subsidiaries [clause (k)]	Sales of receivables by Receivables Subsidiaries	Delete
	Sale-Leasebacks [clause (n)]	Sale/Leaseback Transactions for FMV	Delete
	Equipment Receivables [clause (u)]	Sale of equipment receivables	Delete

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Section	Sub-Clause	Relevant Basket	Amendment
“First Lien Net Leverage Ratio” and other leverage Ratios	[clause (a)]	Includes cash at Holdings for netting purposes; Holding is not subject to negative covenants (including RP restrictions)	Exclude cash at Holdings from all cash netting and liquidity concepts
“Investment”	First proviso	Excludes intercompany loans, advances or Indebtedness from the definition of Investment	Such intercompany company loans would be subject to the overall Non-Loan Party cap at the end of the definition of Permitted Investments
“Letter of Credit”		Includes standby and commercial LCs	Commercial LCs would not be available unless Ally agrees at its sole option (Ally does not issue them currently)
“Perfection Exceptions”		$1MM exclusion for average daily balance of any deposit account	Limit is further qualified by an aggregate balance cap of $5MM
“Regulation S-X”			Tie to regulation as in effect on December 31, 2020.

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Section	Sub-Clause	Relevant Basket	Amendment
“Threshold Amount”		$20MM—used for materiality in notices and cross-defaults	Reduce threshold to $5MM
Limited Condition Transaction [Section 1.02(i)]			Block without the consent of the Required Revolving Lenders and the Required Lenders
Incremental, Incremental Equivalent Debt, Specified Refinancing Debt [Ss. 2.14, 2.15 & 2.18]	Incremental, Incremental Equivalent and Specified Refinancing Facilities	Included	Delete throughout. None of the concepts may be utilized going-forward, absent the prior written consent of the Required Lenders and the Required Revolving Lenders
Material Notices [Section 6.02(d)]	Junior Financing Notices	$10MM materiality threshold to trigger notice	Reduce threshold to $5MM
Affiliate Transactions [Section 6.18]	Affiliate Transactions		Delete existing exceptions (other than an exception for transactions that are in the ordinary course of business, consistent with past practices, and at arm’s length;

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Section	Sub-Clause	Relevant Basket	Amendment
			any such transaction involving aggregate consideration of $1 million or more being certified by a responsible officer of the Borrower as meeting all of the foregoing exceptions), and any permission or waiver with respect to the general covenant will require the prior written consent of the Required Lenders and the Required Revolving Lenders Add exception (which shall not require the prior written consent of the Required Lenders and the Required Revolving Lenders) for payment of a CAD10,000 annual dividend to OTPP FTP grossed up by the amount of any withholding or similar tax required by law as provided for in the certificate of incorporation (“FTP Dividend”). If the Borrower cannot pay the FTP Dividend under Delaware law due to insufficient funds or otherwise, such dividend accrues until payment. Add an exception for the payment of the administrative agent

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Section	Sub-Clause	Relevant Basket	Amendment
			fee to the Second Lien Agent (on behalf of Sub-Agent, if applicable) in an aggregate amount not to exceed $250,000.
Indebtedness [s.7.01]	Permitted Ratio Debt [clause (b)]	● FLNR < 5.00x for pari debt ● TNL < 6.00x for junior or unsecured debt Non-Loan Party sublimit (together with 7.01(o)) of greater of (x) $20,000,000 and (y) 3.00% of Consolidated Total Assets	Delete
	Capitalized Lease Obligations and other purchase money debt [clause (d)]	Greater of (x) $15,000,000 and (y) 2.25% of Consolidated Total Assets	$5,000,000
	Preferred Stock [clause (h)]	Issuance of Preferred Stock	Delete
	General Debt Basket [clause (l)]	Greater of (x) $25,000,000 and (y) 3.75% of Consolidated Total Assets	$5,000,000, no grower. Can be incurred by non-loan parties (need exception for debt of foreign subs that don’t become Loan Parties), (iii) no maturity prior to the Maturity Date of Term Loans and (iv) must be provided by an

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Section	Sub-Clause	Relevant Basket	Amendment
			unaffiliated third party.
	Refinancing Debt [clause (n)]	Included	Delete
	Incurred / Assumed Acquisition Debt [clause (o)]	● FLNR < 5.00x or no worse than ratio prior to acquisition for pari debt ● TNL < 6.00x or no worse than ratio prior to acquisition for junior or unsecured debt Non-Loan Party sublimit (together with 7.01(b)) of $12,500,000	Delete
	Contribution Indebtedness [clause I]	Included	Delete
	Non-Loan Party Debt [clause (t)]	Greater of (x) $20,000,000 and (y) 3.00% of Consolidated Total Assets	Delete, including related Lien basket and other references
	Qualified Receivables Financing [clause (v)]	Qualified Receivables Financing or Qualified Receivables Factoring	Delete
	Joint Ventures [clause (cc)]	Greater of (x) $10,000,000 and (y) 1.50% of Consolidated Total Assets	Delete, including related Lien basket and other references
	Permitted Acquisition [clause (dd)]	Greater of (x) $30,000,000 and (y) 4.50% of Consolidated Total Assets	Delete
	Preferred Stock [clause (gg)]	Unlimited so long as Borrower could incur $1.00 of additional unsecured Permitted Ratio Debt on a pro forma basis	Delete all preferred stock capacity

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Section	Sub-Clause	Relevant Basket	Amendment
	Additional limitation		Absent the prior consent of the Required Lender and the Required Revolving Lenders, no Indebtedness may be incurred (or assumed or guaranteed) if such Indebtedness (when taken together with all other Indebtedness incurred on or after the Third Amendment Effective Date) would exceed the Threshold Amount and would have any principal payments coming due (whether by scheduled commitment reductions or otherwise) before the 6th month following the stated maturity of both the Revolving Credit Facility and the Term Facility
	Priority confirmation		Add the following confirmation and agreement to the end of Section 7.01: absent the prior written consent of the Required Lenders and the Required Revolving Lenders, (i) nothing in the Credit Agreement permits any debt to be senior in payment or security to the Term Facility or the Revolving Credit Facility (whether by subordination or

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Section	Sub-Clause	Relevant Basket	Amendment
			otherwise), and (ii) no debt may be secured on a pariLien basis with the Term Facility or Revolving Credit Facility (and except in the case of (x) the Term Loans being subject to the Agreement Among Lenders and (y) capital lease/purchase money Indebtedness permitted under the applicable Section of the Amended Credit Agreement (subject to cap noted above), any debt secured by the Collateral must be junior in priority to the Collateral securing, or purporting to secure, the Term Facility and the Revolving Credit Facility pursuant to an Intercreditor Agreement acceptable to Blackstone Credit and Ally Representative).
	Additional Basket	N/A	Indebtedness under the 2L Credit Agreement in an amount up to the Second Lien Debt Cap under the ICA; provided, that such Indebtedness is subject at all times to the ICA

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Section	Sub-Clause	Relevant Basket	Amendment
Liens [s.7.02]	General Liens Basket [clause (25) in “Permitted Liens”]	Greater (x) $25,000,000 and (y) 3.75% of Consolidated Total Assets.	$3,500,000 and must be junior of record to the Lien with respect to the Obligations and cannot be secured against assets that are not Collateral.
	Additional Basket	N/A	Liens securing the indebtedness under 2L Credit Agreement and ancillary documents thereto to such indebtedness is permitted under the specific Section of the Amended Credit Agreement
Fundamental Changes [s.7.03]	Mergers, dissolutions, liquidations, consolidations [s.7.03]	Specified Change of Control Transaction	Delete
	[clause (c)]	Restricted Subsidiary dispositions to the Borrower or another Restricted Subsidiary	Revise “or to any Restricted Subsidiary” to “or to any direct or indirect Restricted Subsidiary of the Borrower”Add “(other than Holdings)” after “to any other Loan Party” at the end of this clause
Asset Sales [s. 7.04]	Designated Non-Cash Consideration [(clause (c)]	Greater of (x) $15,000,000 and (y) 2.25% of Consolidated Total Assets	Delete

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Section	Sub-Clause	Relevant Basket	Amendment
	General disposition basket [clauses (1) and (2)]	Unlimited in consideration	Qualify that may be used only so long as no EoD exists or would result and may not be used to sell or otherwise dispose of more than $15,000,000 in value in any calendar year
Restricted Payments [s.7.05]	Refinancing of Junior Debt Making payments of Junior Financing [clause (3)]	Included	Delete Prohibit all payments (including principal, interest or other amounts) purchases, etc. with respect to 2L Term Loans (except as expressly permitted by the ICA)
	Prepayment of assumed Indebtedness [(clause (4)]	Included	Delete
	Payment of Junior Financing [(clause (5))]	Included	Delete
	Payment to holders of Disqualified Stock [clause (6)]	Included	Delete
	Payment of Dividends to holders of Designated Preferred Stock [clause (7)]	Subject to (A) immediately after giving effect to the issuance of such Designated Preferred Stock, (x) the Borrower’s First Lien Net Leverage Ratio does not exceed 3.75 to 1.00 and (y) the Borrower’s Consolidated Total Net Leverage Ratio does not	Delete

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Section	Sub-Clause	Relevant Basket	Amendment
		exceed 5.00 to 1.00 and (B) the aggregate amount of dividends declared and paid pursuant to this clause (7) does not exceed the Net Cash Proceeds actually and contemporaneously received by the Borrower from the sale (or the contribution of the Net Cash Proceeds from the sale) of Designated Preferred Stock
	Excluded Contributions [clause (10)]	Permitted subject to no Default or Event of Default	Must be made within 60 days of the applicable contribution and no EoD may exist or result therefrom All equity linked baskets shall be reset to $0 as of the Third Amendment Effective Date (and for the avoidance of doubt, no portion of the conversion, exchange or other satisfaction with respect to Holdco Notes shall create capacity under any such basket)
	General RP Basket [clause (11)]	$12,500,000	Delete
	Debt Contributions [clause (14)(b)]	Included	Delete
	Sponsor Fees [clause 14(d)]	Not to exceed 2.0% of Consolidated EBITDA in any Fiscal Year	Delete

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Section	Sub-Clause	Relevant Basket	Amendment
	Receivables Repurchase Obligation [clause (16)]	Included	Delete
	Ratio Basket [clause (22)]	FNLR < 3.75x	Delete
	Holdco Notes [clause (25)]	$10.5MM per fiscal year payments on Holdco Notes	Delete
	Payment of outstanding warrants [clause (26)]	Not to exceed the greater of (x) $10,000,000 and (y) 1.50% of Consolidated Total Assets	Delete
	Available Amount	Starter basket of $12,500,000 plus a builder component based on retained ECF plus certain other credits	DeleteAvailable Amount concept in its entirety
	Management Incentive Plan	N/A	Amended to permit the payment of taxes under that certain management incentive plan adopted in connection (“MIP”) set forth in the MIP received by the Lenders as of the date hereof, subject to no Event of Default.
	Key Employee Retention Plans	N/A	Amended to permit the payment of all scheduled payments set forth in the key employee retention plan received by the Lenders as of the date hereof.

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Section	Sub-Clause	Relevant Basket	Amendment
	Payment of OTPP friendly third party fee	N/A	Amended to permit payment of FTP Dividend
Investments [s.7.05 and “Permitted Investments”]	Similar Business in person that becomes a Restricted Subsidiary [“Permitted Investments” clause (4)]	Unlimited	Delete
	Loans to Officers [“Permitted Investments” clause (7)]	$10,000,000	Delete
	Similar Business [“Permitted Investment” clause (11)]	Greater of $30,000,000 and 4.50% of Consolidated Total Assets	Delete
	General Investment Basket [“Permitted Investment” clause (12)]	Greater of $30,000,000 and 4.50% of Consolidated Total Assets	$5,000,000
	Ordinary course Investments in Restricted Subsidiaries [“Permitted Investment” clause (21)]	Ordinary course Investments in Restricted Subsidiaries	Ordinary course Investments in Restricted Subsidiaries (for the avoidance of doubt, subject to the aggregate Non-Loan Party cap below)
	Receivables Subsidiaries [“Permitted Investment” clause (22)]	Investments in Receivables Subsidiaries	Delete

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Section	Sub-Clause	Relevant Basket	Amendment
	Receivables Subsidiaries and Qualified Receivables Financings [“Permitted Investment” clause (24)]	Investments for Receivables Subsidiaries and Qualified Receivables Financings	Unavailable for use, unless proceeds are sufficient to, and are concurrently applied solely, to pay in full, in cash the Revolving Credit Facility and terminate the related commitments
	JV Basket [“Permitted Investment” clause (25)]	Greater of $15,000,000 and 2.25% of Consolidated Total Assets	Delete
	Non-Loan Party aggregate cap [“Permitted Investment”]	Greater of (x) $15,000,000 and (y) 2.25% of Consolidated Total Assets	$3,500,000, include “intercompany” transactions otherwise definitionally excluded under the term “Investments”
	Investment in Unrestricted Subsidiary [s.7.05, clause (20)]	Greater of (x) $5,000,000 and (y) 0.75%	Delete
	Ratio Basket [s.7.05, clause (22)]	FNLR < 4.00x	Delete
	Available Amount	Starter basket of $12,500,000 plus a builder component based on retained ECF plus certain other credits	Delete Available Amount concept in its entirety
Events of Default [Section 8.01]	Judgment cross-default [clause (h)]	$20MM materiality threshold	Reduce to $5MM
Release of Guarantors			Add the following: Absent the prior written consent

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Section	Sub-Clause	Relevant Basket	Amendment
and Collateral [Section 9.11]			of the Required Lenders and Required Revolving Lenders, no release (whether by way any transaction or series of transactions) shall be given effect (x) as to any Person that is an obligor with respect to the Obligations, or any property as Collateral (whether by operation of the definition of Excluded Property, Section 9.11 or otherwise), in either case if, after giving effect to such release and any related transactions, such Person or such property will serve as an obligor or will provide security, as applicable, for all or any Term Loan or Revolving Loan, for any exchange, replacement or any other refinancing thereof (or any successive refinancing thereof) or for any other financing provided by a Person who is (or was prior to the transactions in question or will contemporaneously become) a Lender, a Sponsor or an Affiliate

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Section	Sub-Clause	Relevant Basket	Amendment
			or Approved Fund of a Lender or a Sponsor.
Assignments [Section 10.07]	Assignments of Loans		Permit the assignment of Revolving Credit Facility to Blackstone Credit or its Affiliates, Approved Funds or permitted assigns without Borrower consent

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Annex B

2L Term Sheet

 

 

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Term Sheet for Second Lien Loan Agreement

 

July 3, 2024

 

This Term Sheet summarizes the principal terms of a proposed Second Lien Loan Agreement (the “Second Lien Loan Agreement”) to be made by and among KLDiscovery Holdings, Inc. (f/k/a LD Lower Holdings, Inc.), a Delaware corporation (the “Borrower”), LD Topco, Inc., a Delaware corporation (“Holdings”), the other guarantors party thereto, 1397225 Ontario Limited (“OTPP”) and certain funds and/or accounts managed by MGG Investment Group LP and/or its affiliates (“MGG” and, together with OTPP, collectively, the “Lenders” and each, a “Lender”). This Term Sheet is an expression of intent only, does not express the agreement of the parties, is not meant to be binding on the parties, and is meant to be used as a negotiation aid by the parties. The parties do not intend to be bound until they enter into a definitive agreement regarding the subject matter of this Term Sheet. Reference is made to that certain Credit Agreement, dated as of February 8, 2021 (as amended by that certain First Amendment to Credit Agreement, dated as of March 3, 2023 and the Second Amendment to Credit Agreement, dated as of March 8, 2024, the “Existing Senior Credit Agreement” and, the Existing Senior Credit Agreement as amended in connection with the incurrence of the Second Lien Loan Agreement, the “Amended Senior Credit Agreement”), by and among the Borrower, Holdings, the other guarantors party thereto, the lenders party thereto (the “Senior Lenders”), Wilmington Trust, National Association, as administrative agent and collateral agent and Ally Bank, as a lender and an L/C Issuer (as defined therein).

The principal terms of the proposed Second Lien Loan Agreement are as follows:

Agent:	MGG or its designee.
Loan:	$50,000,000 on a second lien and payment subordinated basis under the Second Lien Loan Agreement (the “Loan”). The Loan will be documented in substantially similar form as the loan and security documents will be in effect in connection with the Amended Senior Credit Agreement (with appropriate modifications to effectuate the 2L Term Loan facility), but on a second lien and payment subordinated basis and with the other terms set forth herein. The proceeds of the Loan will be applied to permanently repay $20,000,000 of the First Lien Term Loans (as defined below) and transaction and operating expenses, with any remaining loan proceeds applied to repay the revolving credit facility under the Amended Senior Credit Agreement (without a corresponding permanent commitment reduction. The Loan and all documentation governing it shall be referred to herein as the “Loan Documentation”. On terms to be agreed, the Borrower and the Lender may agree to fund additional term Loans in an amount not to exceed $50,000,000 in the aggregate, the proceeds of which shall be on the same terms of the Loan Document, as in effect on the date thereof.

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Interest:	17% per annum, which shall be paid in kind (and not in cash) by capitalizing such accrued interest and adding it to the principal amount of the Loan on a quarterly basis (“PIK Interest”).
Repayment:	The entire unpaid principal balance of the Loan (including all capitalized PIK Interest) shall be due as a balloon payment on the Maturity Date.
Maturity:	All principal and accrued interest outstanding under the Loan shall be due and payable in full on November 8, 2027 (the “Maturity Date”); provided that such date shall not be earlier than the date that is six (6) months after the stated maturity date of the First Lien Term Loans, as so extended under the Amended Senior Credit Agreement.
Collateral:	Lenders’ rights under the Loan shall be secured on a second-lien basis by a perfected security interest in, and liens upon, substantially all of the Borrower Parties’ (as defined in the Amended Senior Credit Agreement) assets, with such collateral being equivalent to the assets securing the loans under the Amended Senior Credit Agreement (the “First Lien Loans” and the term loans thereunder, the “First Lien Term Loans”), subject to the terms of an intercreditor agreement between the Lenders and the Senior Lenders on terms satisfactory to each party to such agreement (the “Intercreditor Agreement”).
Intercreditor Agreement:	The Intercreditor Agreement shall be documented in accordance with the terms set forth on Annex E to the Transaction Term Sheet.
Make Whole Payment:	M.O.I.C of 2x return of the principal of the Loans.
Reporting:	The Borrower will deliver to the Lenders financial reporting consistent with the reporting required under the Amended Senior Credit Agreement, including without limitation (i) quarterly financial statements within 45 days after the end of each fiscal quarter, (ii) annual audited financial statements within 90 days of fiscal year-end (or such later time as may be agreed to by the Lenders in their sole discretion), (iii) monthly reporting and 13-week cash flow reports on terms substantially similar to the Amended Senior Credit Agreement, as well as any other reports or notices delivered under the Amended Senior Credit Agreement, including, without limitation, notices of defaults, events of default, and amendments, waivers or forbearances thereunder, and other report(s) to be confirmed, and (iv) such other information as may be reasonably required by the Lenders and typical of secured credit facilities of this size and type.

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Covenants, Representations and Warranties:	The Borrower will be subject to affirmative and negative covenants, representations and warranties consistent with those (subject to basket and covenant cushions of 15%) set forth in the Amended Senior Credit Agreement, including without limitation, (i) a customary anti-layering negative covenant, (ii) all PIK Interest shall be excluded from financial covenant calculations and (iii) restricted payments shall be permitted to fund the payment of taxes of recipients of permitted distributions under that certain management incentive plan adopted in connection with the Amended Senior Credit Agreement (“MIP”) and, to the extent constituting restricted payments, all scheduled payments set forth in the MIP and set forth in those certain key employee retention plans, in each case as of the initial date of adoption.
Equity Cure:	The Loan Documentation shall contain an equity cure with customary restrictions limiting use to no more than 5 times in the aggregate and not in consecutive quarters, provided that in any event, the Loan Documentation shall not require any prepayment of the Loan.
Events of Default:	The Borrower will be subject to events of default consistent with those set forth in the Amended Senior Credit Agreement and cross-accelerated (not cross-defaulted) to the Amended Senior Credit Agreement.
Conditions Precedent:	The Loan Documentation shall contain conditions precedent substantially similar to those of the Existing Credit Agreement and the Amended Senior Credit Agreement and shall include: (1) substantially simultaneous application of the proceeds of the Loan made on the closing date to the repayment of the First Lien Term Loans, as set forth herein and (2) the extension of the maturity date of the First Lien Term Loans to a date not earlier than August 9, 2027.
Governing Law:	New York.
Fees and Expenses; Indemnity.	Same as the Amended Senior Credit Agreement, mutatis mutandis.

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Annex C

Governance Term Sheet

 

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Board of Directors:	Number of Directors: The Board of Directors of the Company (the “Board”) will consist of 7 directors (each, a “Director”): the Company’s Chief Executive Officer, two designees of the Company stockholders affiliated with MGG Investment Group LP (collectively, “MGG”), two designees of 1397225 Ontario Limited (“OTPP”), and two independent directors (each of which shall be selected for nomination together by MGG and OTPP). Each of MGG and OTPP shall be considered “Major Stockholders”. Independent directors must be independent from the Company and each of the Major Stockholders. Director Removal/Replacement; Vacancies: A Director can be removed and/or replaced at any time, with or without cause, as determined by the affirmative vote of the holders of at least a majority of the outstanding Class A Common Stock and Class B-2 Common Stock of the Company, except that the MGG and OTPP designees may only be removed by the stockholders following a request from MGG and OTPP, respectively, and any independent director may only be removed by the stockholders following a joint request from the Major Stockholders. Any vacancy created by the resignation, death or removal of a Director can be filled by the affirmative vote of the holders of at least a majority of the outstanding Class A Common Stock and Class B-2 Common Stock of the Company, except that any vacancy of a MGG and OTPP Director may only be filled by the stockholders following a joint request from MGG and OTPP, respectively, and any replacement independent director may only be filled by the stockholders following a joint request by the Major Stockholders. Quorum: Majority; must include at least one MGG Director and one OTPP Director. Board Voting: Majority of Directors present at a quorate meeting. Chairman/Lead Director: The Chairman will be selected from among the Directors by the Board, subject to approval of the Major Stockholders, and may be removed from his or her role as Chairman (but, for clarity, not as Director) at any time by any Major Stockholder.
Consent of the Major Stockholders:	The consent of each Major Stockholder will be required for the Company to take certain fundamental corporate actions, including the following (references to the “Company” in this section include the Company and its subsidiaries): i. any dissolution, winding up or bankruptcy filing of the Company; ii. any change in the Company’s principal lines of business; iii. a sale of the Company, whether through merger, consolidation, share exchange, business combination, sale of all or substantially all of the Company’s assets, stock or otherwise, other than pursuant to a Forced Sale as described below; iv. the incurrence of indebtedness by the Company or its subsidiaries other than (a) certain existing indebtedness of the Company (the “Existing Indebtedness”), and (b) other indebtedness not in excess of $1 million in the aggregate; v. the acquisition of assets or securities, whether through merger, consolidation, share exchange, business combination or otherwise, by the Company or any of its subsidiaries in any transaction or series of related transactions for consideration in excess of $1 million; vi. the sale, assignment, leasing, exclusive licensing, or other transfer of assets, in any transaction or series of related transactions, with a fair market value in excess of $500,000; vii. an issuance or sale of any equity securities (or securities convertible or exercisable therefor) including, but not limited to, warrants other than the issuance of shares upon vesting or exercise of awards issued under the MIP or the 2019 Incentive Award Plan, or of any warrants outstanding as of closing to purchase the Company’s equity

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	securities; viii. any redemption, repurchase or other acquisition of the Company’s securities, other than pursuant to employment arrangements that are known to the Board and that existed prior to the Board’s constitution; ix. any change in the size or composition of the Board; x. the creation of any Board committee, selection of the members and chairperson of each Board committee, or any change in the scope of authority of any board committee; xi. the appointment, termination or replacement of the Company’s independent auditor or any material change in the Company’s accounting methods or policies (except as required by GAAP); xii. the appointment, termination or replacement of the Company’s CEO or any other officer that reports directly to the CEO or Board; xiii. the entry into or amendment of any employment agreement for, and otherwise setting compensation for, the Company’s CEO or any other officer that reports directly to the CEO or Board; xiv. the adoption of any incentive plans or arrangements for management, employees or other service providers of the Company; xv. the declaration or payment of distributions with respect to shares of the Company’s capital stock (other than the declaration and payment of the annual dividend payable on the Class B-2 Common Stock); xvi. any transaction with (a) any holder of capital stock of the Company or (b) any Director or officer of the Company or any immediate family member thereof, other than performance by the Company in accordance with the terms of existing contracts that are known to the Board; xvii. the creation of any subsidiary, or any joint venture or similar arrangement; xviii. the making of any loans, advances or capital contributions to any person in excess of $250,000; xix. the commencement or settlement of any litigation, arbitration, dispute or proceeding reasonably expected to involve an amount in controversy greater than $500,000 or with respect to a material matter raised via the Company’s whistleblower hotline; xx. any agreement by the Company to (a) increase the interest payable on or total yield on any Existing Indebtedness by more than 3.0% per annum, (b) increase the scheduled payments or prepayments of principal under any Existing Indebtedness, (c) modify any covenant or obligations (or having the effect of modifying any covenant or obligations) related to any Existing Indebtedness in a manner adverse to the Company or more burdensome on the Company to perform under the terms of any other Existing Indebtedness, or (iv) modify the maturity date of any Existing Indebtedness; xxi. any amendment, modification or supplement to the Budget or the Business Plan approved as described below, other than the adjustments specifically contemplated herein; and xxii. any amendment, modification or supplement to the Company’s organizational documents (including, but not limited to, the Certificate of Incorporation and Bylaws) with respect to any of the foregoing matters.
Annual Budget and	For each fiscal year, the Company’s management will prepare and deliver a draft annual operating budget and business plan of the Company (as to any fiscal year, the “Budget” and the “Business Plan”) to the Board and the Major Stockholders for consideration. If the Board and the Major Stockholders do not approve a Budget or Business Plan for any upcoming fiscal year,

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Business Plan:	until such time as the Board and the Major Stockholders approve a Budget and Business Plan for such upcoming fiscal year, the Budget for the prior fiscal year shall serve as the Budget and Business Plan for such upcoming fiscal year; provided, that (i) each line item from the proposed Budget that has been approved by the Board and the Major Stockholders shall be included, (ii) any extraordinary and one-time line items in the prior year Budget shall be excluded, (iii) operating expenditures for the prior fiscal year shall be increased or decreased, as applicable, by the change in the Consumer Price Index, as published by the U.S. Department of Labor Bureau of Labor Statistics, and (iv) line items for recurring maintenance capital expenditures from the prior fiscal year’s Budget with the presumption that such recurring expenditures are necessary in the current fiscal year shall be included.
Transfer/ Resale Restrictions:	No party to the stockholders’ agreement may transfer its common stock (other than pursuant to certain customary permitted transfers or as otherwise described herein) without the prior consent of each of the Major Stockholders. The current expectation is that the the Major Stockholders will be the sole stockholder parties to the stockholders agreement.
Drag-Along Rights:	If the Major Stockholders, acting together (the “Dragging Holders”), propose a sale of the Company (whether via a sale of the Company’s equity, an asset sale, a merger or another transaction, in each case, that would result in a change of control of the Company) to any purchaser, then each party to the stockholders’ agreement will be required (on customary terms and conditions) to include the pro rata portion of their equity in such sale and to vote their equity and take any and all other actions in furtherance thereof on the same terms and conditions applicable to the Dragging Holders (and shall waive all appraisal and related rights in connection with such transaction).
Forced Sale Right:	From and after the date falling 54 months after the consummation of the restructuring, either Major Stockholder (the “Electing Stockholder”) may cause the Company to initiate a sale process; provided that the other Major Stockholder may, if such sale process is initiated before the date falling 66 months after the consummation of the restructuring (the “Cutoff Date”), elect to delay the initiation of the sale process up to (but in no event later than) the Cutoff Date if, on the date that the Electing Stockholder notifies the other Major Stockholder of its desire to initiate a sale process (the “Election Date”), the value of the S&P 500 index is 88% or less than its peak value during the twelve months preceding the Election Date.
Share Class Structure:	Three classes of common stock (collectively, the “Common Stock”): o Class A Common Stock (the “Class A Common Stock”) - Carries all normal economic and voting rights. - At any time, in its sole option, OTPP will have the ability to convert any number of shares of Class A Common Stock into an equal number of shares of Class B-1 Common Stock and Class B-2 Common Stock. o Class B-1 Common Stock (the “Class B-1 Common Stock”) - Carries all normal economic and voting rights alongside the Class A Common Stock, except that the Class B-1 Stock will not have the right to vote on the election or removal of Directors. - At any time, in its sole option, OTPP will have the ability to convert any number of shares of Class B-1 Common Stock into an equal number of shares of Class A Common Stock, so long as contemporaneously with such conversion an equal number of shares of Class B-2 Common Stock are redeemed by the Company. o Class B-2 Common Stock (the “Class B-2 Common Stock”) - Carries no general economic or voting rights, except the right to vote on the election or removal of Directors alongside the Class A Common Stock.

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	- The Class B-2 Common Stock will be entitled to receive an aggregate annual cash dividend of CAD 10,000 (grossed up by the amount of any withholding or similar tax required by law to be imposed on such dividend). In the Transaction, OTPP will be issued a combination of Class A Common Stock and Class B-1 Common Stock such that, following the Closing, OTPP holds (i) Class A Common Stock representing no more than 30% of the total number of shares of Class A Common Stock and Class B-1 Common Stock then outstanding, and (ii) the remainder of its ownership in shares of Class B-1 Common Stock. A third party designated by OTPP (the “OTPP Designee”) will be issued a number of shares of Class B-2 Common Stock equal to the number of shares of Class B‑1 Common Stock issued to OTPP in the Transaction. Notwithstanding any other provision of the stockholders agreement, OTPP may transfer all or any of portion of its Class B-1 Common Stock to another OTPP Designee and OTPP may cause the OTPP Designee to transfer all or any portion of its Class B-1 Common Stock to OTPP or another OTPP Designee.
Corporate Opportunities and Competitive Activities:	To the maximum extent permitted by the Delaware General Corporation Law, the Amended Charter will provide for the Company’s renunciation of any right to corporate opportunities of the Major Stockholders (and their respective affiliates and Board nominees), and the Major Stockholders (and their respective affiliates and Board nominees) shall have no duty to refrain from (i) pursuing such corporate opportunities, (ii) engaging directly or indirectly in the same or similar business activities or lines of business in which the Company or any of its subsidiaries engages or proposes to engage or (iii) otherwise competing with the Company or any of its subsidiaries. To the maximum extent permitted by law, none of the Major Stockholders (or their respective affiliates or Board nominees) shall be liable to the Company or its subsidiaries or stockholders for breach of any fiduciary duty solely by reason of the fact that such Major Stockholder (or its affiliates or Board nominees) engages in any such activities.
Termination:	Upon the occurrence of a Qualified IPO or Qualified Direct Listing on the NYSE or NASDAQ (each term to be defined in the stockholders agreement), the foregoing terms (but for greater certainty, not the terms attached to the securities themselves and the 30% Rule provision below) shall automatically terminate.
30% Rule Cooperation:	In the stockholders agreement, the Company and the Major Stockholders will agree to reasonably cooperate with OTPP to ensure ongoing compliance with the so-called “30% rule”, meaning the restrictions set out in section 11 of Schedule III of the Pension Benefits Standards Regulations, 1985 (Canada), as incorporated by reference in Section 79 of regulation 909 under Section 62 of the Pension Benefits Act (Ontario), in respect of this investment structure and the exercise of OTPP’s rights under the stockholders agreement. The OTPP Designee will not be party to the stockholders agreement. OTPP will procure that the OTPP Designee votes and transfers its shares to give effect to the provisions of the stockholders agreement and shall be responsible for any failure of the OTPP Designee to so comply. OTPP may direct the Company or the other stockholders to require that any securities that would otherwise be transferred or issued to OTPP instead be transferred or issued to the OTPP Designee to the extent necessary to comply with the 30% rule.

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Annex D

Management Equity Incentive Plan Term Sheet

OVERVIEW
General	KLDiscovery Inc. (the “Company”) will adopt a Management Incentive Plan (the “MIP”) on the terms and conditions set forth herein effective as of the Transaction Effective Date. Capitalized terms used but not otherwise defined in this MIP Term Sheet shall have the meanings ascribed to them in the Transaction Term Sheet to which this MIP Term Sheet is annexed.
Administration	The board of directors of the Company, or a committee thereof (the “Board”), will administer the MIP. The Board has the authority to prescribe the terms of awards under the MIP and to make all administrative determinations under the MIP in consultation with the CEO.
Incentive Equity Pool	The Company will reserve exclusively for management employees (the “Participants”) a pool of shares of common stock of the reorganized Company (the “New Common Equity”) representing 7.5% of (1) the Company common stock outstanding at closing (including the Contingent Shares and New Common Stock and a number of shares equal to the number of Vested TRSUs issued in connection with the closing and a number of shares equal to the Outstanding TRSUs as of closing) plus (2) all of the shares reserved for the MIP (the “MIP Pool”). Awards for (a) two-thirds of the MIP Pool (i.e., 5% of New Common Equity) shall be issued effective as of the Transaction Effective Date (the “Initial Grants”) and (b) the remaining one-third of the MIP Pool (i.e., 2.5% of New Common Equity) shall be available for issuance after the Transaction Effective Date by the Board after consultation with the CEO.
Grants	The Initial Grants shall be 1/3 time-vesting restricted stock units (“RSUs”) and 2/3 performance-based vesting RSUs. The types and terms of subsequent grants shall be determined by the Board.
VESTING
Time-Vesting Awards	The time-vesting RSUs will vest ratably on each of the first four anniversaries of the grant date, and any unvested time-vesting RSUs will vest upon a Change in Control (in each case subject to a Participant’s continued employment through the applicable vesting date).
Accelerated Vesting Upon Termination	If a Participant’s employment is terminated (i) due to death, (ii) by the Company without Cause (including, for the avoidance of doubt, termination by the Company due to the Participant’s disability) or (iii) with respect to each Participant who is a party to an Executive Severance Agreement with the Company only (each, an “Executive”), by the Executive for Good Reason (each, a “Qualifying Termination”), (1) the portion of the unvested time-vesting RSUs that would otherwise vest during the 12-month period following such Qualifying Termination will vest upon such Qualifying Termination, and (2) 100% of the Participant’s unvested performance-based RSUs will remain outstanding until the first anniversary of the date of such Qualifying Termination, in each case, subject to a release of claims requirement. For the avoidance of doubt, if a Change in Control (as defined in the Company’s 2019 Incentive Award Plan) does not occur on or before the first anniversary of the date of such Qualifying Termination, all unvested performance-based RSUs shall be forfeited.

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Performance-Based Awards	The performance-based RSUs will vest if (a) the Participant remains employed by the Company through the Change in Control and (b) in connection with the consummation of a Change in Control of the Company following the Transaction Effective Date, the aggregate cash consideration (plus any other forms of consideration deemed acceptable by the Debenture Holders (as defined in the Transaction Term Sheet to which this MIP Term Sheet is annexed)) received by the Debenture Holders in respect of the Transaction Common Stock in connection with such Change in Control together with any amounts received by the Debenture Holders in redemption or repurchase of all or part of Transaction Common Stock or as an extraordinary cash dividend or other distribution or proceeds of any partial liquidation of the Company on account of the Transaction Common Stock prior to such Change in Control, in each case, excluding any documented external fees or expenses (including any transaction fees) incurred by the Debenture Holders in connection with such disposition, dividend, or distribution, as applicable, equals or exceeds the Measurement Value. The Debenture Holders shall have the sole discretion to determine whether and to what extent the deferred proceeds payable in a Change in Control, if any, shall be taken into account for purposes of determining whether the performance-vesting condition is achieved, subject to Section 409A of the Internal Revenue Code. “Measurement Value” means the outstanding amounts due in respect of the Debentures (as defined in the Transaction Term Sheet to which this MIP Term Sheet is annexed) (including principal, accrued but unpaid interest, and all other obligations under the Debentures) immediately prior the Transaction Effective Date. “Transaction Common Stock” means the shares of KLD Common Stock received by the Debenture Holders in the Transaction in respect of their Debentures. Any performance-based RSU that is not vested upon a Change in Control pursuant to the foregoing conditions shall be forfeited for no consideration.
Settlement	Shares associated with vested time vesting RSUs will settle at the earlier of a Change in Control or seven (7) years after grant.
ADDITIONAL TERMS
Taxes	Participants may satisfy taxes incurred in connection with the vesting and settlement of awards through net share settlement.
Securities Law	RSUs will be issued in transactions that are not registered under the Securities Act of 1933. When the RSUs vest, participants will receive restricted securities that may only be transferred in accordance with an exemption from applicable registration requirements.

 

[1] The following terms relate solely to the Initial Grants. The vesting terms for subsequent grants will be determined by the Board.

[2] “Change in Control” shall have the meaning ascribed to it in the Company’s 2019 Incentive Award Plan.

[3] “Cause” and “Good Reason” shall have the same meanings ascribed to those terms in the Company’s 2019 Incentive Award Plan and the Executive Severance Agreements, respectively.

 

[4] The following terms relate solely to the Initial Grants. Terms of subsequent grants will be determined by the Board.

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Annex E

Intercreditor Term Sheet

 

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Definitions
	First Lien Debt Cap	110% of outstanding First Lien Loans as of the amendment effective date. "Discharge of First Lien Debt" shall mean the payment in full of the First Lien Debt (including, without limitation, all interest, expenses and fees arising whether allowed or allowable in connection with an insolvency proceeding) up to the First Lien Debt Cap plus the Maximum First Lien DIP Cap (if applicable).
	Second Lien Debt Cap	$55mm + 110% of the incremental capacity available under the Second Lien Credit Agreement (so long as such incremental is provided on the same terms as the Second Lien facility) + PIK Interest. "Discharge of Second Lien Debt" shall mean the payment in full of the Second Lien Debt (including, without limitation, all interest, expenses and fees arising whether allowed or allowable in connection with an insolvency proceeding) up to the Second Lien Debt Cap plus the Maximum Second Lien DIP Cap (if applicable).

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	Enforcement Action	Customary enforcement actions, including, without limitation: • Foreclosure or other secured creditor remedies on the Lien in any Collateral • Taking possession, selling or realizing on any Collateral – including the solicitation of bids or engagement of agents, brokers, bankers, accountants or other parties for purposes of selling the Collateral • Exercising voting rights in respect of pledged equity interests of Collateral (other than voting rights on account of the equity interests of the AHG issued by KL Discovery, Inc., which, for the avoidance of doubt, shall not be prohibited by the ICA) • Requesting relief from automatic stay or other stay in respect of the Collateral • Except to the extent otherwise permitted in the ICA (including, for the avoidance of doubt, actions constituting Permitted Second Lien Actions), the exercise of unsecured creditor remedies, including the commencement of any insolvency proceeding in its capacity as creditor of a borrower or guarantor

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	Permitted Second Lien Payments	To include (i) PIK interest, (ii) PIK default rate interest, (iii) amendment, consent and similar fees, in each case only if payable in kind by increasing the outstanding principal balance, (iv) permitted reorganization securities pursuant to and subject to the terms of the ICA, (v) so long as no (a) bankruptcy Event of Default; (b) payment Event of Default; or (c) 2 consecutive quarters of financial covenant Events of Default have occurred and is continuing, fees, costs and expenses of any agent or sub-agent of the 2L not to exceed an amount to be agreed per annum, and (vi) so long as no (a) bankruptcy Event of Default; (b) payment Event of Default; or (c) 2 consecutive quarters of financial covenant Events of Default have occurred and is continuing, fees, costs and expenses of legal counsel due and payable under the 2L Credit Agreement in connection with transactions not in violation of the ICA. All references to “Event of Default” in the above paragraph shall have the meaning as set forth in the Amended Senior Credit Agreement as defined in that Term Sheet for Second Lien Loan Agreement dated July 3, 2024. Permitted Distributions solely on account of the equity interests of the AHG issued by KL Discovery, Inc. shall not constitute Second Lien payments and shall not be prohibited by the ICA, but for the avoidance of doubt, only to the extent otherwise expressly permitted by the terms of the Credit Agreement.

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	Permitted Second Lien Actions	Customary permitted 2L actions, including, without limitation, (i) filing a proof of claim and responsive pleadings, in each case in a manner consistent with the terms of the ICA, (ii) filing pleadings, objections or motions asserting rights available to unsecured creditors, in each case, in a manner not consistent with the terms of the ICA and such action is not accompanied by a claim for monetary damages or other monetary relief, (iii) [reserved], (iv) making a cash bid for the purchase of Collateral, (v) making a credit bid, provided that a credit bid may be made only so long as the Discharge of First Lien Debt occurs at the consummation of the transaction the subject of such credit bid, (vi) appraising the Collateral, (vii) accelerating the Second Lien Debt subject to the prior acceleration of the First Lien Debt (and such acceleration shall be rescinded if the First Lien Debt acceleration is rescinded), (viii) voting on or objecting to a Plan (as defined below) to the extent not in violation of the terms set out under Plan Voting + Objection, retaining permitted debt or equity securities and making filings and motions, in each case, to the extent not in violation of the ICA.
	Purchase Triggering Event	• Acceleration or Maturity of 1L Debt; provided that, a Purchase Triggering Event cannot extend the 1L Maturity or the 1L ability to exercise remedies at Maturity. • Commencement of an insolvency or liquidation proceeding
Lien Enforcement and Subordination
	Standstill	Permanent standstill on 2L Enforcement Action

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	Lien and Claim Release	Lien release provisions to provide that (1) net cash proceeds of Collateral shall be applied according to the payment waterfall, (2) any pre-enforcement disposition or release permitted or consented to by the 1L to also be permitted under the terms of the 2L Credit Agreement (regardless of whether an EOD exists), (3) post-enforcement, net cash proceeds from a sale or disposition shall permanently repay the 1L, and (4) any release or deemed release under the ICA by the 2L shall not extend to its rights (if any) otherwise existing under applicable law and/or the Second Lien Documents to the proceeds of such sale or other disposition of Collateral. The Second Lien Lenders agree to release the 2L obligations against the Borrower and/or any subsidiary of the Borrower that is released from the 1L obligations; provided that the net cash proceeds of such disposition are applied in accordance with the payment waterfall.
	Payment Waterfall	1. First Lien Enforcement Expenses 2. First Lien Debt up to First Lien Debt Cap 3. Second Lien Debt up to Second Lien Debt Cap 4. Excess First Lien Debt 5. Excess Second Lien Debt 6. Remainder to Borrowers
	Turnover	2L agrees to turnover proceeds (and before such turnover, hold in trust for the benefit of the 1L Lenders) of Collateral and all payments and distributions on account of the Second Lien Debt received prior to the Discharge of First Lien Debt (including reorganization securities to the extent required to be turned over under Reorganization Securities, except to the extent constituting Permitted Second Lien Payments).
	Subrogation	2L rights of subrogation will be released as to any obligor or Collateral that the 1L Lender (or a wholly-owned SPV of the 1L Lender) obtains ownership of as a result of an Enforcement Action in accordance to the ICA, any Post-Petition Sale (as defined below) or any Plan (as defined below) and so long as any net cash proceeds received or debt deemed exchanged thereto permanently reduce the First Lien Debt.
Bankruptcy Provisions

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	DIP Financing	1L DIP Capacity: An additional amount of 20% above the First Lien Debt Cap (the “Maximum First Lien DIP Cap”). 2L DIP Capacity: An additional amount of 20% above the Second Lien Debt Cap (the “Maximum Second Lien DIP Cap”).
		2L agrees that neither it nor its affiliates will provide a pari or priming DIP Financing. The 2L retains the right to provide a DIP Financing junior to the First Lien Debt and any DIP Financing provided by a First Lien Lender.
	Adequate Protection	The 2L may not seek adequate protection except in the form of replacement liens; provided, that, such replacement liens shall be subject to the lien priorities under the ICA and shall be junior to any liens securing the 1L Obligations (including adequate protection liens). Any cash adequate protection payments or cash proceeds of adequate protection provided to the 2L shall be applied in accordance with the priorities of the ICA waterfall.
	Reorganization Securities	2L may receive and retain debt and equity reorganization securities, so long as (i) in the case of debt obligations, the ICA applies to any debt obligations distributed (including to reflect both payment and lien subordination at least to the same extent as the 2L is subordinated in payment and lien priority to the 1L) and (ii) in the case of equity securities, to the extent that the outstanding balance of the First Lien Debt (net of the value of any other cash or property, other than equity reorganization securities, distributed to the First Lien Lenders on account of such First Lien Debt) exceeds the value of such equity reorganization securities that are so distributed to the First Lien Lenders (with such value in each case being determined based on the value of the debtors as determined under or in connection with such plan confirmed pursuant to a final, non-appealable order or as may be otherwise agreed in writing by the First Lien Lenders and the Second Lien Lenders), then the Second Lien Lenders shall promptly turn over to the First Lien Lenders a portion of the equity reorganization securities distributed to the Second Lien Lenders with a value equal to the amount of such excess.
	Asset Sales	2L deemed to consent to any post-petition sale or other disposition (including any motion therefor) of Collateral (a “Post-Petition Sale”), so long as (1) 2L liens attach to any proceeds subject to the lien priorities hereunder and (2) the net cash proceeds received by the 1L Lenders are applied per the payment waterfall.

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	Plan Voting + Objection	2L agrees not to vote for any plan of reorganization, plan of liquidation or other dispositive plan (a “Plan”) that violates the payment waterfall and reserves the right to vote against and object to any plan of reorganization, arrangement or proposal, so long as such objection or vote is not in contravention of the expressed terms of the payment waterfall or any other provision of the ICA (including any prohibition on contesting the validity or priority of the 1L claims and liens. Subject to the foregoing, the 2L agrees to support any Plan that is supported by the 1L and the Company.
	Post-Petition Claims	2L agrees not to contest receipt of post-petition interest, fees and expenses of 1L. 1L agrees not to contest the 2L’s receipt of post-petition interest on a PIK basis.
	Automatic Stay Waivers	2L waives any right to contest the automatic stay. Without limitation to any expressed rights of the 2L under the ICA otherwise, the 2L waives any right to seek to surcharge the Collateral and the ICA shall contain other customary waivers to be agreed, including not to contest or protest the validity or priority of the First Lien Debt or any Enforcement Action undertaken by or on behalf of the First Lien Lenders in a manner not in violation of the ICA.
	Unsecured Creditor Rights	2L to retain all rights as an unsecured creditor (solely in such capacity) to the extent exercised in a manner consistent with the other terms of the ICA.
Other Terms
	2L Purchase Option	Customary purchase option for all of the 1L at par plus accrued interest, fees and other amounts constituting 1L obligations upon the occurrence of a purchase trigger event.

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	Amendment Restrictions	To include, without limitation, customary reciprocal restrictions on (i) increasing commitments in excess of the debt cap or changing prepayments or payments to increase amount or frequency payable, (ii) increasing yield by more than 2% per annum (excluding the effect of any increase as a result of the implementation of the default rate), (iii) adding or modifying covenant or EODs that would directly restrict payments or performance of obligations under the other credit documents, (iv) extending 1L maturity/shortening 2L maturity (provided that the 2L maturity must be no earlier than 6 months after the maturity of the 1L), and (v) modifications that violate the ICA provisions. Neither any Second Lien Lender nor any of its Controlled Investment Affiliates may acquire, hold or otherwise the obtain the benefit of any debt, or any lien on the assets, of any borrower or any of its subsidiaries, unless such debt constitutes Second Lien Debt and such lien solely secures the Second Lien Debt subject to the terms of the ICA or such debt (and related lien) constitutes a permitted DIP Financing under the ICA.
	Amendment of ICA	Any amendment or waiver of the ICA shall require the consent of the Required Revolving Lenders, Required Lenders and Second Lien Lenders.
	Transfer Restrictions	The 2L Lenders may not assign or participate any of Second Lien Debt to any borrower, any guarantor or any other person (other than affiliate of 2L Lender that is neither a loan party nor any subsidiary of a loan party) and may not refinance, exchange or replace any of the Second Lien Debt, in each case without the consent of the Required Lenders and the Required Revolving Lenders under the 1L.

 

 

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Exhibit B

Form of Joinder

The undersigned (“Joinder Party”) hereby acknowledges that it has read and understands the Transaction Support Agreement, dated as of ___________, ____ (as amended, supplemented, amended and restated, or otherwise modified from time to time, the “Agreement”)[1], by and among the Company, the Sponsors, and the Persons named therein as “Consenting Stakeholders” thereunder.

 

 

[Signature Page Follows]

 

 

 

 

 

 

 

 

 

 

 

 

 

[1] Capitalized terms used but not otherwise defined herein shall having the meanings ascribed to such terms in the Agreement.

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JOINDER PARTY: _________________

 

Date Executed: _________________

 

 

 

By:

Name:

Title:

 

Address:

E-mail address(es):

 

 

Aggregate Amounts Beneficially Owned or Managed on Account of:
Term Loan Claims	$
Revolving Credit Claims	$
Debenture Claims	$
Existing Equity Interests

 

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ANNEX I TO THE JOINDER

 

[Attached.]

 

 

 

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EXCHANGE AGREEMENT

by and among

KLDISCOVERY INC.

and

THE PARTICIPATING HOLDER PARTIES NAMED HEREIN

dated as of

July 3, 2024

 

 

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TABLE OF CONTENTS

Page

ARTICLE 1 EXCHANGE OF DEBENTURES		1
1.01	Exchange of Debentures	1
1.02	Pre-Closing Revisions to Schedule I Allocations	2
1.03	Adjustments	2
1.04	Withholding	3
ARTICLE 2 CLOSING		3
2.01	Closing	3
2.02	Restructuring Transactions	4
2.03	Further Assurances	4
2.04	Closing Tax Document Deliverables	4
ARTICLE 3 REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY ENTITIES		4
3.01	Organization; Power and Authority	4
3.02	Authorization; Non-Contravention	5
3.03	Capitalization and Related Matters	6
3.04	Litigation	7
3.05	Brokerage	7
3.06	Disclaimer; Acknowledgment; Non-Reliance	7
3.07	Compensation Plans	8
3.08	Opinion of Financial Advisor	8
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PARTICIPATING HOLDERS		8
4.01	Organization; Power and Authority	8
4.02	Authorization; No Breach	8
4.03	Title to Existing Debentures	9
4.04	Litigation	10
4.05	Investment Representations	10
4.06	Disclaimer; Acknowledgment; Non-Reliance	10
ARTICLE 5 COVENANTS AND AGREEMENTS		11
5.01	Covenants of the	11
5.02	Negative Covenants of the Company Entities	13
5.03	Company Stockholders’ Meeting	14
5.04	Amendment of Charter and Bylaws	14
5.05	Mutual Releases	14

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5.06	Publicity; Press Releases and Announcements	15
5.07	Additional Provisions Regarding Company’s Commitments.	15
ARTICLE 6 CONDITIONS TO CLOSING		15
6.01	Conditions to the Obligations of All Parties	15
6.02	Additional Conditions to the Obligations of the Company	16
6.03	Additional Conditions to the Obligations of the Participating Holders	16
ARTICLE 7 TERMINATION		18
7.01	Termination	18
7.02	Effect of Termination	19
ARTICLE 8 DEFINITIONS		19
8.01	Definitions	19
8.02	Usage	26
ARTICLE 9 MISCELLANEOUS		27
9.01	Expenses	27
9.02	Notices	27
9.03	Complete Agreement	28
9.04	Amendment and Waiver	28
9.05	Assignment	29
9.06	Severability	29
9.07	Captions	29
9.08	Counterparts	29
9.09	Third Party Beneficiaries	29
9.10	Specific Performance	29
9.11	Governing Law	30
9.12	CONSENT TO JURISDICTION	30
9.13	WAIVER OF JURY TRIAL	30
9.14	No Strict Construction	31
9.15	Non-Recourse	31
9.16	Survival	31
9.17	Securities Purchase Agreement Amendment	32

 

 

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EXHIBITS AND SCHEDULES

Exhibit A – Form of Amended Charter

Exhibit B – Form of Amended Bylaws

Exhibit C – Form of New Stockholders’ Agreement

Exhibit D – Form of OTPP Designee Subscription Agreement

Exhibit E – Form of RRA Termination Agreement

 

Schedule I – Allocation of Consideration Shares

Disclosure Letter

Schedule 5.01(c)(ii) – Covenants

Schedule 5.02 – Exceptions to Negative Covenants
Schedule 6.03(c)(vi) – Form of Letter Agreement

 

 

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EXCHANGE AGREEMENT

THIS EXCHANGE AGREEMENT (this “Agreement”) is made and entered into as of July 3, 2024, by and among (i) KLDiscovery Inc. (the “Company”), and (ii) the Participating Holder parties listed on the signature pages hereto (the “Participating Holders”). Capitalized terms used and not otherwise defined herein have the meanings set forth in Article 8 or as set forth in the Transaction Support Agreement (as defined herein).

WHEREAS, the Company and certain consenting stakeholders have, in good faith and at arms’-length, negotiated or been apprised of certain restructuring and recapitalization transactions with respect to the Company’s capital structure on the terms and subject to the conditions of that certain Transaction Support Agreement dated as of the date hereof, by and among the Company, its direct and indirect affiliated entities and the various other consenting stakeholders identified therein (including all exhibits, annexes, and schedules thereto, as amended, restated, amended and restated, supplemented, or otherwise modified from time to time in accordance with its terms, the “Transaction Support Agreement”);

WHEREAS, the Company previously issued its 8.00% Convertible Debentures due 2024 (the “Debentures”) pursuant to that certain Securities Purchase Agreement dated December 16, 2019 (as the same has been or may be amended, supplemented, modified and/or waived, the “Securities Purchase Agreement”);

WHEREAS, the undersigned Participating Holders collectively hold 100% of the issued and outstanding Debentures; and

WHEREAS, pursuant to the Transaction Support Agreement, the Company and the undersigned Participating Holders have agreed that the Participating Holders will exchange their Debentures for newly-issued Common Stock of the Company through a series of related transactions, all on the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements herein contained, and intending to be legally bound, the parties hereto hereby agree as follows:

ARTICLE 1
EXCHANGE OF DEBENTURES

1.01 Exchange of Debentures. On the terms and subject to the conditions contained in this Agreement, at the Closing and simultaneously with the consummation of the other Transactions, the Company and the Participating Holders shall consummate the following transactions (collectively, the “Debenture Exchange”): (i) each Participating Holder shall deliver to the Company a signed statement attesting to its ownership of the Debentures set forth on Schedule I and confirming that its Debentures may be cancelled on the Company’s Debenture Registry in connection with the Debenture Exchange, and (ii) in exchange for the surrendered Debentures, the Company shall issue, convey and deliver to such Participating Holder the number and class of new shares of Common Stock set forth opposite such Participating Holder’s name on Schedule I, as it may be revised from time to time prior to the Closing Date in accordance with Section 1.02 and Section 1.03 hereto (the new shares of Common Stock to be issued to all

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Participating Holders in the aggregate, the “Consideration Shares”); provided, that the OTPP Holder may direct that any number of its Consideration Shares be issued to the OTPP Designee pursuant to the OTPP Designee Subscription Agreement, as indicated on Schedule I, in exchange for the payment of nominal consideration by the OTPP Designee to the Company as further set forth in the OTPP Designee Subscription Agreement. As promptly as practicable following the issuance of the Consideration Shares, the Company shall deliver to the Participating Holders reasonable evidence of the issuance thereof. On the terms and subject to the conditions contained in this Agreement, effective upon consummation of the Debenture Exchange at the Closing, all Debentures held by the Participating Holders shall automatically be cancelled, and all obligations of any Company Entities with respect thereto shall be fully and forever terminated and extinguished. Each exchange of Debentures by each Participating Holder as contemplated by this Section 1.01 shall constitute a separate transaction hereunder.

1.02 Pre-Closing Revisions to Schedule I Allocations. Notwithstanding anything in this Agreement to the contrary, any Affiliated Holders may, by providing written notice to the Company at least two (2) Business Days prior to the Closing Date and without the consent of any other party to this Agreement, revise the number of Consideration Shares to be received by each of such Affiliated Holders (and, in the case of the OTPP Holder, by the OTPP Designee pursuant to the OTPP Designee Subscription Agreement), in each case as set forth on Schedule I hereto; provided, that such revision shall not change the aggregate amount of Consideration Shares to be received by such Affiliated Holders (including, in the case of the OTPP Holder, the OTPP Designee).

1.03 Adjustments.

(a) It is the intention of the parties that the Consideration Shares shall represent 96% of the Fully-Diluted Shares as of immediately following the Closing (the “Target Percentage”); provided, that for purposes of such calculation, shares of Class B-2 Common Stock shall not be included in the number of Consideration Shares. Accordingly, and notwithstanding anything to the contrary in this Agreement or any other Transaction Agreement, the number of Consideration Shares issuable pursuant to this Agreement shall be equitably adjusted as mutually agreed by the parties hereto, acting reasonably, to the extent necessary or appropriate to cause the Consideration Shares to represent the Target Percentage as of immediately following the Closing, after taking into account (i) the effect of any issuance of shares of capital stock or other Equity Securities, stock split, reverse stock split, stock dividend (including any dividend or distribution of shares of capital stock), division or subdivision of shares, consolidation of shares, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to the Company’s Equity Securities that occurs during the period on or after the date of this Agreement and ending on the Closing Date, (ii) any exercise of options or settlement of restricted stock units under the Company’s 2019 Incentive Award Plan, whether occurring prior to, at or following the Closing, to the extent the shares issued upon such exercise or settlement were not included in the Fully-Diluted Shares as of immediately prior to the Closing, (iii) any exercise of 2024 Warrants, whether occurring prior to, at or following the Closing, (iv) the application of any contractual provisions, obligations or other facts relating to Equity Securities of the Company that exist as of the Closing (including contractual provisions that provide for equitable adjustments in connection with

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recapitalizations, reorganizations or other transactions affecting the Company’s Equity Securities) where such application results in a change to the Fully-Diluted Shares, whether occurring prior to, at or following the Closing, and (v) any other change or correction to the number of Fully-Diluted Shares as of immediately following the Closing as compared to the number of Fully-Diluted Shares set forth on Schedule 3.03(a)(2).

(b) If prior to the Closing the provisions of Section 1.03(a) result in an adjustment to the number of Consideration Shares required to be issued in order to achieve the Target Percentage, then the number of shares issuable to the Participating Holders at the Closing pursuant to Section 1.01 shall be increased or decreased (as applicable), with such adjustment applied pro rata among the Participating Holders listed on Schedule I (or as otherwise directed by the Participating Holders in writing at such time).

(c) If following the Closing the provisions of Section 1.03(a) result in an adjustment to the number of Consideration Shares required to be issued in order to achieve the Target Percentage, then (i) if the number of Consideration Shares is increased, the Company shall issue the necessary number of additional Consideration Shares to the Participating Holders at such time, with such adjustment applied pro rata among the Participating Holders listed on Schedule I (or as otherwise directed by the Participating Holders in writing at such time), and (ii) if the number of Consideration Shares is decreased, the Participating Holders shall surrender the necessary number of Consideration Shares to the Company for cancellation at such time, with such adjustment applied pro rata among the Participating Holders listed on Schedule I (or as otherwise directed by the Participating Holders in writing at such time).

(d) On the date that is three (3) Business Days prior to the Closing, the Company shall deliver to the Participating Holders a detailed schedule showing the anticipated capitalization of the Company as of immediately prior to the Closing, and showing the anticipated number of Fully-Diluted Shares. The Company shall promptly notify the Participating Holders of any subsequent changes to such information prior to the Closing.

1.04 Withholding. The Company and any other applicable withholding agent shall be entitled to deduct and withhold, or cause to be deducted and withheld, from any amounts otherwise payable pursuant to this Agreement such amounts as it determines it is required to deduct and withhold by applicable U.S. federal, state, local and non-U.S. Law. Notwithstanding the foregoing, the parties agree that no withholding shall be required if the Participating Holders provide the information required in Section 2.04.

ARTICLE 2
CLOSING

2.01 Closing. On the terms and subject to the conditions set forth in this Agreement, the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place (a) remotely via the electronic exchange of documents and signatures on the third (3rd) Business Day following the satisfaction or (to the extent permitted by applicable Law) waiver of the conditions set forth in Article 6 (other than those conditions that by their terms are to be satisfied at the

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Closing, provided that such conditions are satisfied or (to the extent permitted by applicable Law) waived at the Closing) or (b) at such other place, time or date as the parties hereto may mutually agree in writing. The date on which the Closing shall occur is referred to herein as the “Closing Date.”

2.02 Restructuring Transactions. At the Closing, the parties hereto shall consummate the Debenture Exchange and each of the other Transactions described in the Transaction Support Agreement.

2.03 Further Assurances. In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, each of the parties hereto shall take such further action (including the execution and delivery of such further instruments and documents) as any other party may reasonably request, all at the sole cost and expense of the requesting party.

2.04 Closing Tax Document Deliverables. On or before the Closing Date, each Participating Holder shall provide the Company with a properly completed and validly executed Internal Revenue Service Form W-9 or appropriate Form W-8 evidencing such Participating Holder’s exemption from withholding under an applicable double tax treaty with the United States and/or a statement certifying such Participating Holder’s eligibility to claim the portfolio interest exemption, in each case with respect to any accrued interest that is exchanged for the Consideration Shares.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY ENTITIES

Except as set forth in the disclosure letter delivered by the Company to the Participating Holders concurrently with the execution of this Agreement (the “Disclosure Letter”) (it being understood that any disclosure in the Company Disclosure Letter shall qualify the corresponding section or subsection of this Article 3 and each other section or subsection as to which the relevance of such disclosure is reasonably apparent on its face) and as otherwise provided in this Article 3, as of the date of this Agreement and as of the Closing Date (in each case, except to the extent that any representation or warranty by its terms is made as of a specified date or time), the Company hereby represents and warrants to the Participating Holders that:

3.01 Organization; Power and Authority.

(a) Each of the Company Entities is duly incorporated or organized, as applicable, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation (in the case of good standing, to the extent such jurisdiction recognizes such concept). Each of the Company Entities is qualified to do business in every jurisdiction in which the ownership of its properties or the conduct of its business requires it to be so qualified, except in such jurisdictions where the failure to be so qualified, individually or in the aggregate, has not been and would not reasonably be expected to be material to Company and its Subsidiaries, taken as a whole, or to affect the Company’s ability to consummate the Transactions in any material respect.

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(b) Each of the Company Entities possesses all requisite corporate (or equivalent) power and authority to enter into this Agreement and the other Transaction Agreements and, subject to obtaining the Company Stockholder Approval, to carry out the Transactions.

3.02 Authorization; Non-Contravention.

(a) The execution, delivery and performance of this Agreement and the other Transaction Agreements by such Company Entity and the consummation by such Company Entity of the Transactions have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of such Company Entity are necessary to authorize such agreements or to consummate the Transactions (other than, with respect to the filing of the Amended Charter, the Company Stockholder Approval, and with respect to the Debenture Exchange, the Company Stockholder Approval and the filing of the Amended Charter pursuant to the DGCL). This Agreement has been duly and validly executed and delivered by such Company Entity and, assuming the due authorization, execution and delivery by the Participating Holders, constitutes a legal, valid and binding obligation of such Company Entity, enforceable against such Company Entity in accordance with its terms, except as limited by the application of bankruptcy, moratorium and other Laws affecting creditors’ rights generally and as limited by the availability of specific performance and the application of equitable principles.

(b) The Company Board, at a meeting duly called and held on or prior to the date hereof, adopted resolutions approving and declaring advisable this Agreement, the Amended Charter and the Transactions (such approval and declaration having been made in accordance with the DGCL) and resolving to make the Company Board Recommendation.

(c) Except as set forth on Schedule 3.02(c), the execution, delivery and performance of this Agreement and the other Transaction Agreements, the consummation of the Transactions and the fulfillment of and compliance with the respective terms hereof and thereof by the Company Entities do not and shall not (i) conflict with or result in a breach or violation of, (ii) constitute a default under (whether with or without the passage of time, the giving of notice or both), (iii) result in the creation of any Lien upon, or the grant, assignment or transfer to any other Person of any license or other right or interest under, to or in, any Equity Securities of any Company Entity or any of the Company Entities’ assets pursuant to, (iv) give any third party the right to modify, terminate or accelerate, or cause or result in any modification, termination or acceleration of, any obligation under, or (v) create any right to payment or any other right (concurrently or with the passage of time and/or upon the occurrence of one or more events or conditions) pursuant to, the Organizational Documents of any of the Company Entities, any Law to which any Company Entity is subject, or any contract to which any Company Entity is a party or bound (including, for the avoidance of doubt, the Credit Agreement after giving effect to the Transactions), except where such violations, conflicts, breaches or defaults, other than with respect to the Organizational Documents of any of the Company Entities or applicable Laws, has not been and would not reasonably be expected to be material to

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Company and its Subsidiaries, taken as a whole, or to affect the Company’s ability to consummate the Transactions in any material respect.

(d) Except for the filing of the Amended Charter pursuant to the DGCL and the filing of a Notice of Exempt Offering on Form D with the Securities and Exchange Commission (the “SEC”) with respect to the issuance of the Consideration Shares and the notices described in Sections 5.01(a)(iii) and (iv), no authorization, consent, approval, exemption or other action by, notice to or filing with any Governmental Entity is required in connection with the execution, delivery and performance of this Agreement, the consummation of the Transactions and the fulfillment of and compliance with the respective terms hereof and thereof.

(e) Except as expressly provided by this Agreement and the Transaction Agreements, none of the Company Entities are a party to any restructuring or similar agreements or arrangements with the other parties to this Agreement or any other Person that have not been disclosed to all parties to this Agreement.

3.03 Capitalization and Related Matters.

(a) (1) As of the opening of business on the date of this Agreement, and from the opening of business on such date until immediately prior to the Closing on the Closing Date, the capitalization of the Company shall be as set forth on Schedule 3.03(a)(1); and (2) as of immediately following the Closing and the Debenture Exchange, the capitalization of the Company (including the number of Fully-Diluted Shares as of immediately following the Closing and the Debenture Exchange) shall be as set forth on Schedule 3.03(a)(2); in each case, assuming that during the period beginning as of immediately prior to the opening of business on the date of this Agreement and ending on the Closing Date: (i) none of the Debentures are converted; (ii) none of the 2024 Warrants and none of the options outstanding under the Company’s 2019 Incentive Award Plan are exercised; (iii) none of the restricted stock units outstanding under the Company’s 2019 Incentive Award Plan vest; and (iv) no awards outstanding under the Company’s 2019 Incentive Award Plan are forfeited.

(b) Except as set forth on Schedule 3.03(b) and as contemplated by the Transaction Agreements, (i) other than the 2024 Warrants, the Debentures and the Contingent Shares, no Company Entity has outstanding any securities (including options, warrants, purchase rights, subscription rights, conversion rights or similar rights) convertible or exchangeable for any of its Equity Securities or containing any profit participation features, nor any rights or options to subscribe for or to purchase its Equity Securities or any securities convertible into or exchangeable for its Equity Securities or any equity appreciation rights or phantom equity plan, nor any promises to issues any such securities, rights or options, (ii) none of the Company Entities are, and immediately following the Closing none will be, subject to any obligation (contingent or otherwise) to repurchase, redeem or otherwise acquire or retire any Equity Securities or make or pay any dividends or distributions in respect of any Equity Securities, (iii) there are no, and immediately following the Closing there will not be, any, statutory or contractual preemptive rights, co-sale rights, rights of first refusal or similar rights or restrictions with

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respect to the Equity Securities of any Company Entity, (iv) no Company Entity has violated any applicable federal, provincial or state securities Laws in connection with the offer, sale or issuance of any of its Equity Securities, and (v) other than the Stockholders’ Agreement, dated December 19, 2019, by and among Pivotal Acquisition Corp., affiliates of Carlyle Equity Opportunity GP, L.P. and Revolution Growth III, LP and certain other signatories thereto, as amended and the Existing RRA, there are no agreements among the Company and the holders of Equity Securities of the Company Entities, or among the Company and any other Persons, or, to the actual knowledge of the Company’s management, among holders of Equity Securities of the Company, in each case, with respect to the voting or transfer of the Company Entities’ Equity Securities or with respect to any other aspect of the Company Entities’ governance. All of the outstanding Equity Securities of each Company Entity are, and immediately following the Closing shall be, duly authorized, validly issued, fully paid and non-assessable. Subject only to the Company Stockholder Approval, the Consideration Shares to be issued at the Closing have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will have been validly issued and will be fully paid and nonassessable and the issuance thereof is not subject to any preemptive or other similar right.

(c) Schedule 3.03(c) sets forth each Subsidiary of the Company, including the name of each Subsidiary of the Company, the jurisdiction of its incorporation or organization, as applicable, and the Person(s) owning the outstanding Equity Securities of such Subsidiary. No Company Entity has any obligation to make any Investment (whether by loan, capital contribution, purchase of securities or otherwise, and including any additional Investments) in any Person.

3.04 Litigation. There are no Actions pending or, to the Company’s knowledge, threatened in writing against any of the Company Entities or any of their respective assets, at law or in equity, or before or by any Governmental Entity that (i) individually or in the aggregate, would reasonably be expected to have an adverse effect on the Company’s ability to consummate the Transactions, or (ii) seek to restrain or prohibit or to obtain damages or other relief in connection with the Transactions. There are no outstanding Orders against any of the Company Entities or any of their respective assets that (x) individually or in the aggregate, have been or would reasonably be expected to be material to Company and its Subsidiaries, taken as a whole, or to have an adverse effect on the Company’s ability to consummate the Transactions, or (y) seek to restrain or prohibit or to obtain damages or other relief in connection with the Transactions.

3.05 Brokerage. Except for the claims set forth on Schedule 3.05 (for which the Company shall be solely liable), there are and shall be no claims for brokerage commissions, finders’ fees or similar compensation in connection with the Transactions based on any arrangement or agreement to which any Company Entity is a party or by which any Company Entity is bound.

3.06 Disclaimer; Acknowledgment; Non-Reliance. Except for the representations and warranties expressly and specifically set forth in Article 3 of this Agreement and in the other Transaction Agreements, no Company Entity makes any express or implied representation or warranty in connection with the Transactions, and the Company Entities hereby disclaim any such representations or warranties in connection with the Transactions. The Company acknowledges

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that the representations and warranties to the Company expressly and specifically set forth in Article 4 of this Agreement and in the other Transaction Agreements constitute the sole and exclusive representations and warranties being made to the Company in connection with the Transactions, and the Company understands, acknowledges and agrees that the Company is not relying on any other representations or warranties of any kind or nature expressed or implied.

3.07 Compensation Plans. Except for the adoption of the non-insider and the insider KERP, an increase of 2,154,313 shares in the shares available for issuance under the 2019 Incentive Award Plan, and as otherwise set forth on Schedule 3.07, since December 31, 2023, none of the Company Entities have (i) adopted, amended, restated, supplemented, modified, replaced, assigned, or renewed or otherwise extended the term of, any of the Company Incentive Plans, or (ii) made any payments under any of the Company Incentive Plans, except as required by applicable Law or as required by the terms of any of the foregoing.

3.08 Opinion of Financial Advisor. Prior to the execution of this Agreement, the Company Board received a fairness opinion from Ducera Partners LLC to the effect that, as of the date thereof and based upon and subject to the various qualifications and assumptions set forth therein, the Debenture Exchange is fair to the Company from a financial point of view. The Company has made available to the Participating Holders a copy of such opinion.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PARTICIPATING HOLDERS

Except as otherwise provided in this Article 4, each Participating Holder (on an individual, several basis solely with respect to itself), hereby represents and warrants to the Company that:

4.01 Organization; Power and Authority.

(a) Such Participating Holder is duly incorporated or organized, as applicable, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation (in the case of good standing, to the extent such jurisdiction recognizes such concept). Such Participating Holder is qualified to do business in every jurisdiction in which the ownership of its properties or the conduct of its business requires it to be so qualified, except in such jurisdictions where the failure to be so qualified, individually or in the aggregate, would reasonably be expected to affect the Participating Holder’s ability to consummate the Transactions in any material respect.

(b) Such Participating Holder possesses all requisite corporate (or equivalent) power and authority to enter into this Agreement and the other Transaction Agreements and to carry out the Transactions.

4.02 Authorization; No Breach.

(a) The execution, delivery and performance of this Agreement and the other Transaction Agreements by such Participating Holder and the consummation by such Participating Holder of the Transactions have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of such Participating Holder are necessary to authorize such agreements or to consummate the

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Transactions. This Agreement has been duly and validly executed and delivered by such Participating Holder and, assuming the due authorization, execution and delivery by the Company Entities and the other Participating Holders, constitutes a legal, valid and binding obligation of such Participating Holder, enforceable against such Participating Holder in accordance with its terms, except as limited by the application of bankruptcy, moratorium and other Laws affecting creditors’ rights generally and as limited by the availability of specific performance and the application of equitable principles.

(b) The execution, delivery and performance of this Agreement and the other Transaction Agreements, the consummation of the Transactions and the fulfillment of and compliance with the respective terms hereof and thereof by such Participating Holder do not and shall not (i) conflict with or result in a breach or violation of, (ii) constitute a default under (whether with or without the passage of time, the giving of notice or both), (iii) result in the creation of any Lien upon, or the grant, assignment or transfer to any other Person of any license or other right or interest under, to or in, any Equity Securities of such Participating Holder or any of the assets of such Participating Holder pursuant to, (iv) give any third party the right to modify, terminate or accelerate, or cause or result in any modification, termination or acceleration of, any obligation under, or (v) create any right to payment or any other right (concurrently or with the passage of time and/or upon the occurrence of one or more events or conditions) pursuant to, the Organizational Documents of such Participating Holder, any Law to which such Participating Holder is subject, or any contract to which such Participating Holder is a party or bound, except where such violations, conflicts, breaches or defaults, other than with respect to the Organizational Documents of such Participating Holder or applicable Laws, has not affected and would not reasonably be expected to affect the Participating Holder’s ability to consummate the Transactions in any material respect.

(c) Except for the notices described in Sections 5.01(a)(iii) and (iv), no authorization, consent, approval, exemption or other action by, notice to or filing with any Governmental Entity is required in connection with the execution, delivery and performance of this Agreement, the consummation of the Transactions and the fulfillment of and compliance with the respective terms hereof and thereof.

(d) Except as expressly provided by this Agreement and the Transaction Agreements, neither such Participating Holder nor any of its direct or indirect Subsidiaries is a party to any restructuring or similar agreements or arrangements with the other parties to this Agreement or any other Person that relate to the Company and that have not been disclosed to all parties to this Agreement.

4.03 Title to Existing Debentures. (a) Such Participating Holder is the sole beneficial owner of, and has good and marketable title to, Debentures having an aggregate principal amount set forth opposite such Participating Holder’s name on Schedule I and (b) such Participating Holder will be the sole beneficial owner of, and have good and marketable title to, any Debentures issued as PIK interest with respect to the Debentures described in Section 4.03(a). At the Closing, such Participating Holder shall transfer, convey and deliver to the Company good and marketable title to Debentures having an aggregate initial principal amount set forth opposite such Participating Holder’s name on Schedule I, and any Debentures issued as PIK interest with respect

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thereto, free and clear of all Liens (except for restrictions on transfer under applicable securities Laws).

4.04 Litigation. There are no Actions pending or, to such Participating Holder’s knowledge, threatened in writing against such Participating Holder or any of its direct and indirect Subsidiaries or any of their respective assets, at law or in equity, or before or by any Governmental Entity that (i) individually or in the aggregate, would reasonably be expected to have an adverse effect on such Participating Holder’s ability to consummate the Transactions or (ii) seek to restrain or prohibit or to obtain damages or other relief in connection with the Transactions. There are no outstanding Orders against such Participating Holder or any of its direct and indirect Subsidiaries or any of their respective assets that (x) individually or in the aggregate, would reasonably be expected to have an adverse effect on such Participating Holder’s ability to consummate the Transactions or (y) seek to restrain or prohibit or to obtain damages or other relief in connection with the Transactions.

4.05 Investment Representations.

(a) The representations and warranties in Section 9(d) of the Transaction Support Agreement are hereby incorporated by reference, mutatis mutandis, and each Participating Holder, for the benefit of the Company (including for the benefit of Guggenheim Securities, LLC, who is acting as a financial advisor to the Company (the “Financial Advisor”)), makes the same such representations and warranties here as it does in its capacity as a “Consenting Stakeholder” (as defined in the Transaction Support Agreement) in Section 9(d) of the Transaction Support Agreement.

(b) The OTPP Holder hereby represents and warrants, solely as to itself, for the benefit of the Company (including for the benefit of the Financial Advisor), that it is an “accredited investor” within the meaning of section 73.3 of the Securities Act (Ontario), was not created or is not used solely to purchase or hold securities as an accredited investor described in paragraph (m) of the applicable definition, and is acquiring the Consideration Shares as principal.

(c) The office or offices of such Participating Holder in which it has its principal place of business are identified in the address or addresses of such Participating Holder set forth on such Participating Holder’s signature page.

4.06 Disclaimer; Acknowledgment; Non-Reliance. Except for the representations and warranties expressly and specifically set forth in Article 4 of this Agreement and in the other Transaction Agreements, none of such Participating Holder or any of its direct and indirect Subsidiaries makes any express or implied representation or warranty in connection with the Transactions, and such Participating Holder and its direct and indirect Subsidiaries hereby disclaim any such representations or warranties in connection with the Transactions. Such Participating Holder acknowledges, for the benefit of the Company (including for the benefit of the Financial Advisor), that (w) it has the requisite knowledge and experience in financial and business matters so that it is capable of evaluating the merits and risks of the acquisition of the Consideration Shares contemplated hereby and has had such opportunity as it has deemed adequate to obtain such information as is necessary to permit such Participating Holder to evaluate the merits and risks of

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the acquisition of the Consideration Shares contemplated hereby; (x) it is aware and understands that an investment in the Consideration Shares involves a considerable degree of risk, that it is able to bear the economic risk, and sustain a complete loss, of such investment in the Consideration Shares, and that no U.S. federal or state or non-U.S. agency has made any finding or determination as to the fairness for investment or any recommendation or endorsement of any such investment; (y) it has made its own independent assessment, to its satisfaction, concerning any and all legal, regulatory, tax, credit, economic, business and financial considerations with respect to the Company and the Consideration Shares in connection with its acquisition of the Consideration Shares contemplated hereby; and (z) the representations and warranties being made to such Participating Holder expressly and specifically set forth in Article 3 of this Agreement and in the other Transaction Agreements constitute the sole and exclusive representations and warranties to such Participating Holder in connection with the Transactions, and such Participating Holder understands, acknowledges and agrees that such Participating Holder is not relying on any other representations or warranties of any kind or nature, expressed or implied.

ARTICLE 5
COVENANTS AND AGREEMENTS

5.01 Covenants of the Parties. During the period from the date of this Agreement until the earlier of (i) the date of the termination of this Agreement in accordance with Article 7 or (ii) the Closing, each party agrees to, and to cause its Subsidiaries to, comply with Section 5.01(a) and (b), and the Company agrees to, and to cause its Subsidiaries to, comply with Section 5.01(c):

(a) use commercially reasonable efforts to:

(i) satisfy the conditions of the other parties hereto set forth in Article 6 or otherwise comply with this Agreement and to consummate the Transactions;

(ii) obtain any and all required regulatory and/or third-party approvals required to consummate the Transactions;

(iii) in the case of the Participating Holders, procure that a voluntary notice in accordance with section 18(2) of the NSIA is submitted to the ISU in respect of the Transactions as soon as reasonably practicable after the date of this Agreement with a view to satisfying the ISU that the Transactions do not give rise to a “notifiable acquisition” pursuant to section 6 of the NSIA;

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(iv) in the event that such voluntary notification is rejected in accordance with section 18(6)(a) of the NSIA and the Transactions are considered by the ISU to give rise to a “notifiable acquisition” pursuant to section 6 of the NSIA, in the case of the Participating Holders, submit a mandatory notice in accordance with section 14(1) of the NSIA as soon as practicable upon receipt of notice of such rejection from the ISU;

(v) cooperate and provide any information as may reasonably be required or requested in connection with any and all regulatory and/or third party approvals for the Transactions or to respond to any information requests from any Governmental Entity in order to satisfy the conditions precedent set forth in Section 6.01 of this Agreement. In the case of the Participating Holders this shall include (a) providing the Company with a reasonable opportunity to review and comment on all draft filings, notices, responses, communications, documents or other submissions intended to be submitted to any Governmental Entity in order to obtain regulatory approvals, including the ISU, in advance of such submission and shall take any such comments into reasonable consideration; (b) providing the Company with copies of any written communication and a summary of any oral communication from any Governmental Entity, including the ISU, promptly after receiving such communication; and (c) providing the Company prior notice of and the opportunity to attend any meetings or calls arranged with any Governmental Entity, including the ISU; and

(vi) in the case of the Company, upon reasonable prior notice, provide the Participating Holders with any information reasonably requested regarding the Company Entities (including access to the books and records of the Company Entities), and reasonable access to management and advisors of the Company Entities, for the purposes of evaluating the Company Entities’ assets, liabilities, operations, businesses, finances, strategies, prospects and affairs;

(b) negotiate in good faith and execute and deliver the other agreements, documents and instruments that may be required to effectuate and consummate the Transactions; and

(c) except as set forth in Schedule 5.02, as expressly contemplated by this Agreement or the other Transaction Agreements, as required by applicable Law or as otherwise agreed in writing by the Participating Holders, such agreement not to be unreasonably withheld, conditioned or delayed:

(i) conduct its business and operations in the ordinary course in all material respects and in substantially the same manner as such business and operations have been conducted prior to the date of this Agreement;

(ii) except as set forth in Schedule 5.01(c)(ii), use commercially reasonable efforts to preserve intact, in all material respects, its current business organization, keep available the services of its current Company officers, employees and other service providers, and maintain its relations and goodwill with

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all customers, landlords, employees, lenders, vendors, and other Persons having beneficial business relationships with the Company; provided, however, that no action by the Company or any of its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.02 shall be deemed a breach of this Section 5.01(c)(ii) unless such action constitutes a breach of such provision of Section 5.02; and

(iii) conduct its business and operations in compliance with Law, including without limitation all applicable Anti-Corruption Laws, Global Trade Laws and Regulations, Anti-Money Laundering Laws, and Modern Slavery Laws and Regulations.

5.02 Negative Covenants of the Company Entities. Except as set forth in Schedule 5.02 or in Section 5.07, during the period from the date of this Agreement until the earlier of (i) the date of the termination of this Agreement in accordance with Article 7 or (ii) the Closing, except as expressly contemplated by this Agreement or the other Transaction Agreements, as required by applicable Law or as otherwise agreed in writing by the Participating Holders, such agreement not to be unreasonably withheld, the Company shall not, and shall cause its Subsidiaries not to:

(a) split, combine, reduce or reclassify any of its share capital, except for any such transaction with respect to a direct or indirect wholly owned Company Subsidiary that results in such Company Subsidiary remaining a direct or indirect wholly owned Subsidiary of the Company after consummation of such transaction;

(b) other than as required by the terms of the Contingent Shares, the Debentures, the 2024 Warrants and the options and restricted stock units outstanding under the 2019 Incentive Award Plan, issue, purchase or redeem any of its Common Stock or any other Equity Securities;

(c) make any material change in its financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes;

(d) amend the Organizational Documents of any Company Entity;

(e) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, recapitalization, restructuring or other reorganization of any Company Entity, or alter through merger, liquidation, reorganization or restructuring the corporate structure of the Company Entities;

(f) take any actions to pay any dividends, redeem any securities, or otherwise cause assets of the Company Entities to be distributed to its stockholders or other equityholders;

(g) allow to lapse, encumber, sell, lease, license, covenant not to assert, transfer, assign, exchange, swap, abandon, pledge or otherwise waive or dispose of, or subject to any Lien, any properties, rights or assets that are material to the Company Entities, taken as a whole, except for transactions between or among the Company Entities;

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(h) (1) make, change or revoke any material Tax election; (2) change any material method of Tax accounting or accounting period; (3) file any amended income or other material Tax Return; (4) settle or compromise any audit, claim, assessment or proceeding relating to a material amount of Taxes; (5) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of state, local, or non-U.S. Tax Law) with respect to any material Tax; or (6) request or agree to any extension or waiver of the statutes of limitation applicable to any material Tax claim or assessment;

(i) other than the termination of awards under the Company’s 2019 Incentive Award Plan in accordance with the terms of such plan, enter into, amend or modify in any material respect or terminate any contract or agreement between any Company Entity, on the one hand, and any officer, director, stockholder, employee or Affiliate of any Company Entity on the other hand; or

(j) offer or agree, in writing or otherwise, to take any or authorize any of the foregoing actions.

5.03 Company Stockholders’ Meeting. The Company will take all action necessary under all applicable Laws and in accordance with its Organizational Documents to call, give notice of and hold a special meeting of the holders of Common Stock to vote on the adoption and approval of the Amended Charter (the “Company Stockholders’ Meeting”) as soon as practicable following the date of this Agreement. Each Participating Holder will furnish to the Company the information relating to it required by applicable Law to be set forth in the proxy statement for the Company Stockholders’ Meeting (the “Proxy Statement”) and each party hereto agrees to correct any information provided by it for use in the Proxy Statement that shall have become false or misleading. The Company Stockholders’ Meeting will be held as promptly as reasonably practicable, provided that (i) it shall not be held earlier than ten (10) days after the day on which the distribution of the Proxy Statement (in accordance with applicable Law) to the Company stockholders of record as of the record date for the Company Stockholders’ Meeting has been completed (the “Mailing Date”), and (ii) it shall not be held later than twenty (20) Business Days (subject to extension by mutual agreement of the Company and the Participating Holders) following the Mailing Date. The Company will cause all proxies solicited in connection with the Company Stockholders’ Meeting to be solicited in compliance with all applicable Laws. The Proxy Statement will include a statement to the effect that the Company Board has determined that the Amended Charter is advisable and recommends that the Company’s stockholders vote to approve the Amended Charter at the Company Stockholders’ Meeting (collectively, the “Company Board Recommendation”). The Company Board Recommendation will not be withdrawn or modified in a manner adverse to the Participating Holders, and no resolution by the Company Board or any committee thereof to withdraw or modify the Company Board Recommendation in a manner adverse to the Participating Holders will be adopted or proposed.

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5.04 Amendment of Charter and Bylaws.

(a) Prior to the Closing, subject to the receipt by the Company of the Company Stockholder Approval, the Company shall amend and restate the Second Amended and Restated Certificate of Incorporation of the Company, as amended, by filing the Amended Charter with the Delaware Secretary of State.

(b) Effective as of the Closing, the Company Board shall adopt the Amended Bylaws as the bylaws of the Company.

5.05 Mutual Releases. From and after the Closing and the execution, delivery and effectiveness of the Mutual Release Agreement, the terms of the Mutual Release Agreement shall be incorporated by reference in their entirety.

5.06 Publicity; Press Releases and Announcements. The terms of Section 15.21 of the Transaction Support Agreement (Publicity) are hereby incorporated by reference in their entirety, mutatis mutandis.

5.07 Additional Provisions Regarding Company’s Commitments. The terms of Section 7 of the Transaction Support Agreement (Additional Provisions Regarding Company’s Commitments) are hereby incorporated by reference in their entirety, mutatis mutandis.

ARTICLE 6
CONDITIONS TO CLOSING

6.01 Conditions to the Obligations of All Parties. The obligation of each of the parties hereto to consummate the Debenture Exchange at the Closing is subject to the satisfaction, or waiver by each of the Company and the Participating Holders, of each of the following conditions as of immediately prior to the Closing:

(a) The Company shall have obtained the Company Stockholder Approval;

(b) No Law or Order of, or request to file a notice to review the Transactions by, any Governmental Entity of competent jurisdiction shall be pending or in effect as of the Closing that restrains, prohibits or makes illegal the consummation of the Transactions;

(c) The other Transactions shall have closed (or be closed substantially concurrently herewith), in each case in accordance with the terms of the Transaction Support Agreement, the other Transaction Agreements, and the various other documents and agreements giving effect to the other Transactions; and

(d) The voluntary notification has been submitted to the ISU in accordance with Section 5.01(a)(iii) and the parties have been informed in writing by the ISU that either the voluntary notification has been accepted, or that a mandatory notice is required to be submitted to the ISU in connection with one or more of the Transactions in accordance with Section 5.01(a)(iv), and if such mandatory notice is so required, such mandatory notice has been submitted and:

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(i) the UK Secretary of State shall have notified the parties in accordance with section 14(8)(b)(ii) of the NSIA that no further action will be taken in relation to the Transactions; or

(ii) in the event that a call-in notice is given by the UK Secretary of State in relation to the Transactions, the Secretary of State shall:

(A) have issued a final notification in accordance with section 26(2)(a) of the NSIA confirming that no further action will be taken in relation to the Transactions under the NSIA; or

(B) have issued a final order in accordance with section 26(2)(b) of the NSIA permitting the Transactions to proceed subject only to such remedies or requirements that are acceptable to the parties, acting reasonably.

6.02 Additional Conditions to the Obligations of the Company. The obligation of the Company to consummate the transactions contemplated by this Agreement to be consummated at the Closing is subject to the satisfaction, or waiver by the Company, of each of the following additional conditions as of immediately prior to the Closing:

(a) (i) The representations and warranties of the Participating Holders contained in Section 4.01 (Organization; Power and Authority), Section 4.02(a) (Authorization) and Section 4.03 (Title to Existing Debentures) shall be true and correct in all respects as of the date hereof and as of the Closing (except to the extent that any such representation or warranty by its terms is made as of an earlier date or time, in which case such representation or warranty shall be true and correct in all respects as of such earlier date or time); and (ii) the representations and warranties of the Participating Holders contained in Article 4 other than those listed in Section 6.02(a)(i) shall be true and correct as of the date hereof and as of the Closing (except to the extent that any such representation or warranty by its terms is made as of an earlier date or time, in which case such representation or warranty shall be true and correct as of such earlier date or time) except for such inaccuracies that, individually or in the aggregate, have not and would not reasonably be expected to, prevent, materially delay or materially impede the performance by the Participating Holders of their obligations under this Agreement or the Transaction Agreements; provided, that for purposes of determining the accuracy of such representations and warranties, all materiality and similar qualifications limiting the scope of such representations and warranties shall be disregarded;

(b) Each of the covenants and agreements of the Participating Holders to be performed as of or prior to the Closing shall have been performed in all material respects; and

(c) The Participating Holders shall have delivered to the Company:

(i) the New Stockholders’ Agreement, duly executed by the Participating Holders and their Affiliates that are parties thereto;

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(ii) the OTPP Designee Subscription Agreement, duly executed by the OTPP Designee; and

(iii) one or more certificates, dated as of the Closing Date and duly executed by the Participating Holder(s), to the effect that each of the conditions specified above in Section 6.02(a) and Section 6.02(b) has been satisfied with respect to the representations and warranties, and the performance of covenants and agreements, of the applicable Participating Holder(s).

6.03 Additional Conditions to the Obligations of the Participating Holders. The obligation of the Participating Holders to consummate the transactions contemplated by this Agreement is subject to the satisfaction, or waiver by the Participating Holders, of each of the following additional conditions as of immediately prior to the Closing:

(a) (i) The representations and warranties of the Company contained in Article 3 (other than the representations and warranties of the Company contained in Section 3.01 (Organization; Power and Authority), Section 3.02(a)-(b) (Authorization), Section 3.03 (Capitalization and Related Matters), and Section 3.05 (Brokerage)) shall be true and correct of the date hereof and as of the Closing (except to the extent that any such representation or warranty by its terms is made as of an earlier date or time, in which case such representation or warranty shall be true and correct as of such earlier date or time) except for such inaccuracies that, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect; provided, that for purposes of determining the accuracy of such representations and warranties, all materiality and similar qualifications limiting the scope of such representations and warranties shall be disregarded; and (ii) the representations and warranties of the Company contained in Section 3.01 (Organization; Power and Authority), Section 3.02(a)-(b) (Authorization), Section 3.03 (Capitalization and Related Matters), and Section 3.05 (Brokerage) shall be true and correct in all respects (except, with respect to Section 3.03, for de minimis deviations) as of the date hereof and as of the Closing (except to the extent that any such representation or warranty by its terms is made as of an earlier date or time, in which case such representation or warranty shall be true and correct in all respects (except, with respect to Section 3.03, for de minimis deviations) as of such earlier date or time);

(b) Each of the covenants and agreements of the Company Entities be performed as of or prior to the Closing shall have been performed in all material respects; and

(c) the Company shall have delivered to the Participating Holders:

(i) a certificate dated as of the Closing Date and executed by the Company (1) to the effect that each of the conditions specified above in Section 6.03(a), Section 6.03(b), and Section 6.01(a) has been satisfied, and (2) certifying as complete and accurate a copy of the written consent or meeting resolutions of the Company Board approving and adopting this Agreement, the Amended Charter, the Amended Bylaws and the other Transactions;

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(ii) a certificate of good standing (or equivalent document) of the Company, issued not earlier than three (3) Business Days prior to the Closing Date;

(iii) a file-stamped copy of the Amended Charter evidencing its filing with the Delaware Secretary of State;

(iv) the New Stockholders’ Agreement, duly executed by the Company; and

(v) the RRA Termination Agreement, duly executed by all parties thereto;

(vi) the letter agreement substantially in the form attached hereto as Schedule 6.03(c)(vi), duly executed by the Company and the counterparty thereto; and

(vii) the OTPP Designee Subscription Agreement, duly executed by the Company.

ARTICLE 7
TERMINATION

7.01 Termination. Notwithstanding anything to the contrary contained herein, this Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing:

(a) by the mutual written consent of the Company and the Participating Holders;

(b) by the Company, if there has been a violation or breach by the Participating Holders of any covenant, representation or warranty contained in this Agreement which, if not cured, would prevent the satisfaction of any condition to the obligations of the Company at the Closing set forth in Section 6.01 or Section 6.02 (and such violation or breach has not been waived by the Company) and such violation or breach is not capable of being cured or, if capable of being cured, shall not have been cured prior to the earlier of (i) fifteen (15) days after written notice thereof from the Company and (ii) the Outside Date; provided, that the right to terminate this Agreement pursuant to this Section 7.01(b) shall not be available to the Company at any time that the Company has violated, or is in breach of, any covenant, representation or warranty hereunder, if such breach by the Company would, if not cured, prevent satisfaction of any of conditions to Closing of the Participating Holders hereunder (and has not been waived by the Participating Holders);

(c) by the Participating Holders, if there has been a violation or breach by the Company of any covenant, representation or warranty contained in this Agreement which would, if not cured, prevent the satisfaction of any condition to the obligations of the Participating Holders at the Closing set forth in Section 6.01 or Section 6.03 (and such violation or breach has not been waived by the Participating Holders) and such violation or breach is not capable of being cured or, if capable of being cured, shall not have been

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cured prior to the earlier of (i) fifteen (15) days after written notice thereof from the Participating Holders and (ii) the Outside Date; provided that the right to terminate this Agreement pursuant to this Section 7.01(c) shall not be available to the Participating Holders at any time that any of the Participating Holders have violated, or are in breach of, any covenant, representation or warranty hereunder if such breach by the Participating Holders would, if not cured, prevent satisfaction of any of the conditions to Closing of the Company Entities hereunder (and has not been waived by the Company);

(d) by the Company or the Participating Holders, if a Governmental Entity of competent jurisdiction shall have issued a non-appealable final Order, having the effect of permanently restraining, enjoining or otherwise prohibiting any of the Transactions;

(e) by the Company or the Participating Holders, if the transactions contemplated by this Agreement have not been consummated on or before the Outside Date; provided, that none of the Company or the Participating Holders shall be entitled to terminate this Agreement pursuant to this Section 7.01(e) if such party’s breach of this Agreement has prevented the consummation of the transactions contemplated hereby prior to the Outside Date; or

(f) by the Company or the Participating Holders, if the Transaction Support Agreement has been terminated by any party thereto in accordance with Section 12 thereof.

7.02 Effect of Termination. In the event of any termination of this Agreement as provided in Section 7.01, this Agreement shall forthwith become void and of no further force or effect, and there shall be no further liability or obligation on the part of any party hereto to any other party hereto with respect to this Agreement; provided, that (a) this Section 7.02 and Article 9 shall survive the termination of this Agreement and shall be enforceable by the parties hereto, and (b) no such termination shall relieve any party hereto from liability for any Fraud, intentional misrepresentation, or willful and material breach of this Agreement prior to termination.

ARTICLE 8
DEFINITIONS

8.01 Definitions. For the purposes of this Agreement, capitalized terms used herein and not otherwise defined herein have the meanings given to such terms as set forth below:

“2024 Warrants” means the warrants issued by the Company to purchase up to an aggregate of 29,350,000 shares of Common Stock at an exercise price of $11.50 per share that expire on December 19, 2024.

“Action” means any action (by any private right of action of any Person or by any Governmental Entity), suit, litigation, claim, complaint, grievance, charge, audit, investigation, hearing, inquiry, or other proceeding (including any administrative, criminal or arbitration or mediation proceedings).

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“Affiliate” of any particular Person means any other Person controlling, controlled by or under common control or common investment management with such particular Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of voting securities, contract or otherwise, and such “control” will be conclusively presumed if any Person owns ten percent (10%) or more of the voting capital stock or other Equity Securities, directly or indirectly, of any other Person.

“Affiliated Holders” means Participating Holders and their respective Affiliates; provided, for the avoidance of doubt, Participating Holders with investments managed by separate Persons shall be deemed to be Affiliated Holders if the Persons who manage their investments are themselves under common control as defined within the definition of Affiliate.

“Amended Bylaws” means the amended and restated bylaws of the Company in the form attached hereto as Exhibit B.

“Amended Charter” means the third amended and restated certificate of incorporation of the Company in the form attached hereto as Exhibit A.

“Anti-Corruption Laws” means laws, regulations or orders relating to anti-bribery or anti-corruption including, without limitation, the Prevention of Corruption Act 1988, the Foreign Contribution (Regulation) Act 2010, The Indian Penal Code 1860, the PRC Criminal Law (revised in 2020), the PRC Anti Unfair Competition Law (revised in 2019) the Interim Rules of the State Administration for Industry and Commerce on Prohibition of Commercial Bribery, the U.S. Foreign Corrupt Practices Act of 1977, as amended from time to time (the “FCPA”), the UK Bribery Act of 2010, the Canadian Corruption of Foreign Public Officials Act, relevant provisions of the Canadian Criminal Code, and all applicable national and international laws enacted to implement the OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions.

“Anti-Money Laundering Laws” means laws, regulations, rules, or guidelines relating to money laundering, countering the financing of terrorism, and financial recordkeeping, including, without limitation, those implemented and administered by competent authorities in the European Union and its Member States, the United Kingdom, the United States, Canada, China, India and all other jurisdictions in which the Company and its subsidiaries conduct business or own assets.

“Business Day” means any day of the year that is not a Saturday or a Sunday on which national banking institutions in New York, New York, United States and Toronto, Ontario, Canada are open to the public for conducting business and are not required or authorized to close.

"Child Labour” means: (i) “Child Labour” as defined in the Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act; or (ii) any employment below the minimum age as established in national legislation (as set forth in ILO Convention 138 on the Minimum Age for Admission to Employment), hazardous unpaid household services, and the worst forms of child labour (as set forth in ILO Convention 182 on the Worst Forms of Child Labour).

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“Chosen Courts” has the meaning set forth in Section 9.12.

“Closing” has the meaning set forth in Section 2.01.

“Closing Date” has the meaning set forth in Section 2.01.

“Code” means the Internal Revenue Code of 1986, as amended.

“Common Stock” means shares of common stock of the Company.

“Company” has the meaning set forth in the Preamble.

“Company Board” means the board of directors of the Company or the Special Review Committee thereof, as applicable.

“Company Board Recommendation” has the meaning set forth in Section 5.03(b) of the Agreement.

“Company Entity” means each of the Company and its direct and indirect Subsidiaries.

“Company Incentive Plans” means the Company’s 2019 Incentive Award Plan and any other employee bonus, incentive, retention or similar benefit plans or programs of the Company Entities.

“Company Stockholder Approval” means the affirmative vote of the holders of a majority of the outstanding shares of Common Stock in favor of the approval of the Amended Charter.

“Company Stockholders’ Meeting” has the meaning set forth in Section 5.03(b) of the Agreement.

“Contingent Shares” has the meaning given in that certain Agreement and Plan of Reorganization, dated as of May 20, 2019, by and among Pivotal Acquisition Corp., Pivotal Merger Sub Corp., LD Topco, Inc., and Carlyle Equity Opportunity GP, L.P., as subsequently amended from time to time; provided, that Contingent Shares shall not include any such shares that holders thereof affiliated with Carlyle Group Inc. agree will not be issued to them.

“Credit Agreement” means that certain Credit Agreement, dated as of February 8, 2021, by and among KLDiscovery Holdings, Inc., LD Topco, Inc., the Lenders party thereto, Wilmington Trust, National Association, as Administrative Agent and Collateral Agent, Ally Bank, and certain other parties thereto, as amended on March 3, 2023 and March 8, 2024, and as may be subsequently amended from time to time.

“Debenture Exchange” has the meaning set forth in Section 1.01.

“Debentures” has the meaning set forth in the Recitals.

“DGCL” means the Delaware General Corporation Law, as amended from time to time.

“Disclosure Letter” has the meaning set forth in Article 3.

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“Equity Securities” means with respect to any Person, all (i) units, capital stock, shares, partnership interests or other equity interests (including classes, groups or series thereof having such relative rights, powers or obligations as may from time to time be established by the issuer thereof or the governing body of its Affiliate, as the case may be, including rights, powers or duties different from, senior to or more favorable than existing classes, groups and series of units, stock and other equity interests and including any so-called “profits interests”) or securities or agreements providing for profit participation features, equity appreciation rights, phantom equity or similar rights to participate in profits, (ii) warrants, options, puts, calls, rights of first refusal, subscription rights, preemptive rights, conversion rights, exchange rights or other rights to purchase or otherwise acquire, or contracts or binding commitments that require the issuance of, securities described in the foregoing clause of this definition and (iii) obligations, evidences of indebtedness or other securities or interests convertible or exchangeable into securities described in the foregoing clauses of this definition.

“Existing RRA” means that certain Registration Rights Agreement, dated as of December 19, 2019, by and among the Company (f/k/a Pivotal Acquisition Corp.), each of the Controlling Holders (as defined therein), and certain other persons.

“Financial Advisor” has the meaning set forth in Section 4.05(a).

“Forced Labour” means: (i) “Forced Labour” as defined in the Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act; or (ii) any work or service that is exacted from a person under the threat of penalty, and for which that person has not offered himself or herself voluntarily.

“Fraud” means, with respect to any Person, intentional (and not constructive) misrepresentation of a fact by such Person with respect to the making of the representations and warranties in Article 3 or 4 (as applicable) with the actual knowledge (as opposed to imputed or constructive knowledge or knowledge that could have been obtained after inquiry, or recklessness or negligence) of such Person that such representation was false when made and which was made with the specific intent to induce the Person to whom such representation was made (the “Recipient”) to enter into or consummate the transactions contemplated by this Agreement and upon which the Recipient has reasonably relied to its detriment.

“Fully-Diluted Shares” means the sum (without duplication), as of immediately following the Closing, of (i) the aggregate number of shares of Common Stock or other capital stock of the Company then issued and outstanding (including, for the avoidance of doubt, the Consideration Shares and the Contingent Shares), and (ii) the aggregate number of shares of Common Stock or other capital stock of the Company that are or may become issuable in connection with agreements or outstanding Equity Securities of the Company or its Subsidiaries that could require the issuance of shares of capital stock of the Company, including, without limitation, all options (to the extent outstanding as of immediately following the Closing) and restricted stock units then outstanding under the Company’s 2019 Incentive Award Plan and all outstanding warrants of the Company other than the 2024 Warrants; provided, that the Fully-Diluted Shares shall not include (1) shares of Common Stock that are or may become issuable in connection with awards made under the MIP, (2) shares of Class B-2 Common Stock, (3) shares of Class A Common Stock that are issuable upon conversion of Class B-1 Common Stock and automatic redemption of Class B-2 Common

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Stock or (4) shares of Class B-1 Common Stock (and, for the avoidance of doubt, shares of Class B-2 Common Stock) that are issuable upon conversion of Class A Common Stock; provided, further, that notwithstanding the foregoing, the Fully-Diluted Shares shall include any shares of Common Stock that are issued pursuant to exercise of the 2024 Warrants subsequent to the Closing (in which case, the Fully-Diluted Shares as of immediately following the Closing shall be deemed to include such shares of Common Stock issued in respect of the 2024 Warrants, regardless of when such exercise occurs).

“Global Trade Laws and Regulations” means export controls, and trade, economic and financial sanctions laws, regulations, embargoes, and restrictive measures administered or enforced by the United States, including without limitation the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) and the U.S. Department of Commerce, the United Kingdom, the European Union, Canada, United Nations, India and all relevant regulations made under any of the foregoing; and other similar applicable economic and trade sanctions, export or import control laws.

“Governmental Entity” means any applicable federal, state, local, or foreign government or any agency, bureau, board, commission, court, or arbitral body, department, political subdivision, regulatory or administrative authority, tribunal, or other instrumentality thereof, or any self-regulatory organization, including the UK Secretary of State.

“Investment” as applied to any Person means (i) any direct or indirect purchase or other acquisition (whether by loan, contribution of capital, exchange or otherwise) by such Person of any notes, obligations, instruments, units, securities or other ownership interests (including partnership interests and joint venture interests) of any other Person and (ii) any capital contribution by such Person to any other Person. For the avoidance of doubt, “Investment” does not include intercompany loans between the Company and a wholly-owned direct or indirect Subsidiary of the Company, or between wholly-owned direct or indirect Subsidiaries of the Company, made in the ordinary course of business.

“ISU” means the Investment Security Unit within the United Kingdom Cabinet Office, the operational unit which administers the NSIA.

“Law” means any U.S. federal, state, local, or foreign law (including common law), statute, code, ordinance, rule, regulation, decree, injunction, order, ruling, assessment, writ, or other legal requirement, or judgment, in each case, that is validly adopted, promulgated, issued, or entered by a Governmental Entity of competent jurisdiction.

“Lien” means any mortgage, pledge, security interest, license, encumbrance, lien (statutory or otherwise), hypothecation, assignment, easement or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof), any sale of receivables with recourse against any Company Entity or any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar statute.

“Material Adverse Effect” means any event, change, occurrence or effect, either individually or in the aggregate, that (i) has had or would reasonably be expected to have a material adverse effect on the business, assets and liabilities, financial condition or results of operations of

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the Company and its Subsidiaries, taken as a whole, or (ii) would prevent, materially delay or materially impede the performance by the Company of its obligations under this Agreement or the Transaction Agreements; provided, however, that in the case of clause (i) only, none of the following, alone or in combination, shall be deemed to constitute, or be taken into account in determining whether there has been or would or could be, a Material Adverse Effect: (1) any changes in general economic or business conditions or in the financial, debt, banking, capital, credit or securities markets, or in interest or exchange rates, in each case, in the United States or elsewhere in the world, (2) any changes or developments generally affecting any of the industries in which the Company or its Subsidiaries operate, (3) any actions required under this Agreement to obtain any approval or authorization under applicable Laws for the consummation of the Transactions, (4) any adoption, implementation, modification, repeal, interpretation, proposal of or other changes in any applicable Laws, decrees, Orders or other directives of any Governmental Entity or any changes in applicable accounting regulations or principles (including United States generally accepted accounting principles), or in interpretations of any of the foregoing, (5) any change in the price or trading volume of the Common Stock, in and of itself (provided, that the facts or occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of “Material Adverse Effect” may be taken into account in determining whether there has been a Material Adverse Effect), (6) any failure by the Company to meet internal or published projections, forecasts or revenue or earnings predictions, in and of itself (provided, that the facts or occurrences giving rise to or contributing to such failure that are not otherwise excluded from the definition of “Material Adverse Effect” may be taken into account in determining whether there has been a Material Adverse Effect), (7) political, geopolitical, social or regulatory conditions, including any outbreak, continuation or escalation of any military conflict, declared or undeclared war, armed hostilities, civil unrest, public demonstrations, acts of sabotage, acts of foreign or domestic terrorism, malicious cyber-enabled activities (including hacking, data loss, ransomware and other unauthorized cyber intrusions that seek to compromise the confidentiality, integrity or availability of computer or communication systems or information therein), or governmental shutdown or slowdown, or any escalation or worsening of any such conditions, (8) any natural or manmade disasters or calamities, weather conditions including hurricanes, floods, tornados, tsunamis, earthquakes and wild fires, cyber outages, or other force majeure events, or any escalation or worsening of such conditions, (9) any epidemic, pandemic or outbreak of disease (including, for the avoidance of doubt, COVID-19), or any escalation or worsening of such conditions, (10) any other regional, national or international calamity, crisis or emergency, (11) the announcement of this Agreement and the Transactions, including the initiation of litigation by any Person with respect to this Agreement, and including any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any customers, suppliers, distributors, partners or employees of the Company and its Subsidiaries due to the announcement of this Agreement or the identity of the parties to this Agreement, or the performance of this Agreement and the Transactions, (12) any action taken by the Company, or which the Company causes to be taken by any of its Subsidiaries, in each case, which is required by this Agreement or (13) any actions taken (or omitted to be taken) at the written request of, or with the written consent of, the Participating Holders; provided, in the case of clauses (1), (2), (4), (7), (8), (9) and (10), to the extent that the impact of such event, change, occurrence or effect is not disproportionately adverse to the Company and its Subsidiaries, taken as a whole, as compared to other participants in the industries in which the Company and its Subsidiaries operate (and provided further, that in

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such event, only the incremental disproportionate adverse impact shall be taken into account when determining whether there has been a “Material Adverse Effect”).

“MIP” has the meaning given in the Transaction Term Sheet attached as Exhibit A to the Transaction Support Agreement.

“Modern Slavery” means Forced Labour, debt bondage, involuntary servitude, Child Labour, and human trafficking.

“Modern Slavery Laws and Regulations” means laws and regulations related to Modern Slavery.

“Mutual Release Agreement” means that certain Mutual Release Agreement to be entered into in connection with the consummation of the Transactions, in the form attached as Schedule 3 to the Transaction Support Agreement.

“New Stockholders’ Agreement” means the stockholders’ agreement to be executed and delivered at the Closing by the Company, the Participating Holders and certain Affiliates of the Participating Holders, in the form attached hereto as Exhibit C.

“NSIA” means the UK National Security and Investment Act 2021, as amended from time to time, together with its secondary legislation.

“Order” means any order, judgment, injunction, decree, notice, ruling, decision, determination, verdict, sentence, subpoena, writ or award issued, made, entered, rendered or otherwise put into effect by or under the authority of any Governmental Entity or arbitrator (whether public or private).

“Organizational Documents” means, with respect to any Person that is an entity, such Person’s organizational documents, including the certificate or articles of organization, incorporation or partnership, bylaws, operating agreement, stockholders’ agreement or partnership agreement, joint venture and trust agreements, and any similar governing documents of any such Person, in each case including amendments, supplements and certificates of designation thereto.

“OTPP Designee” means any third party entity to be designated by OTPP and which has entered into an agreement with OTPP under which OTPP has the right to direct the voting and transfer of the shares held by such third party.

“OTPP Designee Subscription Agreement” means the subscription agreement by and between the OTPP Designee and the Company, pursuant to which the OTPP Designee will subscribe for certain shares of Class B-2 Common Stock of the Company, in the form attached to this Agreement as Exhibit D.

“OTPP Holder” means 1397225 Ontario Limited.

“Outside Date” means the “Outside Effective Date” as such term is defined in the Transaction Support Agreement, as such date may be extended from time to time in accordance with Section 4(d) of the Transaction Support Agreement.

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“Participating Holder” has the meaning set forth in the Preamble.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a Governmental Entity or any department, agency or political subdivision thereof.

“RRA Termination Agreement” means the agreement by and among the Company and the Controlling Holders (as defined in the Existing RRA), terminating the Existing RRA in its entirety concurrently with the Closing, in the form attached to this Agreement as Exhibit E.

“Securities Act” means the Securities Act of 1933, as amended.

“Securities Purchase Agreement” has the meaning set forth in the Recitals.

“Subsidiary” means, with respect to any Person, any corporation, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons shall be allocated a majority of partnership, association or other business entity gains or losses or shall be or control the managing director or general partner of such partnership, association or other business entity.

“Target Percentage” has the meaning set forth in Section 1.03.

“Tax” means any U.S. federal, state, municipal, county, local, non-U.S. or other income, gross receipts, ad valorem, franchise, profits, sales or use, transfer, registration, excise, utility, environmental, communications, real or personal property, capital unit, license, payroll, wage or other withholding, employment, social security (or similar), severance, stamp, occupation, premium, windfall profits, customs duties, unemployment, disability, value added, alternative or add on minimum, estimated or other tax of any kind whatsoever (including deficiencies, penalties, additions to tax and interest attributable thereto), whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other Person under Law (including Treasury Regulation 1.1502-6 or any other similar provision of state, local or non-U.S. Law), by contract, as a transferee or successor or otherwise.

“Tax Return” means any return, declaration, report, claim for refund or information return or statement relating to Taxes filed or required to be filed with a Governmental Entity, including any schedule or attachment thereto, and including any amendment thereof.

“Transaction Agreements” means this Agreement, the Transaction Support Agreement, the OTPP Designee Subscription Agreement, the RRA Termination Agreement, and the other agreements and documents contemplated herein and therein, each as may be amended from time to time.

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“Transactions” means the transactions contemplated by this Agreement and the other Transaction Agreements.

“UK Secretary of State” means the Secretary of State, as referred to in the NSIA.

8.02 Usage.

(a) Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

(b) Words denoting any gender shall include all genders (including the neutral gender). Where a word is defined herein, references to the singular shall include references to the plural and vice versa.

(c) A reference to any party to this Agreement or any other agreement or document shall include such party’s successors and permitted assigns.

(d) All references to “$” and dollars shall be deemed to refer to United States currency unless otherwise specifically provided.

(e) All references to a day or days shall be deemed to refer to a calendar day or calendar days, as applicable, unless otherwise specifically provided.

(f) The phrase “to the extent” means “the degree by which” and not “if”.

(g) All references to an Article, Section or Exhibit shall be deemed to refer to such Article, Section or Exhibit of this Agreement, unless otherwise specified.

(h) The terms “hereof,” “herein,” “hereunder” and derivative words refer to this entire Agreement, unless the context otherwise requires.

(i) The words “either,” “or,” “neither,” “nor” and “any” are not exclusive.

ARTICLE 9
MISCELLANEOUS

9.01 Expenses.

(a) The parties hereto shall pay all fees and expenses incurred by such party in connection with this Agreement and the Transactions or otherwise required by applicable Law; provided, that, the Company shall comply with its obligations under the Transaction Support Agreement with respect to “Transaction Fees and Expenses”, as defined therein.

(b) If any Action relating to this Agreement, the Transactions or the enforcement of any provision of this Agreement is brought against any party hereto, the prevailing party in such Action shall be entitled to recover all reasonable expenses relating thereto (including attorneys’ fees and expenses) from the party against which such Action is brought in addition to any other relief to which such prevailing party may be entitled.

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9.02 Notices. All notices hereunder shall be deemed given if in writing and delivered, by electronic mail, courier, or registered or certified mail (return receipt requested), to the following addresses (or at such other addresses as shall be specified by like notice):

 

(a)		if to the Company, to:
		KLDiscovery Inc.
		9023 Columbine Road
		Eden Prairie, MN 55347
		Attention:	Andrew Southam, General Counsel
		Email:	andrew.southam@kldiscovery.com
		with copies to (which shall not constitute notice):
		Gibson, Dunn & Crutcher LLP
		200 Park Ave.
		New York, NY 10016
		Attention:	Scott J. Greenberg
			Joe Zujkowski
			AnnElyse Scarlett Gains
			Michael G. Farag
		Email:	SGreenberg@gibsondunn.com
			JZujkowski@gibsondunn.com
			AGains@gibsondunn.com
			MFarag@gibsondunn.com

 

 

(b)		if to a Participating Holder, to the address or e-mail addresses set forth on such Participating Holder’s signature page to this Agreement, and with a copy to:
		Morrison & Foerster LLP
		250 West 55th Street
		New York, NY 10019-9601
		Attention:	James A. Newton
			Aly El Hamamsy
			Leo Martin
		Email:	jnewton@mofo.com
			aelhamamsy@mofo.com
			lmartin@mofo.com

 

 

Any notice given by delivery, mail, or courier shall be effective when received or if sent by electronic mail, when sent to the extent that an undeliverable message is not promptly received by the sender thereof.

 

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9.03 Complete Agreement. This Agreement, together with the other Transaction Agreements, contains the complete agreement among the parties hereto with respect to the subject matter hereof and supersedes any prior understandings, agreements or representations by or between such parties, whether written or oral, or any prior course of dealing among them, which may have related to the subject matter hereof in any way

9.04 Amendment and Waiver. This Agreement may be amended or any provision of this Agreement may be waived; provided, that (i) any amendment (other than any revision to Schedule I pursuant to Section 1.02 hereto) shall be binding only if such amendment is set forth in a writing executed by the party against whom such amendment shall be enforced and (ii) any waiver of any rights (but not obligations) of any party hereto under this Agreement may be waived by such party on its own behalf without the prior consent of any other party hereto and will only be effective against the party that executes such waiver. No course of dealing between or among any Persons having any interest in this Agreement shall be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any Person under or by reason of this Agreement. No waiver of any of the provisions of this Agreement shall be effective unless in writing and no waiver shall be deemed to, nor shall any waiver, constitute a waiver of any other provisions, regardless of whether similar, nor shall any waiver constitute a continuing waiver.

9.05 Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned (including by operation of law) without the prior written consent of each of other party hereto. Any purported assignment of rights or delegation of performance obligations in violation of this Section 9.05 is void.

9.06 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Agreement. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

9.07 Captions. The captions, headers and titles used in this Agreement are for convenience of reference only and do not constitute a part of this Agreement and shall not be deemed to limit, characterize or in any way affect any provision of this Agreement, and all provisions of this Agreement shall be enforced and construed as if no such caption, header or title had been used in this Agreement.

9.08 Counterparts. This Agreement may be executed in multiple counterparts (including by means of facsimile or electronically transmitted (including in .pdf or .tif formats) signature pages), all of which, taken together, shall constitute one and the same Agreement.

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9.09 Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Except as expressly stated herein (including, for purposes of Section 9.15, the Non-Recourse Parties), nothing in this Agreement, express or implied, is intended to or shall confer upon any Person other than the parties hereto or their respective successors and permitted assigns, any rights, remedies or liabilities under or by reason of this Agreement (such third party Persons specifically including employees and creditors of the Company).

9.10 Specific Performance. The parties hereto agree that irreparable damage, for which monetary relief, even if available, would not be an adequate remedy, would occur in the event that any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached, including if the parties hereto fail to take any action required of them hereunder to consummate the transactions contemplated by this Agreement. It is accordingly agreed that, prior to any valid termination of this Agreement pursuant to Section 7.01, (i) the parties hereto shall be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in the courts described in Section 9.12 without proof of damages or otherwise, this being in addition to any other remedy to which they are entitled under this Agreement, and (ii) the right of specific performance and other equitable relief is an integral part of the transactions contemplated by this Agreement and without that right, none of the parties hereto would have entered into this Agreement. The parties hereto agree not to assert that a remedy of specific performance or other equitable relief is unenforceable, invalid, contrary to law or inequitable for any reason, and not to assert that a remedy of monetary damages would provide an adequate remedy or that the parties otherwise have an adequate remedy at law. The parties hereto acknowledge and agree that any party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 9.10 shall not be required to provide any bond or other security in connection with any such order or injunction.

9.11 Governing Law. This Agreement, and all claims or causes of action (whether at law or in equity, in contract or in tort) that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance hereof, or the transactions contemplated in this Agreement, shall be governed by and construed in accordance with the laws of the State of New York, including its statutes of limitations, without giving effect to any conflict-of-laws or other rule that would result in the application of the laws of a different jurisdiction.

9.12 CONSENT TO JURISDICTION. THE PARTIES AGREE THAT JURISDICTION AND VENUE IN ANY SUIT, ACTION, OR PROCEEDING BROUGHT BY ANY PARTY PURSUANT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY SHALL PROPERLY AND EXCLUSIVELY LIE IN THE STATE AND FEDERAL COURTS SITTING IN THE BOROUGH OF MANHATTAN, NEW YORK, NEW YORK, AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT THEREFROM (THE “CHOSEN COURTS”). EACH PARTY ALSO AGREES NOT TO BRING ANY SUIT, ACTION OR PROCEEDING, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY OTHER COURT (OTHER THAN UPON THE APPEAL OF ANY JUDGMENT, DECISION OR ACTION OF ANY SUCH

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CHOSEN COURT OR, AS APPLICABLE, ANY FEDERAL APPELLATE COURT THAT INCLUDES THE STATE OF NEW YORK WITHIN ITS JURISDICTION). BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE CHOSEN COURTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY WITH RESPECT TO SUCH SUIT, ACTION OR PROCEEDING. THE PARTIES IRREVOCABLY AGREE THAT VENUE WOULD BE PROPER IN ANY CHOSEN COURT, AND HEREBY WAIVE ANY OBJECTION THAT ANY SUCH CHOSEN COURT IS AN IMPROPER OR INCONVENIENT FORUM FOR THE RESOLUTION OF SUCH SUIT, ACTION OR PROCEEDING. EACH OF THE PARTIES FURTHER IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

9.13 WAIVER OF JURY TRIAL. THE PARTIES TO THIS AGREEMENT EACH HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE IRREVOCABLE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

9.14 No Strict Construction. Notwithstanding the fact that this Agreement has been drafted or prepared by one of the parties, each of the parties hereto confirms that they and their respective counsel have reviewed, negotiated and adopted this Agreement as the joint agreement and understanding of the parties hereto and the language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any Person. In the event an ambiguity or question of intent or interpretation arises with respect to this Agreement, the terms and provisions of the execution version of this Agreement shall control and prior drafts of this Agreement shall not be considered or analyzed for any purpose (including in support of parol evidence proffered by any Person in connection with this Agreement).

9.15 Non-Recourse. All claims, obligations, liabilities, or causes of action that may be based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any manner to this Agreement, the negotiation, execution or performance of this Agreement (including any representation or warranty made in connection with or as an inducement to this Agreement) or the transactions contemplated hereby may be made only against (and are those solely of) the Persons that are expressly identified as parties to this Agreement. No other party, including any of the parties’ Affiliates or any of the parties’ or their Affiliates’ directors, officers, employees,

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incorporators, members, partners, managers, stockholders, agents, attorneys, or representatives, or any of their respective investment bankers, financial advisors or lenders (collectively, the “Non-Recourse Parties”), shall have any liabilities for any claims, causes of action, obligations, or liabilities arising under, out of, in connection with, or related in any manner to this Agreement or based on, in respect of, or by reason of this Agreement or its negotiation, execution, performance, or breach. Notwithstanding anything to the contrary in this Section ‎9.15, nothing in this Section ‎9.15 shall be deemed to limit any liabilities or obligations of, or claims against, (a) any party to any other Transaction Agreement or serve as a waiver of any right on the part of any party to such other Transaction Agreement to make any claim or take any action permitted by, pursuant to, and in accordance with the specific terms of such other Transaction Agreement or (b) any Person in respect of Fraud.

9.16 Survival. The representations and warranties set forth in Article 3 and Article 4 of this Agreement, and in any certificate delivered pursuant to this Agreement, shall terminate at the earlier of the Closing or at the time of termination of this Agreement pursuant to Section 7.01, and thereafter, subject to Section 7.02, none of the parties or any of their Affiliates shall have any liability whatsoever with respect to any such representation or warranty, and no claim for breach of any such representation or warranty, detrimental reliance or other right or remedy (whether in contract, in tort or at law or in equity) may be brought after the Closing with respect thereto against any of the parties or their Affiliates. Notwithstanding anything to the contrary in this Section ‎9.16, nothing in this Section ‎9.16 shall be deemed to limit any liabilities or obligations of, or claims against, any Person in respect of Fraud.

9.17 Securities Purchase Agreement Amendment. This Agreement shall constitute the “exchange agreement” referenced in that certain Third Amendment to Securities Purchase Agreement, dated as of July 2, 2024, by and among the Company and the purchasers identified on the signature pages thereto.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Exchange Agreement as of the date first written above.

 

COMPANY
KLDISCOVERY INC.
By:	/s/ Dawn Wilson
Name:	Dawn Wilson
Title:	CFO

 

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[Participating Holders Signature Pages on File]

 

 

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Exhibit A

 

Form of Amended Charter

 

(See attached)

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THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

KLDISCOVERY INC.

 

(Originally incorporated on August 2, 2018 under the name Pivotal Acquisition Corp.)

 

KLDiscovery Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (as it now exists or may hereafter be amended or supplemented, the “DGCL”), does hereby certify that:

FIRST: The name of the corporation is KLDiscovery Inc. (the “Corporation”).

SECOND: The registered office of the Corporation is to be located at 251 Little Falls Drive, Wilmington, New Castle County, Delaware 19808. The name of its registered agent at that address is Corporation Service Company.

THIRD: The purpose of the Corporation shall be to engage in any lawful act or activity for which corporations may be organized under the DGCL.

FOURTH:

Effective as of the effectiveness of the Third Amended and Restated Certificate of Incorporation (the “Effective Time”), each share of common stock, par value $0.0001 per share, of the Corporation (the “Old Common Stock”) issued prior to the Effective Time (including shares held by the Corporation as treasury stock) shall automatically, without any further action on the part of the Corporation or any holder of Old Common Stock, and whether or not certificates (if any) representing such shares of Old Common Stock are surrendered to the Corporation or its transfer agent, be reclassified and changed into one validly issued, fully paid and nonassessable share of Class A Common Stock (as defined below) (the “Reclassification”). Certificates dated as of a date prior to the Effective Time representing outstanding shares of Old Common Stock, if any, shall, immediately after the Effective Time, cease to represent any equity interest in the Corporation.

The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 4,501,000,000, which shall be divided into four classes as follows:

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2,500,000,000 shares shall be Class A Common Stock, par value $0.0001 per share (the “Class A Common Stock”), 1,000,000,000 shares shall be Class B-1 Common Stock, par value $0.0001 per share (the “Class B-1 Common Stock”), 1,000,000,000 shares shall be Class B-2 Common Stock, par value $0.0000001 per share (the “Class B-2 Common Stock”, and together with the Class A Common Stock and Class B-1 Common Stock, the “Common Stock”), and 1,000,000 shares shall be Preferred Stock, par value $0.0001 per share (the “Preferred Stock”). The designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation are as follows:

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FIFTH: The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

1. For purposes of the Amended and Restated Certificate, “Stockholders Agreement” means the Stockholders Agreement dated [●], by and among the Corporation, 1397225 Ontario Limited and the affiliates of MGG Investment Group LP listed on the signature pages thereto, as it may be amended from time to time by the parties thereto in accordance with its terms. The Corporation shall maintain a copy of the Stockholders Agreement at the principal offices of the Corporation and a copy thereof shall be provided free of charge to any stockholder who makes a request therefor. In addition, the Corporation shall provide prompt notice of any amendment to the Stockholders Agreement to its stockholders; provided that if the Class A Common Stock is then listed on a national securities exchange, such notice may be deemed given if disclosed in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to § 13, § 14 or § 15(d) (15 U.S.C. § 78m, § 77n or § 78o(d)) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder or the corresponding provisions of any subsequent United States federal securities laws, rules or regulations. For purposes of the Amended and Restated Certificate, a “Termination Event” shall mean termination of the Stockholders Agreement pursuant to its terms.

2. The management of the business and the conduct of the affairs of the Corporation shall be vested in the Board of Directors and shall be conducted in accordance with the

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bylaws of the Corporation (as amended from time to time, the “Bylaws”) and, prior to a Termination Event, the Stockholders Agreement. In furtherance thereof, prior to a Termination Event, the requirements for creation and composition of any committee of the Board of Directors, qualifications to be chosen, and to continue to serve, as Chair of the Board of Directors, the size of the Board of Directors and qualifications of its members, quorum and action of the Board of Directors, approvals for certain actions, and manner of choosing officers of the Corporation, terms of office of such officers, and filling of vacancies in officer positions, shall be those as are set forth in the Stockholders Agreement.

3. Notwithstanding anything in the Amended and Restated Certificate to the contrary, prior to a Termination Event, (i) the Corporation is not authorized to engage in any act or activity that would constitute a breach by the Corporation of the Stockholders Agreement, including by any amendment to the Amended and Restated Certificate (whether directly or indirectly by amendment, merger, consolidation, domestication, transfer, continuance, recapitalization, reclassification, waiver, statutory conversion, or otherwise), and (ii) the Corporation shall lack the power to engage in any such act or activity, which shall be void ab initio unless (in the case of either of clauses (i) or (ii)) such act or activity is approved, or ratified after such act or activity occurs, by the consent of the Major Stockholders (as defined in the Stockholders Agreement). For the avoidance of doubt, a breach of the Stockholders Agreement shall not occur if an act or activity would constitute a breach of a contractual right of one or more of the parties to the Stockholders Agreement and such right has been waived (either by a limited waiver or otherwise and whether before or after such act or activity occurs) by such party or parties.

4. Prior to the Termination Date, in the event of any conflict between the terms and provisions of the Amended and Restated Certificate and those contained in the Stockholders Agreement, the terms and provisions of the Stockholders Agreement shall govern and control, except as provided otherwise by mandatory provisions of the DGCL that cannot be altered as a matter of public policy. For the avoidance of doubt, the voting powers attached (as such term “attached” is used in the Pension Benefits Act Regulations (Ontario)) to each share of stock (including the power to vote on the election and removal of directors) shall be those as set forth in the Amended and Restated Certificate, and provisions in the Stockholders Agreement obligating parties thereto to exercise those voting powers as required therein shall not be deemed to change the voting powers so attached to each share of stock as set forth in the Amended and Restated Certificate.

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SIXTH:

A. The personal liability of the directors and officers of the Corporation to the Corporation or its stockholders for monetary damages for breach of his or her fiduciary duty as director or officer is hereby eliminated to the fullest extent permitted by the DGCL.

B. The Corporation, to the full extent permitted by Section 145 of the DGCL, shall indemnify, advance expenses and hold harmless all persons whom it may indemnify pursuant thereto (for the avoidance of doubt, including but not limited to the Corporation’s current and former directors and officers). The Corporation may, by action of the Board of Directors, provide rights to indemnification and to advancement of expenses to such other employees or agents of the Corporation or its subsidiaries to such extent and to such effect as the Board of Directors shall determine to be appropriate and authorized by the DGCL. Expenses (including attorneys’ fees) incurred by a current or former officer or director of the Corporation in defending any civil, criminal, administrative, or investigative action, suit or proceeding for which such officer or director may be entitled to indemnification hereunder shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized hereby.

C. If a claim under Article SIXTH, Section B is not paid in full by the Corporation within 60 days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 20 days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. To the fullest extent permitted by law, if successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses

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pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) in any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set forth in the DGCL. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article SIXTH or otherwise shall be on the Corporation.

D. Any amendment, repeal or modification of this Article SIXTH, or the adoption of any provision of the Amended and Restated Certificate inconsistent with this Article SIXTH, shall not adversely affect any right or protection existing hereunder immediately prior to such amendment, repeal, modification, or adoption (for the avoidance of doubt, including but not limited to those rights and protections of current and former directors and officers). If the DGCL is amended after approval by the stockholders of this Article SIXTH to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of a director or officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL as so amended.

SEVENTH: Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery (the “Chancery Court”) of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the Superior Court of the State of Delaware, or if such other court does not have jurisdiction, the federal district court for the District of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring: (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee, agent or stockholder of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation or its directors, officers or other employees, agents, or stockholders, arising pursuant to any provision of the DGCL or the Amended and Restated Certificate or the Bylaws (in each case, as may be amended from time to time) or (iv) any action asserting a claim against the Corporation or its directors, officers or other employees, agents, or stockholders, governed by the internal affairs doctrine, in each such case, subject to said court having personal

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jurisdiction over the indispensable parties named as defendants therein. Notwithstanding the foregoing, the provisions of this Article SEVENTH will not apply to suits brought to enforce any liability or duty created by the Securities Exchange Act of 1934, as amended, or any other claim for which the federal courts have exclusive jurisdiction.

EIGHTH: Subject, prior to the Termination Date, to the terms of the Stockholders Agreement and to any other applicable provisions of the Amended and Restated Certificate, from time to time any of the provisions of the Amended and Restated Certificate may be amended, altered, changed or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the stockholders of the Corporation by the Amended and Restated Certificate are granted subject to the provisions of this Article EIGHTH. Notwithstanding any other provision of the Amended and Restated Certificate, and in addition to any vote required by applicable law and any approval required under the Stockholders Agreement, prior to a Termination Event, the Corporation shall not amend, alter or repeal, or adopt any provision inconsistent with, the following provisions, whether directly or indirectly by amendment, merger, consolidation, domestication, transfer, continuance, recapitalization, reclassification, waiver, statutory conversion, or otherwise, without, in addition to any other vote required by the DGCL or the Amended and Restated Certificate, obtaining the affirmative vote of each of the Major Stockholders: (i) Article FIFTH, Section A of the Amended and Restated Certificate, or (ii) any other provision of the Amended and Restated Certificate that references the Stockholders Agreement. If any provision or provisions of this Article EIGHTH shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article EIGHTH (including, without limitation, each portion of any sentence of this Article EIGHTH containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article EIGHTH.

NINTH:

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TENTH: The Corporation expressly elects not to be governed by Section 203 of the DGCL.

ELEVENTH: If any provision or provisions of the Amended and Restated Certificate shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of the Amended and Restated Certificate (including, without limitation, each portion of any sentence of the Amended and Restated Certificate containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article ELEVENTH.

 

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IN WITNESS WHEREOF, the Corporation has caused this Third Amended and Restated Certificate of Incorporation to be signed by the undersigned officer on this [●].

 

	By:
	Name:
	Title:

 

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Exhibit B

 

Form of Amended Bylaws

 

(See attached)

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Second Amended and Restated Bylaws of KLDiscovery, Inc.

(the “Corporation”)

 

Meetings of stockholders shall be held at such place, if any, either within or without the State of Delaware, as designated by the Board of Directors of the Corporation (the “Board”). The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the General Corporation Law of the State of Delaware (the “DGCL”). In the absence of any such designation or determination, a meeting of stockholders shall be held at the principal executive office of the Corporation.

An annual meeting of stockholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place, if any, on such date, and at such time as the Board (or its designee) shall each year fix, which date shall be within thirteen (13) months of the last annual meeting of stockholders or the last action by written consent to elect directors in lieu of an annual meeting, as applicable.

Special meetings of stockholders, for any purpose or purposes prescribed in the notice of the meeting, may be called by the Board (or its designee) and shall be held at such place, if any, on such date, and at such time as they or such person shall fix.

Notice of the place, if any, date, and time of all meetings of the stockholders, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, and the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of the meeting, shall be given, not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting, except as otherwise provided herein or required by law (meaning, here and hereinafter, as required from time to time by the DGCL or the Third Amended and Restated Certificate of Incorporation of the Corporation (including, for the avoidance of doubt, any certificate of designations relating to any series of preferred stock) (as amended or restated from time to time, the “Certificate of Incorporation”).

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When any meeting of stockholders is adjourned to another time or place, if any, (including an adjournment taken to address a technical failure to convene or continue a meeting using remote communication), notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken, displayed, during the time scheduled for the meeting, on the same electronic network used to enable stockholders and proxyholders to participate in the meeting by means of remote communication, or set forth in the notice of meeting; provided, however, that if the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix a new record date for notice of such adjourned meeting, in accordance with Section 213 of the DGCL, and shall give notice of the adjourned meeting, in accordance with Section 222 of the DGCL, to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting. At any adjourned meeting, any business may be transacted which might have been transacted at the original meeting.

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At any meeting of stockholders, the holders of a majority of the voting power of all of the shares of stock outstanding and entitled to vote at the meeting, present in person (or by remote communication, if applicable), or represented by proxy, shall constitute a quorum for all purposes, unless or except to the extent that the presence of a larger number is required by law. Where a separate vote by a class or classes or series is required, the holders of a majority of the voting power of the outstanding shares of such class or classes or series, present in person (or by remote communication, if applicable) or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter.

If a quorum shall fail to attend any meeting, the meeting may be adjourned to another place, if any, date or time by the chairperson of the meeting or by the affirmative vote of the holders of a majority of the voting power of shares of stock entitled to vote thereat who cast a vote “for” or “against” such adjournment (excluding abstentions and broker non-votes).

Such person as the Board may have designated or, in the absence of such a person, the Chairperson of the Board (the “Chairperson”) or, in the Chairperson’s absence, the Chief Executive Officer of the Corporation or, in the Chief Executive Officer’s absence, such person as may be chosen by the affirmative vote of the holders of a majority of the voting power of shares of stock entitled to vote thereat who cast a vote “for” or “against” such matter (excluding abstentions and broker non-votes), shall call to order any meeting of the stockholders and act as chairperson of the meeting. In the absence of the Secretary of the Corporation, the secretary of the meeting shall be such person as the chairperson of the meeting appoints.

The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to him or her in order. Unless and to the extent determined by the Board or the chairperson of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. The chairperson shall have the power to adjourn the meeting to another place, if any, date and time.

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At any meeting of the stockholders, every stockholder entitled to vote thereat may vote in person (or by remote communication, if applicable) or by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting. Any copy, facsimile telecommunication or other reliable reproduction of the document (including electronic transmission) created pursuant to this paragraph may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

The Corporation may, and to the extent required by law, shall, in advance of any meeting of stockholders, appoint one (1) or more inspectors to act at the meeting and make a written report thereof. The Corporation may designate one (1) or more alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the chairperson of the meeting may, and to the extent required by law, shall appoint one (1) or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector’s ability.

All elections of directors shall be determined by a plurality of the votes of shares present in person (or by remote communication, if applicable) or represented by proxy at the meeting and entitled to vote on such election of directors. Except as otherwise provided in the Certificate of Incorporation, the Stockholders Agreement, dated [●], by and among the Corporation, OTPP and the affiliates of MGG listed on the signature pages thereto, as amended, supplemented, restated or otherwise modified from time to time by the parties thereto (the “Stockholders Agreement”), or these Bylaws, or otherwise required by law, all other matters shall be determined by the affirmative vote of the holders of a majority of the votes cast “for” or “against” (excluding abstentions and broker non-votes).

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The Corporation shall prepare, no later than the ten (10th) day before each meeting of stockholders, a complete list of stockholders entitled to vote at any meeting of stockholders, provided, however, if the record date for determining the stockholders entitled to vote is less than ten (10) days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth (10th) day before the meeting date, arranged in alphabetical order, and showing the address of each such stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of at least ten (10) days ending on the day before the meeting date: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation.

Notwithstanding anything contrary in these Bylaws, any action required by the DGCL to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation in the manner required by Section 228 of the DGCL. No consent shall be effective to take the corporate action referred to therein unless consents signed by a sufficient number of holders to take such action are delivered to the Corporation in the manner required by Section 228 of the DGCL within sixty (60) days of the first date on which a consent is so delivered to the Corporation. Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing. Any person executing a consent may provide, whether through instruction to an agent or otherwise, that such a consent will be effective at a future time, including a time determined upon the happening of an event, occurring no later than sixty (60) days after such instruction is given or such provision is made, if evidence of such instruction or provision is provided to the Corporation. Unless otherwise provided, any such consent shall be revocable prior to its becoming effective.

Irrespective of Section 116 of the DGCL, whenever this Article I requires one or more persons (including a record or beneficial owner of stock) to deliver a document or information to the Corporation or any officer, employee or agent thereof (including any notice, request, questionnaire, revocation, representation, letter or other document or agreement), such document or information must be in writing exclusively (and not in an electronic transmission) and delivered

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exclusively by hand (including, without limitation, overnight courier service) or by certified or registered mail, return receipt requested.

The number of directors who shall constitute the Whole Board shall be seven (7) unless otherwise changed in conformity with the Stockholders Agreement. For purposes of these Bylaws, the term “Whole Board” shall mean the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships. Each director shall be elected for a term of one (1) year and hold office until such director’s successor is elected and qualified or until such director’s earlier resignation or removal.

Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled only by stockholders and not directors.

Regular meetings of the Board shall be held at such place or places, if any, on such date or dates, and at such time or times as shall have been established by the Board and publicized among all directors. A notice of each regular meeting shall not be required.

Special meetings of the Board may be called by one-third (1/3) of the directors then in office (rounded up to the nearest whole number) or by the Chairperson or the Chief Executive Officer and shall be held at such place, if any, on such date, and at such time as they or such person shall fix. Notice of the place, if any, date, and time of each such special meeting shall be given to each director by whom it is not waived by mailing written notice not less than five (5) days before the meeting or by electronic transmission (including facsimile) of the same not less than twenty-four (24) hours before the meeting. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting.

The requirements for a quorum at any meeting of the Board and for Board action shall be as set forth in the Stockholders Agreement.

Members of the Board, or of any committee designated by the Board, may participate in a meeting of such Board or committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

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Action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if all members thereof consent thereto in writing or by electronic transmission, and after the action is taken, the consent or consents relating thereto shall be filed with the minutes of proceedings of the Board, or committee thereof, in the same paper or electronic form as the minutes are maintained. Any person (whether or not then a director) may provide, whether through instruction to an agent or otherwise, that a consent to action will be effective at a future time (including a time determined upon the happening of an event), no later than sixty (60) days after such instruction is given or such provision is made and such consent shall be deemed to have been given for purposes of this Section 7 at such effective time so long as such person is then a director and did not revoke the consent prior to such time. Any such consent shall be revocable prior to its becoming effective.

Directors, as such, may receive, pursuant to resolution of the Board, fixed fees and other compensation for their services as directors, including, without limitation, their services as members of committees of the Board.

The Board may, subject to the terms of the Stockholders Agreement, designate committees of the Board, with such lawfully delegable powers and duties as it thereby confers, to serve at the pleasure of the Board and shall, for those committees and any others provided for herein, elect a director or directors to serve as the member or members thereof, designating, if it desires, other directors as alternate members who may replace any absent or disqualified member at any meeting of the committee.

The officers of the Corporation shall consist of a Chief Executive Officer, a President, one (1) or more Vice Presidents, a Secretary, a Treasurer and such other officers as may from time to time be appointed by the Board (or its designee). The manner of choosing officers of the Corporation, terms of office of such officers, and filling of vacancies in officer positions, shall be those as are set forth in the Stockholders Agreement. Any number of offices may be held by the same person.

The Chief Executive Officer shall be the chief executive officer of the Corporation. Subject to the provisions of these Bylaws and the Stockholders Agreement, and to the direction of the Board, the Chief Executive Officer shall have the responsibility for the general management and control of the business and affairs of the Corporation and shall perform all duties and have all

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powers which are commonly incident to the office of chief executive officer or which are delegated to such person by the Board.

Subject to the provisions of these Bylaws and the Stockholders Agreement, and to the direction of the Board, the President shall perform all duties and have all powers which are commonly incident to the office of president or which are delegated to him or her by the Board. The President shall perform the duties and exercise the powers of the Chief Executive Officer and of the Treasurer in the event of a vacancy in the office of Chief Executive Officer or Treasurer, or in the event of either such person’s absence or disability.

Each Vice President shall have such powers and duties as may be delegated to him or her by the Board in conformity with the Stockholders Agreement. One (1) Vice President may be designated by the Board (or its designee) to perform the duties and exercise the powers of the President in the event of the President’s absence or disability.

The Treasurer shall have the responsibility for maintaining the financial records of the Corporation. The Treasurer shall make such disbursements of the funds of the Corporation as are authorized and shall render from time to time an account of all such transactions and of the financial condition of the Corporation. The Treasurer shall also perform such other duties as the Board (or its designee) may from time to time prescribe in conformity with the Stockholders Agreement.

The Secretary shall issue all authorized notices for, and shall keep minutes of, all meetings of the stockholders and the Board. The Secretary shall have charge of the corporate books, shall have power to sign all stock certificates (if any), and shall perform such other duties as the Board (or its designee) may from time to time prescribe in conformity with the Stockholders Agreement.

The Board (or its designee) may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof.

Unless otherwise directed by the Board, the Chief Executive Officer, or any officer of the Corporation authorized by the Chief Executive Officer, shall have power to vote and otherwise act on behalf of the Corporation, in person (or by remote communication, if applicable) or by proxy, at any meeting of equityholders, or with respect to any action of equityholders, of any other entity in which this Corporation may hold securities and otherwise to exercise any and all

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rights and powers which this Corporation may possess by reason of its ownership of securities in such other entity.

By adopting these Bylaws, the Board hereby provides that shares of stock of the Corporation shall be uncertificated.

Transfers of stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by transfer agents designated to transfer shares of the stock of the Corporation. The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes or series of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.

In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance with the foregoing provisions of this Section 3 at the adjourned meeting.

In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

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In order that the Corporation may determine the stockholders entitled to consent to corporate action without a meeting in accordance with Section 228 of the DGCL, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall be not more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board. If no record date has been fixed by the Board, the record date for determining stockholders entitled to consent to corporate action without a meeting, when no prior action by the Board is required by the DGCL, shall be the first date on which a signed consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with Section 228(d) of the DGCL. If no record date has been fixed by the Board and prior action by the Board is required by the DGCL, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board adopts the resolution taking such prior action.

The issue, transfer, conversion and registration of shares of stock shall be governed by such other regulations as the Board (or its designee) may establish.

Section 5. Registered Stockholders.

The Corporation (i) shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner and (ii) shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware.

Notices may be given in any manner permitted under Section 232 of the DGCL.

Whenever notice is required to be given under any provision of the DGCL or the Certificate of Incorporation or Bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the Certificate of Incorporation or the Bylaws.

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In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board (or its designee).

The Board may provide a suitable seal, containing the name of the Corporation, which seal shall be in the charge of the Secretary. If and when so directed by the Board (or its designee), duplicates of the seal may be kept and used by any officer.

Each director and each member of any committee designated by the Board shall, in the performance of such director’s duties, be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board, or by any other person as to matters which such director reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

The fiscal year of the Corporation shall be as fixed by the Board.

Except as otherwise expressly provided herein, in applying any provision of these Bylaws which requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.

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These Bylaws may be amended or repealed by the Board at any meeting or by the stockholders at any meeting, subject to the terms of the Certificate of Incorporation and Stockholders Agreement.

 

107562784.2

 

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Exhibit C

 

Form of New Stockholders’ Agreement

 

(See attached)

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Stockholders Agreement

 

by and among

 

KLDiscovery Inc.

 

and

 

The Major Stockholders Named Herein

 

dated as of

 

[●]

 

 

 

 

 

 

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TABLE OF CONTENTS

 

1.	Definitions		1
2.	Board Issues		8
	2.1	Size of Board	8
	2.2	Composition of Board	8
	2.3	Failure to Designate a Director Candidate; Vacancies	8
	2.4	Removal of Board Members	9
	2.5	Notwithstanding anything to the contrary in this Agreement	9
	2.6	No Liability for Election of Designated or Approved Directors	10
	2.7	Stockholder Action	10
	2.8	Quorum and Board Action	10
	2.9	Chairperson of the Board	10
3.	Covenants		10
	3.1	Consent Rights	10
	3.2	Compliance with Law	13
4.	Annual Budget and Business Plan		14
5.	Transfer Restriction; Cooperation on Certain Transfers		14
6.	Drag-Along Right		15
	6.1	Actions to be Taken	15
	6.2	Conditions	16
	6.3	Company Obligations	18
7.	Forced Sale Rights		18
	7.1	Initiation of Sale Process	18
	7.2	Specific Company Obligations	18
	7.3	Board Approval of the Terms and Conditions of a Proposed Sale of the Company	19
	7.4	Appointment and Authority of Holder Representative	20
8.	Remedies		20
	8.1	Irrevocable Proxy and Power of Attorney	20
	8.2	Specific Enforcement	21
	8.3	Remedies Cumulative	21
9.	Term		21

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10.	30% Rule		21
11.	Miscellaneous		22
	11.1	Representations and Warranties	22
	11.2	Additional Parties	23
	11.3	Successors and Assigns	23
	11.4	Governing Law; Forum; Waiver of Jury Trail	23
	11.5	Notices	24
	11.6	Consent Required to Amend, Modify, Terminate or Waive	24
	11.7	Delays or Omissions	24
	11.8	MGG Representative	25
	11.9	Severability	25
	11.10	Entire Agreement	25
	11.11	Share Legend	25
	11.12	Stock Splits, Dividends and Recapitalizations	26
	11.13	Manner of Voting	26
	11.14	Further Assurances	26
	11.15	Costs of Enforcement	26
	11.16	No Third-Party Beneficiaries	26
	11.17	Construction	26
	11.18	Counterparts	27

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STOCKHOLDERS AGREEMENT

This Stockholders Agreement (this “Agreement”) is made as of [●] (the “Effective Time”), by and among (i) KLDiscovery Inc., a Delaware corporation (the “Company”), (ii) the “OTPP Party” listed on the signature pages hereto (“OTPP”), and (iii) the “MGG Parties” listed on the signature pages hereto (collectively, “MGG”, and together with OTPP, the “Major Stockholders” and each, a “Major Stockholder”).

RECITALS

WHEREAS, concurrently with the execution of this Agreement, the Company and the Major Stockholders are effecting an out-of-court privately negotiated exchange pursuant to which, among other things, the Major Stockholders will exchange 100% of the 8% convertible debentures due in 2024 issued by the Company and held by them for shares of Common Stock (the “Exchange”); and

WHEREAS, in order to induce each Major Stockholder to effect the Exchange, each other Major Stockholder and the Company have agreed to the covenants and other agreements contained herein.

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the sufficiency of which is acknowledged by the Parties, the Parties agree as follows:

1. Definitions. For purposes of this Agreement:

(a) “30% Rule” means the restrictions set out in section 11 of Schedule III of the Pension Benefits Standards Regulations, 1985 (Canada), as incorporated by reference in Section 79 of regulation 909 under Section 62 of the Pension Benefits Act (Ontario), which prohibits Ontario Teachers’ Pension Plan Board and its Affiliates from, directly or indirectly, investing the moneys of the plan in the securities of a corporation to which are attached more than 30% of the votes that may be cast to elect or remove the directors of a corporation, or any amendment or replacement of that rule.

(b) “30% Rule Designee” shall mean initially Ferndale3 Corp., any Permitted Transferee of such Person, and any other Person that OTPP may designate, so long as OTPP has the contractual right to direct the voting and transfer of the Shares held by such 30% Rule Designee.

(c) “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including, without limitation, any general partner, managing member, officer, director or trustee of such Person, or any venture capital fund or other investment fund now or hereafter existing that is controlled by one or more general partners, managing members or investment advisers of, or shares the same management company or investment adviser with, such Person.

(d) “Agreement” has the meaning set forth in the Preamble.

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(e) “Anti-Corruption Laws” means laws, regulations or orders relating to anti-bribery or anti-corruption including, without limitation, the Prevention of Corruption Act 1988, the Foreign Contribution (Regulation) Act 2010, The Indian Penal Code 1860, the PRC Criminal Law (revised in 2020), the PRC Anti Unfair Competition Law (revised in 2019) the Interim Rules of the State Administration for Industry and Commerce on Prohibition of Commercial Bribery, the U.S. Foreign Corrupt Practices Act of 1977, as amended from time to time, the UK Bribery Act of 2010, the Canadian Corruption of Foreign Public Officials Act, relevant provisions of the Canadian Criminal Code, and all applicable national and international laws enacted to implement the OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions.

(f) “Anti-Money Laundering Laws” means laws, regulations, rules, or guidelines relating to money laundering, countering the financing of terrorism, and financial recordkeeping, including, without limitation, those implemented and administered by competent authorities in the European Union and its Member States, the United Kingdom, the United States, Canada, China, India and all other jurisdictions in which the Company and its Subsidiaries conduct business or own assets.

(g) “Applicable Entity” has the meaning set forth in Section 10(b).

(h) “Board” means the board of Directors of the Company.

(i) “Board Shares” means shares of Class A Common Stock and shares of Class B-2 Common Stock.

(j) “Budget” has the meaning set forth in Section 4(a).

(k) “Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in New York, New York, United States or Toronto, Ontario, Canada.

(l) “Business Plan” has the meaning set forth in Section 4(a).

(m) “Bylaws” means the Second Amended and Restated Bylaws of the Company, as they may be subsequently amended or amended and restated.

(n) “Capital Stock” means the Common Stock and Preferred Stock.

(o) “CEO” has the meaning set forth in Section 2.2(a).

(p) “CEO Director” has the meaning set forth in Section 2.2(a).

(q) “Certificate of Incorporation” means the Third Amended and Restated Certificate of Incorporation of the Company, as it may be subsequently amended or amended and restated.

(r) “Change of Control” means a Change of Control Merger or Change of Control Sale.

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(s) “Change of Control Merger” means a merger, consolidation, statutory conversion, transfer, domestication, or continuance in which the Company is a constituent party or a Subsidiary of the Company is a constituent party and the Company issues shares of its capital stock pursuant to such merger, consolidation, statutory conversion, transfer, domestication, or continuance, except any such merger, consolidation, statutory conversion, transfer, domestication, or continuance in which the shares of Capital Stock of the Company outstanding immediately prior to such merger, consolidation, statutory conversion, transfer, domestication, or continuance continue to represent, or are converted into or exchanged for shares of capital stock or other equity interests that represent, immediately following such merger, consolidation, statutory conversion, transfer, domestication, or continuance, more than 50% of the total voting power of the surviving or resulting corporation or entity generally entitled to vote on the election of the board of directors or similar body of such Person, or, if the surviving or resulting corporation or entity is a wholly owned Subsidiary of another corporation or entity immediately following such merger, consolidation, statutory conversion, transfer, domestication, or continuance, of the parent corporation or entity of such surviving or resulting corporation or entity.

(t) “Change of Control Sale” means (1) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any Subsidiary of the Company, of all or substantially all the assets of the Company and its Subsidiaries taken as a whole, or (2) the sale, lease, transfer, exclusive license or other disposition (whether by merger, consolidation, statutory conversion, domestication, continuance or otherwise, and whether in a single transaction or a series of related transactions) of one or more Subsidiaries of the Company if substantially all of the assets of the Company and its Subsidiaries taken as a whole are held by such Subsidiary or Subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned Subsidiary of the Company.

(u) “Child Labour” means: (i) “Child Labour” as defined in the Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act; or (ii) any employment below the minimum age as established in national legislation (as set forth in ILO Convention 138 on the Minimum Age for Admission to Employment), hazardous unpaid household services, and the worst forms of child labour (as set forth in ILO Convention 182 on the Worst Forms of Child Labour).

(v) “Class A Common Stock” means the Class A Common Stock, par value $0.0001 per share, of the Company.

(w) “Class B-1 Common Stock” means the Class B-1 Common Stock, par value $0.0001 per share, of the Company.

(x) “Class B-2 Common Stock” means the Class B-2 Common Stock, par value $0.0000001 per share, of the Company.

(y) “Common Stock” means the Class A Common Stock, Class B-1 Common Stock and Class B-2 Common Stock.

(z) “Company” has the meaning set forth in the Preamble.

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(aa) “Company Group” means the Company and its direct and indirect Subsidiaries.

(bb) “control,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting stock, by contract or otherwise.

(cc) “Cutoff Date” has the meaning set forth in Section 7.1(c).

(dd) “Deal Counsel” has the meaning set forth in Section 7.2(a).

(ee) “Director” means any member of the Board.

(ff) “Disqualification Event” has the meaning set forth in Section 2.5.

(gg) “Disqualified Designee” has the meaning set forth in Section 2.5.

(hh) “DGCL” means the Delaware General Corporation Law.

(ii) “Electing Holder” shall have the meaning set forth in Section 7.1(a).

(jj) “Effective Time” has the meaning set forth in the Preamble.

(kk) “Exchange” has the meaning set forth in the Recitals.

(ll) “Existing Indebtedness” has the meaning set forth in Section 3.1(d).

(mm) “Financial Advisor” has the meaning set forth in Section 7.2(a).

(nn) “Forced Labour” means: (i) “Forced Labour” as defined in the Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act; or (ii) any work or service that is exacted from a person under the threat of penalty, and for which that person has not offered himself or herself voluntarily.

(oo) “GAAP” means United States generally accepted accounting principles.

(pp) “General Voting Shares” means Shares other than the Class B-2 Common Stock.

(qq) “Global Trade Laws and Regulations” means export controls, and trade, economic and financial sanctions laws, regulations, embargoes, and restrictive measures administered or enforced by the United States, including without limitation the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) and the U.S. Department of Commerce, the United Kingdom, the European Union, Canada, United Nations, India and all relevant regulations made under any of the foregoing; and other similar applicable economic and trade sanctions, export or import control laws.

(rr) “Holder Representative” has the meaning set forth in Section 7.1(a).

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(ss) “Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships, of a natural person referred to herein.

(tt) “Indebtedness” means, with respect to any Person, any liability of such Person in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments and shall also include (a) any liability of such Person under any agreement related to the fixing of interest rates on any Indebtedness and (b) any capitalized lease obligations of such Person (if and to the extent the same would appear on a balance sheet of such Person prepared in accordance with GAAP).

(uu) “Independent” means an individual who the Board (or committee of the Board designated by the Board) determines has no relationship with the Company or any Major Stockholder that would interfere with the exercise of independent judgment in carrying out the responsibilities of a Director.

(vv) “Independent Directors” has the meaning set forth in Section 2.2(d).

(ww) “Major Stockholder” has the meaning set forth in the Preamble.

(xx) “MIP” means the Company’s Management Incentive Plan.

(yy) “MGG” has the meaning set forth in the Preamble.

(zz) “MGG Directors” has the meaning set forth in Section 2.2(c).

(aaa) “Modern Slavery” means Forced Labour, debt bondage, involuntary servitude, Child Labour, and human trafficking.

(bbb) “Modern Slavery Laws and Regulations” means laws and regulations related to Modern Slavery.

(ccc) “Nasdaq” means that Nasdaq Global Select Market.

(ddd) “NYSE” means the New York Stock Exchange.

(eee) “OFAC” has the meaning set forth in Section 1(pp).

(fff) “OTPP” has the meaning set forth in the Preamble.

(ggg) “OTPP Directors” has the meaning set forth in Section 2.2(b).

(hhh) “Party” means the Company, the Major Stockholders, and any other Person that becomes a party to this Agreement pursuant to Section 11.2.

(iii) “Permitted Transfer” means: (i) in the case of a Transferor that is an entity (other than a Transfer contemplated by subsection (iii) of this definition, which shall be governed by that subsection), a Transfer by such Transferor to its Affiliates, (ii) in the case of a Transferor

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that is a natural person, (x) a Transfer made for bona fide estate planning purposes, either during his or her lifetime or on death by will or intestacy to an Immediate Family Member, or any other relative approved by the Board, or any custodian or trustee of any trust, partnership or limited liability company for the benefit of, or the ownership interests of which are owned wholly by, such Transferor or any such Immediate Family Member or Board-approved relative, or (y) a Transfer by way of gift to any Immediate Family Member of such Transferor approved by the Board; provided, in each of (i) and (ii), the Transferor shall deliver prior written notice to the Company and each Major Stockholder of such Transfer and the applicable Transferee(s) shall, as a condition to such Transfer, take the actions contemplated by Section 11.2(b); and provided, such Transfer is made pursuant to a transaction in which there is no consideration actually paid for or as a result of such Transfer, and (iii) a Transfer between OTPP or any 30% Rule Designee, on the one hand, and any other 30% Rule Designee, on the other; provided that in the case of clause (iii), the Transferor shall deliver prior written notice to the Company and each Major Stockholder, but for the avoidance of doubt, the 30% Rule Designee shall not, as a condition of such Transfer, be required to take the actions contemplated in Section 11.2(b), and provided in the case of clause (iii) such Transfer is made pursuant to a transaction in which the consideration actually paid for or as a result of such Transfer is equal to the consideration initially paid for the Shares subject of such Transfer.

(jjj) “Permitted Transferee” means any Transferee to whom Shares are Transferred in a Permitted Transfer.

(kkk) “Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

(lll) “Preferred Stock” means the Preferred Stock, par value $0.0001 per share, of the Company.

(mmm) “Proposed Sale” has the meaning set forth in Section 6.2.

(nnn) “Proxyholder” has the meaning set forth in Section 8.1.

(ooo) “Qualified Direct Listing” means an initial listing of any class of common stock of the Company (which need not be Class A Common Stock, Class B-1 Common Stock or Class B-2 Common Stock) on NASDAQ or the NYSE by means of an effective registration statement filed by the Company with the SEC, without a related underwritten offering of such common stock, for which the Board, in its sole discretion, determines that the Company is expected to have a market capitalization equal to or greater than $375,000,000 at any time on the first day of trading.

(ppp) “Qualified IPO” means the sale of shares of any class of common stock of the Company (which need not be Class A Common Stock, Class B-1 Common Stock or Class B-2 Common Stock) to the public in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act, resulting in at least $75,000,000 of gross proceeds, net of the underwriting discount and commissions, to the Company and in connection with such offering the shares of common stock are listed for trading on NASDAQ or the NYSE.

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(qqq) “Restricted Country” means any country or geographic region subject to comprehensive economic sanctions administered by OFAC which currently includes: Crimea, Cuba, the so-called Donetsk and Luhansk People’s Republics, Iran, North Korea, and Syria.

(rrr) “Sale of the Company” means any of: (1) a Stock Sale or (2) a Change of Control.

(sss) “Sale Notice” has the meaning set forth in Section 7.1(a).

(ttt) “Sale Process” has the meaning set forth in Section 7.1(a).

(uuu) “SEC” means the United States Securities and Exchange Commission.

(vvv) “Securities Act” means the Securities Act of 1933.

(www) “Shares” means any shares of Capital Stock, by whatever name called, now owned or subsequently acquired by a Stockholder, however acquired, whether through stock splits, stock dividends, reclassifications, recapitalizations, conversions, similar events or otherwise.

(xxx) “Stock Sale” means a transaction or series of related transactions in which a Person, or a group of related Persons, acquires from stockholders of the Company Shares representing more than fifty percent (50%) of the outstanding voting power of the Company generally entitled to vote on the election of the Board.

(yyy) “Stockholder” means the Major Stockholders, the 30% Rule Designee, and any other Person (other than, for greater certainty, the 30% Rule Designee) that becomes a party to this Agreement pursuant to Section 11.2.

(zzz) “Stockholder Representative” has the meaning set forth in Section 6.1(f).

(aaaa) “Subsidiary” means, with respect to any Person, any corporation, limited liability company, joint venture, partnership or other entity of which such Person (a) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (i) the total combined voting power of all classes of voting securities of such entity, (ii) the total combined equity interests of such entity, or (iii) the capital or profit interests, in the case of a partnership; or (b) otherwise has the power to vote, either directly or indirectly, sufficient securities to elect a majority of the board of directors or similar governing body of such entity.

(bbbb) “Third-Party Transferee” has the meaning set forth in Section 5(c).

(cccc) “Transaction Support Agreement” means that certain Transaction Support Agreement dated as of [●], by and among the Company, its direct and indirect affiliated entities and the various other consenting stakeholders identified therein (including all exhibits, annexes, and schedules thereto, as amended, restated, amended and restated, supplemented, or otherwise modified from time to time in accordance with its terms).

(dddd) “Transfer” means any direct or indirect transfer, whether by sale, assignment, encumbrance, hypothecation, pledge, conveyance in trust, gift, bequest, devise or descent, by operation of law or by any other transfer or disposition of any kind, including to any

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receivers, creditors, trustees in bankruptcy or other insolvency proceeding, including such transfer of any beneficial interest therein; provided, that with respect to each Major Stockholder, the following will not be deemed to be a Transfer of any Shares: (i) a sale, transfer or issuance of limited partnership interests or other equity interests or securities of such Major Stockholder or its ultimate parent entity, or (ii) a sale, transfer or issuance of limited partnership interest or other equity interests or securities of any investment fund, intermediate holding company, co-investment aggregator or similar entity that is an Affiliate of such Major Stockholder (or any successor thereto or any investment vehicle that is organized to make investments in parallel, or to co-invest, with any of the foregoing) so long as following such sale, transfer or issuance, such entity remains an Affiliate of such Major Stockholder.

(eeee) “Transferee” means a Person receiving shares in a Permitted Transfer.

(ffff) “Transferor” means a Person Transferring shares in a Permitted Transfer.

(gggg) Any reference in this Agreement to “vote” or “voting” or similar language shall include, without limitation, action by written consent of the stockholders.

2. Board Issues.

2.1 Size of Board. The Parties shall take all necessary action so that the Board will consist of seven (7) Directors.

2.2 Composition of Board. Each Stockholder agrees to vote, or cause to be voted, all Board Shares owned by such Stockholder, or over which such Stockholder has voting control, from time to time and at all times, in whatever manner as shall be necessary to ensure that at each annual or special meeting of stockholders at which an election of Directors is held, or pursuant to any written consent of the stockholders, the following individuals shall be elected to the Board:

(a) the Company’s Chief Executive Officer (the “CEO” and in his or her capacity as such, the “CEO Director”), who as of the Effective Time is Mr. Christopher Weiler, provided that if for any reason the CEO Director ceases to serve as the CEO, each of the Stockholders shall promptly vote their respective Board Shares (i) to remove the former CEO from the Board if such person has not resigned from the position of CEO Director and (ii) to elect the then-current CEO to serve as the new CEO Director;

(b) two individuals designated for nomination from time to time by OTPP (the “OTPP Directors”);

(c) two individuals designated for nomination from time to time by MGG (the “MGG Directors”); and

(d) two individuals who are Independent and who are designated for nomination by mutual agreement of the Major Stockholders (the “Independent Directors”).

In furtherance of the foregoing, OTPP and MGG shall at all times have the right to designate individuals for nomination to the Board at any time.

2.3 Failure to Designate a Director Candidate; Vacancies.

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(a) In the absence of any designation from the Person(s) with the right to designate a Director for nomination as specified in Section 2.2, each Stockholder agrees to vote, or cause to be voted, all Board Shares owned by such Stockholder, or over which such Stockholder has voting control, to reelect the individual then serving in such Director position if willing to serve, unless such individual has been removed as provided herein, in which case such Board seat shall remain vacant until filled as provided in Section 2.2.

(b) The Parties shall take all necessary action so that any vacancies created by the resignation, removal, or death of a Director shall be filled pursuant to, and only pursuant to, the provisions of Section 2.2.

2.4 Removal of Board Members. Each Stockholder agrees to vote, or cause to be voted, all Board Shares owned by such Stockholder, or over which such Stockholder has voting control, from time to time and at all times, in whatever manner as shall be necessary to ensure that:

(a) a Director elected or serving pursuant to Section 2.2 or Section 2.3(a), or elected to fill a vacancy pursuant to Section 2.3(b), shall be promptly removed from office by the vote of stockholders of the Company upon the occurrence of any of the following: (i) written request of the Person(s) who would be entitled to designate a replacement nominee for such Director pursuant to Section 2.2 to remove such Director (which, for the avoidance of doubt, in the case of the Independent Directors, requires the request of both Major Stockholders); (ii) in the case of the CEO Director, if such CEO Director ceases to serve as the CEO; or (iii) in the case of the Independent Directors, if any such Independent Director ceases to be Independent; and

(b) no Director elected or serving pursuant to Section 2.2, Section 2.3(a), or Section 2.3(b), may be removed from office unless such removal is made in accordance with Section 2.4(a).

2.5 Notwithstanding anything to the contrary in this Agreement, each Person with the right to designate for nomination or participate in the designation for nomination of a Director as specified above hereby represents and warrants to the Company that, to such Person’s knowledge, none of the “bad actor” disqualifying events described in Rule 506(d)(1)(i)-(viii) promulgated under the Securities Act (each, a “Disqualification Event”), is applicable to such Person’s initial designee named above except, if applicable, for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable. Any designated Director nominee to whom any Disqualification Event is applicable, except for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable, is hereinafter referred to as a “Disqualified Designee”. Each Person with the right to designate or participate in the designation for nomination of a Director as specified above hereby covenants and agrees (A) not to designate for nomination or participate in the designation for nomination of any Director designee who, to such Person’s knowledge, is a Disqualified Designee and (B) that in the event such Person becomes aware that any individual previously designated by such Person is or has become a Disqualified Designee, such Person shall as promptly as reasonably practicable notify the Company of such fact and take such actions as are necessary to cause the resignation or removal of such Disqualified Designee from the Board and designate for nomination a replacement designee who is not a Disqualified Designee.

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2.6 No Liability for Election of Designated or Approved Directors. No Stockholder, nor any Affiliate of any Stockholder, shall have any liability as a result of designating for nomination or approving an individual for election as a Director for any act or omission by such designated or approved individual in such individual’s capacity as a Director, nor shall any Stockholder have any liability as a result of voting for any such designee in accordance with this Agreement.

2.7 Stockholder Action. Each Stockholder agrees to execute any written consents of stockholders of the Company required or advisable to perform its obligations in this Section 2.

2.8 Quorum and Board Action. The presence of a majority of the Directors then in office, which must include the presence of at least one MGG Director and at least one OTPP Director, shall be necessary and sufficient to constitute a quorum for the transaction of business at any meeting of the Board; provided, that, in no event shall such a quorum be less than one-third of the total number of authorized Directors, whether or not there exist any vacancies in previously authorized directorships or unfilled newly-created directorships. The affirmative vote of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board.

2.9 Chairperson of the Board. The Chairperson of the Board shall be selected from among the Directors by the Board, subject to the approval of each of the Major Stockholders. The Chairperson of the Board may be removed as Chairperson of the Board at any time by notice in writing delivered to the Company by any Major Stockholder, and the Parties shall take all necessary action, following such notice, to remove such individual as Chairperson of the Board.

3. Covenants.

3.1 Consent Rights. The Company hereby covenants and agrees with each Major Stockholder that it shall not (and shall not cause or permit any Subsidiary of the Company to) cause or permit to occur (or approve or enter into any binding obligation to effect), any of the following matters without first obtaining the written approval of each Major Stockholder:

(a) any liquidation, dissolution, winding up or bankruptcy filing of any member of the Company Group;

(b) any change in the Company Group’s principal lines of business;

(c) any Change of Control, other than a Sale of the Company that is subject to Section 7 (which shall be governed by Section 7);

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(d) the incurrence, assumption, endorsement, or guaranty of Indebtedness by the Company or its Subsidiaries, other than (i) Indebtedness existing as of the Effective Time, after giving effect to the transactions contemplated by the Transaction Support Agreement to be consummated on such date, as set forth on Schedule I (the “Existing Indebtedness”), and (ii) other Indebtedness (that is not Existing Indebtedness) not in excess of $1,000,000 of borrowings in the aggregate;

(e) the acquisition of assets or securities, whether through merger, consolidation, share exchange, business combination, securities purchase, asset purchase or otherwise, or any investment in any Person, by the Company Group in any transaction or series of related transactions for consideration in excess of $1,000,000;

(f) the sale, assignment, transfer, conveyance, leasing, exclusive licensing, or other disposition of assets of the Company Group, in any transaction or series of related transactions, with a fair market value in excess of $500,000;

(g) any issuance, sale, distribution, grant, or Transfer of any shares of capital stock or other equity securities of the Company or any other member of the Company Group (or securities convertible or exercisable therefor) including but not limited to warrants and stock options (other than shares of Common Stock issued: (i) pursuant to the exercise of any conversion rights set forth in the Certificate of Incorporation; (ii) upon vesting or exercise of awards issued under the MIP or the Company’s 2019 Incentive Award Plan; or (iii) upon exercise of any warrants outstanding as of the Effective Time to purchase Common Stock);

(h) any redemption, repurchase or other acquisition of any securities of the Company or any other member of the Company Group, other than (i) pursuant to employment arrangements that are known to the Board and that existed prior to the Effective Time and (ii) shares of Common Stock acquired pursuant to the exercise of any conversion rights (and concomitant required redemption of Class B-2 Common Stock, if applicable) set forth in the Certificate of Incorporation;

(i) any change in the size or composition of the Board resulting in a change to how the Board is contemplated by this Agreement as of the date hereof;

(j) the creation of any Board committee, the selection of the members and chairperson of each Board committee, or any change in the scope of authority of any Board committee;

(k) the appointment, termination or replacement of the Company Group’s independent auditor, or any material change in the Company’s accounting principles, methods or policies (except as required by GAAP);

(l) the appointment, termination or replacement of the CEO and any other officer that reports directly to the CEO or the Board;

(m) the entry into or amendment of any employment agreement for, and otherwise setting compensation for, the CEO or any other officer that reports directly to the CEO or Board;

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(n) the adoption of any incentive plans or similar arrangements for officers, employees or other service providers of the Company Group;

(o) the declaration or payment of dividends with respect to any equity securities of the Company Group (other than any dividends required to be declared and paid pursuant to the Certificate of Incorporation, including, for greater certainty, an amount equal to CAD$10,000 grossed-up for any withholding tax, payable: (i) as soon as reasonably practicable after the date hereof; and (ii) annually in each subsequent year);

(p) the entry into, consummation, amendment, modification or supplement of, or waiver of compliance with, any contract or transaction with (i) any holder of capital stock of the Company or any Affiliate thereof, or (ii) any director or officer of any member of the Company Group or any Immediate Family Member thereof, other than performance by the Company Group in accordance with the terms of contracts that are known to the Board and that are in effect as of the Effective Time;

(q) the creation of any Subsidiary of any member of the Company Group, provided that the creation of any Subsidiary shall be in compliance with the 30% Rule;

(r) the entry by any member of the Company Group into any joint venture or similar arrangement;

(s) the making of any loans, advances or capital contributions to any Person in excess of $250,000 (other than advancement of expenses as required by the Certificate of Incorporation or any indemnification agreement approved by the Board);

(t) the commencement, settlement, waiver or compromise of any litigation, arbitration, dispute or proceeding reasonably expected to involve an amount in controversy greater than $500,000 or with respect to a material matter raised via the Company’s whistleblower hotline;

(u) any agreement by the Company Group to (i) increase the interest payable on or total yield on any Existing Indebtedness by more than 2.0% per annum, (ii) increase the scheduled payments or prepayments of principal under any Existing Indebtedness, (iii) modify any covenant or obligations (or having the effect of modifying any covenant or obligations) related to any Existing Indebtedness in a manner adverse to the Company Group or more burdensome on the Company Group to perform under the terms of any other Existing Indebtedness, or (iv) modify the maturity date of any Existing Indebtedness;

(v) any amendment, modification or supplement to the Budget or the Business Plan approved pursuant to Section 4, other than such adjustments specifically contemplated by Section 4(c); or

(w) any amendment, modification or supplement to the Company’s organizational documents (including but not limited to the Certificate of Incorporation and Bylaws) with respect to any of the foregoing matters.

To the extent any of the above actions would, absent this Agreement, require pursuant to the DGCL that the Board act before stockholders in approving such action, and such sequencing

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requirement may not be modified as a matter of Delaware public policy, then the Board may approve and adopt such action prior to obtaining the consent required by this Section 3.1; provided, that such action may not be effected until the consent required by this Section 3.1 is obtained.

3.2 Compliance with Law. The Company agrees that, at all times, the Company Group:

(a) Will, and will ensure any individuals or entities acting on the Company’s or its Subsidiaries behalf will, not act in violation of applicable Anti-Corruption Laws or offer, pay, promise to pay, authorize the payment of, receive, or solicit anything of value under circumstances such that all or a portion of such thing of value would be offered, given, or promised, directly or indirectly, to any Person to obtain any improper advantage;

(b) Will remain in full compliance with applicable Global Trade Laws and Regulations and will not, directly or indirectly, conduct business with a Restricted Country, individuals ordinarily resident in a Restricted Country, or entities incorporating under the laws of a Restricted Country unless permitted under a general or specific license issued by OFAC, participate in any boycott not authorized by the U.S. government, or otherwise act in violation of applicable Global Trade Laws and Regulations;

(c) Will remain in full compliance with applicable Modern Slavery Laws and Regulations;

(d) Will make and keep books, records and accounts which in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company Group, and devise and maintain a system of internal accounting controls consistent with generally accepted international standards;

(e) Will allow the Major Stockholders (and their respective Affiliates and representatives) to review the Company’s and its Subsidiaries’ books and records and have reasonable access to information, persons and premises at all reasonable times that any Major Stockholder shall reasonably require in order to allow such Major Stockholder to comply with obligations to which it is subject under any applicable laws and regulations;

(f) Will periodically provide the Major Stockholders (and their respective Affiliates and representatives) with a compliance questionnaire in relation to Global Trade Laws and Regulations, which questionnaire must be completed and returned by the Company as requested by the Major Stockholders;

(g) Will participate in OTPP’s periodic monitoring efforts with respect to compliance with Anti-Corruption Laws, Anti-Money Laundering Laws, Global Trade Laws and Regulations, Modern Slavery Laws and Regulations, and related topics and provide requested information within a reasonable period of time; and

(h) Will cooperate with any audit or investigation initiated by the Major Stockholders as a result of any information indicating actual or potential violations of applicable law or policy, as determined in the sole discretion of the Major Stockholders, and provide all reasonable information and assistance requested upon an investigation or inquiry.

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4. Annual Budget and Business Plan.

(a) As soon as practicable, but in any event at least thirty (30) days before the end of each fiscal year of the Company, management of the Company shall deliver to the Board and each Major Stockholder a budget and business plan for the next fiscal year (as to each fiscal year, the “Budget” and the “Business Plan”, as applicable) for consideration, which shall be subject to approval by the Board and the Major Stockholders.

(b) Subject to Section 4(c), in any fiscal year, the Company shall operate within the Budget and the Business Plan as approved by the Board and the Major Stockholders.

(c) If the Board and the Major Stockholders do not approve a Budget or Business Plan for any upcoming fiscal year by the first date of such fiscal year, then until such time as the Board and the Major Stockholders approve a Budget and Business Plan for such fiscal year, the Budget for the prior fiscal year shall serve as the Budget and Business Plan for such upcoming fiscal year; provided, that (i) each line item from the proposed Budget that has been approved by the Board and the Major Stockholders shall be included, (ii) any extraordinary and one-time line items in the prior year Budget shall be excluded, (iii) operating expenditures for the prior fiscal year shall be increased or decreased, as applicable, by the change in the Consumer Price Index, as published by the U.S. Department of Labor Bureau of Labor Statistics, and (iv) line items for recurring maintenance capital expenditures from the prior fiscal year’s Budget with the presumption that such recurring expenditures are necessary in the current fiscal year shall be included.

5. Transfer Restriction; Cooperation on Certain Transfers.

(a) No Stockholder shall Transfer any Shares to any Person unless such Transfer: (i) is a redemption required by Article FOURTH Section (B)(8)(ii)(C) of the Certificate of Incorporation; (ii) involves solely the grant or delivery of a revocable proxy to a Person that has been approved by the Board or by each of the Major Stockholders; (iii) is approved in writing by each of the Major Stockholders; or (iv) is a Permitted Transfer. The Stockholder proposing to Transfer Shares shall notify the Company and each Major Stockholder in writing in advance of any proposed Transfer of Shares.

(b) Notwithstanding any other provision of the Agreement, including Section 5(a), and without any consent required thereunder, OTPP may Transfer all or any of portion of its shares of Class B‑1 Common Stock to a 30% Rule Designee, and OTPP may cause any 30% Rule Designee to Transfer all or any portion of its shares of Class B-2 Common Stock to OTPP or another 30% Rule Designee. Additionally, OTPP may direct the Company or the other Stockholders to require that any Board Shares that would otherwise be Transferred by or to or issued to OTPP instead be Transferred by or to or issued to any 30% Rule Designee. For the avoidance of doubt, no 30% Rule Designee will be a party to this Agreement or be required to execute a joinder or deed of adherence as a condition precedent to owning any Shares.

(c) To the extent that OTPP desires to Transfer, and/or cause a 30% Rule Designee to Transfer (as applicable), Class B-1 Common Stock and/or Class B-2 Common Stock to any Person other than a 30% Rule Designee, OTPP or an Affiliate of OTPP (a “Third-Party Transferee”), and such Transfer is permitted pursuant to the terms of this Agreement, then if

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requested in writing by OTPP, the Company and OTPP shall cooperate to ensure that, concurrently with such Transfer, a number of shares of Class B-1 Common Stock and Class B-2 Common Stock equal to the number of shares sought to be Transferred to the Third-Party Transferee are exchanged (whether by conversion and redemption, repurchase or otherwise) for a number of shares of Class A Common Stock equal to the number of shares sought to be Transferred to the Third-Party Transferee. By way of example, and for the avoidance of doubt, if OTPP desires to Transfer ten shares of Class B-1 Common Stock to a Third-Party Transferee in a Transfer permitted pursuant to the terms of this Agreement, then if requested in writing by OTPP, the Company and OTPP shall cooperate to ensure that, concurrently with such Transfer, ten shares of Class B-1 Common Stock and ten shares of Class B-2 Common Stock would be exchanged (whether by conversion and redemption, repurchase or otherwise) for ten shares of Class A Common Stock, and such ten shares of Class A Common Stock would concurrently be Transferred to the Third-Party Transferee.

6. Drag-Along Right.

6.1 Actions to be Taken. In the event that both of the Major Stockholders, acting together, approve a Sale of the Company (which approval must be in writing), specifying that this Section 6 shall apply to such transaction, then, subject to satisfaction of each of the conditions set forth in Section 6.2, each Stockholder hereby agrees with the Major Stockholders and the Company:

(a) if such transaction requires stockholder approval, with respect to all General Voting Shares that such Stockholder owns or over which such Stockholder otherwise exercises voting power, to vote (in person, by proxy or by action by written consent, as applicable) all General Voting Shares in favor of, and approve, such Sale of the Company and the related definitive agreement(s) pursuant to which the Sale of the Company is to be consummated and to vote in opposition to any and all other proposals that could delay or impair the ability of the Company to consummate such Sale of the Company;

(b) if such transaction is a Stock Sale, to sell the same proportion of Shares beneficially held by such Stockholder (which in the case of OTPP, shall include the Shares held by the 30% Rule Designee) as is being sold by each Major Stockholder to the Person to whom the Major Stockholders propose to sell their Shares, and, except as permitted in Section 6.2 below, on the same terms and conditions as the other stockholders of the Company;

(c) to execute and deliver all related documentation and take such other action in support of the Sale of the Company as shall reasonably be requested by the Company or the Major Stockholders in order to carry out the terms and provision of this Section 6, including, without limitation, (i) executing and delivering instruments of conveyance and transfer, and any purchase agreement, merger agreement, business combination agreement, any associated indemnity or escrow agreement, any reasonably customary release agreement in the capacity of a securityholder, termination of investment-related documents, accredited investor forms, documents evidencing the removal of Board designees, powers of attorney, any associated voting, support, or joinder agreement, consent, waiver, governmental filing, share certificates duly endorsed for Transfer (free and clear of impermissible liens, claims and encumbrances), and any similar or related documents, and (ii) providing any information reasonably necessary for any public filings with the SEC in connection with the Sale of the Company;

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(d) not to deposit, and to cause their Affiliates not to deposit, except as provided in this Agreement, any Shares owned by such Stockholder or Affiliate in a voting trust or subject any Shares to any arrangement or agreement with respect to the voting of such Shares, unless specifically requested to do so by the acquirer in connection with the Sale of the Company;

(e) to refrain from (i) exercising any dissenters’ rights or rights of appraisal under applicable law at any time with respect to such Sale of the Company or (ii) asserting any claim or commencing, joining or participating in any way (including, without limitation, as a member of a class in any action, suit or proceeding) challenging the Sale of the Company, this Agreement, or consummation of the transactions contemplated in connection with the Sale of the Company or this Agreement, including (x) challenging the validity of, or seeking to enjoin the operation of, or the definitive agreement(s) with respect to, such Sale of the Company or (y) alleging a breach of any fiduciary duty of the Major Stockholders or any Affiliate or associate thereof, Directors or the acquirer(s) (including, without limitation, aiding and abetting breach of fiduciary duty) in connection with the Sale of the Company or any action taken thereby with respect to such Sale of the Company; and

(f) in the event that the Major Stockholders, in connection with such Sale of the Company, appoint a stockholder representative (the “Stockholder Representative”) with respect to matters affecting the stockholders under the applicable definitive transaction agreements following consummation of such Sale of the Company, (x) to consent to (i) the appointment of such Stockholder Representative, (ii) the establishment of any escrow, expense or similar fund in connection with any indemnification or similar obligations to the Stockholder Representative, and (iii) the payment of such Stockholder’s pro rata portion (from the applicable escrow or expense fund or otherwise) of any and all reasonable fees and expenses to such Stockholder Representative in connection with such Stockholder Representative’s services and duties in connection with such Sale of the Company and its related service as the representative of the Stockholders, and (y) not to assert any claim or commence any suit against the Stockholder Representative or any other Stockholder with respect to any action or inaction taken or failed to be taken by the Stockholder Representative, within the scope of the Stockholder Representative’s authority, in connection with its service as the Stockholder Representative, absent fraud, bad faith, gross negligence or willful misconduct.

6.2 Conditions. Notwithstanding anything to the contrary set forth herein, a Stockholder will not be required to comply with Section 6.1 above in connection with any proposed Sale of the Company (the “Proposed Sale”), unless:

(a) any representations and warranties to be made by such Stockholder in connection with the Proposed Sale are limited to representations and warranties related to authority, ownership, the ability to convey title to Shares, and representations and warranties that are necessary or advisable to ensure compliance with applicable securities laws, including, but not limited to, representations and warranties that (i) the Stockholder holds all right, title and interest in and to the Shares such Stockholder purports to hold, free and clear of all liens and encumbrances, (ii) the obligations of the Stockholder in connection with the transaction have been duly authorized, if applicable, (iii) the documents to be entered into by the Stockholder have been duly executed by the Stockholder and delivered to the acquirer and are enforceable (subject to customary limitations) against the Stockholder in accordance with their respective terms, and (iv) neither the execution and delivery of documents to be entered into by the Stockholder in connection with the transaction,

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nor the performance of the Stockholder’s obligations thereunder, will cause a breach or violation of the terms of any agreement (including the Company’s or such Stockholder’s organizational documents) to which the Stockholder is a party, or any law or judgment, order or decree of any court or governmental agency that applies to the Stockholder;

(b) such Stockholder is not required to agree (unless such Stockholder is a Company officer, Director, employee or other service provider) to any restrictive covenant in connection with the Proposed Sale (including, without limitation, any covenant not to compete or covenant not to solicit customers, employees or suppliers of any party to the Proposed Sale) or any release of claims other than a release in customary form of claims arising solely in such Stockholder’s capacity as a stockholder of the Company;

(c) such Stockholder and its Affiliates are not required to amend, extend or terminate any contractual or other relationship with the Company, the acquirer or their respective Affiliates, except that the Stockholder may be required to agree to terminate any investment-related documents between or among such Stockholder, the Company and/or other stockholders of the Company;

(d) the Stockholder is not liable for the breach of any representation, warranty or covenant made by any other Person in connection with the Proposed Sale, other than the Company (except to the extent that funds may be paid out of an escrow established to cover breach of representations, warranties and covenants of the Company as well as breach by any stockholder of any of identical representations, warranties and covenants provided by all stockholders);

(e) liability shall be limited to such Stockholder’s applicable share (determined based on the respective proceeds payable to each stockholder of the Company in connection with such Proposed Sale) of a negotiated aggregate indemnification amount that in no event exceeds the amount of consideration otherwise payable to such Stockholder in connection with such Proposed Sale in such person’s capacity as a stockholder of the Company, except with respect to claims related to fraud by such Stockholder, the liability for which need not be limited as to such Stockholder; and

(f) upon the consummation of the Proposed Sale, (i) each holder of each class of Common Stock (other than the Class B-2 Common Stock), as such, will receive the same form and amount of consideration per share for their shares of Common Stock as is received by all other holders of Common Stock (other than the Class B-2 Common Stock), as such, and if any holders of any Common Stock are given a choice as to the form of consideration to be received as a result of the Proposed Sale, all holders of Common Stock (other than the Class B-2 Common Stock), as such, will be given the same option; provided, that, notwithstanding the foregoing provisions of this Section 6.2(f), if the consideration to be paid in exchange for shares of Common Stock includes any securities and due receipt thereof by any stockholder would require under applicable law the registration or qualification of such securities or of any Person as a broker or dealer or agent with respect to such securities or the provision to any stockholder of any information other than such information as a prudent issuer would generally furnish in an offering made solely to “accredited investors” as defined in Regulation D promulgated under the Securities Act, the Company may cause to be paid to any such stockholder in lieu thereof, against surrender of the applicable Shares held by the stockholder, an amount in cash equal to the fair value (as determined in good faith by the Board) of the securities which such Stockholder would otherwise receive as of the date of the

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issuance of such securities in exchange for the Shares held by the stockholder and (ii) holders of Class B-2 Common Stock, as such, shall receive an amount of consideration contemplated by Article FOURTH, Section (B)(8)(i)(A) of the Certificate of Incorporation.

6.3 Company Obligations. The Company covenants and agrees to call a special meeting of stockholders for the purposes of approving a Sale of the Company, upon the written request of the Major Stockholders in accordance with this Section 6.

7. Forced Sale Rights.

7.1 Initiation of Sale Process.

(a) Subject to Section 7.1(b) and Section 7.1(c), upon written notice to the Company from either or both Major Stockholder(s) (the “Electing Holder” or “Electing Holders” and such notice, a “Sale Notice”), the Company shall initiate a process (the “Sale Process”), in accordance with this Section 7, intended to result in a Sale of the Company. Such Sale Notice shall include a designation of one individual (the “Holder Representative”) to act on behalf of the Electing Holder(s) and to exercise the authority granted to the Holder Representative pursuant to Section 7.2. Subject to Section 7.1(b) and Section 7.1(c), (i) each of the Stockholders and the Company agree to use his, her or its commercially reasonable efforts, in consultation with the Financial Advisor and Deal Counsel, to facilitate a Sale of the Company following delivery of the Sale Notice and (ii), in furtherance of the foregoing, upon receipt of the Sale Notice, the Company shall, and shall cause its officers, employees, consultants, counsel and advisors, to take the actions set forth in Section 7.2.

(b) A Major Stockholder may only deliver a Sale Notice on or after the date that is fifty-four (54) months after the Effective Time.

(c) If a Major Stockholder delivers a Sale Notice on a date prior to the date that is sixty-six (66) months after the Effective Time (the “Cutoff Date”), the other Major Stockholder may elect to delay the initiation of the Sale Process up to (but in no event to a date later than) the Cutoff Date if, on the date the Sale Notice is delivered, the value of the S&P 500 index is 88% or less than its peak value during the twelve (12) months preceding the date the Sale Notice is delivered.

7.2 Specific Company Obligations.

(a) In connection with any Sale Process, the Company shall engage an investment bank (the “Financial Advisor”) and a law firm (the “Deal Counsel”) reasonably satisfactory to the Holder Representative (which may be the Company’s existing investment bank and law firm) to assist with the Sale Process. The Financial Advisor and Deal Counsel, as well as any other advisors engaged pursuant to this Section 7.2(a), shall represent the Company, and only the Company, in the Sale Process, and the costs, fees and expenses of such advisors shall be paid by the Company pursuant to the terms of engagement letters that are approved by the Holder Representative (such approval not to be unreasonably withheld, conditioned or delayed). None of the Financial Advisor, Deal Counsel or any other advisor selected in accordance with this Section 7.2(a) shall be terminated by the Company without the written consent of the Holder Representative.

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(b) Without limiting the generality of the provisions of Section 7.2(a), in connection with any Sale Process, at the request of the Holder Representative, the Company shall, and shall cause its employees, officers, consultants, counsel and advisors to:

(i) assist the Financial Advisor in creating a list of potential acquirers;

(ii) set up and maintain a virtual or actual data room (as elected by the Holder Representative) containing due diligence materials customarily provided in connection with transactions of the nature of a Sale of the Company, along with any other due diligence materials requested by the Holder Representative or reasonably requested by any potential acquirer;

(iii) execute customary nondisclosure agreements with potential acquirers;

(iv) provide incentive compensation to members of the Company’s management, and in an amount and form, all as determined by the Holder Representative to be necessary or helpful to the successful consummation of the Sale of the Company;

(v) prepare, or assist the Financial Advisor with the preparation of, any marketing, financial or other materials deemed by the Holder Representative or the Financial Advisor to be necessary or helpful in connection with a Sale of the Company;

(vi) attend and participate in any meetings, conference calls or presentations regarding the Company and its business with potential acquirers;

(vii) execute a letter of intent or term sheet on terms reasonably acceptable to the Holder Representative with one or more potential acquirers;

(viii) execute and perform the Company’s obligations contained in such definitive agreements relating to a Sale of the Company as are negotiated by the Holder Representative and the potential acquirer; and

(ix) communicate regularly and promptly with each of the Financial Advisor, Deal Counsel and the Holder Representative regarding the Sale Process.

7.3 Board Approval of the Terms and Conditions of a Proposed Sale of the Company. The Company shall cause its management, together with the Financial Advisor and Deal Counsel, to deliver regular updates to the Board and the Holder Representative regarding material developments in the Sale Process and summarizing the status of the negotiation of the terms and conditions of the Sale of the Company. The Company shall, upon request of the Holder Representative, either call a meeting of its Board or seek the written consent of the Board approving the Sale of the Company and the entering into of the definitive agreements relating thereto. In the event that a Sale Process results in a potential transaction for a Sale of the Company on terms and conditions that are acceptable to the Holder Representative, each Stockholder shall use his, her or its reasonable best efforts to cause such Sale of the Company to be consummated and shall take all actions reasonably necessary to consummate such transaction and oppose any actions or proposals that could delay or impair the consummation of such Sale of the Company.

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7.4 Appointment and Authority of Holder Representative.

(a) The Stockholders have agreed that it is desirable to designate a representative to act on behalf of the Stockholders for the purposes described in this Section 7.4. The Holder Representative shall be selected by the Electing Holder(s) and shall serve as the agent and representative of each Stockholder with respect to any Sale Process.

(b) The Holder Representative shall have full power and authority to take all actions under this Section 7 that are to be taken by the Holder Representative. The Holder Representative shall take any and all actions which it believes are necessary or appropriate under this Agreement in connection with the Sale Process, including giving and receiving any notice or instruction permitted or required under this Agreement by the Holder Representative, consenting to any actions on behalf of the Stockholders in connection with a Sale of the Company pursuant to a Sale Process, conducting negotiations with any potential acquirer and its agents regarding such Sale of the Company pursuant to a Sale Process, dealing with the Company in connection with the Sale Process, taking any and all other actions specified in or contemplated by this Agreement in connection with the Sale Process, and engaging counsel, accountants or other representatives to represent the Electing Holder(s) in connection with the foregoing matters.

(c) The Holder Representative shall be indemnified for and shall be held harmless by the Stockholders against any losses incurred by the Holder Representative or any of its Affiliates and any of their respective partners, directors, officers, employees, agents, stockholders, consultants, attorneys, accountants, advisors, brokers, representatives or controlling persons, in each case relating to the Holder Representative’s conduct as Holder Representative, other than damages or losses resulting from the Holder Representative’s gross negligence or willful misconduct in connection with its performance under this Agreement. This indemnification shall survive the termination of this Agreement. The Holder Representative may, in all questions arising under this Agreement, rely on the advice of counsel, and for anything done, omitted or suffered in good faith by the Holder Representative in accordance with such advice, the Holder Representative shall not be liable to the Stockholders. In no event shall the Holder Representative be liable hereunder or in connection herewith to the Stockholders for any indirect, punitive, special or consequential damages.

(d) Any action taken by the Holder Representative pursuant to the authority granted in this Section 7.4 shall be effective and absolutely binding as the action of the Stockholders under this Agreement.

(e) The Company shall be entitled to rely on the actions and determinations of the Holder Representative, and shall have no liability whatsoever with respect to any action or omission of it taken in reasonable reliance on the actions or omissions of the Holder Representative.

8. Remedies.

8.1 Irrevocable Proxy and Power of Attorney. Each Stockholder hereby constitutes and appoints as the proxies of such Stockholder, and hereby grants a power of attorney to, OTPP and MGG Investment Group LP (each, a “Proxyholder”), and each of them, with full power of substitution, with respect to the matters set forth herein, including, without limitation, votes

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regarding the composition of the Board and votes regarding any Sale of the Company, and hereby authorizes each of them to represent and vote the Shares held by such Stockholder, if and only if the Stockholder (i) fails to vote (whether by proxy, in person or by written consent) all of such Stockholder’s Board Shares in favor of the election or removal of individuals as members of the Board determined pursuant to and in accordance with the terms and provisions of this Agreement and all of such party’s General Voting Shares in favor of any Sale of the Company pursuant to and in accordance with the terms and provisions of this Agreement within five (5) Business Days after a request therefor by the Company or any Major Stockholder or (ii) attempts to vote (whether by proxy, in person or by written consent) any of such Stockholder’s Shares in a manner which is inconsistent with the terms of this Agreement. The power of attorney granted hereunder shall authorize each Proxyholder to execute and deliver any documentation required by this Agreement on behalf of any Stockholder failing to do so within five (5) Business Days after request by the Company or any Major Stockholder. Each of the proxy and power of attorney granted pursuant to this Section 8.1 is given in consideration of the agreements and covenants of the Parties in connection with the transactions contemplated by this Agreement and, as such, each is coupled with an interest and shall be irrevocable unless and until this Agreement terminates or expires pursuant to Section 9 hereof. Each Stockholder hereto hereby revokes any and all previous proxies or powers of attorney with respect to the Shares and shall not hereafter, unless and until this Agreement terminates or expires pursuant to Section 9 hereof, purport to grant any other proxy or power of attorney with respect to any of the Shares, deposit any of the Shares into a voting trust or enter into any agreement (other than this Agreement), arrangement or understanding with any Person, directly or indirectly, to vote, grant any proxy or give instructions with respect to the voting of any of the Shares, in each case, with respect to any of the matters set forth herein.

8.2 Specific Enforcement. Each Party acknowledges and agrees that each other Party hereto will be irreparably damaged in the event any of the provisions of this Agreement are not performed by the Parties in accordance with their specific terms or are otherwise breached. Accordingly, it is agreed that each of the Company and the Major Stockholders shall be entitled to an injunction to prevent breaches of this Agreement, and to specific enforcement of this Agreement and its terms and provisions, without requirement to post a bond therefor. Each Party agrees to use commercially reasonable efforts to cooperate in seeking and agreeing to an expedited schedule in any litigation seeking an injunction or order of specific performance.

8.3 Remedies Cumulative. All remedies, either under this Agreement or by law or otherwise afforded to any Party, shall be cumulative and not alternative.

9. Term. This Agreement shall be effective as of the Effective Date and shall continue in effect until and shall terminate upon the earliest to occur of (a) a Qualified IPO, (b) a Qualified Direct Listing, (c) the consummation of a Sale of the Company, (provided that the provisions of Section 6.1 and Section 10 (30% Rule) hereof will continue after the closing of any Sale of the Company to the extent necessary to enforce the provisions thereof with respect to such Sale of the Company), or (d) termination of this Agreement in accordance with Section 11.6 below.

10. 30% Rule.

(a) Notwithstanding any other provision of this Agreement, neither Ontario Teachers’ Pension Plan Board nor any Subsidiary thereof (each, an “Applicable Entity”) shall be required or permitted to make any investment in any member of the Company Group, or take any

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action or step, or to cause any other Person to take any action or step, that would be reasonably expected to cause any such Applicable Entity to be in breach of or to contravene the 30% Rule.

(b) The members of the Company Group and the Stockholders will cooperate with the relevant Applicable Entities (to the extent commercially reasonable and provided that one or more of the Applicable Entities agrees to reimburse the Stockholders for all reasonable out-of-pocket costs or expenses incurred by them, if any, in respect of any such cooperation, excluding the cost of acquiring any securities) to assist the Applicable Entities to comply with the 30% Rule in relation to their investment in any member of the Company Group and the exercise of OTPP’s rights under this Agreement and any debt facility of the Company Group in which OTPP or its Affiliates participates. In furtherance of the foregoing, each Stockholder and the members of the Company Group will take (or omit to take) any action or step reasonably requested by any Applicable Entity, including, without limitation, a change in the authorized capital of a member of the Company Group, that is necessary to avoid any breach or potential breach of the 30% Rule. The Stockholders agree to exercise their governance rights and cause their nominated directors to exercise their powers as such to comply with the foregoing.

(c) OTPP (i) will cause the 30% Rule Designee to vote and Transfer its Shares in accordance with this Agreement and to comply with the other terms and conditions of this Agreement as if such 30% Rule Designee were party hereto as a Stockholder, (ii) agrees on behalf of the 30% Rule Designee to the appointment of the Stockholder Representative pursuant to Section 6.1(f), the appointment of the Holder Representative pursuant to Section 7.4, and the appointment of proxies and grants of power of attorney pursuant to Section 8.1 as if such 30% Rule Designee were party hereto as a Stockholder, and (iii) agrees that OTPP will be liable for any default by a 30% Rule Designee or any act or omission by the 30% Rule Designee, contrary to, or outside the terms of this Agreement or the Certificate of Incorporation as if the action or omission were taken by OTPP.

(d) Notwithstanding anything contained in this Section 10, no Stockholder shall be required by this Section 10 to take any action or step that has, or would reasonably be likely to have, a material adverse effect on such Stockholder’s economic, governance or other rights under this Agreement.

11. Miscellaneous.

11.1 Representations and Warranties. Each Party hereby represents and warrants to each other Party hereto that: (i) it has full legal power and authority to execute and deliver this Agreement and to perform its obligations hereunder, (ii) if such Party is an entity, it has taken all necessary action, and obtained any consents that are required, to execute, deliver and perform this Agreement, (iii) this Agreement has been duly and validly executed and delivered by such Party, and (iv) assuming the due execution and delivery by each other Party hereto, this Agreement constitutes the valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, rehabilitation, liquidation, preferential transfer, moratorium and similar laws now or hereafter affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at equity or law). Each Party agrees that, except for the representations and warranties contained in this Section 11.1, no Party makes, and each Party disclaims any reliance upon, any express or implied representation

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or warranty whatsoever or with respect to any information provided or made available in connection with this Agreement.

11.2 Additional Parties.

(a) Other Persons who own Capital Stock may become Parties to this Agreement only with the prior written consent of each of the Major Stockholders. Each such Person shall execute and deliver a counterpart signature page to this Agreement agreeing to be bound by and subject to the terms of this Agreement as a Stockholder hereunder and shall thereafter be deemed a Stockholder for all purposes under this Agreement.

(b) In connection with any Permitted Transfer, the Transferee (other than a 30% Rule Designee) shall, as a condition to such Transfer, deliver a joinder or counterpart signature page to this Agreement and thereby become bound by all the terms and conditions of this Agreement to the same extent as the Transferor was prior to such Transfer (but only with respect to the Shares so Transferred to the Transferee). Upon the execution and delivery of a counterpart signature page to this Agreement by any Transferee, such Transferee shall be deemed a Stockholder for all purposes under this Agreement. The Company shall not permit the Transfer of the Shares subject to this Agreement on its books (other than to a 30% Rule Designee) unless and until such Transferee shall have complied with the terms of this Section 11.2(b).

11.3 Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties; provided, that the rights to designate members of the Board in Section 2 are nontransferable (and shall not inure to the benefit of successors and assigns) other than pursuant to an amendment effected in accordance with Section 11.6 below. Nothing in this Agreement, express or implied, is intended to confer upon any Person other than the Parties or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

11.4 Governing Law; Forum; Waiver of Jury Trail.

(a) This Agreement shall be governed by the internal law of the State of Delaware, without regard to conflict of law principles that would result in the application of any law other than the law of the State of Delaware.

(b) Each of the Parties submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware and any state appellate court therefrom within the State of Delaware (or solely if the Court of Chancery declines to accept jurisdiction over a particular matter, any federal court sitting in the State of Delaware and any federal appellate court therefrom) in respect of the interpretation and enforcement of the provisions of this Agreement; agrees not to commence any proceeding relating to this Agreement except in such courts (other than proceedings in any court of competent jurisdiction to enforce any judgment, decree, or award rendered by any such courts); waives, and agrees not to assert, any defense in any action for the interpretation or enforcement of this Agreement that they are not subject to such jurisdiction or that such action may not be brought or is not maintainable in such courts or that this Agreement may not be enforced in or by such courts, that the action is brought in an inconvenient forum, or that the venue of the action is improper; and consents to service of process by first class certified mail, return

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receipt requested, postage prepaid, to the address at which such Party is to receive notice in accordance with Section 11.5.

(c) EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.4.

11.5 Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing (including electronic mail as permitted in this Agreement) and shall be deemed effectively given upon the earlier of (a) actual receipt, (b) personal delivery to the Party to be notified, (c) when sent, if sent by electronic mail during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next Business Day, (d) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (e) one (1) Business Day after the Business Day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next Business Day delivery, with written verification of receipt. All communications shall be sent to the respective Parties at their address as set forth below each Party’s signature page hereto or as subsequently modified by written notice given in accordance with this Section 11.5.

11.6 Consent Required to Amend, Modify, Terminate or Waive. This Agreement may be amended, modified or terminated (other than pursuant to Section 9) and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument executed by the Company (following approval thereof by the Board) and each Major Stockholder. Notwithstanding the foregoing, any provision hereof may be waived in writing by the waiving Party on such Party’s own behalf, without the consent of any other Party (in the case of the Company, following approval thereof by the Board). The Company shall give prompt written notice of any amendment, modification, termination, or waiver hereunder to any Party that did not consent in writing thereto. Any amendment, modification, termination, or waiver effected in accordance with this Section 11.6 shall be binding on each Party and all of such Party’s successors and permitted assigns, whether or not any such Party, successor or assignee entered into or approved such amendment, modification, termination or waiver.

11.7 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any Party, upon any breach or default of any other Party, shall impair any such right, power or remedy of such nonbreaching or nondefaulting Party, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default previously or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Party of any breach or default under

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this Agreement, or any waiver on the part of any Party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing.

11.8 MGG Representative. For all purposes under this Agreement, actions required or permitted to be taken by MGG, including in its capacity as a Stockholder and a Major Stockholder, shall require the action of all of the affiliates of MGG Investment Group LP that are Stockholder parties hereto from time to time, acting unanimously; provided, that such Parties affiliated with MGG Investment Group LP hereby designate MGG Investment Group LP as their representative to take all such actions under this Agreement, and the Company and the other Parties hereto shall be entitled to rely on the actions and determinations of MGG Investment Group LP acting in such capacity and shall have no liability whatsoever with respect to any action or omission taken in reasonable reliance on the actions or omissions of MGG Investment Group LP acting in such capacity.

11.9 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or circumstance, is found to be invalid or unenforceable in any jurisdiction, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

11.10 Entire Agreement. This Agreement constitutes the full and entire understanding and agreement among the Parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between or among any of the Parties are expressly canceled.

11.11 Share Legend. The Company shall cause the following legend, in addition to any other legend required or advisable pursuant to applicable blue sky laws, to be placed on all notices of issuances of uncertificated Shares to any Stockholder who is a Party hereto:

THE SHARES REFERENCED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR A VALID EXEMPTION FROM THE OTHERWISE APPLICABLE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT OF 1933.

THE SHARES REFERENCED HEREIN ARE SUBJECT TO CERTAIN VOTING LIMITATIONS AND TRANSFER RESTRICTIONS, INCLUDING DRAG-ALONG RIGHTS, AS SET FORTH IN AN AGREEMENT ENTERED INTO BY THE HOLDER OF THESE SHARES,

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THE COMPANY, AND CERTAIN OTHER STOCKHOLDERS OF THE COMPANY. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.

Each Stockholder agrees that the Company may instruct its transfer agent to impose the foregoing legends on notices of issuances of uncertificated Shares to enforce the provisions of this Agreement, and the Company agrees to promptly do so. The second paragraph of the foregoing legend pertaining to this Agreement shall be removed at the request of the holder upon termination of this Agreement.

11.12 Stock Splits, Dividends and Recapitalizations. In the event of any issuance of Shares or other voting securities of the Company hereafter to any of the Stockholders (including, without limitation, in connection with any stock split, stock dividend, recapitalization, reorganization, or the like), such Shares shall become subject to this Agreement and shall be notated with the legend set forth in Section 11.11.

11.13 Manner of Voting. The voting of Shares pursuant to this Agreement may be effected in person, by proxy, by written consent or in any other manner permitted by applicable law. For the avoidance of doubt, voting of the Shares pursuant to the Agreement need not make explicit reference to the terms of this Agreement.

11.14 Further Assurances. At any time or from time to time after the date hereof, the Parties agree to cooperate with each other, and at the request of any other Party, to execute and deliver any further instruments or documents and to take all such further action as the other Party may reasonably request in order to carry out the intent of the parties hereunder.

11.15 Costs of Enforcement. Each Party will bear its own costs in respect of any disputes arising under this Agreement.

11.16 No Third-Party Beneficiaries. This Agreement is not intended to and shall not confer upon any Person, other than the Parties and their respective successors and permitted assigns, any rights or remedies.

11.17 Construction. For purposes of this Agreement:

(a) whenever the context may require, any pronoun will include the corresponding masculine, feminine and neuter forms;

(b) where the context permits, the use of the term “or” shall be equivalent to the use of the term “and/or”;

(c) any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the construction or interpretation of this Agreement;

(d) The words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation”;

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(e) references to the “Preamble”, “Recitals” and “Sections” are intended to refer to the Preamble, Recitals and Sections of this Agreement;

(f) the table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement;

(g) references to “Dollars” and “$” mean dollars in lawful currency of the United States of America;

(h) the titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement;

(i) any references to any statute, regulation, contract or document are to such statute, regulation, contract or document as amended from time to time (and, in the case of a statute or regulation, to any successor provisions and any rules or regulations thereunder); and

(j) if any action or notice is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action or notice will be deferred until, or may be taken or given on, the next Business Day.

11.18 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via electronic mail (including pdf or any electronic signature complying with the U.S. ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties have executed this Stockholders Agreement as of the date first written above.

 

COMPANY
KLDISCOVERY INC.
By:
Name:
Title:
Address:
Email

 

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IN WITNESS WHEREOF, the parties have executed this Stockholders Agreement as of the date first written above.

 

OTPP PARTY
1397225 ONTARIO LIMITED
By:
Name:	Antony Waszkiewicz
Title:	Authorized Signatory
Address:	Ontario Teachers’ Pension Plan
	160 Front Street West, Suite 3200
	Toronto, Ontario M5J 0G4
	Canada
Attention:	Antony Waszkiewicz & Christopher Witkowski
Email:	antony_waszkiewicz@otppcredit.com; christopher_witkowski@otppcredit.com; law_investments@otpp.com

 

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IN WITNESS WHEREOF, the parties have executed this Stockholders Agreement as of the date first written above.

 

MGG PARTIES
MGG SPECIALTY FINANCE FUND II LP
MGG SF EVERGREEN FUND LP
MGG CANADA FUND LP
MGG INSURANCE FUND SERIES INTERESTS OF THE SALI MULTI-SERIES FUND, L.P.
MGG SF EVERGREEN UNLEVERED FUND LP
MGG SF DRAWDOWN UNLEVERED FUND II LP
MGG SF DRAWDOWN UNLEVERED FUND II (LUXEMBOURG) SCSP
MGG OFFSHORE FUNDING I, LLC
MGG SF EVERGREEN MASTER FUND (CAYMAN) LP
MGG SF DRAWDOWN MASTER FUND (CAYMAN) LP
MGG SF DRAWDOWN UNLEVERED MASTER FUND II (CAYMAN) LP
MGG SF EVERGREEN UNLEVERED MASTER FUND II (CAYMAN) LP
MGG (BVI) LIMITED
MGG COINVEST V LLC
PIVOTAL SPAC FUNDING LLC
By: MGG Investment Group LP, on behalf of each of the above, as Authorized Signatory
By:
Name:	Kevin F. Griffin
Title:	Chief Executive Officer & Chief Investment Officer
Address:	MGG Investment Group LP
	One Penn Plaza, 53rd Floor
	New York, NY 10119
Attention:	Operations
Email:	ops@mgginv.com; dstohr@mgginv.com; legal@mgginv.com

 

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Schedule I

Existing Indebtedness

 

1. Indebtedness under the Credit Agreement, dated as of February 8, 2021, by and among KLDiscovery Holdings, Inc. (f/k/a LD Lower Holdings, Inc.), a Delaware corporation, LD Topco, Inc., a Delaware corporation, the other guarantors party thereto, the lenders party thereto, Wilmington Trust, National Association, as administrative agent and collateral agent and Ally Bank, as a lender and an L/C Issuer (as defined therein), as amended by that certain First Amendment to Credit Agreement, dated as of March 3, 2023, the Second Amendment to Credit Agreement, dated as of March 8, 2024, and the Third Amendment to Credit Agreement, dated as of [●], pursuant to which Ally Bank holds $40,000,000 in revolving commitments and Blackstone Alternative Credit Advisors LP and its affiliates hold $280,000,000 in term loans, in each case, as of the Effective Time, after giving effect to the transactions contemplated by the Transaction Support Agreement to be consummated on such date.

 

2. Indebtedness under the Second Lien Loan Agreement, dated as of [●], by and among KLDiscovery Holdings, Inc. (f/k/a LD Lower Holdings, Inc.), a Delaware corporation, LD Topco, Inc., a Delaware corporation, the other guarantors party thereto, OTPP, as a lender and certain funds and/or accounts managed by MGG Investment Group LP and/or its affiliates, as lenders, pursuant to which the Company has incurred or may incur (i) $50,000,000 of term loans as of the Effective Time, after giving effect to the transactions contemplated by the Transaction Support Agreement to be consummated on such date, (ii) up to $50,000,000 of additional term loans, and (iii) all PIK Interest as defined therein; provided, that, any Indebtedness which may be incurred under (ii) and (iii) from time to time shall be deemed to constitute “Existing Indebtedness” as of the Effective Time, after giving effect to the transactions contemplated by the Transaction Support Agreement to be consummated on such date.

 

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Exhibit D

 

Form of OTPP Designee Subscription Agreement

 

(See attached)

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SUBSCRIPTION AGREEMENT

This Subscription Agreement (this “Agreement”) is entered into and made effective as of [●], 2024, by and between KLDiscovery Inc., a Delaware corporation, (the “Company”), and Ferndale3 Corp., an Ontario corporation (“Purchaser”) (each a “Party” and, collectively, the “Parties”).

RECITALS

WHEREAS, Purchaser desires to subscribe for and purchase [146,778,755] shares of Class B-2 Common Stock of the Company in accordance with the terms of this Agreement, and the Company desires to issue and sell such shares of Class B-2 Common Stock to Purchaser in accordance with the terms hereof.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

The Company represents and warrants to Purchaser as of the Closing, as follows:

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Purchaser represents and warrants to the Company as of the Closing as follows:

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If to the Company, to:
KLDiscovery Inc.
9023 Columbine Road
Eden Prairie, MN 55347
Attention:		Andrew Southam, General Counsel
Email:		andrew.southam@kldiscovery.com
with copies to (which shall not constitute notice):

 

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Gibson, Dunn & Crutcher LLP
200 Park Ave.
New York, NY 10016
Attention:		Scott J. Greenberg Joe Zujkowski AnnElyse Scarlett Gains Michael G. Farag
Email:		SGreenberg@gibsondunn.com
		JZujkowski@gibsondunn.com
		AGains@gibsondunn.com
		MFarag@gibsondunn.com

 

If to Purchaser, to:
22 Adelaide Street West, Suite 3600
Toronto, Ontario, Canada
M5H 4E3
Attention: Jim Leech
with a copy (which shall not constitute notice) to:
22 Adelaide Street West, Suite 3600
Toronto, Ontario, Canada
M5H 4E3
Attention:		Robert Picard
E-mail:		rpicard@grllp.com

 

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[Signature pages follow]

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

 

KLDISCOVERY INC.
By:
		Name:
		Title:

 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

 

FERNDALE3 CORP.
By:
		Name: Jim Leech
		Title:

 

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Exhibit E

 

Exhibit E – Form of RRA Termination Agreement

 

(See attached)

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AMENDMENT AND TERMINATION AGREEMENT

 

This Amendment and Termination Agreement (this “Amendment”) is entered into as of [●], 2024, by and between KLDiscovery Inc. (formerly known as Pivotal Acquisition Corp.), a Delaware corporation (the “Company”), and the undersigned stockholders of the Company (the “Stockholders”), with respect to that certain Registration Rights Agreement, dated as of December 19, 2019, by and among the Company, the Stockholders, and certain other parties thereto (the “Registration Rights Agreement”). All capitalized terms used herein and not otherwise defined shall having the meanings ascribed to them in the Registration Rights Agreement.

 

WITNESSETH:

 

WHEREAS, the Company has entered into (i) that certain Transaction Support Agreement, dated as of July 3, 2024 (the “Transaction Support Agreement”), by and among the Company and certain lenders, equityholders, and other stakeholders of the Company, including affiliates of the Stockholders, and (ii) that certain Exchange Agreement, dated as of July 3, 2024 (the “Exchange Agreement”), by and among the Company, 1397225 Ontario Limited (“OTPP”), and certain affiliates of MGG Investment Group LP (MGG Investment Group LP and such affiliates, collectively, “MGG”);

 

WHEREAS, it is a condition to the consummation of the transactions contemplated by the Exchange Agreement (the “Closing”, and the date of the Closing, the “Effective Date”) that, concurrently with the Closing, the Company and the Controlling Holders have executed and delivered this agreement terminating the Registration Rights Agreement in its entirety;

 

WHEREAS, pursuant to Section 13(a) of the Registration Rights Agreement, the Registration Rights Agreement may be amended with the prior written consent of the Company and each Controlling Holder; and

 

WHEREAS, pursuant to Section 13(a) of the Registration Rights Agreement, the Company and the Stockholders, being all of the Controlling Holders under the Registration Rights Agreement, now desire to amend the Registration Rights Agreement as set forth in this Amendment, with such amendment to be effective as of the Effective Date.

 

NOW THEREFORE, in consideration of the premises and the mutual agreements herein set forth, and as an inducement for the parties to the Exchange Agreement and the Transaction Support Agreement to consummate the Closing and the other transactions contemplated thereby, the parties hereto hereby agree as follows:

 

 

“(s) Termination. This Agreement will automatically terminate in its entirety upon the occurrence of the “Closing” as defined in that certain Exchange Agreement,

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dated as of July 3, 2024, by and among the Company, 1397225 Ontario Limited, and certain affiliates of MGG Investment Group LP. Following such termination, this Agreement shall be void and of no further force or effect, and there shall be no further liability or obligation on the part of any party hereto with respect to this Agreement.”

 

[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above.

 

COMPANY
KLDISCOVERY INC.
By:
Name:
Title:

 

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STOCKHOLDERS1
CEOF II DE I AIV, L.P. By: CEOF II DE AIV GP, L.P., its general partner By: CEOF II DE GP AIV, L.L.C., its general partner
By:
		Name:
		Title:

 

1 Note to Draft: To add signature blocks for any other “Controlling Holders” as of the time of execution.

 

 

CEOF II Coinvestment (DE), L.P. By: CEOF II DE AIV GP, L.P., its general partner By: CEOF II DE GP AIV, L.L.C., its general partner
By:
		Name:
		Title:

 

 

CEOF II Coinvestment B (DE), L.P. By: CEOF II DE AIV GP, L.P., its general partner By: CEOF II DE GP AIV, L.L.C., its general partner
By:
		Name:
		Title:

 

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KLDiscovery Enters into Transaction Support Agreement and Exchange Agreement to Reinforce Long-Term Financial Foundation

 

Signs definitive documentation with debenture holders, term loan lenders, revolving credit facility lender, and largest shareholder to strengthen balance sheet and reduce debt, positioning the Company to execute its long-term strategic plan

 

Company remains focused on meeting increased market demand for its unique and comprehensive services and solutions

 

Transaction expected to close in the third quarter of 2024

 

EDEN PRAIRIE, MN. – July 8, 2024 – (BUSINESS WIRE) KLDiscovery Inc. (“KLDiscovery” or the “Company”), a global leader in data management, information governance, eDiscovery, and advisory services solutions, today announced that it has signed a transaction support agreement (the “TSA”) with its convertible debenture holders, term loan lenders, revolving credit facility lender, and largest shareholder and an exchange agreement with its convertible debenture holders. This represents an important step toward closing a transaction that will significantly reduce the Company’s long-term debt and strengthen its financial position, enabling KLDiscovery to focus on its growth model and investment in market-leading client solutions.

 

“We are pleased to reach this significant milestone with our capital partners as we drive toward closing this transaction in the near term,” said Chris Weiler, Chief Executive Officer of KLDiscovery. “KLDiscovery's future is focused on growth through technology and service innovation. This transaction will bolster our balance sheet and position us for long-term success. With the support of our long-term stakeholders and our dedicated team driving us forward, we remain committed to delivering exceptional service and pioneering solutions for our clients.”

 

Under the TSA and the related definitive documents, KLDiscovery’s outstanding convertible notes will be cancelled and exchanged for new shares representing approximately 96% of the Company’s pro forma outstanding common equity (on a diluted basis) and the maturity of the Company’s term loan will be extended to August 2027. This transaction will result in both a meaningful reduction in KLDiscovery’s overall debt and the successful elimination of its near-term debt maturities. The documentation also contemplates KLDiscovery receiving committed second lien secured financing to support future operations and growth.

 

The signing of these transaction documents reflects the continued strong support of KLDiscovery’s debenture holders, term loan lenders, revolving credit facility lender, and largest shareholder, who are confident in the Company’s prospects and business strategy.

 

Kevin Griffin, CEO & Chief Investment Officer of debenture holder MGG Investment Group, said, “We are looking forward to working with Chris and the entire KLDiscovery team to build on the Company’s impressive track record. As corporations continue to grapple with more and more complex litigation and regulatory compliance matters, KLDiscovery is well-positioned to capture the growing demand for its industry-leading specialized eDiscovery, information governance, and data recovery solutions globally. The Company’s robust pipeline will be supported by a strong balance sheet that will allow it to actively pursue many growth opportunities available to it.”

 

The transaction remains subject to satisfying certain closing conditions and is expected to close in the third quarter of 2024. In the interim, KLDiscovery continues to focus on meeting the increased market demand for its unique and comprehensive solutions headlined by Nebula, the Company’s flagship, end-to-end AI / ML powered solution that serves as a singular platform of engagement for legal and other types of data. The Company maintains its commitment to providing its clients with the highest quality services, market-leading data security, and uninterrupted access to its entire portfolio of services and technology.

 

Advisors

Gibson, Dunn & Crutcher LLP is serving as legal counsel, Guggenheim Securities, LLC and AlixPartners are serving as financial advisors, and C Street Advisory Group is serving as strategic communications advisor to the Company.

 

Morrison & Foerster LLP is serving as legal counsel and Lazard is serving as investment banker to the debenture holders.

 

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About KLDiscovery

KLDiscovery provides technology-enabled services and software to help law firms, corporations, and government agencies solve complex data challenges. With offices in 26 locations across 17 countries, KLDiscovery is a global leader in delivering best-in-class data management, information governance, and eDiscovery solutions to support the litigation, regulatory compliance, and internal investigation needs of clients. Serving organizations for over 30 years, KLDiscovery offers data collection and forensic investigation, early case assessment, data processing, application software and data hosting for web-based document reviews, and managed document review services. In addition, through its global Ontrack data management business, KLDiscovery delivers world-class data recovery, disaster recovery, email extraction and restoration, data destruction, and tape management. KLDiscovery has been recognized as one of the fastest growing companies in North America by both Inc. Magazine (Inc. 5000) and Deloitte (Deloitte’s Technology Fast 500), and CEO Chris Weiler was a 2014 Ernst & Young Entrepreneur of the Year™. Additionally, KLDiscovery is a Relativity Certified Partner and maintains ISO/IEC 27001 Certified data centers around the world. Visit www.kldiscovery.com to learn more.

 

Forward Looking Statements

This press release includes “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934 and the United States Private Securities Litigation Reform Act of 1995. All statements contained in this press release other than statements of historical facts, including, without limitation, statements regarding the terms of the transaction, the ability to close and the timing of the closing of the transaction, the Company's future and its long-term stakeholders support, the Company’s ability to capture demand for its solutions globally and pursue growth opportunities, Company expansion and Company investment in growth and technology-enabled services and software are forward-looking statements. When used in this press release, the words “estimated,” “expects,” “anticipates,” “forecasts,” “believes,” “may,” “will,” “should,” “future” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements.

 

These forward-looking statements are not guarantees of future performance, conditions, results or events, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside KLDiscovery’s management’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include: closing of the transactions described herein, including satisfaction or waiver of all conditions to closing; consequences of KLDiscovery’s substantial levels of indebtedness, including the pending maturity and potential acceleration thereof, and its ability to repay its debt obligations as they become due or to secure alternative sources of financing; KLDiscovery’s potential failure to comply with privacy and information security regulations governing the client datasets it processes and stores; KLDiscovery’s ability to operate in highly competitive markets, and potential adverse effects of this competition; risk of decreased revenues if KLDiscovery does not adapt its pricing models; the ability to attract, motivate and retain qualified employees, including members of KLDiscovery’s senior management team; the ability to maintain a high level of client service and expand operations; potential issues with KLDiscovery’s product offerings that could cause legal exposure, reputational damage and an inability to deliver services; KLDiscovery’s ability to develop and successfully grow revenues from new products such as Nebula, improve existing products and adapt its business model to keep pace with industry trends; risk that KLDiscovery’s products and services fail to interoperate with third-party systems; potential unavailability of third-party technology that KLDiscovery uses in its products and services; potential disruption of KLDiscovery’s products, offerings, website and networks; difficulties resulting from KLDiscovery’s implementation of new consolidated business systems; the ability to deliver products and services following a disaster or business continuity event; disease or similar public health threat, such as COVID-19; potential unauthorized use of our products and technology by third parties and/or data security breaches and other incidents; potential intellectual property infringement claims; and the ability to comply with various trade restrictions, such as sanctions and export controls, resulting from KLDiscovery’s international operations. These risks and other factors discussed in the “Risk Factors” section of KLDiscovery’s Annual Report on Form 10-K for the year ended December 31, 2024, and subsequent Quarterly Report on Form 10-Q filed with the Securities Exchange Commission (“SEC”) and any other reports KLDiscovery files with the SEC, could cause actual results to differ materially from those expressed or implied by forward-looking statements made by KLDiscovery or on its behalf. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results or outcomes. All statements speak only as of the date made, and unless legally required, KLDiscovery undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

 

 

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Media Contact

Danny Zambito
888.811.3789
danny.zambito@kldiscovery.com

 

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v3.24.2

Document And Entity Information	Jul. 03, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jul. 03, 2024
Entity Registrant Name	KLDiscovery Inc.
Entity Central Index Key	0001752474
Entity Emerging Growth Company	true
Entity File Number	001-38789
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	61-1898603
Entity Address, Address Line One	9023 Columbine Road
Entity Address, City or Town	Eden Prairie
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	55347
City Area Code	888
Local Phone Number	811-3789
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Ex Transition Period	false
Title of 12(b) Security	N/A
No Trading Symbol Flag	true
Security Exchange Name	NONE

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