Exhibit 10.2

 

April 7, 2016

 

HCAC II, Inc.

c/o Hennessy Capital Partners II LLC

700 Louisiana Street, Suite 900

Houston, TX 77002

Attention: Kevin M. Charlton

 

AMENDED AND RESTATED COMMITMENT LETTER
$25 MILLION SENIOR SECURED CREDIT FACILITY

 

Ladies and Gentlemen:

 

As we, Wells Fargo Bank, N.A. (“Wells Fargo” or “we” or “us”), understand,
Hennessy Capital Partners II LLC and/or its controlled investment affiliates
(collectively, the “Sponsor”) has formed an acquisition entity, HCAC II, Inc., a
Delaware corporation (“Newco” or “you”), and a wholly owned subsidiary of
Hennessy Capital Acquisition Corp. II, a Delaware corporation (“Parent”), in
order to acquire (the “Acquisition”) USI Senior Holdings, Inc. (the “Company” or
the “Acquired Business”) and certain of its subsidiaries pursuant to an
agreement and plan of merger whereby Newco will merge with and into the Company.
Wells Fargo understands that you would like to obtain financing for the
Borrowers (as defined in the Term Sheet) in order to (a) refinance certain of
the Borrowers’ (as defined in the Term Sheet) existing indebtedness, (b) finance
general corporate purposes of the Borrowers (as defined in the Term Sheet), and
(c) pay fees and expenses associated with the Acquisition and related
transactions. The Acquisition, the entering into and funding of the Facility (as
defined below), the Refinancing (as defined below), and the Term Loan Facility
(as defined below) and the payment of related fees and expenses are referred to
herein collectively as the “Transactions”, and the date of the effectiveness of
the Facility (as defined below) and the consummation of the Acquisition is
referred to herein as the “Closing Date”.

 

You have also advised Wells Fargo that you intend that:

 

  (a) the Sponsor and other investors (collectively with the Sponsor, the
“Investors”) will directly or indirectly contribute to Parent, for further
contribution directly or indirectly to Newco, an aggregate amount of cash equity
(which, in respect of any equity of Parent other than common stock or “qualified
preferred”, shall be on terms reasonably acceptable to Wells Fargo)
(collectively, the “Equity Contribution”) that represents, together with
rollover equity (which may be cash or non-cash) of (i) the Company held by
management and current investors in the Company or (ii) of the Parent held by
current investors in the Parent, not less than $199,500,000;

 

  (b) the Borrowers (as defined in the Term Sheet) will obtain the Facility (as
defined below) on the terms described herein;

 

  (c) the Borrower will enter into a senior secured term loan facility from a
term lender selected by the Borrowers and reasonably acceptable to Wells Fargo
(provided, GSO Capital Partners, is

 

 

HCAC II, Inc.

April 7, 2016

 

    reasonably acceptable to Wells Fargo) in an amount up to $100,000,000 and on
terms and pursuant to agreements reasonably acceptable to Wells Fargo (the “Term
Loan Facility”); and         (d) all indebtedness of the USI and its
subsidiaries under that certain Revolving Credit and Term Loan Agreement, dated
as of May 1, 2015, by and among SunTrust Bank, USI, USI Intermediate Holdings,
Inc. and USI Senior Holdings, Inc. and the other lenders from time to time party
thereto, shall have been paid in full, and all commitments, security interests
and guaranties in connection therewith shall have been terminated and released
(or arrangements therefor reasonably satisfactory to Wells Fargo shall have been
made) (the transactions described in this clause (d) are collectively referred
to herein as the “Refinancing”).

 

Immediately after consummating the Transactions, the Borrowers and their
subsidiaries will have no outstanding indebtedness except as described above and
except for (i) indebtedness permitted to remain outstanding under the Merger
Agreement (as defined below), (ii) indebtedness permitted to be incurred under
the Merger Agreement (as defined below) prior to the Closing Date, and (iii)
trade payables, capital leases and equipment financings that the Borrowers and
Wells Fargo reasonably agree may remain outstanding after the Closing Date (the
indebtedness described in clauses (i) through (iii) above, collectively, the
“Permitted Surviving Debt”).

 

Based upon information known to us today concerning the Transactions, we are
pleased to provide you with this amended and restated commitment letter and the
annexes attached hereto (the “Commitment Letter”) and the term sheet and the
annexes attached thereto (the “Term Sheet”) which establish the terms and
conditions under which Wells Fargo commits to provide to the Borrowers (as
defined in the Term Sheet) a $25,000,000 senior secured credit facility (the
“Facility”). This Commitment Letter amends and restates that certain commitment
letter dated April 1, 2016 between Wells Fargo and you.

 

Confidentiality

 

(a) You agree that this Commitment Letter (including the Term Sheet) is for your
confidential use only and that neither its existence, nor the terms hereof or
thereof, will be disclosed by you to any person other than (i) your officers,
directors, employees, accountants, attorneys, and other advisors, and then only
on a confidential and “need-to-know” basis in connection with the Transactions
contemplated hereby, (ii) pursuant to the order of any court or administrative
agency or otherwise as required by applicable law, regulation, compulsory legal
process or as requested by a governmental authority (in which case you agree to
inform Wells Fargo promptly thereof) and (iii) in connection with the exercise
of any remedy or enforcement of any right under this Commitment Letter. The
foregoing notwithstanding, following your acceptance of this Commitment Letter
in accordance herewith, you may (i) provide a copy hereof (including the Term
Sheet, but not including the fee letter dated the date hereof (the “Fee Letter”)
(unless Wells Fargo shall otherwise consent in writing) and (unless Wells Fargo
shall otherwise consent) Annex A-I shall be redacted (in form and substance
satisfactory to Wells Fargo) in respect of amounts, percentages and basis points
of fee based compensation set forth therein) to the Company (so long as it
agrees not to disclose this Commitment Letter (including the Term Sheet) other
than to its officers, directors, employees, accountants, attorneys, and other
advisors, and then only on a confidential and “need-to-know” basis in connection
with the Transactions contemplated hereby), and (ii)  file or make such other
public disclosures of the terms and conditions hereof (including the Term Sheet,
but not including the Fee Letter) as you are required by law to make; provided,
that the existence and contents thereof may be disclosed as part of projections,
pro forma information and a generic disclosure of

 

 - 2 - 

HCAC II, Inc.

April 7, 2016

 

aggregate sources and uses in any proxy statement or similar public filing
related to the Acquisition or in connection with any public filing requirement.

 

(b) Wells Fargo agrees that all non-public information received by them from the
Sponsor or the Acquired Business in connection with the Acquisition and the
Transactions, including, without limitation, any information regarding the
Company and its subsidiaries, their operations, assets, and existing and
contemplated business plans shall be treated by Wells Fargo in a confidential
manner, and shall not be disclosed by Wells Fargo to persons who are not parties
to this Commitment Letter, except: (i) to your officers, directors, employees,
attorneys advisors, accountants, auditors, and consultants to Wells Fargo on a
confidential and “need to know” basis in connection with the Transactions
contemplated hereby, (ii) to subsidiaries and affiliates of Wells Fargo,
provided that any such subsidiary or affiliate shall have agreed to receive such
information hereunder subject to the terms of this clause (b), (iii) as may be
required by regulatory authorities so long as such authorities are informed of
the confidential nature of such information, provided that prior to any
disclosure under this clause (iii), the disclosing party agrees (except with
respect to any audit or examination conducted by bank accountants or any
governmental bank authority exercising examination or regulatory authority
(including any self-regulatory authority)) to promptly provide Sponsor with
prior notice thereof, to the extent that it is practicable to do so and to the
extent the disclosing party is permitted to do so pursuant to the terms of the
applicable regulation, (iv) as may be required by statute, decision, or judicial
or administrative order, rule, or regulation, provided that prior to any
disclosure under this clause (iv), the disclosing party agrees to promptly
provide Sponsor with prior notice thereof, to the extent that it is practicable
to do so and to the extent that the disclosing party is permitted to provide
such prior notice to Sponsor pursuant to the terms of the applicable statute,
decision, or judicial or administrative order, rule, or regulation, (v) as may
be agreed to in advance by Sponsor, (vi) as requested or required by any
governmental authority pursuant to any subpoena or other legal process, provided
that prior to any disclosure under this clause (vi) the disclosing party agrees
to promptly provide Sponsor with prior notice thereof, to the extent that it is
practicable to do so and to the extent that the disclosing party is permitted to
provide such prior notice to Sponsor pursuant to the terms of the subpoena or
other legal process, (vii) as to any such information that is or becomes
generally available to the public (other than as a result of prohibited
disclosure by Wells Fargo), (viii) in connection with any proposed assignment or
participation of Wells Fargo’s interest in the Facility, provided that any such
proposed assignee or participant shall have agreed to receive such information
subject to the terms of this clause (b), and (ix) in connection with any
litigation or other adverse proceeding involving parties to this Commitment
Letter; provided that prior to any disclosure to a party other than Sponsor,
Newco, Company, the Lenders (as defined in the Term Sheet), their respective
affiliates and their respective counsel under this clause (ix) with respect to
litigation involving a party other than Sponsor, Newco, Company, the Lenders (as
defined in the Term Sheet), and their respective affiliates, the disclosing
party agrees to promptly provide Sponsor with prior notice thereof.
Notwithstanding the foregoing, you and the Sponsor acknowledge that confidential
information under this clause (b) shall not include any information received by
Wells Fargo from one or more companies affiliated with the Acquired Business in
connection with existing credit relationships that Wells Fargo or its affiliates
have entered into with the Loan Parties (as defined in the Term Sheet) prior to
the date hereof.

 

(c) Anything to the contrary in this Commitment Letter notwithstanding, Sponsor
agrees that Wells Fargo shall have the right to provide information concerning
the Facility to loan syndication and reporting services.

 

 - 3 - 

HCAC II, Inc.

April 7, 2016

 

Costs and Expenses

 

As consideration for the commitments and agreements of Wells Fargo under this
Commitment Letter with respect to the Facility, if the Closing Date occurs you
agree to pay or reimburse (or cause payment or reimbursement with respect to)
Wells Fargo, promptly upon demand therefor (and in any event within ten (10)
days) following receipt of the relevant invoice (including customary backup
documentation in reasonable detail supporting such invoice) (provided nothing
herein shall require the furnishing of or access to any information, materials
or documents subject to attorney-client privilege), for (a) all reasonable and
documented costs and expenses (including, without limitation, all reasonable and
documented costs and expenses arising in connection with the syndication of the
Facility and any due diligence investigation performed by Wells Fargo or its
advisors, and the reasonable and documented out-of-pocket fees and expenses of
special counsel to Wells Fargo and also of, without limitation, any local legal
counsel as shall be reasonably necessary following consultation with you in
connection with the transactions contemplated hereby) arising in connection with
the negotiation, preparation, execution and delivery of the Commitment Letter
and Loan Documents and any amendment or waiver with respect thereto and (b) all
reasonable and documented legal or other expenses in connection with the
enforcement of the Loan Documents and any of Wells Fargo’s rights and remedies
hereunder.

 

Indemnification

 

Sponsor agrees to indemnify, defend, and hold harmless Wells Fargo, each of its
affiliates, and each of their respective officers, directors, employees, agents,
advisors, attorneys, and representatives (each, an “Indemnified Person”) as set
forth on Annex A hereto. The parties agree that the indemnification (and other)
provisions shall be as set forth on Annex A and those provisions are
incorporated herein by this reference.

 

Conditions

 

There are no other conditions (implied or otherwise) to the commitment of Wells
Fargo to provide the Facility other than those conditions set forth on Annex B-I
to the Term Sheet (the “Funding Conditions”).

 

Notwithstanding anything in this Commitment Letter, the Term Sheet, the
definitive documentation for the Facility (the “Loan Documents”) or any other
letter agreement or other undertaking concerning the Facility to the contrary
but subject to the Funding Conditions, (i) the only representations and
warranties relating to the Company and its subsidiaries and their businesses,
the making and accuracy of which shall be a condition to the availability of the
Facility on the Closing Date shall be (A) such of the representations and
warranties made by or on behalf of the Company and its subsidiaries in the
Agreement and Plan of Merger dated as of April 1, 2016 by and among Newco, the
Company, and Hennessy Capital Acquisition Corp. II (the “Merger Agreement”), but
only to the extent that you (or your applicable affiliate) or Newco have a right
not to consummate the transactions contemplated by the Merger Agreement or to
terminate your or its obligations under the Merger Agreement as a result of a
breach of such representations and warranties (the “Specified Merger Agreement
Representations”), and (B) the Specified Representations (as defined below), and
(ii) the terms of the Facility shall contain no condition precedent to the
funding of the Facility on the Closing Date other than those set forth in Annex
B-I to the Term Sheet, the satisfaction of which shall obligate the Lenders (as
defined in the Term Sheet) to provide the Facility on the terms set forth in
this Commitment Letter and the Term Sheet (it being

 

 - 4 - 

HCAC II, Inc.

April 7, 2016

 

understood that, to the extent any collateral is not provided on the Closing
Date after use of commercially reasonable efforts to do so (other than (x) the
filing of Uniform Commercial Code financing statements, (y) a security interest
that can be created by the execution and delivery of a security agreement and
(z) the delivery of stock certificates, if any, in respect of the equity
interests of the Borrowers and their material wholly-owned U.S. subsidiaries
(solely to the extent required in the Term Sheet)), the providing of such
collateral shall not constitute a condition precedent to the availability of the
Facility on the Closing Date but shall be required to be provided and/or
perfected within 90 days (or such longer period as the Agent (as defined in the
Term Sheet) agrees to) after the Closing Date pursuant to arrangements to be
mutually agreed upon by the parties hereto acting reasonably). For purposes
hereof, “Specified Representations” means the representations and warranties set
forth in the Loan Documents relating to organization, existence, power and
authority (as to execution, delivery and performance of the Loan Documents), due
authorization, execution, delivery, enforceability and non-contravention of the
Loan Documents with the Loan Parties’ (as defined in the Term Sheet) governing
documents, solvency as of the Closing Date (after giving effect to the
Transactions) of the Parent and its subsidiaries on a consolidated basis (such
representation and warranty to be consistent with the solvency certificate in
the form set forth in Annex B-II), Federal Reserve Bank margin regulations, the
Investment Company Act, OFAC, Patriot Act, Foreign Corrupt Practices Act and
other anti-terrorism laws (including the use of proceeds of the Facility not
violating such laws), and, subject to the parenthetical in clause (ii) above and
the permitted liens set forth in the Loan Documents, the creation, validity,
perfection and priority of the security interests granted in the collateral as
of the Closing Date. This paragraph, and the provisions herein, shall be
referred to as the “Certain Funds Provision”.

 

Exclusivity

 

On or prior to the earlier of (a) the mutual agreement of the parties hereto not
to pursue the execution of the Loan Documents; (b) the Closing Date; and (c) the
Expiration Date (as defined below) (or such later date as you and Wells Fargo
shall have mutually agreed to extend Wells Fargo’s Commitment hereunder), you or
the Sponsor, unless you first obtain our approval:

 

  (i) shall not, and shall cause your affiliates, agents, representatives,
counsel, consultants and advisors and any other person acting on your or their
behalf not to, directly or indirectly solicit, participate in any negotiations
or discussions with or provide or afford access to information to any third
party with respect to, or otherwise effect, facilitate, encourage or accept any
offers for the funding of the Facility or any alternative equity or debt
financing arrangements in connection with the Transactions (other than the
Equity Contribution, on terms and in the amount reasonably agreed by Wells
Fargo, and the Term Loan Facility); and

 

  (ii) shall terminate or have terminated prior to the date hereof any written
agreement or arrangement related to the foregoing to which you or your
affiliates are parties, as well as any activities and discussions related to the
foregoing as may be continuing on the date hereof with any party other than
Wells Fargo and its representatives.

 

Notwithstanding any term or provision hereof to the contrary, all of the rights
of Wells Fargo under this paragraph shall remain in full force and effect
notwithstanding the termination of this Commitment Letter or Wells Fargo’s
commitments and agreements hereunder.

 

 - 5 - 

HCAC II, Inc.

April 7, 2016

 

Information

 

In issuing this Commitment Letter, Wells Fargo is relying on the accuracy of the
information furnished to it by or on behalf of Sponsor, Newco and/or Company and
their affiliates, without independent verification thereof. Sponsor hereby
represents that to its knowledge (a) all written factual information (other than
forward looking information, projections of future financial performance and
information of a general economic or industry specific nature) concerning Newco,
Company and its subsidiaries (the “Information”) that has been, or is hereafter,
made available by or on behalf of Sponsor, Newco or Company or their affiliates,
when considered as a whole, does not, or shall not when delivered, contain any
untrue statement of material fact or omit to state a material fact necessary in
order to make the statements contained therein not materially misleading in any
material respect in light of the circumstances under which such statements have
been made (after giving effect to all supplements and updates thereto), and (b)
all projections, when taken as a whole, that have been or are hereafter made
available by or on behalf of Sponsor, Newco and/or Company or their affiliates
(“Projections”) are, or when delivered shall be, prepared in good faith on the
basis of information and assumptions that are believed by Sponsor to be
reasonable at the time such projections were furnished; it being recognized by
Wells Fargo that projections of future events are not to be viewed as facts and
are subject to significant uncertainties and contingencies many of which are
beyond your control, that no assurance can be given that any particular
financial projections will be realized and actual results may vary significantly
from projected results. You agree that if at any time prior to the closing of
the Transactions any of the representations in the preceding sentence would be
incorrect in any material respect if the Information and Projections were being
furnished, and such representations were being made, at such time, then you will
use commercially reasonable efforts to promptly supplement the Information and
the Projections so that such representations will be correct in all material
respects under those circumstances, provided, that any such supplementation
shall cure any breach of such representations.

 

Sharing Information; Absence of Fiduciary Relationship; Affiliate Activities

 

You acknowledge that Wells Fargo or one or more of its affiliates may be
providing debt financing, equity capital or other services (including financial
advisory services) to other companies in respect of which you may have
conflicting interests regarding the transactions described herein or otherwise.
You also acknowledge that we do not have any obligation to use in connection
with the transactions contemplated by this Commitment Letter, or to furnish to
you, confidential information obtained by us from other companies.

 

You further acknowledge and agree that (a) no fiduciary, advisory or agency
relationship between you, on the one hand, and Wells Fargo, on the other hand,
is intended to be or has been created in respect of any of the transactions
contemplated by this Commitment Letter, irrespective of whether Wells Fargo or
one or more of its affiliates has advised or is advising you on other matters,
(b) Wells Fargo, on the one hand, and you, on the other hand, have an
arms-length business relationship that does not directly or indirectly give rise
to, nor do you rely on, any fiduciary duty on the part of Wells Fargo, (c) you
are capable of evaluating and understanding, and you understand and accept, the
terms, risks and conditions of the transactions contemplated by this Commitment
Letter, (d) you have been advised that Wells Fargo or one or more of its
affiliates is engaged in a broad range of transactions that may involve
interests that differ from your interests and that Wells Fargo does not have any
obligation to disclose such interests and transactions to you by virtue of any
fiduciary, advisory or agency relationship, and (e) you waive, to the fullest
extent permitted by law, any claims you may have against Wells Fargo for breach
of fiduciary duty or alleged breach of fiduciary duty and agree that Wells Fargo
shall not have any liability (whether direct or indirect) to you in respect of
such a fiduciary duty claim or to any person asserting a fiduciary duty

 

 - 6 - 

HCAC II, Inc.

April 7, 2016

 

claim on behalf of or in right of you, including your stockholders, employees or
creditors.  For the avoidance of doubt, the provisions of this paragraph apply
only to the transactions contemplated by this Commitment Letter and the
relationships and duties created in connection with the transactions
contemplated by this Commitment Letter.

 

You further acknowledge that Wells Fargo or one or more of Wells Fargo’s
affiliates are full service securities firm engaged in securities trading and
brokerage activities as well as providing investment banking and other financial
services.  In the ordinary course of business, Wells Fargo or one or more of
Wells Fargo’s affiliates may provide investment banking and other financial
services to, and/or acquire, hold or sell, for their respective own accounts and
the accounts of customers, equity, debt and other securities and financial
instruments (including bank loans and other obligations) of, you, and Company
and other companies with which you or Company may have commercial or other
relationships.  With respect to any debt or other securities and/or financial
instruments so held by Wells Fargo or one or more of its affiliates or any of
their respective customers, all rights in respect of such securities and
financial instruments, including any voting rights, will be exercised by the
holder of the rights, in its sole discretion.

 

Governing Law, Etc.

 

This Commitment Letter, and the Term Sheet, and the Fee Letter, the rights of
the parties hereto or thereto with respect to all matters arising hereunder or
related hereto, and any and all claims, controversies or disputes arising
hereunder or related hereto shall be governed by, and construed in accordance
with, the law of the State of New York. Each of the parties hereto (a) agrees
that all claims, controversies, or disputes arising hereunder or hereto shall be
tried and litigated only in the state courts, and to the extent permitted by
applicable law, federal courts located in New York, New York and each of the
parties hereto submits to the exclusive jurisdiction and venue of such courts
relative to any such claim, controversy or dispute, or any appellate court from
any thereof and (b) waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court; provided, that, notwithstanding the preceding sentence and the
governing law provisions of this Commitment Letter, it is understood and agreed
that (x) the interpretation of the definition of “Material Adverse Effect” set
forth in the Merger Agreement (and whether or not a Material Adverse Effect has
occurred), (y) the determination of the accuracy of any Specified Merger
Agreement Representation and whether as a result of any inaccuracy thereof you
or your applicable affiliate has the right to terminate your or their
obligations under the Merger Agreement or to decline to consummate the
Acquisition and (z) the determination of whether the Acquisition has been
consummated in accordance with the terms of the Merger Agreement and, in any
case, claims or disputes arising out of any such interpretation or determination
or any aspect thereof, in each case, shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.

 

Waiver of Jury Trial

 

To the maximum extent permitted by applicable law, each party hereto irrevocably
waives any and all rights to a trial by jury in respect of to any claim,
counterclaim, controversy, or dispute (whether based in contract, tort, or
otherwise) arising out of or relating to this Commitment Letter, the Acquisition
or the Transactions or the actions of Wells Fargo or any of its affiliates in
the negotiation, performance, or enforcement of this Commitment Letter or the
Transactions or the actions of Wells Fargo or any of its affiliates in the
negotiation, performance, or enforcement of this Commitment Letter.

 

 - 7 - 

HCAC II, Inc.

April 7, 2016

 

Patriot Act

 

Wells Fargo hereby notifies you that pursuant to the requirements of the USA
PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the
“PATRIOT Act”), Wells Fargo may be required to obtain, verify and record
information that identifies the Loan Parties (as defined in the Term Sheet),
which information includes the name, address, tax identification number and
other information regarding the Loan Parties that will allow Wells Fargo to
identify the Loan Parties in accordance with the PATRIOT Act. This notice is
given in accordance with the requirements of the PATRIOT Act. You agree to cause
Company to provide Wells Fargo, prior to the Closing Date, with all
documentation and other information required by bank regulatory authorities
under “know your customer” and anti-money laundering rules and regulations,
including, without limitation, the PATRIOT Act.

 

Counterparts; Electronic Execution

 

This Commitment Letter (together with the Term Sheet and the Fee Letter) sets
forth the entire agreement between the parties with respect to the matters
addressed herein, supersedes all prior communications, written or oral, with
respect to the subject matter hereof, and may not be amended or modified except
in writing signed by the parties hereto. Each of the parties hereto agrees that
this Commitment Letter is a binding and enforceable agreement with respect to
the subject matter contained herein (including an obligation to negotiate in
good faith); it being acknowledged and agreed that the commitments of Wells
Fargo hereunder to fund the Facility on the Closing Date are subject only to the
Funding Conditions, and upon satisfaction (or waiver by Wells Fargo) of the
Funding Conditions, the funding of the Facility shall occur. This Commitment
Letter may be executed in any number of counterparts, each of which, when so
executed, shall be deemed to be an original and all of which, taken together,
shall constitute one and the same letter. Delivery of an executed counterpart of
a signature page to this letter by telefacsimile or other electronic
transmission shall be as effective as delivery of a manually executed
counterpart of this letter. This Commitment Letter shall not be assignable by
you (except by you (and with prior written notice to Wells Fargo) to one or more
of your affiliates that is a domestic “shell” company controlled, directly or
indirectly, by the Sponsor to effect the consummation of the Acquisition prior
to or substantially concurrently with (and to the Company substantially
concurrently with) the consummation of the closing of the Acquisition) without
the prior written consent of Wells Fargo (any purported assignment without such
consent shall be null and void), is intended to be solely for the benefit of the
parties hereto, and is not intended to confer any benefits upon, or create any
rights in favor of, any person other than the parties hereto and the Indemnified
Persons. In the event that this Commitment Letter is terminated or expires, the
Indemnification, Confidentiality, Exclusivity, Sharing Information; Absence of
Fiduciary Relationship; Affiliate Activities, Governing Law, Etc., and the
Waiver of Jury Trial provisions hereof shall survive such termination or
expiration. Anything contained herein to the contrary notwithstanding, the
obligations of Sponsor under this Commitment Letter shall terminate at the time
of the initial funding of the Facility.

 

Nothing contained herein shall limit or preclude Wells Fargo or any of its
affiliates from carrying on any business with, providing banking or other
financial services to, or from participating in any capacity, including as an
equity investor, in any entity or person whatsoever, including, without
limitation, any competitor, supplier or customer of you, the seller(s) of the
stock of the Company, or the Company, or any of your or their respective
affiliates, or any other entity or person that may have interests different than
or adverse to such entities or persons. Neither Wells Fargo nor any of its
affiliates has assumed or will assume an advisory, agency, or fiduciary
responsibility in your or your affiliates’ favor with respect to any of the
Transactions or the process leading thereto (irrespective of whether Wells Fargo
or any of its affiliates has advised or is currently advising you or your
affiliates on other matters).

 

 - 8 - 

HCAC II, Inc.

April 7, 2016

 

[remainder of page intentionally left blank]

 

 

 

 

 

 - 9 - 

HCAC II, Inc.

April 7, 2016

 

This Commitment Letter shall expire at 5 p.m. (New York time) on April 8, 2016,
unless prior thereto Wells Fargo has received a copy of this Commitment Letter
and the Fee Letter signed by you. In the event (i) the initial funding under the
Facility does not occur on or prior to August 19, 2016, (ii) after the execution
of the Merger Agreement and prior to the consummation of the Transactions, the
Merger Agreement terminates in accordance with its terms, or (iii) the
consummation of the Acquisition occurs with or without the funding of the
Facility (such earliest time, the “Expiration Date”), then Wells Fargo’s
commitment to provide the Facility shall automatically expire on such date
unless Wells Fargo agrees in its sole discretion to an extension, provided, that
any rights of Wells Fargo that survive termination shall continue in full force
and effect for purposes of clarity. If you elect to deliver your signed
counterpart of this Commitment Letter by telecopier or other electronic
transmission, please arrange for the executed original to follow by next-day
courier.

 

  Very truly yours,       WELLS FARGO BANK, NATIONAL ASSOCIATION         By: /s/
Vivek Tayal        Name: 

Vivek Tayal

    Title: Director

 

ACCEPTED AND AGREED TO

this 7th day of April, 2016

      HCAC II, INC.       By: /s/ Daniel J. Hennessy   Name:  Daniel J. Hennessy
  Title: Chairman and Chief Executive Officer  

 

 

HCAC II, Inc.

April 7, 2016

 

ANNEX A

 

Indemnification Provisions

 

Capitalized terms used herein shall have the meanings ascribed to them in the
amended and restated commitment letter, dated April 7, 2016 (the “Commitment
Letter”) addressed to HCAC II, Inc. (the “Indemnifying Party”) from Wells Fargo
Bank, N.A. (“Wells Fargo”).

 

To the fullest extent permitted by applicable law, the Indemnifying Party agrees
that it will indemnify, defend, and hold harmless each of the Indemnified
Persons from and against (i) any and all losses, claims, damages, obligations,
penalties, judgments, awards, liabilities, costs, expenses and disbursements,
(ii) any and all actions, suits, proceedings and investigations in respect
thereof, and (iii) any and all reasonable and documented legal or other costs,
expenses or disbursements (supported by customary backup documentation in
reasonable detail; provided nothing herein shall require the furnishing of or
access to any information, materials or documents subject to attorney-client
privilege) in giving testimony or furnishing documents in response to a subpoena
or otherwise (including, without limitation, the costs, expenses and
disbursements, as and when incurred, of investigating, preparing or defending
any such action, proceeding or investigation (whether or not in connection with
litigation in which any of the Indemnified Persons is a party) and including,
without limitation, any and all losses, claims, damages, obligations, penalties,
judgments, awards, liabilities, costs, expenses and disbursements, resulting
from any act or omission of any of the Indemnified Persons), directly or
indirectly, caused by, relating to, based upon, arising out of or in connection
with (a) the Transactions, (b) the Commitment Letter or the Facility, or (c) any
untrue statement of a material fact contained in, or omissions in, Information
furnished by Indemnifying Party or Company, or any of their subsidiaries or
affiliates in connection with the Transactions or the Commitment Letter;
provided, however, such indemnity agreement shall not apply to any portion of
any such loss, claim, damage, obligation, penalty, judgment, award, liability,
cost, expense or disbursement of an Indemnified Person to the extent it is found
in a final judgment by a court of competent jurisdiction (not subject to further
appeal) to have resulted primarily and directly from (x) the gross negligence,
bad faith or willful misconduct of such Indemnified Person or which result from
a claim brought as a result of the breach by such Indemnified Person of its
obligations under any documents executed in connection with the Facility or (y)
any dispute solely among the Indemnified Persons and/or their related parties
and not arising out of any act or omission of you, any of your or its
subsidiaries or the Sponsor (other than any proceeding against Wells Fargo
solely in its capacity or in fulfilling its role as an Agent or similar role
under the Facility).

 

These Indemnification Provisions shall be in addition to any liability which the
Indemnifying Party may have to the Indemnified Persons.

 

If any action, suit, proceeding or investigation is commenced, as to which any
of the Indemnified Persons proposes to demand indemnification, it shall notify
the Indemnifying Party with reasonable promptness; provided, however, that any
failure by any of the Indemnified Persons to so notify the Indemnifying Party
shall not relieve the Indemnifying Party from its obligations hereunder. Wells
Fargo, on behalf of the Indemnified Persons, shall have the right to retain
counsel of its choice to represent the Indemnified Persons, and the Indemnifying
Party shall pay the reasonable and documented fees, expenses, and disbursement
of such counsel (supported by customary backup documentation in reasonable
detail; provided nothing herein shall require the furnishing of or access to any
information, materials or documents subject to attorney-client privilege), and
such counsel shall, to the extent consistent with its professional
responsibilities, cooperate with the Indemnifying Party and any counsel
designated by the

 

 - 1 - 

HCAC II, Inc.

April 7, 2016

 

Indemnifying Party. The Indemnifying Party shall be liable for any settlement of
any claim against any of the Indemnified Persons made with its written consent,
which consent shall not be unreasonably withheld. Without the prior written
consent of Wells Fargo, the Indemnifying Party shall not settle or compromise
any claim, permit a default or consent to the entry of any judgment in respect
thereof unless any such settlement or compromise exclusively requires payment of
money by you.

 

Neither expiration nor termination of Wells Fargo’s commitments under the
Commitment Letter or funding or repayment of the loans under the Facility shall
affect these Indemnification Provisions which shall remain operative and
continue in full force and effect.

 

The following shall hereinafter be referred to as the “SPAC Provision”.
Reference is made to the final prospectus of Hennessy Capital Acquisition Corp.
II (the “SPAC”), filed with the Securities and Exchange Commission and dated
July 22, 2015 (File No. 333-205152) (the “Prospectus”). Wells Fargo warrants and
represents that it has read the Prospectus and understands that the SPAC has
established a trust account containing the proceeds of its initial public
offering (the “IPO”) and from certain private placements occurring
simultaneously with the IPO (collectively, with interest accrued from time to
time thereon, the “Trust Fund”) initially in an amount of $199,599,000 for the
benefit of the SPAC’s public stockholders (“Public Stockholders”) and certain
parties (including the underwriters of the IPO) and that, except for a portion
of the interest earned on the amounts held in the Trust Fund, the SPAC may
disburse monies from the Trust Fund only: (i) to the Public Stockholders in the
event they elect to redeem the shares of common stock of the SPAC in connection
with the consummation of the SPAC’s initial business combination (as such term
is used in the Prospectus) (“Business Combination”), (ii) to the Public
Stockholders if the SPAC fails to consummate a Business Combination within 24
months from the closing of the IPO, (iii) any amounts necessary to pay any taxes
and for working capital purposes or (iv) to the SPAC after or concurrently with
the consummation of a Business Combination. For and in consideration of the SPAC
entering into discussions with Wells Fargo regarding a potential business
relationship (which may include a Business Combination), and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Wells Fargo hereby agrees it does not now and shall not at any
time hereafter have any right, title, interest or claim of any kind in or to any
monies in the Trust Fund or distributions therefrom, or make any claim against,
the Trust Fund, regardless of whether such claim arises as a result of, in
connection with or relating in any way to, any proposed or actual business
relationship between the SPAC and Wells Fargo, this Commitment Letter or any
other matter, and regardless of whether such claim arises based on contract,
tort, equity or any other theory of legal liability (any and all such claims are
collectively referred to hereafter as the “Claims”). Wells Fargo hereby
irrevocably waives any Claims it may have against the Trust Fund (including any
distributions therefrom) now or in the future as a result of, or arising out of,
any negotiations, contracts or agreements with the SPAC and will not seek
recourse against the Trust Fund (including any distributions therefrom) for any
reason whatsoever (including, without limitation, for an alleged breach of this
Commitment Letter). Wells Fargo agrees and acknowledges that such irrevocable
waiver is material to this Commitment Letter and the Transactions described
herein and specifically relied upon by the SPAC to induce it to enter into the
Transactions or other matters described or referred to in this Commitment
Letter, and Wells Fargo further intends and understands such waiver to be valid,
binding and enforceable under applicable law. To the extent Wells Fargo
commences any action or proceeding based upon, in connection with, relating to
or

 

 - 2 - 

HCAC II, Inc.

April 7, 2016

 

arising out of any matter relating to the SPAC, which proceeding seeks, in whole
or in part, monetary relief against the SPAC, Wells Fargo hereby acknowledges
and agrees that its sole remedy shall be against funds held outside of the Trust
Fund and that such claim shall not permit Wells Fargo (or any party claiming on
Wells Fargo’s behalf or in lieu of Wells Fargo) to have any claim against the
Trust Fund (including any distributions therefrom) or any amounts contained
therein. In the event Wells Fargo commences any action or proceeding based upon,
in connection with, relating to or arising out of any matter relating to the
SPAC, which proceeding seeks, in whole or in part, relief against the Trust Fund
(including any distributions therefrom) or the Public Stockholders, whether in
the form of money damages or injunctive relief, the SPAC shall be entitled to
recover from Wells Fargo the associated reasonable and documented legal fees and
costs in connection with any such action, in the event the SPAC prevails in such
action or proceeding.

 

 - 3 - 

HCAC II, Inc.

April 7, 2016

 

TERM SHEET

 

This Term Sheet is part of the amended and restated commitment letter, dated
April 7, 2016 (the “Commitment Letter”), addressed to HCAC II, Inc. by Wells
Fargo Bank, N.A. (“Wells Fargo”) and is subject to the terms and conditions of
the Commitment Letter. Capitalized terms used herein and the accompanying
Annexes shall have the meanings set forth in the Commitment Letter unless
otherwise defined herein.

 

Borrowers: Initially, Company (as successor by merger to Newco), and immediately
following the Closing Date, United Subcontractors, Inc. (“USI”) and its domestic
subsidiaries reasonably acceptable to Agent with assets to be included in the
Borrowing Base (individually, a “Borrower” and collectively, the “Borrowers”).  
    Guarantors: Parent, all of USI’s wholly owned domestic subsidiaries (other
than the Borrowers) and any parent holding companies of the Borrowers.  Such
Guarantors, together with Borrowers, each a “Loan Party” and collectively, the
“Loan Parties”).     Lenders and Agent: Wells Fargo and such other reasonably
acceptable lenders (the “Lenders”) as Agent elects to include within the
syndicate in consultation with USI following the Closing Date.  Wells Fargo
shall be the sole agent for the Lenders (in such capacity, the “Agent”).    
Facility: A senior secured facility (the “Facility”) in a maximum credit amount
(“Maximum Credit Amount”) of $25,000,000. Under the Facility, Lenders will
provide Borrowers with a revolving credit facility (the “Revolver”).     Sole
Lead Arranger and Sole Bookrunner: Wells Fargo     Revolver: Advances under the
Revolver (“Advances” or “Revolving Loans”) will be available starting on the
Closing Date (subject to the Closing Borrowing Base) and thereafter up to a
maximum amount outstanding at any one time of $25,000,000 (the “Maximum Revolver
Amount”). In addition, the amount of Advances plus Letters of Credit shall not,
at any time, exceed the Borrowing Base (as hereinafter defined).     Closing
Borrowing Base: In the event that as of the Closing Date, the Agent has not
received a final report from the field examinations of the business and
collateral of Borrowers in each case as provided below, the Borrowing Base for
purposes of the initial

 

 - 4 - 

HCAC II, Inc.

April 7, 2016

 

 

Revolving Loans and Letters of Credit on the Closing Date (the “Closing
Borrowing Base”) shall be equal to the sum of (i) 40% multiplied by the book
value of the accounts receivable of Borrowers (exclusive of retainage and
unbilled accounts receivable); plus (ii) the amount equal to the lesser of (A)
25% of the net book value of the inventory of Borrowers and (B) $5,000,000;
minus (iii) applicable reserves established by Agent.

 

The Closing Borrowing Base shall only be in effect until the earlier of 60 days
after the Closing Date or the date Agent has received the final report from a
current field examination, provided, that, Agent may adjust the Closing
Borrowing Base as to the eligible accounts and eligible inventory based on any
field examination results at the time that it receives such results and
otherwise at any time prior to the receipt of such field examination based on
information that would give rise to the rights of the Agent under the Loan
Documents to make adjustments to the Borrowing Base.

 

Subject to the Certain Funds Provisions, on and after the receipt by Agent of
the field examination results as provided below, Revolving Loans and Letters of
Credit shall be provided to Borrowers subject to the terms and conditions of the
Loan Documents and availability under the Borrowing Base, which will be
calculated as set forth below.

 

In the event that the Agent has not received a final report from the field
examinations of the business and collateral of Borrowers prior to the Closing
Date, Borrowers shall use commercially reasonable efforts to provide Agent and
the field examiners sufficient access and information to complete such field
examinations (it being understood that the completion of such examinations shall
not be a condition precedent, but if not delivered prior to the Closing Date
will be required on or prior to the 60th day following the Closing Date) and
Parent, Sponsor and their affiliates agree to use commercially reasonable
efforts and to cooperate in good faith to cause such field examinations to be
commenced as soon as practicable following the date of the Commitment Letter. If
the Agent has not received such final report from the field examinations on or
prior to the 60th day after the Closing Date (or such later date as is agreed to
by Agent in its sole discretion), availability shall be zero on and after such
60th day (or such other date as is agreed to by Agent in its sole discretion)
until Agent’s receipt and reasonable opportunity to review the results of such
final report from the field examination.

 

 - 5 - 

HCAC II, Inc.

April 7, 2016

 

Borrowing Base:

Subject to the Closing Borrowing Base as provided above and the Certain Funds
Provision, the Revolving Loans and Letters of Credit shall be provided to each
Borrower subject to the terms and conditions of the Loan Documents and
availability under the Borrowing Base, which will be calculated as follows:

 

(a) 85% multiplied by the net amount of the eligible accounts of such Borrower
(with a sublimit of up to $2,500,000 for accounts representing progress billings
subject to a field exam report), plus

 

(b) the amount equal to the lesser of (i) 30% multiplied by the net book value
(calculated at the lower of cost or market on a first in, first out basis) of
eligible inventory of such Borrower or (ii) $5,000,0001; plus

 

(c) domestic cash of the Borrowers, in an amount not to exceed $3,000,000, on
deposit in blocked accounts subject to a first priority perfected lien in favor
of the Agent and which give the Agent exclusive access and control for
withdrawal purposes; minus

 

(d) customary reserves.

   

Letter of Credit Subfacility:

Under the Revolver, Borrowers will be entitled to request that Agent issue
letters of credit (each, a “Letter of Credit”) in an aggregate amount not to
exceed $12,000,000 at any one time outstanding. The aggregate amount of
outstanding Letters of Credit will be reserved against the credit availability
created under the Borrowing Base and the Maximum Revolver Amount.      Optional
Prepayment: The Advances may be prepaid in whole or in part from time to time
without penalty or premium.  The Revolver commitments may be reduced from time
to without penalty or premium.     Mandatory Prepayments:

The Facility will be required to be prepaid in an amount equal to the amount by
which the Revolving Loans plus the Letter of

___________________

1 To accommodate alternate advance rates of up to an amount equal to the lesser
of (i) 60% of cost on eligible inventory or (ii) 85% of the net orderly
liquidation value of eligible inventory, Wells Fargo will require appraisals.

 - 6 - 

HCAC II, Inc.

April 7, 2016

 

  Credit usage exceed the Borrowing Base.       In the event of a change of
control (to be defined), the Borrowers will be required to make an offer to
prepay amounts outstanding under the Facility.       Any mandatory prepayments
shall be applied first, to Advances outstanding under the Revolver, and second
to cash collateralize the Letters of Credit.      Use of Proceeds: To (i)
refinance certain existing indebtedness of Borrowers’, (ii) fund fees and
expenses associated with the Facility and the Transactions, and (iii) finance
the ongoing general corporate needs of Borrowers.       Fees and Interest Rates:
As set forth in the Fee Letter and on Annex A-I.     Term: Five (5) years from
the Closing Date (“Maturity Date”).     Collateral:

Subject to permitted liens (to be mutually agreeable to Agent and Borrowers) and
customary exclusions to be mutually agreed upon, (a) a first priority perfected
security interest in the cash, accounts receivable, books and records, chattel
paper, deposit accounts (and all cash, checks and other negotiable instruments,
funds and other evidences of payment held therein), securities accounts and
operating accounts, inventory, and all other working capital assets and all
documents, instruments, and general intangibles related to any of the foregoing
of the Loan Parties’ now owned and hereafter acquired, and all proceeds and
products thereof (“Revolver Priority Collateral”) and (b) a second priority
perfected security interest in all of the Loan Parties’ now owned and hereafter
acquired property and assets and all proceeds and products thereof other than
the Revolver Priority Collateral (“Term Loan Priority Collateral”), including
stock (or other ownership interests in) of each Loan Party (other than the stock
of the Parent) and all proceeds and products thereof; provided that only 65% of
the stock of (or other ownership interests in) any controlled foreign
corporations will be required to be pledged if the pledge of a greater
percentage would result in material adverse tax consequences.

 

A customary intercreditor agreement reasonably acceptable to the Agent in its
sole discretion will be entered into by the Agent and the agent (the “Term
Agent”) under the term loan facility in an aggregate principal amount of up to
$100 million (“Term Loan Facility”) of the Borrowers in place on the Closing
Date governing the respective rights and obligations

 

 - 7 - 

HCAC II, Inc.

April 7, 2016

 

  of the Lenders and the lenders under such Term Loan Facility with respect to
the Collateral and other customary matters.    

Collection:

 

 

 

 

The Loan Parties will direct all of their customers to remit all collections to
deposit accounts that are subject to control agreements reasonably satisfactory
to Agent.

 

The Agent shall have full dominion over all collections and cash will be swept
against the Advances on a daily basis at all times (i) at the election of the
Agent, upon the occurrence and during the continuance of a payment, reporting or
bankruptcy or insolvency related event of default, and (ii) commencing when
excess availability is less than the greater of (A) 12.5% of the Maximum Credit
Amount and (B) $5,000,000, and continuing until, in each case, such time as no
such event of default exists and excess availability has been greater than the
threshold set forth in clause (ii) at all times for 30 consecutive days.

   

Bank Products:

 

The Loan Parties shall be required to establish and maintain their primary
depository and treasury management relationships with Wells Fargo or one of its
affiliates.

 

Each Loan Party will offer Wells Fargo (or one or more of its affiliates) the
first opportunity to bid for all other bank products, including, but not limited
to, foreign exchange and interest rate hedging products, for so long as the
Facility is in place.

 

Nothing herein is a recommendation, solicitation, commitment or offer by Wells
Fargo to provide any Loan Party any interest rate protection, currency hedge or
commodities hedge product.

 

Revolver Documentation: The Loan Documents shall be consistent with this Term
Sheet and customary for transactions of this type and shall be negotiated in
good faith by the Borrowers and Wells Fargo so that the Loan Documents, giving
effect to the Certain Funds Provision, are finalized as promptly as practicable
after the acceptance of this Commitment Letter (the “Revolver Facility
Documentation Principles”).    

Representations and Warranties:

 

The credit agreement governing the Facility, will contain the following
representations and warranties (which will be the only representations and
warranties) regarding the Loan Parties and their subsidiaries (and certain of
which will be subject to materiality thresholds, baskets and customary
exceptions and qualifications to be mutually agreed upon)

 

 - 8 - 

HCAC II, Inc.

April 7, 2016

 

  regarding: due organization and qualification; subsidiaries; due
authorization; no conflict; governmental and third party consents and approvals;
binding obligations; perfected liens; title to assets; no encumbrances;
jurisdiction of organization; location of chief executive office; organizational
identification number; commercial tort claims; litigation; compliance with laws
(including SPAC-related) and material agreements; accuracy of financial
statements and no material adverse change; employee benefits and ERISA;
environmental condition; intellectual property and licenses; leases; deposit
accounts and securities accounts; complete disclosure; solvency; material
contracts; Patriot Act, FCPA and OFAC; accuracy of disclosure; employee matters
and absence of labor disputes; identification of subsidiaries; indebtedness;
payment of taxes; margin stock; governmental regulation; not an investment
company or subject to regulation restricting the transactions; use of proceeds;
insurance; deposit accounts; Parent as holding company; acquisition documents;
collateral matters; governmental contracts; hedge agreements; eligible accounts;
eligible inventory; location of inventory and equipment; and inventory records.
    Affirmative Covenants: The credit agreement governing the Facility will
contain the following affirmative covenants (which will be the only affirmative
covenants and certain of which will be subject to materiality thresholds,
baskets and customary exceptions and qualifications to be mutually agreed upon)
which will be applicable to the Loan Parties and their subsidiaries regarding:
financial statements, reports, and certificates; monthly collateral reporting
(provided, that, borrowing base certifications and related collateral reports
would be required on a weekly basis when excess availability is less than the
greater of (A) 12.5% of the Maximum Credit Amount and (B) $5,000,000);
existence; maintenance of properties; taxes; insurance; material intellectual
property; inspection; compliance with laws; regulatory matters; environmental;
disclosure updates and customary notifications; formation of subsidiaries;
conduct of business; books and records; further assurances; lender meetings;
material contracts; use of proceeds; margin regulations; deposit accounts; cash
management; hedge agreements; additional guarantors and collateral; employee
benefits; ERISA and location of inventory and equipment.     Negative Covenants:
The credit agreement governing the Facility will contain the following negative
covenants (which will be the only negative covenants and certain of which will
be subject to materiality

 

 - 9 - 

HCAC II, Inc.

April 7, 2016

 

thresholds, baskets and customary exceptions and qualifications to be mutually
agreed upon) which will be applicable to the Loan Parties and their subsidiaries
regarding: limitations on: indebtedness; liens; fundamental changes; disposal of
assets; change of name; nature of business; prepayments and amendments; change
of control; distributions; accounting methods; investments (other than permitted
acquisitions subject to terms and conditions to be agreed upon); transactions
with affiliates; use of proceeds; Parent as holding company; mergers,
consolidations and acquisitions; redemptions; dividends and payments on junior
capital (including an absolute prohibition on all payments of fixed cash
dividends in respect of “qualified preferred” stock); sale/leaseback
transactions; limitation on issuance of equity interests (subject to the SPAC
structure); speculative hedging; changes in fiscal year or accounting practices;
restrictive agreements; operating leases; consignments; and inventory and
equipment with bailees.     Financial Covenants:

Upon the occurrence and during the continuance of a Covenant Testing Trigger
Period (as defined below), the Parent and its subsidiaries shall be required to
maintain a fixed charge coverage ratio of 1.10 tested on a monthly basis.

 

“Covenant Testing Trigger Period” means the period (i) commencing on any day
that excess availability is less than the greater of (A) 12.5% of the Maximum
Credit Amount and (B) $5,000,000, and (ii) continuing until excess availability
has been greater than or equal to the threshold set forth in clause (i) at all
times for 30 consecutive days.

    Events of Default: The following events of default (which will be the only
events of default) will be contained in the credit agreement governing the
Facility and will be applicable to the Loan Parties and their subsidiaries (and
certain of which will be subject to materiality thresholds, exceptions and grace
periods to be mutually agreed upon) regarding: non-payment of obligations;
non-performance of covenants and obligations; material judgments; bankruptcy or
insolvency; any restrainment against the conduct of all or a material portion of
business affairs; default on other material debt (including hedging agreements);
cross default to the Term Loan Facility; cross acceleration to other material
debt; breach of any representation or warranty; limitation or termination of any
guarantee with respect to the Facility; impairment of security; employee
benefits; change in control; and actual or asserted invalidity or
unenforceability of any Facility documentation or liens securing obligations
under

 

 - 10 - 

HCAC II, Inc.

April 7, 2016

 

  the Facility documentation.     Conditions Precedent to Closing: The
conditions precedent set forth on Annex B-I.     Assignments:  Each Lender shall
be permitted to assign its rights and obligations under the Loan Documents, or
any part thereof, to any person or entity with the consent of Agent and with the
consent of Borrower (such consent not to be unreasonably withheld or delayed);
provided that no consent by Borrower shall be required for assignments (a) to
another Lender, an affiliate of a Lender or an approved fund under common
control with a Lender or (b) after the occurrence and during the continuance of
a payment or bankruptcy or insolvency-related event of default. Subject to
customary voting limitations, each Lender shall be permitted to sell
participations in such rights and obligations, or any part thereof to any person
or entity without the consent of Borrowers.     Governing Law and Forum: New
York; provided, that, notwithstanding the governing law provisions of the Loan
Documents, it is understood and agreed that (a) the interpretation of the
definition of “Material Adverse Effect” (and whether or not a Material Adverse
Effect has occurred), (b) the determination of the accuracy of any Specified
Merger Agreement Representation and whether as a result of any inaccuracy
thereof either Sponsor or its applicable affiliate has the right to terminate
its obligations under the Merger Agreement or to decline to consummate the
Acquisition and (c) the determination of whether the Acquisition has been
consummated in accordance with the terms of the Merger Agreement and, in any
case, claims or disputes arising out of any such interpretation or determination
or any aspect thereof shall, in each case, be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
    Counsel to Agent and the Lenders:

Morgan, Lewis & Bockius, LLP

 

 - 11 - 

HCAC II, Inc.

April 7, 2016

 

Annex A-I

 

Interest Rates and Fees

 

Interest Rate Options Borrowers may elect that the loans bear interest at a rate
per annum equal to:       (i) the Base Rate plus the Applicable Margin; or      
(ii) the LIBOR Rate plus the Applicable Margin.       As used herein:       The
“Base Rate” means the greatest of (a) the prime lending rate as announced from
time to time by Wells Fargo Bank, N.A., (b) the Federal Funds Rate plus ½%,
and  (c) the three month LIBOR Rate (which rate shall be determined on a daily
basis), plus 1%.       The “LIBOR Rate” means the rate per annum as reported on
Reuters Screen LIBOR01 page (or any successor page) 2 business days prior to the
commencement of the requested interest period, for a term, and in an amount,
comparable to the interest period and the amount of the LIBOR Rate Loan
requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR
Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by
Borrowers in accordance with the definitive credit agreement (and, if any such
rate is below zero, the LIBOR Rate shall be deemed to be zero), which
determination shall be made by Agent and shall be conclusive in the absence of
manifest error.  The LIBOR Rate shall be available for interest periods of 1, 2,
3 or 6 months.       “Applicable Margin” means, as of any date of determination,
the following margin based upon Borrowers’ most recent monthly average excess
availability calculation:

  

Level  Average Excess Availability  Applicable Margin in respect of Base Rate
Loans under the Revolver   Applicable Margin in respect of LIBOR Rate Loans
under the Revolver (the “Revolver LIBOR Margin”)  I  >50% of the Maximum Credit
Amount   0.75%   1.75% II  <50% of the Maximum Credit Amount   1.25%   2.25%

 

 - 1 - 

HCAC II, Inc.

April 7, 2016

 

Interest Payment Dates In the case of loans bearing interest based upon the Base
Rate (“Base Rate Loans”), monthly in arrears.         In the case of Loans
bearing interest based upon the LIBOR Rate (“LIBOR Rate Loans”), on the last day
of each relevant interest period; provided that the interest for any interest
period in excess of 3 months shall be paid in 3 month intervals after the
commencement of the applicable interest period and on the last day of such
interest period.     Letter of Credit Fees An amount equal to the Revolver LIBOR
Margin per annum times the amount of each Letter of Credit, payable in cash
monthly in arrears, plus the charges imposed by the letter of credit issuing
bank; provided however, that if the Default Rate is in effect, the Letter of
Credit Fee shall be increased by an additional 2.0% per annum.     Default Rate
At any time when an event of default has occurred and is continuing and upon
written election of the Agent or the Required Lenders (to be defined in the Loan
Documents) all amounts owing under the Facility shall bear interest at 2.0% per
annum above the interest rate otherwise applicable thereto.     Rate and Fee
Basis All per annum rates shall be calculated on the basis of a year of 360 days
and the actual number of days elapsed.     Fees Certain fees shall be as agreed
to by the parties in the Fee Letter.     Unused Revolver Fee A fee in an amount
equal to 0.50% per annum times the unused portion of the Revolver shall be due
and payable monthly in arrears.

 

 - 2 - 

HCAC II, Inc.

April 7, 2016

 

Annex B-I

 

The availability of the Facility is subject to the satisfaction of each of the
following conditions precedent:

 

(a)          Except as contemplated by the Merger Agreement, since December 31,
2015, no Material Adverse Effect (as defined in the Merger Agreement as in
effect on the date hereof, as used herein for clarity, a “Material Adverse
Effect”) shall have occurred that would excuse Parent or Newco from their
obligation to consummate the Acquisition under the Merger Agreement;

 

(b)          The Acquisition shall have been consummated, or shall be
consummated substantially concurrently with the initial borrowing under the
Facility in accordance with the Merger Agreement. The Merger Agreement shall not
have been amended or waived, and no consents shall have been given with respect
thereto, in any material respect by you or your subsidiaries in a manner
materially adverse to Wells Fargo (in its capacity as such) without the consent
of Wells Fargo (such consent not to be unreasonably withheld, conditioned or
delayed based on the interests of Wells Fargo); provided that (a) the granting
of any consent under the Merger Agreement that is not materially adverse to the
interests of Wells Fargo shall not otherwise constitute an amendment or waiver
and (b) any change to the definition of “Material Adverse Effect” in the Merger
Agreement shall be deemed materially adverse to Wells Fargo;

 

(c)          The Equity Contribution shall have been consummated, or shall be
consummated substantially concurrently with the borrowing under the Facility, in
at least the amount set forth in the Commitment Letter (as such amount may be
modified pursuant to paragraph (b) above); provided that if the Company enters
into any subscription agreements, backstop agreements, warrant agreements,
registration rights agreements, conversion agreements, lock-up agreements, or
any other similar agreements respecting the Company’s capital structure in
connection with the Equity Contribution or the Transactions, such agreements
shall be on terms and conditions reasonably satisfactory to Wells Fargo. The
Refinancing shall have been consummated, or shall be consummated substantially
concurrently with the initial borrowing under the Facility;

 

(d)          Subject to the Certain Funds Provision, (i) delivery of Loan
Documents duly executed by the Loan Parties (or applicable third parties as the
case may be) including, without limitation, a credit agreement, security
agreements, control agreements, landlord waivers, mortgages, pledge agreements,
intercreditor agreements and subordination agreements, and (ii) receipt of other
documentation customary for transactions of this type including legal opinions,
officers’ certificates, instruments necessary to perfect the Agent’s first
priority security interest in the Collateral, and certificates of insurance
policies and/or endorsements naming Agent as additional insured or loss payee,
as the case may be, all in form and substance reasonably satisfactory to Agent;

 

(e)          With respect to each Loan Party, receipt of evidence of customary
corporate authority and officer’s certificates (including copies of governing
documents certified as of a recent date by the appropriate governmental
official) and certificates of status and good standing issued as of a recent
date by the jurisdictions of organization of each Loan Party;

 

(f)           The Agent shall have received, at least five (5) Business Days
prior to the Closing Date, all documentation and other information about the
Borrowers and the Guarantors and their senior management and key principals
required under applicable “know your customer” and anti-money laundering rules
and regulations, including the PATRIOT Act, that has been requested in writing
at least

 

 - 3 - 

HCAC II, Inc.

April 7, 2016

 

ten (10) Business Days prior to the Closing Date; provided that Agent shall have
received all documentation and other information required under this clause (f)
for any new Loan Party formed or senior management or key principal appointed
within ten (10) Business Days prior to the Closing Date;

 

(g)          The capital structure of the Loan Parties shall be reasonably
satisfactory to Agent (provided, Wells Fargo acknowledges that the capital
structure of the Company contemplated in the Merger Agreement (as in effect on
the date hereof) is reasonably satisfactory to Wells Fargo);

 

(h)          Minimum liquidity of the Loan Parties at closing, after giving
effect to the initial use of proceeds (including the payment of all fees and
expenses), of not less than $7,500,000, of which at least $5,000,000 must be
derived from excess availability (excluding any qualified cash permitted under
the Borrowing Base) under the Revolver, the Company’s LTM Adjusted EBITDA (as
mutually agreed upon) for the last twelve months prior to the Closing Date is
not less than $40.0 million, and Agent shall have received a closing borrowing
base certificate using, if applicable, the Closing Borrowing Base and otherwise
in accordance with the Agent’s customary procedures and practices so as to
obtain current results;

 

(i)           Borrowers shall have received proceeds of the Term Loan Facility
in an aggregate amount of at least $100,000,000 (it being understood that any
purchase price reductions in respect of the Acquisition or any original issue
discount, in each case reducing the proceeds of the Term Loan Facility, shall
reduce such minimum amount on a dollar-for-dollar basis) and otherwise on terms
and conditions reasonably satisfactory to Agent, and the provider of such debt
shall have entered into an intercreditor agreement with Agent in form and
substance reasonably satisfactory to Agent;

 

(j)           All documents and instruments, in each case, as applicable, in
accordance with the Revolver Facility Documentation Principles and subject to
the Certain Funds Provision, required to perfect the Agent’s security interests
in the Collateral shall have been executed and delivered and, if applicable, be
in proper form for filing;

 

(k)          Agent shall have received a solvency certificate consistent with
the certificate attached hereto as Annex B-II from the chief financial officer
of Parent;

 

(l)           All costs, fees and expenses contemplated hereby and under the Fee
Letter and the other Loan Documents due and payable on the Closing Date to Agent
and Lenders in respect of the Transactions shall have been paid;

 

(m)         Agent shall have received (a) audited consolidated balance sheets
and related statements of operations, shareholders’ equity and cash flows of the
Borrowers for the fiscal years ended December 31, 2015 and December 31, 2014,
(b) unaudited consolidated balance sheets and related consolidated statements of
operations and cash flows of the Borrowers for each subsequent fiscal quarter
(other than the fourth fiscal quarter) ended at least 45 days prior to the
Closing Date, (c) unaudited consolidated balance sheets and related consolidated
statements of operations and cash flows of the Borrowers for the two months
ended immediately prior to the Closing Date, and (d) satisfactory projections
with respect to the Borrowers and its subsidiaries for the period from fiscal
year 2016 through fiscal year 2020 (it being acknowledged that the projections
delivered to Agent on February 23, 2016 are satisfactory); and

 

(n)          The Specified Merger Agreement Representations shall be true and
correct to the extent required by the Certain Funds Provision and the Specified
Representations shall be true and correct

 

 - 4 - 

HCAC II, Inc.

April 7, 2016

 

in all material respects (except in the case of any Specified Representation
which expressly relates to a given date or period, such representation and
warranty shall be true and correct in all material respects as of the respective
date or for the respective period, as the case may be); provided, that to the
extent that any of the Specified Representations are qualified by or subject to
a “material adverse effect”, “material adverse change” or similar term or
qualification, the definition thereof shall be the definition of “Material
Adverse Effect” (as defined in the Merger Agreement) for purposes of any such
representations and warranties made or deemed made on, or as of, the Closing
Date (or any date prior thereto).

 

 - 5 - 

HCAC II, Inc.

April 7, 2016

 

Annex B-II 

 

FORM OF SOLVENCY CERTIFICATE

 

SOLVENCY CERTIFICATE

 of

 PARENT

 AND ITS SUBSIDIARIES

 

Pursuant to the Credit Agreement2, the undersigned hereby certifies, solely in
such undersigned’s capacity as [chief financial officer] [chief accounting
officer] [specify other officer with equivalent duties] of the Parent, and not
individually, as follows:

 

I am generally familiar with the businesses and assets of the Parent and its
Subsidiaries3, taken as a whole, and am duly authorized to executed this
Solvency Certificate on behalf of the Loan Parties pursuant to the Credit
Agreement. As of the date hereof, after giving effect to the consummation of the
Transactions, including the making of the Revolving Loans under the Credit
Agreement, on the date hereof, and after giving effect to the application of the
proceeds of such Indebtedness:

 

  a. The fair value of the assets of the Parent and its Subsidiaries, on a
consolidated basis, exceeds, on a consolidated basis, their debts and
liabilities, subordinated, contingent or otherwise;

 

  b. The present fair saleable value of the property of the Parent and its
Subsidiaries, on a consolidated basis, is greater than the amount that will be
required to pay the probable liability, on a consolidated basis, of their debts
and other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured;

 

  c. The Parent and its Subsidiaries, on a consolidated basis, are able to pay
their debts and liabilities, subordinated, contingent or otherwise, as such
liabilities become absolute and matured; and

 

  d. The Parent and its Subsidiaries, on a consolidated basis, are not engaged
in, and are not about to engage in, business for which they have unreasonably
small capital.

 

For purposes of this Certificate, the amount of any contingent liability at any
time shall be computed as the amount that would reasonably be expected to become
an actual and matured liability. Capitalized terms used but not otherwise
defined herein shall have the meanings assigned to them in the Credit Agreement.

 

[Signature Page Follows]

 

___________________

2 Credit Agreement to be defined.

3 “Subsidiaries” to be defined.

 

 

HCAC II, Inc.

April 7, 2016

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate in such
undersigned’s capacity as [chief financial officer] [chief accounting officer]
[specify other officer with equivalent duties] of the Parent, on behalf of the
Parent, and not individually, as of the date first stated above.

 

  [PARENT]         By:         Name:     Title:  

 

 

- 2 -