Document:

Exhibit

CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (this “Agreement”) is made and entered into as of October 19, 2016, by and between Capital Bank Financial Corp., a Delaware corporation (the “Company”), and Kenneth J. Kavanagh (the “Executive”).  Capitalized terms used herein without definition have the meanings ascribed to such terms in Section 1.
WHEREAS, the Board of Directors of the Company (the “Board”), has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined herein); and
WHEREAS, the Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control and to encourage the Executive’s full attention and dedication to the Company in the event of any threatened or pending Change in Control, and to provide the Executive with compensation and benefits arrangements upon a Change in Control that ensure that the compensation and benefits expectations of the Executive will be satisfied and that provide the Executive with compensation and benefits arrangements that are competitive with those of other corporations.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, and for other good and valuable consideration, it is hereby covenanted and agreed by the Executive and the Company as follows:
1.Certain Definitions.  For purposes of this Agreement, the following terms shall have the meanings set forth below:
“Affiliated Entity” means any entity controlled by, controlling, or under common control with the Company.
“Annual Base Salary” means 12 times the highest monthly base salary paid or payable, including any base salary that has been earned but deferred, to the Executive by the Company and the Affiliated Entities in respect of the one-year period immediately preceding the month in which the Change in Control or, if higher, the Date of Termination, occurs.
“Cause” means: (a) willful misconduct or willful neglect by the Executive in the performance of his duties to the Company; or (b) the Executive’s conviction of or formal admission to or plea of guilty or nolo contendere to a charge of commission of a felony.  No act or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company.  Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company.
“Change in Control” means:
(a)    the acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 40% or more of either (i) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”), or (ii) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change in Control:  (A) any acquisition by the Company, (B) any acquisition directly from the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliated Entity, or (D) any acquisition pursuant to a transaction that complies with clauses (i), (ii), and (iii) of subsection (c) below;
(b)    individuals who, on the date hereof, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board; provided that any person becoming a director subsequent to the date hereof, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination), shall be an Incumbent Director, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board;
(c)    the consummation of a reorganization, merger, statutory share exchange, or consolidation or similar transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case, unless, immediately following such Business Combination, (i) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 40% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (iii) at least two-thirds of the members of the board of directors (or, for a non-corporate entity, equivalent governing body) of the entity resulting from such Business Combination were Incumbent Directors at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or
(d)    approval by the stockholders of the Company of a complete dissolution or liquidation of the Company.
“Change in Control Period” means the period commencing on the date of consummation of a Change in Control and ending on the second anniversary thereof.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Date of Termination” means:  (a) if the Executive’s employment is terminated by the Company without Cause, or by the Executive without Good Reason, the date of receipt of the Notice of Termination or any later date specified therein within 30 days of such notice, as the case may be, (b) if the Executive’s employment is terminated by the Executive with Good Reason, a date that is no later than 60 days after the Company Cure Period (as defined below), if applicable, (c) if the Executive’s employment is terminated by the Company with Cause, the Date of Termination shall be the date on which the Company notifies the Executive of such termination (which shall not be until after the expiration of the Executive Cure Period (as defined below)); and (d) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be.
“Disability” means the inability of the Executive to perform the Executive’s duties with the Company on a full-time basis as a result of incapacity due to mental or physical illness, which inability exists for 180 days during any consecutive 12-month period, as determined by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Good Reason” means, in the absence of the written consent of the Executive:  
(a)    a material reduction in the Executive’s (i) Annual Base Salary, (ii) Target Incentive Payment or maximum annual incentive opportunity, (iii) annual long-term incentive compensation opportunity (cash and equity awards), including target or maximum incentive opportunity, or (iv) retirement, welfare, fringe, and other benefits provided or made available to the Executive in the aggregate, in each case, from those in effect immediately prior to the Change in Control, or if more favorable, those provided or made available to peer executives of the Company (or, if applicable, the entity resulting from a Business Combination, or an entity that, as a result of a Business Combination, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) or the Affiliated Entities at any time thereafter; 
(b)    a material diminution in the position, authority, duties, or responsibilities of the Executive from those in effect immediately prior to the Change in Control;
(c)    a material diminution in the authority, duties, or responsibilities of the person to whom the Executive is required to report from the authority, duties, or responsibilities of such person as in effect immediately prior to such Change in Control;
(d)    any relocation of the Executive’s principal place of business to a location more than 30 miles from the Executive’s principal place of business as in effect immediately prior to such Change in Control; or
(e)    any other action or inaction that constitutes a material breach by the Company of this Agreement or any other agreement between the Executive and the Company or an Affiliated Entity related to the terms and conditions of the Executive’s employment.
“Incumbent Director” has the meaning set forth in the definition of Change in Control.
“Person” means any individual, entity, or group (within the meaning given in Sections 13(d)(3) and 14(d)(2) of the Exchange Act).
“Target Incentive Payment” means the target annual incentive opportunity expressed as a percentage of the Executive’s Annual Base Salary under the Company’s 2013 Omnibus Compensation Plan (or any predecessor or successor plan thereto) as in effect for the year in which the Date of Termination occurs, or, if higher, or if no Target Incentive Payment has been established for such year, the annual incentive payment paid or payable (in cash or equity) to the Executive in respect of the fiscal year of the Company ending immediately prior to the year in which the Change in Control occurs.
2.    Term.  The “Term” of this Agreement shall commence on the date hereof and end on the second anniversary of the date hereof; provided, however, that, commencing on the first anniversary of the date hereof and on each anniversary date thereafter (each, a “Renewal Date”), the Term shall be automatically extended so as to terminate two years from such Renewal Date, unless, at least 90 days prior to the applicable Renewal Date, the Company shall give written notice to the Executive that the Term shall not be so extended; and provided, further, that, notwithstanding anything contained herein to the contrary or the delivery of a notice of nonrenewal prior to a Change in Control, upon a Change in Control, the Term shall automatically be extended so as to extend through the second anniversary of the date of consummation of such Change in Control.
3.    Termination of Employment.
(a)    Death or Disability.  The Executive’s employment shall terminate automatically upon the Executive’s death during the Change in Control Period.  If the Executive incurs a Disability during the Change in Control Period, the Company may provide the Executive with written notice in accordance with Section 10(g) of its intention to terminate the Executive’s employment.  In such event, the Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”); provided that, within 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties.
(b)    With or Without Cause.  The Executive’s employment may be terminated by the Company during the Change in Control Period with or without Cause.  To invoke a termination with Cause, the Company shall provide written notice to the Executive of the existence of one or more of the conditions described in the definition of Cause within 30 days following the Board’s actual knowledge of the existence of such condition or conditions, specifying in reasonable detail the conditions constituting Cause, and the Executive shall have 30 days following receipt of such written notice (the “Executive Cure Period”) during which the Executive may remedy the condition if such condition is reasonably subject to cure.  In addition, in the case of a termination of the Executive’s employment with Cause as described in clause (a) of the definition of Cause, the cessation of employment of the Executive shall not be deemed to be with Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the members of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good-faith opinion of the Board, the Executive is guilty of the conduct described in clause (a) of the definition of Cause, and specifying the particulars thereof in detail.
(c)    Good Reason.  The Executive’s employment may be terminated by the Executive during the Change in Control Period with or without Good Reason.  To invoke a termination with Good Reason, the Executive shall provide written notice to the Company of the existence of one or more of the conditions described in the definition of Good Reason within 30 days following the initial existence of such condition or conditions, specifying in reasonable detail the conditions constituting Good Reason, and the Company shall have 30 days following receipt of such written notice (the “Company Cure Period”) during which it may remedy the condition if such condition is reasonably subject to cure.  If the Company fails to remedy the condition constituting Good Reason during the Company Cure Period, the Executive’s “separation from service” (within the meaning of Section 409A of the Code) must occur, if at all, within 60 days following such Company Cure Period for such termination as a result of such condition to constitute a termination with Good Reason.  Notwithstanding anything to the contrary in this Agreement, a temporary suspension of the Executive’s duties, authorities, employment, or other roles hereunder, not in excess of 90 days, by the Board based upon the Board’s good-faith judgment that such suspension is warranted pending investigation of any material allegations relating to the conduct of the Executive or the conduct of the Company that may implicate the Executive, shall not give rise to Good Reason.
(d)    Notice of Termination.  Any termination by the Company shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 10(g).  For purposes of this Agreement, a “Notice of Termination” means a written notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, and (iii) if the Date of Termination is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 30 days after the giving of such notice or 60 days after the end of the Company Cure Period, if applicable, in the case of a termination by the Executive with Good Reason).  The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause, respectively, shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.
4.    Obligations of the Company upon Termination of Employment during the Change in Control Period.
(a)    Resignation by the Executive with Good Reason or Termination by the Company without Cause.  If, during the Change in Control Period, the Executive’s employment is terminated (i) by the Executive with Good Reason or (ii) by the Company without Cause (and other than due to death or Disability), subject to the execution, delivery, and effectiveness within 30 days of the Date of Termination of a release of claims by the Executive in favor of the Company and the Affiliated Entities substantially in the form attached as Exhibit A (other than with respect to the payment of the Accrued Obligations and Other Benefits (as such terms are defined below)), the Company shall pay or provide, as applicable, to the Executive within 40 days after the Date of Termination (except as otherwise provided by Section 6  to the extent applicable), the following:
(A)    A lump sum cash payment consisting of:  (1) the Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid; (2) any annual incentive payment earned by the Executive for a prior award period, but not yet paid to the Executive (other than any portion of such annual incentive payment that was previously deferred, which portion shall instead be paid in accordance with the applicable deferral arrangement and any election thereunder); (3) any accrued vacation or paid time off to the extent not theretofore paid; and (4) any unreimbursed business expenses incurred prior to the Date of Termination (the sum of the amounts described in clauses (1), (2), (3), and (4) shall be hereinafter referred to as the “Accrued Obligations”);
(B)    A lump sum cash payment equal to the product of (1) 1.5 multiplied by (2) the sum of the Executive’s Annual Base Salary and Target Incentive Payment;
(C)    The Company shall provide the Executive and the Executive’s dependents with continued coverage under any health, medical, dental, or vision insurance program or policy in which the Executive was eligible to participate as of the Date of Termination, for 18 months following such termination on terms no less favorable to the Executive and the Executive’s dependents (including with respect to payment for the costs thereof) than those in effect for employees generally, which coverage shall become secondary to any coverage provided to the Executive by a subsequent employer and to any Medicare coverage for which the Executive becomes eligible; and
(D)    To the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy, practice, contract, or agreement of the Company and the Affiliated Entities through the Date of Termination (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”).
(b)    Termination by the Company with Cause or Due to Disability; Resignation by the Executive without Good Reason; or Termination Due to Death.  If, during the Change in Control Period, the Executive’s employment is terminated by the Company with Cause or due to Disability, the Executive resigns without Good Reason, or the Executive’s employment is terminated due to death, this Agreement shall terminate without further obligations to the Executive, other than the obligation to pay or provide (i) the Accrued Obligations (paid as set forth in Section 4(a)(A)) and (ii) the Other Benefits (paid in accordance with the provisions of the applicable plans).
(c)    Effect of Termination on Other Positions.  If, on the Date of Termination, the Executive is a member of the Board or the board of directors of any of the Company’s subsidiaries, or holds any other position with the Company or its subsidiaries, the Executive shall be deemed to have resigned from all such positions as of the Date of Termination.  The Executive agrees to execute such documents and take such other actions as the Company may request to reflect such resignation.
(d)    Termination of Employment Prior to a Change in Control.  If the Executive’s employment is terminated prior to a Change in Control for any reason, this Agreement shall terminate without further obligations to the Executive.
(e)    Non-Exclusivity of Rights.  The payments and benefits provided under this Section 4 (including, without limitation, the Other Benefits) shall be in full satisfaction of the Company’s obligations to the Executive under this Agreement upon the Executive’s termination of employment, notwithstanding the remaining length of the Change in Control Period, and in no event shall the Executive be entitled to severance benefits (or other damages in respect of a termination of employment or claim for breach of this Agreement) beyond those specified in this Section 4.  Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy, or practice provided by the Company or the Affiliated Entities and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any other contract or agreement with the Company or the Affiliated Entities.  Without limiting the generality of the foregoing, the Executive’s resignation under this Agreement with or without Good Reason, shall in no way affect the Executive’s ability to terminate employment by reason of the Executive’s “retirement” under, or to be eligible to receive benefits under, any compensation and benefits plans, programs, or arrangements of the Company or the Affiliated Entities, including, without limitation, any retirement or pension plans or arrangements or substitute plans adopted by the Company, the Affiliated Entities, or their respective successors, and any termination that otherwise qualifies as Good Reason shall be treated as such even if it is also a “retirement” for purposes of any such plan.
5.    No Mitigation; No Offset; Legal Fees.  The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense, or other claim, right, or action that the Company may have against the Executive or others.  In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and, such amounts shall not be reduced whether or not the Executive obtains other employment.  The Company agrees to pay as incurred (within 10 days following the Company’s receipt of an invoice from the Executive), at any time from the Change in Control through the Executive’s remaining lifetime (or, if longer, through the 20th anniversary of the Change in Control) to the full extent permitted by law, all legal fees and expenses that the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive, or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus, in each case, interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code (“Interest”) based on the rate in effect for the month in which such legal fees and expenses were incurred.
6.    Section 409A.
(a)    General.  It is intended that this Agreement shall comply with the provisions of Section 409A of the Code and the Treasury regulations relating thereto, or an exemption to Section 409A of the Code.  Any payments that qualify for the “short-term deferral” exception or another exception under Section 409A of the Code shall be paid under the applicable exception.  For purposes of the limitations on nonqualified deferred compensation under Section 409A of the Code, each payment of compensation under this Agreement shall be treated as a separate payment of compensation.  To the extent required to avoid taxes and penalties under Section 409A of the Code, all payments to be made upon a termination of employment under this Agreement shall be made upon a “separation from service” under Section 409A of the Code.
(b)    In-Kind Benefits and Reimbursements.  Notwithstanding anything to the contrary in this Agreement, all (i) reimbursements and (ii) in-kind benefits provided under this Agreement that are subject to Section 409A of the Code shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (A) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; (B) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the year in which the expense is incurred; and (C) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.
(c)    Delay of Payments.  Notwithstanding anything to the contrary in this Agreement, to the extent required to avoid taxes and penalties under Section 409A of the Code, if the Executive is considered a “specified employee” for purposes of Section 409A (as determined in accordance with the methodology established by the Company as in effect on the Date of Termination), any payment that constitutes nonqualified deferred compensation within the meaning of Section 409A of the Code that is otherwise due to the Executive under this Agreement during the six-month period following the Executive’s separation from service (as determined in accordance with Section 409A of the Code) on account of the Executive’s separation from service shall be accumulated and paid to the Executive on the first business day of the seventh month following the Executive’s separation from service (the “Delayed Payment Date”).  The Executive shall be entitled to Interest at the rate in effect for the month in which the Executive’s separation from service occurs on any delayed cash payments from the Date of Termination to the Delayed Payment Date.  If the Executive dies during the postponement period, the amounts and entitlements, including Interest, delayed on account of Section 409A shall be paid to the personal representative of the Executive’s estate on the first to occur of the Delayed Payment Date or 30 days after the date of the Executive’s death.
7.    Certain Reductions in Payments.
(a)    Anything in this Agreement to the contrary notwithstanding, in the event the Accounting Firm (as defined below) shall determine that receipt of all Payments (as defined below) would subject the Executive to the excise tax under Section 4999 of the Code, the Accounting Firm shall determine whether to reduce any of the Payments paid or payable pursuant to this Agreement (the “Agreement Payments”) so that the Parachute Value (as defined below) of all Payments, in the aggregate, equals the Safe Harbor Amount (as defined below).  The Agreement Payments shall be so reduced only if the Accounting Firm determines that the Executive would have a greater Net After-Tax Receipt (as defined below) of aggregate Payments if the Agreement Payments were so reduced.  If the Accounting Firm determines that the Executive would not have a greater Net After-Tax Receipt of aggregate Payments if the Agreement Payments were so reduced, the Executive shall receive all Agreement Payments to which the Executive is entitled hereunder.
(b)    If the Accounting Firm determines that aggregate Agreement Payments should be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount, the Company shall promptly give the Executive notice to that effect and a copy of the detailed calculation thereof.  All determinations made by the Accounting Firm under this Section 7 shall be binding upon the Company and the Executive and shall be made as soon as reasonably practicable and in no event later than 15 days following the Date of Termination.  For purposes of reducing the Agreement Payments so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount, only amounts payable under this Agreement (and no other Payments) shall be reduced.  The reduction of the amounts payable hereunder, if applicable, shall be made by reducing the payments and benefits that are parachute payments in the following order:  (i) cash payments that do not constitute deferred compensation within the meaning of Section 409A of the Code; and (ii) cash payments that do constitute deferred compensation, in each case, beginning with payments or benefits that are to be paid the furthest in time from the Accounting Firm’s determination.  All reasonable fees and expenses of the Accounting Firm shall be borne solely by the Company.  For purposes of all present value determinations required to be made under this Section 7, the Company and the Executive elect to use the applicable federal rate that is in effect on the date hereof pursuant to Treasury Regulations § 1-280G, Q&A-32.
(c)    To the extent requested by the Executive, the Company shall cooperate with the Executive in good faith in valuing, and the Accounting Firm shall take into account the value of, services provided or to be provided by the Executive (including, without limitation, the Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant, before, on or after the date of a change in ownership or control of the Company (within the meaning of Q&A-2(b) of the final regulations under Section 280G of the Code), such that payments in respect of such services may be considered reasonable compensation within the meaning of Q&A-9 and Q&A-40 to Q&A-44 of the final regulations under Section 280G of the Code and/or exempt from the definition of the term “parachute payment” within the meaning of Q&A-2(a) of the final regulations under Section 280G of the Code in accordance with Q&A-5(a) of the final regulations under Section 280G of the Code.
(d)    The following terms shall have the following meanings for purposes of this Section 7:
(i)    “Accounting Firm” means a nationally recognized certified public accounting firm or other professional organization that is a certified public accounting firm recognized as an expert in determinations and calculations for purposes of Section 280G of the Code that is selected by the Company prior to a Change in Control for purposes of making the applicable determinations hereunder and is reasonably acceptable to the Executive, which firm shall not, without the Executive’s consent, be a firm serving as accountant or auditor for the individual, entity or group effecting the Change in Control.
(ii)    “Net After-Tax Receipt” means the present value (as determined in accordance with Sections 280G(b)(2)(A)(ii) and 280G(d)(4) of the Code) of a Payment net of all taxes imposed on the Executive with respect thereto under Sections 1 and 4999 of the Code and under applicable state and local laws, determined by applying the highest marginal rate under Section 1 of the Code and under state and local laws that applied to the Executive’s taxable income for the immediately preceding taxable year, or such other rate(s) as the Accounting Firm determines to be likely to apply to the Executive in the relevant tax year(s).
(iii)    “Parachute Value” of a Payment means the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2) of the Code, as determined by the Accounting Firm for purposes of determining whether and to what extent the excise tax under Section 4999 of the Code will apply to such Payment.
(iv)    “Payment” means any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to the Agreement or otherwise.
(v)    “Safe Harbor Amount” means 2.99 times the Executive’s “base amount,” within the meaning of Section 280G(b)(3) of the Code.
(e)    The provisions of this Section 7 shall survive the expiration of the Agreement.
8.    Restrictive Covenants.
(a)    Return of Company Property.  Upon his termination of employment for any reason, the Executive shall promptly return to the Company any keys, credit cards, passes, confidential documents or material, or other property belonging to the Company, and the Executive shall also return all writings, files, records, correspondence, notebooks, notes and other documents and things (including any copies thereof) containing confidential information or relating to the business or proposed business of the Company or the Affiliated Entities or containing any trade secrets relating to the Company or the Affiliated Entities, in each case, in the Executive’s possession, except any personal diaries, calendars, rolodexes or personal notes or correspondence.  For purposes of the preceding sentence, the term “trade secrets” shall have the meaning ascribed to it under the Uniform Trade Secrets Act.  The Executive agrees to represent in writing to the Company upon termination of employment that the Executive has complied with the foregoing provisions of this Section 8(a).
(b)    Mutual Nondisparagement.  The Executive and the Company each agree that, following the Executive’s termination of employment, neither the Executive nor the Company will make any public statements that materially disparage the other party.  The Company shall not be liable for any breach of its obligations under this paragraph if it informs its directors and executive officers, as such term is defined in Rule 3b-7 promulgated under the Exchange Act, of the content of its covenant hereunder and takes reasonable measures to ensure that such individuals honor the Company’s agreement.  Notwithstanding the foregoing, nothing in this Section 8(b) shall prohibit any person from making truthful statements when required by order of a court or other governmental or regulatory body having jurisdiction or to enforce any legal right including, without limitation, the terms of this Agreement.
(c)    Confidential Information.  The Executive agrees that, during the Executive’s employment with the Company and at all times thereafter, the Executive shall hold for the benefit of the Company all secret or confidential information, knowledge, or data relating to the Company or any of the Affiliated Entities, and their respective businesses, which shall have been obtained by the Executive during the Executive’s employment by the Company or during the Executive’s consultation with the Company after the Executive’s termination of employment, and which is not public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement).  Except in the good-faith performance of the Executive’s duties for the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge, or data to anyone other than the Company and those designated by it.  
(d)    Nonsolicitation.  The Executive agrees that, while the Executive is employed by the Company and during the one-year period following the Executive’s termination of employment with the Company, the Executive shall not directly or indirectly, (i) solicit any individual who is, on the Date of Termination (or was, during the six-month period prior to the Date of Termination), employed by the Company or the Affiliated Entities to terminate or refrain from renewing or extending such employment or to become employed by or become a consultant to any other individual or entity other than the Company or the Affiliated Entities or (ii) induce or attempt to induce any customer or investor (in each case, whether former, current, or prospective), supplier, licensee, or other business relation of the Company or any of the Affiliated Entities to cease doing business with the Company or such Affiliated Entity, or in any way interfere with the relationship between any such customer, investor, supplier, licensee, or business relation, on the one hand, and the Company or any the Affiliated Entities, on the other hand.
(e)    Equitable Remedies.  The Executive acknowledges that the Company would be irreparably injured by a violation of Section 8(b), 8(c), or 8(d) and the Executive agrees that the Company, in addition to any other remedies available to it for such breach or threatened breach, on meeting the standards required by law, shall be entitled to a preliminary injunction, temporary restraining order, or other equivalent relief, restraining the Executive from any actual or threatened breach of Section 8(b), 8(c), or 8(d).  If a bond is required to be posted in order for the Company to secure an injunction or other equitable remedy, the parties agree that said bond need not be more than a nominal sum.
(f)    Severability; Blue Pencil.  The Executive acknowledges and agrees that the Executive has had the opportunity to seek advice of counsel in connection with this Agreement and the restrictive covenants contained herein are reasonable in geographical scope temporal duration and in all other respects.  If it is determined that any provision of this Section 8 is invalid or unenforceable, the remainder of the provisions of this Section 8 shall not thereby be affected and shall be given full effect, without regard to the invalid portions.  If any court or other decision-maker of competent jurisdiction determines that any of the covenants in this Section 8 is unenforceable because of the duration or geographic scope of such provision, then after such determination becomes final and unappealable, the duration or scope of such provision, as the case may be, shall be reduced so that such provision becomes enforceable, and in its reduced form, such provision shall be enforced.  Notwithstanding any provision of this Agreement to the contrary, the covenants set forth in this Section 8 are not intended to, and shall be interpreted in a manner that does not, limit or restrict the Executive from exercising any legally protected whistleblower rights (including pursuant to Rule 21F under the Exchange Act).
9.    Successors.
(a)    This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive.  This Agreement and any rights and benefits hereunder shall inure to the benefit of and be enforceable by the Executive’s legal representatives, heirs, or legatees.  This Agreement and any rights and benefits hereunder shall inure to the benefit of and be binding upon the Company and its successors and assigns.
(b)    The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to satisfy all of the obligations under this Agreement in the same manner and to the same extent that the Company would be required to satisfy such obligations if no such succession had taken place.  As used in this Agreement, “Company” means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.
10.    Miscellaneous.
(a)    Amendment.  This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.
(b)    Withholding.  The Company may withhold from any amounts payable under this Agreement such federal, state, local, or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.
(c)    Applicable Law.  The provisions of this Agreement shall be construed in accordance with the internal laws of the State of New York, without regard to the conflict of law provisions of any state.
(d)    Dispute Resolution.  Any controversy or claim arising out of or relating to this Agreement or the breach of this Agreement (other than a controversy or claim arising under Section 8) that is not resolved by the Executive and the Company shall be submitted to arbitration in New York, New York in accordance with New York law and the procedures of the American Arbitration Association.  The determination of the arbitrator shall be conclusive and binding on the Company and the Executive and judgment may be entered on the arbitrator(s)’ awards in any court having competent jurisdiction.
(e)    Severability.  The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, and this Agreement will be construed as if such invalid or unenforceable provision were omitted (but only to the extent that such provision cannot be appropriately reformed or modified).
(f)    Waiver of Breach.  No waiver by any party hereto of a breach of any provision of this Agreement by any other party, or of compliance with any condition or provision of this Agreement to be performed by such other party, will operate or be construed as a waiver of any subsequent breach by such other party of any similar or dissimilar provisions and conditions at the same or any prior or subsequent time.  The failure of any party hereto to take any action by reason of such breach will not deprive such party of the right to take action at any time while such breach continues.
(g)    Notices.  Notices and all other communications provided for in this Agreement shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid, or prepaid overnight courier to the parties at the addresses set forth below (or such other addresses as shall be specified by the parties by like notice):
to the Company (through its agent of service):

Capital Bank Financial Corp.
4725 Piedmont Row Drive, Suite 110
Charlotte, North Carolina 28210
Facsimile:  (704) 554-6909
Attention:  General Counsel

or to the Executive: 

At the address last on the records of the Company

Each party, by written notice furnished to the other party, may modify the applicable delivery address, except that notice of change of address shall be effective only upon receipt.  Such notices, demands, claims, and other communications shall be deemed given in the case of delivery by overnight service with guaranteed next day delivery, the next day or the day designated for delivery; or in the case of certified or registered U.S. mail, five days after deposit in the U.S. mail; provided, however, that in no event shall any such communications be deemed to be given later than the date they are actually received.
(h)    Survivorship.  Upon the expiration or other termination of this Agreement, the respective rights and obligations of the parties hereto shall survive such expiration or other termination to the extent necessary to carry out the intentions of the parties under this Agreement.
(i)    Entire Agreement.  From and after the date hereof, this Agreement shall supersede any other employment agreement or understanding between the parties with respect to the subject matter hereof.  The obligations under this Agreement are enforceable solely against the Company and its successors and assigns.
(j)    Counterparts.  This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.
[Signature Page Follows]

IN WITNESS THEREOF, the Executive has hereunto set the Executive’s hand, and the Company has caused these presents to be executed in its name and on its behalf, all as of the day and year first above written.
CAPITAL BANK FINANCIAL CORP.

By: ____________________________________ 
      Name: 
      Title:

EXECUTIVE

_______________________________________ 
Kenneth J. Kavanagh

[COMPANY LETTERHEAD]
[First Name Last Name 
Street Address 
City, State  Zip]
[DATE]
Dear [EMPLOYEE]:
This Agreement (this “Agreement”) is made as of the date listed below, by and between Capital Bank Financial Corp. (the “Company”) and [EMPLOYEE] (“Employee”) regarding Employee’s cessation of employment with the Company.
Upon execution, this Agreement shall constitute a binding General Release.  We advise that if you have any questions regarding your rights and the General Release contained in this Agreement, you should consult an attorney prior to executing this document.  If you agree to the terms of this Agreement, you should sign this Agreement and return it to the individual listed below on or after the Termination Date (as defined below) but no later than 21 days from the date of this Agreement.
[ADDRESS 
CITY, STATE  ZIP 
ATTENTION:    ]
Employee’s employment will cease on [    ] (the “Termination Date”).  In accordance with the terms of Employee’s Change in Control Severance Agreement with the Company, dated [    ] (the “Change in Control Severance Agreement”), Employee will receive the severance benefits available to Employee under the Change in Control Severance Agreement as set forth on Schedule 1 attached hereto in exchange for the execution of this Agreement, which will release all claims that have been or could be made by Employee relative to Employee’s employment with, or termination by, the Company.
		
	1.
	Restrictions in Change in Control Severance Agreement.  Notwithstanding anything to the contrary in this Agreement, Employee acknowledges and agrees that the provisions relating to restrictions with respect to return of property, nondisparagement, confidential information, and nonsolicitation contained in the Change in Control Severance Agreement shall remain in full and force and effect in accordance with the terms of the Change in Control Severance Agreement.

		
	2.
	Consideration of Agreement.  Employee represents that:  (a) Employee has had sufficient time to consider Employee’s options regarding this Agreement; (b) Employee has been provided with accurate and complete information regarding the benefits that are available to Employee under the terms of this Agreement; (c) Employee has not been subjected to any threats, intimidation, or coercion by the Company in connection with this Agreement; and (d) the terms of this Agreement have been written in a manner that Employee understands.

		
	3.
	Not an Admission.  This Agreement shall not be construed as an admission by any person or entity that he, she, or it has acted wrongfully with respect to Employee or any other person, or that Employee has any claims whatsoever against any person or entity, and the Company specifically disclaims any liability for wrongful acts against Employee or any other person, on the part of itself and its officers, directors, employees, or agents.

		
	4.
	General Release.  Employee hereby irrevocably and unconditionally releases, acquits, and forever discharges the Company and its affiliates, and their officers, directors, partners, members, shareholders, representatives, agents, attorneys, and employees and each of the affiliates, predecessors, successors, and assigns, and family members of the aforementioned (collectively, the “Releasees”) from any and all rights, claims, charges, demands, obligations, causes of action, promises, agreements, controversies, liens, damages, and liabilities of every kind based upon any past action, omission, or event, whether known or unknown, and whether or not in litigation that Employee may have or that could be asserted by another on Employee’s behalf, based on any action, omission, or event relating to Employee’s employment with the Company and/or the cessation thereof through the date Employee executes this Agreement.  This General Release includes actions claiming violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. 2000e et seq., the Americans with Disabilities Act, the Age Discrimination in Employment Act, as amended by the Older Workers’ Benefit Protection Act, the Family and Medical Leave Act of 1993, the Employee Retirement Income Security Act of 1974, the Fair Labor Standards Act, the Equal Pay Act, the Immigration and Reform Control Act, the Uniform Services Employment and Re-Employment Act, the Rehabilitation Act of 1973, and the New York State or City Human Rights Laws, each as amended, or any other federal, state, or local law, regulation, ordinance, or common law, or under any policy, agreement, understanding, or promise, written or oral, formal or informal, between Employee and the Company or any of the Releasees.  This General Release also includes any claims for wrongful discharge or that the Company or any of the other Releasees has dealt with Employee unfairly or in bad faith, and any actions raising tortious claims or any claim of express or implied contract of employment or any other cause of action or claims of violation of common law.  This General Release is for any and all relief, without regard to its form or characterization.  Included in this General Release are any and all claims for attorneys’ fees and for future damages allegedly arising from the alleged continuation of the effects of any past action, omission, or event.  Notwithstanding the foregoing, this General Release shall not release the Company from (a) any obligations under this Agreement or the Change in Control Severance Agreement; (b) any obligations regarding any rights of Employee as a current or former officer, director, or employee of the Company or its affiliates to indemnification under the Company’s bylaws or charter or any insurance policy or other agreement under which Employee is entitled to indemnification or directors’ and officers’ liability coverage; (c) any claims or causes of action that cannot legally be waived, including, but not limited to, any claim for earned but unpaid wages, workers’ compensation benefits, unemployment benefits, and vested 401(k) benefits; and (d) any claims as the holder or beneficial owner of securities (or other rights relating to securities, including equity awards) of the Company or its affiliates.  By signing this Agreement, Employee represents that Employee has not commenced or joined in any claim, charge, action, or proceeding whatsoever against the Company or any of the Releasees arising out of or relating to any of the matters set forth in this paragraph.  Employee further represents that Employee will not be entitled to or accept any personal recovery in any action or proceeding that may be commenced on his behalf arising out of the matters released hereby.

		
	5.
	Notification of New Employer.  Employee hereby consents to the notification of any new employer of Employee’s rights and obligations under this Agreement or the Change in Control Severance Agreement.

		
	6.
	Legal and Equitable Remedies.  Because Employee’s services were personal and unique and because Employee has had access to and has become acquainted with the proprietary information of the Company, the Company shall have the right to enforce this Agreement and any of its provisions by injunction, specific performance, or other equitable relief, without bond and without prejudice to any other rights and remedies that the Company may have for a breach of this Agreement.

		
	7.
	Entire Agreement.  Employee acknowledges and agrees that any prior representations, promises, or agreements between Employee and the Company relating to the subject matter of this Agreement are hereby extinguished, that there are no oral or written representations, promises, or agreements between the parties other than those set forth in this Agreement, and that this constitutes the entire and only agreement on the subject matters covered in this Agreement.  For the avoidance of doubt, this Agreement is not intended to extinguish any provisions of the Change in Control Severance Agreement.

		
	8.
	Severability.  Should any provision of this Agreement be declared or determined by any court to be illegal, invalid, or unenforceable, the validity of the remaining parts, terms, or provisions shall not be affected and each remaining part, term, or provision shall be legal, valid, and enforceable to the fullest extent permitted by law, and any illegal, invalid, or unenforceable part, term, or provision shall be deemed not to be a part of this Agreement.

		
	9.
	Jurisdiction/Choice of Law/Waiver of Jury Trial.  Employee agrees that the provisions of this Agreement shall be construed in accordance with the internal laws of the State of New York, without regard to the conflict of law provisions of any state.  Both parties hereby waive any right to a jury trial.

		
	10.
	Acknowledgement.  By signing this document, in addition to releasing all claims described herein, in accordance with the Older Workers Benefit Protection Act of 1990, Employee is aware of and agrees to the following:

		
	a.
	Employee has been advised to consult with an attorney prior to signing this Agreement;

		
	b.
	Employee was given at least 21 days to consider the actual terms of this Agreement; Employee understands that Employee must deliver a signed copy of this Agreement to the Company in the care of:  [    ];

		
	c.
	Employee understands that Employee may revoke this Agreement within seven calendar days from the date of signing, in which case this Agreement shall be null and void and of no force and effect on the Company or Employee; and

		
	d.
	Employee understands that this Agreement shall not become effective or enforceable until the seven-day revocation period has expired.  Employee further understands and acknowledges that, to be effective, the revocation must be in writing, delivered to [    ], on or before the seventh calendar day by 5:00 pm after Employee signs this Agreement.

PLEASE READ THIS AGREEMENT CAREFULLY.  IT CONTAINS A GENERAL RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS ARISING OUT OF YOUR EMPLOYMENT.
CAPITAL BANK FINANCIAL CORP.
By:        
Name:        
Title:        
Dated:      
I have read this Agreement, and I am fully aware of the legal effects of this Agreement.  I have chosen to execute this Agreement freely, without reliance upon any promises or representations made by the Company other than those contained in this Agreement, and I understand that, under the terms of this Agreement, I will receive payments as described in the Change in Control Severance Agreement, less applicable tax withholdings in accordance with the terms of the Change in Control Severance Agreement following the date on which this Agreement becomes irrevocable as described above.
EMPLOYEE
Dated:              

SCHEDULE 1 
SEVERANCE BENEFITS

Accrued Obligations:        $[●] (Base Salary)
$[●] (Unpaid Incentive Payment)
$[●] (Accrued Vacation)
$[●] (Unreimbursed Expenses)
Cash Severance:            $[●]
Welfare Benefits Continuation:    18 months following the Termination Date
Other Benefits:            [To be specified as applicable]ex10-1.htm

 

	
 
	
Execution Version

      

Exhibit 10.1 

 

	
 

 

 

October 14, 2016

 

NV5 Global, Inc.

200 South Park Road, Suite 350

Hollywood, Florida 33021

Attention: Michael P. Rama, Vice President and Chief Financial Officer

 

 

 

$80,000,000 Senior Secured Revolving Credit Facility

 

Ladies and Gentlemen:

 

Bank of America, N.A. (“Bank of America”) is pleased to offer to be the sole administrative agent (in such capacity, the “Administrative Agent”) for a $80,000,000 Senior Secured Revolving Credit Facility (the “Senior Credit Facility”) to NV5 Global, Inc. (“you” or the “Borrower”), and Bank of America is pleased to offer its commitment to lend all of the Senior Credit Facility (the “Commitment”), upon and subject to the terms and conditions set forth in this letter (this “Commitment Letter”) and in the Summary of Terms and Conditions attached as Exhibit A hereto and incorporated herein by this reference (the “Summary of Terms”). Merrill Lynch, Pierce, Fenner & Smith Incorporated (or any of its designated affiliates, “MLPFS”) is pleased to advise you of its willingness in connection with the foregoing commitment, as sole lead arranger and sole bookrunner (in such capacities, the “Lead Arranger”) for the Senior Credit Facility, to use commercially reasonable efforts to form, through assignments by Bank of America under the Senior Credit Facility, a syndicate of commercial banking institutions (including Bank of America) (collectively, the “Lenders”) for the Senior Credit Facility.

 

Bank of America will act as sole Administrative Agent for the Senior Credit Facility and MLPFS will act as sole Lead Arranger for the Senior Credit Facility. No additional agents, co-agents or arrangers will be appointed and no other titles will be awarded without our prior written approval. You hereby agree that, effective upon your acceptance of this Commitment Letter and continuing through the earlier of 120 days after the closing of the Senior Credit Facility and completion of the syndication process by Bank of America achieving its desired hold level of $40,000,000 (such period, the “Syndication Period”), you shall not solicit any other bank, investment bank, financial institution, person or entity to provide, structure, arrange or syndicate any component of the Senior Credit Facility or any other senior financing similar to or as a replacement of any component of the Senior Credit Facility.

 

The commitment of Bank of America hereunder and the undertaking of MLPFS to provide the services described herein are subject to the satisfaction of each of the following conditions precedent in a manner acceptable to Bank of America and MLPFS: (a) the completion of a due diligence review of the assets, liabilities (including contingent liabilities) and business of the Borrower and its subsidiaries in scope and with results satisfactory to us in our sole and absolute discretion; (b) the accuracy and completeness of all representations that you and your affiliates make to Bank of America and MLPFS and your compliance with the terms of this Commitment Letter (including the Summary of Terms) and the Fee Letter (as hereinafter defined); (c) prior to and during the syndication of the Senior Credit Facility there shall be no competing offering, placement or arrangement of any debt securities or bank financing by or on behalf of the Borrower or any of its subsidiaries; (d) the negotiation, execution and delivery of definitive documentation for the Senior Credit Facility consistent with the Summary of Terms and otherwise satisfactory to Bank of America and MLPFS; (e) no material adverse change in or material disruption of conditions in the market for syndicated bank credit facilities or the financial, banking or capital markets generally shall have occurred that, in the judgment of Bank of America and MLPFS, would impair the syndication of the Senior Credit Facility; and (f) no change, occurrence or development shall have occurred or become known to Bank of America or MLPFS since December 31, 2015 that has had or could reasonably be expected to have a Material Adverse Effect (as defined in the Summary of Terms); provided that, solely for the purposes of the commitment of Bank of America hereunder and the undertaking of MLPFS to provide the services described herein, nothing disclosed in the financial statements filed with the periodic reports filed by the Borrower with the Securities and Exchange Commission will be treated as having, or reasonably being expected to have, a Material Adverse Effect.

 

 

1

 

  

MLPFS intends to commence syndication of the Senior Credit Facility promptly after the Closing Date, as defined in the Summary of Terms, and the commitment of Bank of America hereunder shall be reduced, through assignments under the Senior Credit Facility after closing, dollar-for-dollar as and when corresponding commitments are received from the Lenders until Bank of America reaches its desired hold level of $40,000,000. You agree to actively assist MLPFS in achieving a syndication of the Senior Credit Facility that is satisfactory to MLPFS and you. Such assistance shall include your (a) providing and causing your advisors to provide Bank of America and MLPFS and the other Lenders upon request with all information reasonably deemed necessary by Bank of America and MLPFS to complete syndication, including, but not limited to, information and evaluations prepared by you and your advisors, or on your behalf, relating to the transactions contemplated hereby (including the Projections (as hereinafter defined), the “Information”), (b) if requested by the Lead Arranger, assisting in the preparation of an Information Memorandum and other materials to be used in connection with the syndication of the Senior Credit Facility (collectively with the Summary of Terms, the “Information Materials”), (c) using your commercially reasonable efforts to ensure that the syndication efforts of MLPFS benefit materially from your existing banking relationships, and (d) otherwise assisting Bank of America and MLPFS in their syndication efforts, including by making your officers and advisors, upon reasonable prior notice and during normal business hours, available from time to time to attend and make presentations regarding the business and prospects of the Borrower and its subsidiaries, as appropriate, at one or more meetings of prospective Lenders. 

 

It is understood and agreed that MLPFS will manage and control all aspects of the syndication in consultation with you, including decisions as to the selection of prospective Lenders (each of which shall be a commercial banking institution reasonably acceptable to you) and any titles offered to proposed Lenders, when commitments will be accepted and the final allocations of the commitments among the Lenders. It is understood that no Lender participating in the Senior Credit Facility will receive compensation from you in order to obtain its commitment, except on the terms contained herein, in the Summary of Terms and in the Fee Letter. 

 

You represent, warrant and covenant that (a) all financial projections concerning the Borrower and its subsidiaries that have been or are hereafter made available to Bank of America, MLPFS or the Lenders by you or any of your representatives (or on your or their behalf) (the “Projections”) have been or will be prepared in good faith based upon reasonable assumptions (it being recognized that such Projections are not to be viewed as facts and that actual results during the period or periods covered by any Projections may differ from the projected results contained therein, which differences may be material) and (b) all Information, other than Projections, which has been or is hereafter made available to Bank of America, MLPFS or the Lenders by you or any of your representatives (or on your or their behalf) in connection with any aspect of the transactions contemplated hereby, as and when furnished, is and will be complete and correct in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading. You agree to furnish us with further and supplemental information from time to time until the date of the effectiveness of the Senior Credit Facility (the “Closing Date”) and for such period thereafter as is necessary to complete the syndication of the Senior Credit Facility so that the representation, warranty and covenant in the immediately preceding sentence are correct on the Closing Date and on such later date on which the syndication of the Senior Credit Facility is completed as if the Information were being furnished, and such representation, warranty and covenant were being made, on such date. In issuing this commitment and in arranging and syndicating the Senior Credit Facility, Bank of America and MLPFS are and will be using and relying on the Information without independent verification thereof.

 

 

2

 

  

You acknowledge that MLPFS and/or Bank of America on your behalf will make available Information Materials to the proposed syndicate of Lenders by posting the Information Materials on IntraLinks, SyndTrak or another similar electronic system. In connection with the syndication of the Senior Credit Facility, unless the parties hereto otherwise agree in writing, you shall be under no obligation to provide Information Materials suitable for distribution to any prospective Lender (each, a “Public Lender”) that has personnel who do not wish to receive material non-public information (within the meaning of the United States federal securities laws, “MNPI”) with respect to the Borrower or its affiliates, or the respective securities of any of the foregoing. You agree, however, that the definitive credit documentation will contain provisions concerning Information Materials to be provided to Public Lenders and the absence of MNPI therefrom. Prior to distribution of Information Materials to prospective Lenders, you shall provide us with a customary letter authorizing the dissemination thereof.

 

By executing this Commitment Letter, you agree to reimburse Bank of America and MLPFS from time to time on written demand accompanied by reasonable supporting detail for all reasonable out-of-pocket fees and expenses (including, but not limited to, (a) the reasonable fees, disbursements and other charges of McGuireWoods LLP, as counsel to the Lead Arranger and the Administrative Agent, and (b) due diligence expenses) incurred in connection with the Senior Credit Facility, the syndication thereof, the preparation of the definitive documentation therefor and the other transactions contemplated hereby. You acknowledge that we may receive a benefit, including without limitation, a discount, credit or other accommodation, from any of such counsel based on the fees such counsel may receive on account of their relationship with us including, without limitation, fees paid pursuant hereto.

 

You agree to indemnify and hold harmless Bank of America, MLPFS, each Lender and each of their affiliates and their respective partners, officers, directors, employees, agents, trustees, administrators, managers, advisors and representatives (each, an “Indemnified Party”) from and against (and will reimburse each Indemnified Party as the same are incurred for) any and all claims, damages, losses, liabilities and expenses (including, without limitation, the reasonable fees, disbursements and other charges of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (a) any matters contemplated by this Commitment Letter or any related transaction or (b) the Senior Credit Facility and any other similar or replacement financings in which Bank of America or any of its affiliates is involved, or any use made or proposed to be made with the proceeds thereof, except to the extent such claim, damage, loss, liability or expense (i) is found in a final, nonappealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence, willful misconduct or breach in bad faith of its obligations hereunder. In the case of an investigation, litigation or proceeding to which the indemnity in this paragraph applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by you, your equity holders or creditors or an Indemnified Party, whether or not an Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. You also agree that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to you or your subsidiaries or affiliates or to your or their respective equity holders or creditors arising out of, related to or in connection with any aspect of the transactions contemplated hereby, except to the extent of direct, as opposed to special, indirect, consequential or punitive, damages determined in a final, nonappealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence, willful misconduct or breach in bad faith of its obligations hereunder. Notwithstanding any other provision of this Commitment Letter, no Indemnified Party shall be liable for any damages arising from the use by others of information or other materials obtained through electronic telecommunications or other information transmission systems other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnified Party as determined by a final nonappealable judgment of a court of competent jurisdiction. Notwithstanding the foregoing, each Indemnified Party shall be obligated to refund and return any and all amounts paid by you under this paragraph to such Indemnified Party for any such losses, claims, damages, liabilities and expenses to the extent it has been determined by a final, nonappealable judgment by a court of competent jurisdiction that such Indemnified Person is not entitled to payment of such amounts in accordance with the terms hereof. 

 

 

3

 

  

This Commitment Letter and the fee letter among you, Bank of America and MLPFS of even date herewith (the “Fee Letter”) and the contents hereof and thereof are confidential and, except for disclosure hereof or thereof on a confidential basis to your accountants, attorneys and other professional advisors retained by you in connection with the Senior Credit Facility or as otherwise required by law, may not be disclosed by you in whole or in part to any person or entity without our prior written consent; provided, however, it is understood and agreed that you may disclose this Commitment Letter (including the Summary of Terms) but not the Fee Letter (other than the existence thereof and the contents thereof as part of projections, pro forma information and a generic disclosure of aggregate sources and uses to the extent customary in marketing materials and other required filings) after your acceptance of this Commitment Letter and the Fee Letter, in filings with the Securities and Exchange Commission and other applicable regulatory authorities and stock exchanges. Bank of America and MLPFS hereby notify 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 “Act”), each of them is required to obtain, verify and record information that identifies you, which information includes your name and address and other information that will allow Bank of America or MLPFS, as applicable, to identify you in accordance with the Act.

 

Each of Bank of America and MLPFS shall use all confidential information provided to it or its affiliates by or on behalf of you hereunder solely for the purpose of providing the services which are the subject of this letter agreement and shall treat confidentially all such information; provided, however, that nothing herein shall prevent the either Bank of America or MLPFS from disclosing any such information (i) pursuant to the order of any court or administrative agency or in any pending legal or administrative proceeding, or otherwise as required by applicable law or compulsory legal process (in which case Bank of America and MLPFS agree to inform you promptly thereof prior to such disclosure to the extent not prohibited by law, rule or regulation and shall comply with any applicable protective order (or equivalent) obtained by you or on your behalf and, in the event no such order (or equivalent) is obtained, shall disclose only such of the confidential information as they are advised by counsel is necessary to comply with applicable law, regulation, or court or administrative agency order)), (ii) upon the request or demand of any regulatory authority having jurisdiction over Bank of America, MLPFS or any of their respective affiliates, (iii) to the extent that such information becomes publicly available other than by reason of disclosure in violation of this agreement by Bank of America or MLPFS or any of its affiliates or Representatives (as defined below), (iv) to Bank of America’s and MLPFS’ respective affiliates, and their and such affiliates’ respective employees, legal counsel, independent auditors and other experts or agents who need to know such information in connection with the transactions contemplated hereby (collectively, the “Representatives”) and are informed of the confidential nature of such information and instructed to keep such information confidential, (v) for purposes of establishing a “due diligence” defense, (vi) to the extent that such information is or was received by the Bank of America or MLPFS from a third party that is not to the Bank of America’s or MLPFS’ knowledge subject to confidentiality obligations to you, (vii) to the extent that such information is independently developed by Bank of America or MLPFS or (viii) to potential Lenders, participants, assignees or potential counterparties to any swap or derivative transaction relating to the Borrower or any of its subsidiaries or any of their respective obligations, in each case, who agree to be bound by the terms of this paragraph (or language substantially similar to this paragraph or as otherwise reasonably acceptable to you and Bank of America and MLPFS, including as may be agreed in any confidential information memorandum or other marketing material). This paragraph shall terminate on the first anniversary of the date hereof; provided, however, that nothing in this paragraph (including the first clause of this sentience) shall limit temporally or in scope or ambit the confidentially obligation imposed on Bank of America and MLPFS by applicable law or regulation.

 

 

4

 

  

You acknowledge that Bank of America and MLPFS or their affiliates may be providing financing or other services to parties whose interests may conflict with yours. Bank of America and MLPFS agree that they will not furnish confidential information obtained from you to any of their other customers and that they will treat confidential information relating to you and your affiliates with the same degree of care as they treat their own confidential information. Bank of America and MLPFS further advise you that they will not make available to you confidential information that they have obtained or may obtain from any other customer. In connection with the services and transactions contemplated hereby, you agree that Bank of America and MLPFS are permitted to access, use and share with any of their bank or non-bank affiliates, agents, advisors (legal or otherwise) or representatives any information concerning you or any of your affiliates that is or may come into the possession of Bank of America, MLPFS or any of such affiliates. 

 

In connection with all aspects of each transaction contemplated by this Commitment Letter, you acknowledge and agree, and acknowledge your affiliates’ understanding, that: (a) (i) the arranging and other services described herein regarding the Senior Credit Facility are arm’s-length commercial transactions between you and your affiliates, on the one hand, and Bank of America and MLPFS, on the other hand, (ii) you have consulted your own legal, accounting, regulatory and tax advisors to the extent you have deemed appropriate, and (iii) you are capable of evaluating, and understand and accept, the terms, risks and conditions of the transactions contemplated hereby; (b) (i) Bank of America and MLPFS each has been, is, and will be acting solely as a principal and, except as otherwise expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for you, any of your affiliates or any other person or entity and (ii) neither Bank of America nor MLPFS nor any other Lead Arranger has any obligation to you or your affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein; and (c) Bank of America and MLPFS and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from yours and those of your affiliates, and Bank of America and MLPFS have no obligation to disclose any of such interests to you or your affiliates. To the fullest extent permitted by law, you hereby waive and release any claims that you may have against Bank of America, MLPFS with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated by this Commitment Letter.

 

This Commitment Letter (including the Summary of Terms) and the Fee Letter shall be governed by, and construed in accordance with, the laws of the State of New York. Each of you, Bank of America and MLPFS hereby irrevocably waives any and all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Commitment Letter (including the Summary of Terms), the Fee Letter, the transactions contemplated hereby and thereby or the actions of Bank of America and MLPFS in the negotiation, performance or enforcement hereof. Each of Bank of America, MLPFS and you hereby irrevocably and unconditionally submits to the exclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in the Borough of Manhattan in New York City in respect of any suit, action or proceeding arising out of or relating to the provisions of this Commitment Letter (including the Summary of Terms), the Fee Letter and the transactions contemplated hereby and thereby and irrevocably agrees that all claims in respect of any such suit, action or proceeding may be heard and determined in any such court. Nothing in this Commitment Letter, the Summary of Terms or the Fee Letter shall affect any right that Bank of America, MLPFS or any affiliate thereof may otherwise have to bring any claim, action or proceeding relating to this Commitment Letter (including the Summary of Terms), the Fee Letter and/or the transactions contemplated hereby and thereby in any court of competent jurisdiction to the extent necessary or required as a matter of law to assert such claim, action or proceeding against any assets of the Borrower or any of its subsidiaries or enforce any judgment arising out of any such claim, action or proceeding. Each of Bank of America, MLPFS and you agree that service of any process, summons, notice or document by registered mail addressed to you shall be effective service of process against you for any suit, action or proceeding relating to any such dispute. Each of Bank of America, MLPFS and you waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceedings brought in any such court, and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. A final judgment in any such suit, action or proceeding brought in any such court may be enforced in any other courts to whose jurisdiction you are or may be subject by suit upon judgment. The commitments and undertakings of Bank of America and MLPFS may be terminated by us if you fail to perform your obligations under this Commitment Letter or the Fee Letter on a timely basis.

 

 

5

 

  

The provisions of the immediately preceding seven paragraphs shall remain in full force and effect regardless of whether any definitive documentation for the Senior Credit Facility shall be executed and delivered, and notwithstanding the termination of this Commitment Letter or any commitment or undertaking of Bank of America or MLPFS hereunder.

 

You hereby agree that MLPFS may, without notice to you, assign its rights and obligations under this Commitment Letter to any other registered broker-dealer wholly-owned by Bank of America Corporation to which all or substantially all of Bank of America Corporation’s or any of its subsidiaries’ investment banking, commercial lending services or related businesses may be transferred following the date of this Commitment Letter.

 

This Commitment Letter and the Fee Letter may be executed in counterparts which, taken together, shall constitute an original. Delivery of an executed counterpart of this Commitment Letter or the Fee Letter by telecopier or facsimile shall be effective as delivery of a manually executed counterpart thereof.

 

This Commitment Letter (including the Summary of Terms) and the Fee Letter embody the entire agreement and understanding among Bank of America, MLPFS, you and your affiliates with respect to the Senior Credit Facility and supersedes all prior agreements and understandings relating to the specific matters hereof. However, please note that the terms and conditions of the commitment of Bank of America and the undertaking of MLPFS hereunder are not limited to those set forth herein or in the Summary of Terms. Those matters that are not covered or made clear herein or in the Summary of Terms or the Fee Letter are subject to mutual agreement of the parties. No party has been authorized by Bank of America or MLPFS to make any oral or written statements that are inconsistent with this Commitment Letter. This Commitment Letter is not assignable by the Borrower without our prior written consent and is intended to be solely for the benefit of the parties hereto and the Indemnified Parties.

 

 

6

 

  

This Commitment Letter and all commitments and undertakings of Bank of America and MLPFS hereunder will expire at 5:00 p.m. (Eastern time) on October 17, 2016 unless you execute this Commitment Letter and the Fee Letter and return them to us prior to that time (which may be by fax transmission or other electronic mail transmission), whereupon this Commitment Letter (including the Summary of Terms) and the Fee Letter (each of which may be signed in one or more counterparts) shall become binding agreements. Thereafter, the commitment of Bank of America hereunder will expire on November 30, 2016 unless definitive documentation for the Senior Credit Facility is executed and delivered prior to such date. 

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

 

 

7

 

  

We are pleased to have the opportunity to work with you in connection with this important financing.

 

	
 
	
Very truly yours,
	
 

	 	 	 
	 	BANK OF AMERICA, N.A.	 
	
 
	
 
	
 
	
 

	
 
	
By: 
	
   /s/ Tony Keranov
	
 

	
 
	
Name: 
	
   Tony Keranov 
	
 

	
 
	
Title:
	
   Senior Vice President 
	
 

	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED 
	 	 	 	 
	 	By:	   /s/ Lorraine M. Kieffer	 
	 	Name: 	   Lorraine M. Kieffer 	 
	 	Title:	   Senior Vice President 	 

 

 

Accepted and agreed to

as of the date first above written:

 

NV5 GLOBAL, INC.

 

By:          /s/ Dickerson Wright                                                   

Name:     Dickerson Wright                                                         

Title:       Chairman/CEO                                                              

 

 

 

 

  

SUMMARY OF INDICATIVE TERMS AND CONDITIONS

NV5 GLOBAL, INC.

$80,000,000 SENIOR SECURED REVOLVING CREDIT FACILITY

 

 

Capitalized terms not otherwise defined herein have the same meanings as specified therefor in the commitment

letter (the “Commitment Letter”) to which this Summary of Terms and Conditions is attached.

 

	
BORROWER:
	
NV5 Global, Inc., a Delaware corporation (the “Borrower”).

	 	 
	
GUARANTORS:
	
The Senior Credit Facility and any treasury or cash management services, interest rate, currency, foreign exchange or commodity swap or hedging arrangements entered into with a Lender (or any affiliate thereof) (“Additional Secured Obligations”) will be guaranteed by each existing and future direct and indirect domestic and, to the extent no material adverse tax or regulatory consequences would result and no material impediment (including but not limited to repatriation limitations) exists under the law of the applicable foreign jurisdictions, , foreign subsidiary of the Borrower (collectively, the “Guarantors”; and together with the Borrower, the “Loan Parties”). In addition, the Borrower will guaranty any Additional Secured Obligations entered into by any Loan Party with a Lender (or any affiliate thereof). Notwithstanding anything contained herein to the contrary, any Additional Secured Obligations of a Loan Party shall exclude certain swap obligations if, and to the extent that such swap obligation is or becomes illegal under the Commodity Exchange Act (determined after giving effect to any keepwell or other support for the benefit of such Loan Party). 

	 	 
	ADMINISTRATIVE	 
	
AGENT:
	
Bank of America, N.A. (“Bank of America”) will act as sole administrative agent (the “Administrative Agent”).

	 	 
	SOLE LEAD ARRANGER AND	 
	
SOLE BOOKRUNNER
	
Merrill Lynch, Pierce, Fenner & Smith Incorporated (or any of its affiliates) will act as sole lead arranger and sole bookrunner (the “Lead Arranger”).

	 	 
	
LENDERS:
	
A syndicate of commercial banking institutions (including Bank of America) arranged by the Lead Arranger, which institutions shall be acceptable to the Administrative Agent (collectively, the “Lenders”).

	 	 
	SENIOR CREDIT	 
	
FACILITY:
	$80,000,000 million revolving facility (the “Revolving Facility” or “Senior Credit Facility”), which will include a $5,000,000 million sublimit for the issuance of standby letters of credit (each a “Letter of Credit”) and a $15,000,000 million sublimit for swingline loans (each a “Swingline Loan”). Letters of Credit will be issued by Bank of America (in such capacity, the “L/C Issuer”) and Swingline Loans may be made available by Bank of America (in such capacity, the “Swingline Lender”), and each of the Lenders under the Revolving Facility will purchase an irrevocable and unconditional participation in each Letter of Credit and each Swingline Loan. 

  

 

1

 

 

	
PURPOSE:
	
The proceeds of the Senior Credit Facility shall be used to finance permitted acquisitions, for capital expenditures, and for general corporate purposes not in contravention of any law or of any Loan Document (as hereinafter defined).

	 	 
	
CLOSING DATE:
	
The execution of definitive Loan Documents, anticipated to occur on or before November 30, 2016 (the “Closing Date”).

	 	 
	INTEREST RATES: 	As set forth in Addendum I.
	 	 
	
MATURITY:
	
The Senior Credit Facility shall terminate and all amounts outstanding thereunder shall be due and payable in full five (5) years after the Closing Date.

	 	 
	
INCREASE OPTION:
	
The Senior Credit Facility will include an accordion feature permitting the Borrower to request an increase in the revolving commitments by an additional amount of up to $60,000,000; provided that any such request shall be in a minimum amount of $20,000,000 and in increments of $5,000,000 in excess thereof. Such increases may be effected from time to time after the Closing Date subject to customary terms and conditions and provided that (a) no default or event of default exists at the time of any such increase and (b) the Borrower may make a maximum of two (2) such requests. The Borrower may offer the increase to (i) its existing Lenders, and each existing Lender will have the right, but not the obligation, to commit to all or a portion of the proposed increase, and (ii) if necessary to obtain the requested additional commitments, third party commercial banking institutions reasonably acceptable to the Administrative Agent, the Swingline Lender, the L/C Issuer and the Borrower. 

	 	 
	
AVAILABILITY:
	
Extensions of credit under the Senior Credit Facility may be made on a revolving basis up to the full amount of the Senior Credit Facility and Letters of Credit may be issued up to the sublimit for Letters of Credit. Swingline Loans may be issued up to the sublimit for Swingline Loans.

	 	 
	
OPTIONAL

PREPAYMENTS

AND COMMITMENT
	 
	
REDUCTIONS:
	
The Borrower may prepay the Senior Credit Facility in whole or in part at any time without premium or penalty, subject to reimbursement of the Lenders’ breakage and redeployment costs in the case of prepayment of LIBOR borrowings (but excluding any loss of anticipated profits). The unutilized portion of the commitments under the Senior Credit Facility may be irrevocably reduced or terminated by the Borrower at any time without penalty. 

  

 

2

 

 

	SECURITY:	The Borrower and each of the Guarantors shall grant the Administrative Agent (for the benefit of the Lenders and the other secured parties, collectively, the “Secured Parties”)) valid and perfected first priority (subject to certain exceptions to be set forth in the Loan Documents) liens and security interests in all of the following:

           

	 	
(a)
	
Equity Interests. All present and future shares of capital stock of (or other ownership or profit interests in) each of its present and future subsidiaries (limited, in the case of each entity that is a “controlled foreign corporation” under Section 957 of the Internal Revenue Code, to a pledge of 65% of the capital stock of each such first-tier foreign subsidiary. 

	 	 	 
	 	
(b)
	
Personal Property. All of its present and future personal property and assets, including, but not limited to, machinery and equipment, inventory and other goods, accounts receivable, bank accounts, general intangibles, financial assets, investment property, letter of credit rights, license rights, patents, trademarks, tradenames, copyrights, chattel paper, insurance proceeds, contract rights, hedge agreements, documents, instruments, indemnification rights, tax refunds and cash.

	 	 	 
	 	
(c)
	
Proceeds, Products, Etc. All proceeds and products of the property and assets described in clauses (a) and (b) above.

 

	 	The Security shall ratably secure the relevant party’s obligations in respect of the Senior Credit Facility and the Additional Secured Obligations.
	 	 
	CONDITIONS PRECEDENT	 
	
TO CLOSING:
	
The closing and the initial extension of credit under the Senior Credit Facility will be subject to satisfaction of the conditions precedent deemed appropriate by the Administrative Agent and Bank of America including, but not limited to, the following, in each case, in form and substance reasonably satisfactory to the Administrative Agent and Bank of America:

 

	 	
(a)
	
Loan Documentation. The negotiation, execution and delivery of definitive documentation with respect to the Senior Credit Facility satisfactory to the Lead Arranger, the Administrative Agent and Bank of America (collectively, the “Loan Documents”).

	 	 	 
	 	
(b)
	
Organizational Documents; Certificates of Good Standing. Bank of America shall have received organizational documents of each Loan Party certified by a responsible officer and certificates of good standing for each Loan Party.

	 	 	 
	 	
(c)
	
Legal Opinions. Bank of America shall have received satisfactory opinions of counsel to the Loan Parties (which shall cover, among other things, authority, legality, validity, binding effect and enforceability of the documents for the Senior Credit Facility) and of appropriate local counsel.

   

 

3

 

 

	 	
(d)
	
Financial Statements. Bank of America shall have received copies of interim financial statements of the Borrower and its subsidiaries dated the end of the most recent fiscal quarter for which financial statements are available and projections for the Borrower and its subsidiaries for the first year following the Closing Date.

	 	 	 
	 	
(e)
	
Collateral Documentation. All filings, recordations and searches necessary or desirable in connection with the liens and security interests referred to above under Security shall have been duly made. All deliverables related to the collateral shall have been delivered to the Administrative Agent, including, without limitation, stock certificates and stock powers, instruments, documents and chattel paper (together with allonges or assignments), landlord lien waivers and access agreements with respect to the Borrower’s headquarters location, and, if reasonably required by the Administrative Agent upon further diligence, executed assignment of claims forms. All filing and recording fees and taxes shall have been duly paid. Bank of America shall have received satisfactory evidence that the Administrative Agent (on behalf of the Secured Parties) shall have a valid and perfected first priority (subject to certain exceptions to be set forth in the Loan Documents) lien and security interest in the collateral.

	 	 	 
	 	
(f)
	
Insurance. Bank of America shall be satisfied with the amount, types and terms and conditions of all insurance maintained by the Loan Parties and their subsidiaries. The Administrative Agent shall have received copies of insurance policies, declaration pages, certificates and endorsements of insurance or insurance binders evidencing liability, casualty, property, terrorism and business interruption insurance meeting the requirements set forth in the Loan Documents.

	 	 	 
	 	
(g)
	
Solvency Certificate. Bank of America shall have received a solvency certificate signed by a responsible officer of the Borrower as to the financial condition, solvency and related matters of the Loan Parties and their subsidiaries. 

	 	 	 
	 	
(h)
	
Perfection Certificate. Bank of America shall have received a customary perfection certificate signed by a responsible officer of the Borrower.

	 	 	 
	 	
(i)
	
Material Adverse Effect. There shall not have occurred since December 31, 2015 any event or condition that has had or could be reasonably expected, either individually or in the aggregate, to have a Material Adverse Effect. “Material Adverse Effect” means (i) a material adverse change in, or a material adverse effect on, the operations, business, assets, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of the Loan Parties and their respective subsidiaries, taken as a whole; (ii) a material impairment of the rights and remedies of the Administrative Agent or any Lender under any Loan Documents, or of the ability of any Loan Party to perform its obligations under any Loan Documents to which it is a party; or (iii) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Documents to which it is a party.

   

 

4

 

 

	 	
(j)
	
No Litigation. The absence of any action, suit, investigation or proceeding pending or, to the knowledge of the Loan Parties, threatened in any court or before any arbitrator or governmental authority that could reasonably be expected to have a Material Adverse Effect.

	 	 	 
	 	
(k)
	
Existing Indebtedness. All existing indebtedness for borrowed money of the Loan Parties and their subsidiaries (other than indebtedness permitted by the Loan Documents, including, but not limited to, the existing seller notes on which the Borrower is obligated (the “Seller Notes”)) shall be repaid in full and all security interests related thereto shall be terminated.

	 	 	 
	 	
(l)
	
Consents. Bank of America shall have received evidence that all boards of directors, governmental, shareholder and material third party consents and approvals necessary in connection with the Loan Documents have been obtained.

	 	 	 
	 	
(m)
	
Fees and Expenses. Bank of America and the Lead Arranger shall have received all fees and expenses (including the fees and expenses of counsel (including any local counsel) for the Administrative Agent) owing pursuant to the Loan Documents and fee letter entered into in connection with the Loan Documents. 

	 	 	 
	 	
(n)
	
Due Diligence. Bank of America shall have completed a due diligence investigation of the Loan Parties and their respective subsidiaries in scope, and with results, satisfactory to Bank of America, including, without limitation, U.S. Department of Treasury Office of Foreign Assets Control, Foreign Corrupt Practices Act (“FCPA”) and “know your customer” due diligence. The Loan Parties shall have provided to the Administrative Agent and Bank of America the documentation and other information requested by the Administrative Agent and Bank of America in order to comply with applicable law, including without limitation, the PATRIOT Act.

	 	 	 
	 	
(o)
	
Confirmation of Subordination Terms. Bank of America shall have received copies of and approved the subordination terms of any Seller Notes to be treated as Subordinated Indebtedness for purposes of the calculation of the Consolidated Senior Leverage Ratio. 

    

 

5

 

 

	
CONDITIONS PRECEDENT TO

ALL EXTENSIONS 
	 
	
OF CREDIT:
	
Usual and customary for transactions of this type, including, without limitation, the following: (a) all of the representations and warranties in the Loan Documents shall be true and correct, in each case, as of the date of such extension of credit and (b) no default or event of default under the Senior Credit Facility shall have occurred and be continuing, or would result from such extension of credit.

	 	 
	REPRESENTATIONS	 
	
AND WARRANTIES:
	
Usual and customary for transactions of this type, including, without limitation, the following: (a) existence, qualification and power; (b) authorization and no contravention; (c) receipt of governmental authorizations and other consents; (d) binding effect; (e) accuracy of financial statements and no material adverse effect; (f) no litigation; (g) no default; (h) ownership of property; (i) maintenance of insurance; (j) payment of taxes; (kj) ERISA compliance; (l) margin regulation and Investment Company Act compliance; (m) accuracy of disclosure; (n) compliance with laws; (o) solvency; (p) no casualty; (q) sanctions concerns and anti-corruption laws; (r) authorized officers; (s) subsidiaries, equity interests and Loan Parties; (k) collateral representations; and (t) intellectual property; licenses; etc. 

	 	 
	
COVENANTS:
	
Usual and customary for transactions of this type, including, without limitation, the following:

 

	
 
	
 
	
Affirmative Covenants: (a) delivery of financial statements (including budgets and forecasts); (b) delivery of certificates and other information; (c) delivery of notices; (d) payment of obligations; (e) preservation of existence; (f) maintenance of properties and licenses; (g) maintenance of insurance; (h) compliance with laws; (i) books and records; (j) inspection rights; (k) use of proceeds; (l) compliance with material contracts; (m) covenant to guarantee obligations; (n) covenant to give security; (o) further assurances; (p) interest rate hedging; (q) approvals and authorizations; and (r) maintenance of Bank of America as primary depository bank (accounts to be moved to Bank of America within 120 days of the Closing Date).

	 	 	 
	
 
	
 
	
Negative Covenants: Restrictions (in each case, as appropriate, with exceptions and allowances to be agreed upon) on (a) liens; (b) indebtedness (including an allowance for subordinated seller indebtedness incurred in connection with permitted acquisitions of $15,000,000 per fiscal year); (c) investments (including restrictions on loans, advances and acquisitions); (d) fundamental changes; (e) dispositions; (f) payments of dividends, share repurchases and other distributions; (g) changes in nature of business; (h) transactions with affiliates; (i) burdensome agreements; (j) use of proceeds; (k) capital expenditures; (l) amendments of organizational documents and changes in fiscal year, legal name, state of formation; form of entity and accounting changes; (m) sale and leaseback transactions; (n) prepayment of certain indebtedness; (o) amendment of certain indebtedness and (p) sanctions.

  

 

6

 

 

	
 
	
 
	
The definitive loan documentation for the Senior Credit Facility will include customary requirements for acquisitions, including but not limited to the following: 

 

	 	
●
	
Pro forma financial covenant compliance, the aggregate purchase consideration payable in respect of all Permitted Acquisitions shall not exceed the following without obtaining Required Lenders’ prior consent: (i) an amount greater than $40,000,000 in any twelve calendar month period, with the first such period commencing on the Closing Date and (ii) an amount greater than $120,000,000 (with a sublimit to be agreed upon for investments in non-wholly owned or foreign subsidiaries) in the aggregate during the term of the Senior Credit Facility.

	 	 	 
	 	
●
	
Acquisition shall be approved by Target’s board.

	 	 	 
	 	
●
	
Target’s TTM EBITDA shall not be less than $0.

	 	 	 
	 	
●
	
At the time of such acquisition, and after giving pro forma effect to the payment of the purchase price therefor, the Borrower shall have available liquidity (to be defined as the sum of unrestricted cash and cash equivalents that would be reflected on the Borrower’s consolidated balance sheet plus availability under the Senior Credit Facility) of not less than $10,000,000.

	 	 	 
	 	
●
	
Target shall be in same or related line of business as the Borrower.

	 	 	 
	 	
●
	
Timely satisfaction of collateral and guarantee requirements, as applicable, including, at the request of the Administrative Agent, landlord access agreements with respect to Target headquarters and other material locations.

  

	
 
	
Financial Covenants: To include (but not be limited to) the following:

  

	 	
●
	
Maximum Consolidated Leverage Ratio, defined as the ratio of Total Indebtedness to EBITDA, of not greater than 3.00 to 1.00.

	 	 	 
	 	
●
	
Minimum Consolidated Fixed Charge Coverage Ratio, defined as the ratio of (a) EBITDAR minus Maintenance Capital Expenditures minus Restricted Payments minus Cash Taxes and (b) Interest plus Principal plus Rent Expense, of not less than 1.20 to 1.00.

	 	 	 
	 	 	Each of the ratios referred to above will be calculated on a consolidated basis for each consecutive four (4) fiscal quarter period, with appropriate adjustments for material acquisitions and dispositions, as applicable. Financial covenant term definitions to be mutually agreed upon; calculation of EBITDA to include mutually agreed upon add-backs, including but not limited to an add-back for non-cash stock-based compensation expense.

  

 

7

 

  

	
EVENTS OF DEFAULT:
	
Usual and customary in transactions of this type, including, without limitation, the following: (a) non-payment; (b) default of specific covenants; (c) other defaults; (d) breach of representations and warranties; (e) cross-defaults to other indebtedness in an amount to be agreed; (f) insolvency proceedings; (g) inability to pay debts or attachment; (h) judgments; (i) ERISA; (j) invalidity of Loan Documents (k) change of control; (l) uninsured loss; and (m) subordination. 

	 	 
	REPORTING	 
	
REQUIREMENTS:
	
The Borrower shall deliver to Administrative Agent (and if so requested by Administrative Agent, with copies for each Lender), each of the following financial statements, reports or other items set for below at the following times in form satisfactory to Administrative Agent: (a) within 90 days after the end of Borrower’s fiscal year (or, if earlier, fifteen (15) days after the date required to be filed with the SEC (without giving effect to any extension permitted by the SEC)), consolidated and consolidating income statement, statement of cash flow, and statement of shareholder’s equity and a consolidated balance sheet of Borrower and its subsidiaries for each such fiscal year, audited by an independent certified public accountant reasonably acceptable to Administrative Agent and certified without qualification by such accountants to have been prepared in accordance with GAAP (such audited financial statements to include a balance sheet, income statement, statement of cash flow, and statement of shareholder’s equity, and, if prepared, such accountants’ letter to management); (b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, an unaudited consolidated and consolidating income statement, statement of cash flow, and statement of shareholder’s equity covering Borrower’s and its subsidiaries’ operations and a consolidated balance sheet during such period and in each case compared to the prior period and plan, together with a corresponding discussion and analysis of results from management; and (c) within 120 days of after the end of Borrower’s fiscal year, an annual budget for the Borrower and its subsidiaries.

  

 

8

 

 

	ASSIGNMENTS AND	 
	
PARTICIPATIONS:
	
Senior Credit Facility Assignments: Subject to the consents described below, each Lender will be permitted to make assignments to other commercial banking institutions in respect of the Senior Credit Facility in a minimum amount equal to $5 million. 

	 	 
	 	Consents: The consent of the Borrower (such consent not to be unreasonably withheld or delayed) will be required unless (a) an Event of Default has occurred and is continuing or (b) the assignment is to a Lender, an affiliate of a Lender or an Approved Fund (as such term shall be defined in the Loan Documents) or (c) the assignment is an assignment from Bank of America during the period commencing on the Closing Date and ending on the date that is 120 days following the Closing Date in order to complete the syndication of the Senior Credit Facility, consistent with Bank of America’s intended hold level of $40,000,000, and Bank of America has consulted with the Borrower in connection therewith; provided the Borrower shall be deemed to have consented to such assignment unless it shall object thereto by written notice to the Administrative Agent within fifteen (15) business days after having received notice thereof. The consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) will be required for any assignment in respect of the Senior Credit Facility to an entity that is not a Lender, an affiliate of such Lender or an Approved Fund in respect of such Lender. The consent of the L/C Issuer and the Swingline Lender will be required for any assignment under the Senior Credit Facility.
	 	 
	 	Assignments Generally: An assignment fee in the amount of $3,500 will be charged with respect to each assignment unless waived by the Administrative Agent in its sole discretion. Each Lender will also have the right, without consent of the Borrower or the Administrative Agent, to assign as security, all or part of its rights under the Loan Documents to any Federal Reserve Bank. 
	 	 
	 	Participations: Lenders will be permitted to sell participations on standard terms and conditions.
	 	 
	WAIVERS AND	 
	
AMENDMENTS:
	
Amendments and waivers of the provisions of the Loan Documents will require the approval of Lenders holding loans and commitments representing more than 50% of the aggregate amount of the loans and commitments under the Senior Credit Facility, provided that if there are three (3) or fewer Lenders, approval from at least two (2) Lenders shall be required (the “Required Lenders”), except that (a) the consent of each Lender shall be required with respect to (i)  the waiver of certain conditions precedent to the initial credit extension under the Senior Credit Facility, (ii) the amendment of certain of the pro rata sharing provisions, (iii) the amendment of the voting percentages of the Lenders, (iv) the release of all or substantially all of the collateral securing the Senior Credit Facility and (v) the release of all or substantially all of the value of the guaranties of the Borrower’s obligations made by the Guarantors, and (b) the consent of each Lender affected thereby shall be required with respect to (i) increases or extensions in the commitment of such Lender, (ii)  reductions of principal, interest or fees, and (iii) postponing any date fixed for payment of principal, interest, fees or other amounts due under the Loan Documents and (c) the consent of the Lenders holding more than 50% of the loans and commitments under the Senior Credit Facility or, if there are three (3) or fewer Lenders, consent from at least two (2) Lenders shall be required with respect to certain other matters.

   

 

9

 

 

	
INDEMNIFICATION:
	
The Borrower will indemnify and hold harmless the Administrative Agent, the Lead Arranger, each Lender, the L/C Issuer, the Swingline Lender and their respective affiliates and their partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives (each such person, an “Indemnitee”) from and against all losses, claims, damages, liabilities and expenses arising out of or relating to the Senior Credit Facility, the Loan Documents, the Borrower’s use of loan proceeds or the commitments, including, but not limited to, reasonable attorneys’ fees and settlement costs; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. This indemnification shall survive and continue for the benefit of all such persons or entities.

	 	 
	GOVERNING LAW:	State of New York.
	 	 
	PRICING/FEES/	 
	
EXPENSES:
	
As set forth in Addendum I.

	 	 
	
OTHER:
	
Each of the parties shall (a) waive its right to a trial by jury and (b) submit to New York jurisdiction. The Loan Documents will contain customary increased cost, withholding tax, capital adequacy and yield protection provisions and shall reflect operational, agency, assignment and related provisions that are customarily included in credit agreements with respect to which Bank of America acts as administrative agent, swingline lender and/or letter of credit issuer.

  

 

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ADDENDUM I

PRICING, FEES AND EXPENSES 

 

 

	INTEREST RATES: 	The interest rates per annum applicable to the Senior Credit Facility (other than in respect of and Swingline Loans) will be LIBOR (provided that if LIBOR shall be less than zero percent, such rate shall be deemed to be zero percent) plus the Applicable Margin (as hereinafter defined) or, at the option of the Borrower, the Base Rate (to be defined as the highest of (a) the Federal Funds Rate plus 0.50%, (b) the Bank of America prime rate and (c) the one (1) month LIBOR adjusted daily plus 1.00%) plus the Applicable Margin. “Applicable Margin” means with respect to the Senior Credit Facility, a percentage per annum to be determined in accordance with the applicable pricing grid set forth in Addendum II, based on the Senior Leverage Ratio. “Senior Leverage Ratio” means the ratio of Total Indebtedness minus Subordinated Debt (being debt subordinated on terms and conditions reasonably satisfactory to the Administrative Agent) to EBITDA. Each Swingline Loan shall bear interest at the Base Rate plus the Applicable Margin for Base Rate loans under the Senior Credit Facility.
	 	 
	 	The Borrower may select interest periods of one (1), two (2), three (3) or six (6) months for LIBOR loans, in each case subject to availability. Interest shall be payable at the end of the selected interest period, but no less frequently than quarterly. 
	 	 
	 	Automatically upon the occurrence and during the continuance of any payment event of default of the Borrower or any Loan Party or, at the election of the Required Lenders upon the occurrence of any other event of default, all outstanding principal, fees and other obligations under the Senior Credit Facility shall bear interest at a rate per annum of two percent (2%) in excess of the rate then applicable to such obligation. 
	 	 
	
COMMITMENT FEE:
	
Commencing on the Closing Date, a percentage per annum determined in accordance with the applicable pricing grid set forth in Addendum II shall be payable on the actual daily unused portions of the Senior Credit Facility. Such fee shall be payable quarterly in arrears, commencing on the first quarterly payment date to occur after the Closing Date. Swingline Loans will not be considered utilization of the Senior Credit Facility for purposes of this calculation.

	 	 
	LETTER OF	 
	
CREDIT FEES:
	
Letter of Credit fees shall be payable on the maximum amount available to be drawn under each Letter of Credit at a rate per annum equal to the Applicable Margin from time to time applicable to LIBOR loans under the Senior Credit Facility. Such fees will be (a) payable quarterly in arrears, commencing on the first quarterly payment date to occur after the Closing Date, and (b) shared proportionately by the Lenders under the Senior Credit Facility. In addition, a fronting fee shall be payable to the L/C Issuer for its own account, in an amount to be mutually agreed.

  

 

1

 

 

	CALCULATION OF	 
	
INTEREST AND FEES:
	
Computations of interest for Base Rate Loans shall be made on the basis of a year of 365/366 days. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed.

	 	 
	COST AND YIELD	 
	
PROTECTION:
	
Customary for transactions and facilities of this type, including, without limitation, in respect of breakage or redeployment costs incurred in connection with prepayments, changes in capital adequacy and capital or liquidity requirements or their interpretation (including implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Basel III), illegality, unavailability, reserves without proration or offset and payments free and clear of withholding or other taxes.

	 	 
	
EXPENSES:
	
The Borrower will pay all reasonable costs and expenses of the Administrative Agent and the Lead Arranger associated with the preparation, due diligence, administration, syndication and closing of all Loan Documents, including, without limitation, the legal fees of counsel to the Administrative Agent and the Lead Arranger, regardless of whether or not the Senior Credit Facility is closed. The Borrower will also pay the expenses of the Administrative Agent and each Lender in connection with the enforcement of any of the Loan Documents.

  

 

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ADDENDUM II

PRICING GRID

 

 

	
 

 

Senior

Leverage Ratio
	
 

Applicable Margin for

LIBOR Loans/

Letter of Credit Fees
	
 

Commitment 

Fee
	
 

Applicable Margin

for Base Rate Loans

	
> 2.50:1
	
2.25%
	
0.25%
	
1.25% 

	
< 2.50:1 but > 2.00:1
	
2.00%
	
0.25%
	
1.00%

	
< 2.00:1 but > 1.50:1
	
1.75%
	
0.20%
	
0.75%

	
< 1.50:1
	
1.50%
	
0.20%
	
0.50%

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