Document:

Exhibit 10.2

ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING, THE LIENS AND SECURITY INTERESTS SECURING THE OBLIGATIONS, THE EXERCISE OF ANY RIGHT OR REMEDY WITH RESPECT THERETO, AND CERTAIN OF THE RIGHTS OF THE CREDIT PARTIES HEREUNDER ARE SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AND SUBORDINATION AGREEMENT DATED AS OF APRIL 7, 2015 (AS AMENDED, RESTATED, SUPPLEMENTED, OR OTHERWISE MODIFIED FROM TIME TO TIME, THE “INTERCREDITOR AGREEMENT”), BY AND BETWEEN BMO HARRIS BANK N.A., AS FIRST LIEN LENDER, AND VICTORY PARK MANAGEMENT, LLC, AS SECOND LIEN AGENT.  IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE INTERCREDITOR AGREEMENT AND THIS SECOND LIEN CREDIT AND SECURITY AGREEMENT, THE TERMS OF THE INTERCREDITOR AGREEMENT SHALL GOVERN AND CONTROL.

 

SECOND LIEN CREDIT AND SECURITY AGREEMENT

 

Dated as of April 7, 2015

among

KATY INDUSTRIES, INC., A DELAWARE CORPORATION

CONTINENTAL COMMERCIAL PRODUCTS, LLC, A DELAWARE LIMITED LIABILITY COMPANY,

FTW HOLDINGS, INC., A DELAWARE CORPORATION,

FORT WAYNE PLASTICS, INC., AN INDIANA CORPORATION,

as Borrowers,

21557355 ONTARIO INC., AN ONTARIO CORPORATION,

CCP CANADA, INC., AN ONTARIO CORPORATION,

as Guarantors,

VICTORY PARK MANAGEMENT, LLC,

as Agent

 

and

VPC SBIC I, LP,

as a Lender

 

 

TABLE OF CONTENTS

	 	
Page

	 	
	
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

	
1

	
1.01

	
Defined Terms

	
1

	
1.02

	
Other Interpretive Provisions

	
29

	
1.03

	
Accounting Terms

	
29

	
1.04

	
Uniform Commercial Code

	
31

	
1.05

	
Rounding

	
31

	
1.06

	
Times of Day

	
31

	
1.07

	
Defined Terms in First Lien Loan Documents

	
31

	 		
	
ARTICLE II THE TERM LOAN COMMITMENTS AND CREDIT EXTENSIONS

	
32

	
2.01

	
Term Loan Commitments

	
32

	
2.02

	
[Reserved]

	
32

	
2.03

	
[Reserved]

	
32

	
2.04

	
Repayment of Loans

	
32

	
2.05

	
Prepayments

	
33

	
2.06

	
[Reserved]

	
35

	
2.07

	
Interest

	
35

	
2.08

	
Fees

	
36

	
2.09

	
[Reserved]

	
36

	
2.10

	
Evidence of Debt

	
36

	
2.11

	
Payments Generally

	
37

	
2.12

	
Nature and Extent of Each Borrower’s Liability

	
37

	 	
	
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY

	
39

	
3.01

	
Taxes

	
39

	
3.02

	
[Reserved]

	
42

	
3.03

	
[Reserved]

	
43

	
3.04

	
Increased Costs; Reserves on LIBOR (One Month) Rate Loans

	
43

	
3.05

	
[Reserved]

	
44

	
3.06

	
[Reserved]

	
44

	
3.07

	
Certificate of Lender

	
44

	
3.08

	
Survival

	
44

	 	
	
ARTICLE IV SECURITY AND ADMINISTRATION OF COLLATERAL

	
44

	
4.01

	
Security Interest in Collateral

	
44

	
4.02

	
Other Collateral

	
45

	
4.03

	
Collateral Administration

	
49

	
4.04

	
Further Assurances

	
50

	
4.05

	
Cash Management

	
51

	
4.06

	
Information Regarding Collateral

	
51

	 	
	
ARTICLE V CONDITIONS PRECEDENT TO CREDIT EXTENSION

	
53

	
5.01

	
Conditions of Credit Extension

	
53

	 	
	
ARTICLE VI REPRESENTATIONS AND WARRANTIES

	
55

	
6.01

	
Existence, Qualification and Power

	
55

	
6.02

	
Authorization; No Contravention

	
55

 

i

TABLE OF CONTENTS

 (continued)

 

	
6.03

	
Governmental Authorization; Other Consents

	
55

	
6.04

	
Binding Effect

	
56

	
6.05

	
Financial Statements; No Material Adverse Effect

	
56

	
6.06

	
Litigation

	
56

	
6.07

	
No Default

	
57

	
6.08

	
Ownership of Property; Liens

	
57

	
6.09

	
Environmental Compliance

	
57

	
6.10

	
Insurance

	
58

	
6.11

	
Taxes

	
58

	
6.12

	
ERISA Compliance

	
58

	
6.13

	
Subsidiaries; Equity Interests

	
60

	
6.14

	
Margin Regulations; Investment Company Act

	
60

	
6.15

	
Disclosure

	
60

	
6.16

	
Compliance with Laws

	
60

	
6.17

	
Intellectual Property; Licenses, Etc

	
61

	
6.18

	
Labor Matters

	
61

	
6.19

	
Deposit Accounts and Securities Accounts

	
62

	
6.20

	
[Reserved]

	
62

	
6.21

	
Anti-Terrorism Laws and Foreign Asset Control Regulations

	
62

	
6.22

	
Brokers

	
62

	
6.23

	
Customer and Trade Relations

	
62

	
6.24

	
Material Contracts

	
62

	
6.25

	
Casualty

	
63

	
6.26

	
Senior Indebtedness

	
63

	 	
	
ARTICLE VII AFFIRMATIVE COVENANTS

	
63

	
7.01

	
Financial Statements

	
63

	
7.02

	
Compliance Certificate; Other Information

	
64

	
7.03

	
Notices

	
65

	
7.04

	
Payment of Obligations

	
67

	
7.05

	
Preservation of Existence, Etc

	
67

	
7.06

	
Maintenance of Properties

	
67

	
7.07

	
Maintenance of Insurance

	
67

	
7.08

	
Utilization of Net Proceeds

	
69

	
7.09

	
Compliance with Laws

	
70

	
7.10

	
Books and Records

	
70

	
7.11

	
Inspection Rights and Appraisals; Meetings with the Agent and Lenders

	
70

	
7.12

	
Use of Proceeds

	
71

	
7.13

	
New Domestic Subsidiaries and Qualifying Foreign Subsidiaries

	
71

	
7.14

	
New Foreign Subsidiaries

	
72

	
7.15

	
Compliance with ERISA

	
72

	
7.16

	
Further Assurances

	
72

	
7.17

	
Licenses

	
72

	
7.18

	
Environmental Laws

	
73

	
7.19

	
Landlord and Storage Agreements

	
73

	
7.20

	
Material Contracts

	
73

	
7.21

	
[Reserved]

	
73

 

ii

TABLE OF CONTENTS

 (continued)

 

	
7.23

	
First Lien Debt

	
73

	
7.24

	
Board Observation Rights

	
74

	
7.25

	
Information Technology

	
74

	 	
	
ARTICLE VIII NEGATIVE COVENANTS

	
75

	
8.01

	
Liens

	
75

	
8.02

	
Indebtedness

	
76

	
8.03

	
Investments

	
78

	
8.04

	
Fundamental Changes

	
79

	
8.05

	
Dispositions

	
79

	
8.06

	
Restricted Payments

	
81

	
8.07

	
Change in Nature of Business

	
81

	
8.08

	
Transactions with Affiliates

	
81

	
8.09

	
Burdensome Agreements

	
82

	
8.10

	
Use of Proceeds

	
82

	
8.11

	
Prepayment of Indebtedness; Amendment to Material Agreements

	
82

	
8.12

	
Financial Covenants

	
83

	
8.13

	
Creation of New Subsidiaries

	
85

	
8.14

	
Securities of Subsidiaries

	
85

	
8.15

	
Sale and Leaseback

	
85

	
8.16

	
Acquisitions

	
85

	
8.17

	
Inactive

	
85

	
8.18

	
Management Fees

	
86

	
8.19

	
Centrex Earnout

	
86

	 	
	
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES

	
86

	
9.01

	
Events of Default

	
86

	
9.02

	
Remedies Upon Event of Default

	
89

	
9.03

	
License

	
90

	
9.04

	
Limitation of Remedies

	
90

	 	
	
ARTICLE X THE AGENT

	
91

	
10.01

	
Appointment and Authority

	
91

	
10.02

	
Rights as a Lender

	
91

	
10.03

	
Exculpatory Provisions

	
91

	
10.04

	
Reliance by Agent

	
92

	
10.05

	
Delegation of Duties

	
92

	
10.06

	
Resignation of Agent

	
93

	
10.07

	
Non-Reliance on Agent and Other Lenders

	
93

	
10.08

	
Agent May File Proofs of Claim

	
93

	
10.09

	
Collateral and Guaranty Matters

	
95

	
10.10

	
Notice of Transfer

	
95

	
10.11

	
Reports and Financial Statements

	
95

	
10.12

	
Agency for Perfection

	
96

	
10.13

	
Indemnification of Agent

	
96

	
10.14

	
Intercreditor Agreement; Subordination Agreements

	
96

 

iii

TABLE OF CONTENTS

 (continued)

 

	
ARTICLE XI MISCELLANEOUS

	
96

	
11.01

	
Amendments, Etc

	
96

	
11.02

	
Notices; Effectiveness; Electronic Communication

	
98

	
11.03

	
No Waiver; Cumulative Remedies

	
100

	
11.04

	
Expenses; Indemnity; Damage Waiver

	
100

	
11.05

	
Marshalling; Payments Set Aside

	
101

	
11.06

	
Successors and Assigns

	
101

	
11.07

	
Treatment of Certain Information; Confidentiality

	
103

	
11.08

	
Right of Setoff

	
104

	
11.09

	
Interest Rate Limitation

	
104

	
11.10

	
Counterparts; Integration; Effectiveness

	
105

	
11.11

	
Survival

	
105

	
11.12

	
Severability

	
105

	
11.13

	
Governing Law; Jurisdiction; Etc

	
105

	
11.14

	
Waiver of Jury Trial

	
106

	
11.15

	
Electronic Execution of Assignments and Certain Other Documents

	
106

	
11.16

	
USA PATRIOT Act Notice

	
106

	
11.17

	
No Advisory or Fiduciary Responsibility

	
107

	
11.18

	
Attachments

	
107

 

iv

	
SCHEDULES 

	
1.01A

	
Fiscal Periods

	
1.01B

	
Agent’s Office

	
1.01C

	
Mortgaged Property

	
4.01

	
Commercial Tort Claims

	
4.02

	
Pledged Interests

	
4.06

	
Information Regarding Collateral; Chief Executive Office; Etc.

	
5.01

	
Good Standing and Foreign Qualification Jurisdictions

	
6.06

	
Litigation

	
6.08(b)(1)

	
Owned Real Estate

	
6.08(b)(2)

	
Leased Real Estate

	
6.09

	
Environmental Matters

	
6.10

	
Insurance

	
6.12(d)

	
Pension Plans

	
6.13

	
Subsidiaries; Other Equity Investments

	
6.18

	
Labor Matters

	
6.19

	
Deposit Accounts and Securities Accounts

	
6.24

	
Material Contracts

	
7.02

	
Borrower Website Address

	
8.01

	
Existing Liens

	
8.02

	
Existing Indebtedness

	
8.03

	
Existing Investments

	 	 
	
EXHIBITS

	
Form of

	
A

	
Second Lien Term Loan Note

	
B

	
[Reserved]

	
C

	
Compliance Certificate

	
D

	
[Reserved]

	
E-1

	
US Tax Compliance Certificate

	
E-2

	
US Tax Compliance Certificate

	
E-3

	
US Tax Compliance Certificate

	
E-4

	
US Tax Compliance Certificate

	
F

	
Assignment and Assumption

 

v

SECOND LIEN CREDIT AND SECURITY AGREEMENT

This SECOND LIEN CREDIT AND SECURITY AGREEMENT (this “Agreement”) is entered into as of April 7, 2015, among Katy Industries, Inc., a Delaware corporation (the “Company;”), Continental Commercial Products, LLC, a Delaware limited liability company, FTW Holdings, Inc., a Delaware corporation, Fort Wayne Plastics, Inc., an Indiana corporation (each of the foregoing, together with each other Person that joins this Agreement as a “Borrower”, individually and collectively, “Borrower” or “Borrowers”), the other Persons that are or hereafter become parties to this Agreement as Guarantors, VPC SBIC I, LP (in its individual capacity, “VPC”), as a Lender, the other financial institutions and other entities that are or hereafter become parties to this Agreement as Lenders, and Victory Park Management, LLC (in its individual capacity, “VPM”), as administrative agent and collateral agent for the Lenders (in such capacity, together with its successors and permitted assigns, “Agent”).

 

Preliminary Statements

A.                 The Borrowers have requested that the Lenders provide a credit facility to the Borrowers to finance their mutual and collective business enterprise.

B.                  The Guarantors are willing to guaranty the Obligations of the Borrowers under the Loan Documents.

C.                  The Lenders are willing to provide the credit facility on the terms and conditions set forth in this Agreement.

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

1.01             Defined Terms.  As used in this Agreement, the following terms shall have the meanings set forth below:

“Account Debtor” means any Person who is or may become obligated under or on account of any Account, contract right, Chattel Paper or General Intangible.

“Acquisition” means the acquisition of (a) a controlling equity or other ownership interest in another Person, whether by purchase of such equity or other ownership interest or upon exercise of an option or warrant for, or conversion of securities into, such equity or other ownership interest, or (b) assets of another Person which constitute all or substantially all of the assets of such Person or of a line or lines of business conducted by such Person.

“Agent’s Office” means the Agent’s address and, as appropriate, account as set forth on Schedule 1.01B, or such other address or account with respect to such currency as the Agent may from time to time notify to the Borrower Agent.

“Agreement” means this Second Lien Credit and Security Agreement, as amended, restated, extended, renewed or otherwise modified from time to time.

 

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“ALTA Survey” means a survey reasonably satisfactory to the Agent prepared in accordance with the standards adopted by the American Land Title Association and the American Congress on Surveying and Mapping in 2011, known as the “Minimum Standard Detail Requirements of Land Title Surveys” and in sufficient form to satisfy the requirements of any applicable title insurance company to provide extended coverage over survey defects and shall also show the location of all easements, utilities, and covenants of record, dimensions of all improvements, encroachments from any adjoining property, and certify as to the location of any flood plain area affecting the subject real estate.

“Amortization Amount” has the meaning set forth in Section 2.04.

“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender, (c) an entity or an Affiliate of an entity that administers or manages a Lender or (d) the same investment advisor or an advisor under common control with such Lender, Affiliate or advisor, as applicable.

“Assignment and Assumption” means an assignment and assumption agreement entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 11.06(b)), and accepted by the Agent, in substantially the form of Exhibit F or any other form approved by the Agent.

“Assumed Indebtedness” means Indebtedness of a Person which is (a) in existence at the time such Person becomes a Subsidiary of the Company or (b) is assumed in connection with an Investment in or Acquisition of such Person, and, in each case, has not been incurred or created by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Subsidiary of the Company.

“Attributable Indebtedness” means, on any date, (a) in respect of any Capital Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.

“Audited Financial Statements” means the audited consolidated balance sheet of the Company and its Subsidiaries for the Fiscal Year ended December 31, 2014, and the related consolidated statements of income or operations, retained earnings and cash flows for such Fiscal Year of the Company and its Subsidiaries, including the notes thereto.

“Auditor” has the meaning specified in Section 7.01(a).

“Bankruptcy Code” means Title 11 of the United States Code.

“Borrower Agent” has the meaning specified in Section 2.12(g).

“Borrower’s Deposit Account” has the meaning specified in Section 7.08(b).

“Borrowers” has the meaning specified in the introductory paragraph hereto.

 

2

“Borrowing” means a borrowing of Loans made on the Closing Date by the Lenders according to their respective Term Loan Commitments.

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Agent’s Office is located.

“Canadian Dollars” means the lawful currency of Canada.

“Capital Leases” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.

“Cash Equivalents” means any of the following types of property, to the extent owned by any Borrower free and clear of all Liens (other than Liens created under the Security Instruments):

(a)           cash, denominated in Dollars or Canadian Dollars;

(b)           readily marketable direct obligations of the government of the United States or any agency or instrumentality thereof, or obligations the timely payment of principal and interest on which are fully and unconditionally guaranteed by the government of the United States or any state or municipality thereof, in each case so long as such obligation has an investment grade rating by S&P and Moody’s;

(c)           commercial paper rated at least P-1 (or the then equivalent grade) by Moody’s and A-1 (or the then equivalent grade) by S&P, or carrying an equivalent rating by a nationally recognized rating agency if at any time neither Moody’s nor S&P shall be rating such obligations;

(d)           insured certificates of deposit or bankers’ acceptances of, or time deposits with any Lender or with any commercial bank that (i) is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in the first portion of clause (c) above (without regard to the proviso), (iii) is organized under the laws of the United States or of any state thereof and (iv) has combined capital and surplus of at least $500,000,000;

(e)           readily marketable general obligations of any corporation organized under the laws of any state of the United States of America, payable in the United States of America, expressed to mature not later than twelve months following the date of issuance thereof and rated A or better by S&P or A2 or better by Moody’s; and

(f)            readily marketable shares of investment companies or money market funds that, in each case, invest solely in the foregoing Investments described in clauses (a) through (e) above.

“Cash Interest Rate” means a rate per annum equal to, on any day, the sum of (x) the LIBOR (One Month) Rate then in effect, plus (y) 9.50%.

“Casualty” means any act or occurrence of any kind or nature that results in any loss, destruction, or damage to any asset or property.

“CCP” means Continental Commercial Products, LLC, a Delaware limited liability company.

“Centrex Acquisition” means the acquisition provided for in the Centrex Purchase Agreement.

 

3

“Centrex Acquisition Documents” means the Centrex Purchase Agreement, the Transition Services Agreement, and all other material documents, agreements, bills of sale and certificates, including those executed between or among any of the Loan Parties and the Sellers, delivered in connection with the Centrex Acquisition.

“Centrex Earnout” means the deferred payment obligations of CCP arising under Section 2.10 of the Centrex Purchase Agreement.

“Centrex Earnout Payments” means the “Cabinet Payments” (as defined in the Centrex Purchase Agreement) and any other payment in respect of the Centrex Earnout.

“Centrex Earnout Subordination Agreement” means that certain Subordination Agreement dated as of the Closing Date by and among the Agent, certain of the Loan Parties and the Sellers in respect of certain payments, including the Centrex Earnout Payments.

“Centrex Purchase Agreement” means that certain Asset Purchase Agreement, dated as of the Closing Date, by and among CCP, the Sellers and Terrence L. Reinhart, pursuant to which CCP will acquire certain of the assets of the Sellers with respect to the Business (as defined therein).

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following:  (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

“Change of Control” means an event or series of events by which:

 

(a)           The Equity Investor shall cease to own and control, beneficially and of record both (assuming all of the preferred stock owned by the Equity Investor is converted to common stock) (i) in excess of 51% of the issued and outstanding Equity Interests of the Company, and (ii) a sufficient percentage of the issued and outstanding Equity Interests of the Company to control its board of directors;

(b)           Other than the Equity Investor, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of the Company or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire (such right, an “option right”), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 51% or more of the Equity Interests of the Company on a fully-diluted basis (and taking into account all such Equity Interests that such person or group has the right to acquire pursuant to any option right);

(c)           during any period of 24 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Company cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or

 

4

(d)          The Company shall fail to own and control, beneficially and of record (directly or indirectly), 100% of the issued and outstanding Equity Interests of each of its Subsidiaries, except where such failure is the result of a transaction permitted under the Loan Documents.

“Closing Date” means the first date all the conditions precedent in Section 5.01 are satisfied or waived in accordance with this Agreement.

“Code” means the Internal Revenue Code of 1986, as amended, and the regulations and official guidance thereunder.

“Collateral” means, collectively, certain personal property of the Borrowers or any other Person in which the Agent or any Credit Party is granted a Lien under any Security Instrument as security for all or any portion of the Obligations or any other obligation arising under any Loan Document, but expressly excluding, for the avoidance of doubt, the Excluded Assets and the Excluded Deposit Accounts.

“Company” means Katy Industries, Inc., a Delaware corporation.

“Competitor” means any Person that is an operating company constituting a plastic manufacturer, an importer and distributor of products for the commercial janitorial/sanitary maintenance, industrial and foodservice markets, a distributor of home and tool storage products or a distributor of plastic shelving or cabinets, in each case in the ordinary course of its business and in geographic locations and otherwise under circumstances that would be reasonably considered to compete with the Borrowers’ primary business and which, prior to the making of any assignment of Loans, or granting a participation interest in Loans, to such Person shall have been identified in writing to the Agent by the Borrowers.

“Compliance Certificate” means a certificate substantially in the form of Exhibit C.

“Condemnation” means any seizure or taking of title to, use of, or any other interest in any asset or property, or confiscation of such asset or property or the requisition of the use of such asset or property, under the exercise of the power of condemnation or eminent domain, whether temporarily or permanently, by any Governmental Authority or by any other Person acting under or for the benefit of a Governmental Authority.

“Condemnation Awards” means any and all judgments, awards of damages (including severance and consequential damages), payments, proceeds, settlements, amounts paid for a taking in lieu of Condemnation, or other compensation whenever made, including interest thereon, and the right to receive the same, as a result of, or in connection with, any Condemnation or threatened Condemnation.

 

5

“Consolidated” or “consolidated” means the consolidation, in accordance with GAAP, of the financial condition or operating results of such Person and its Subsidiaries excluding from Consolidated EBITDA the Inactive Subsidiaries.

“Consolidated Capital Expenditures” means, with respect to the Company and its Subsidiaries on a Consolidated basis, for any period the sum of (without duplication) all expenditures (whether paid in cash or accrued as liabilities) by the Company or any Subsidiary during such period for items which should be capitalized under GAAP, including without limitation all transactional costs incurred in connection with such expenditures provided the same have been capitalized; provided, that Consolidated Capital Expenditures shall exclude (i) any Financed Capital Expenditures, (ii) any expenditures for equipment or other property purchased simultaneously or substantially concurrently with the trade-in of existing equipment or property owned by any Borrower or any of its Subsidiaries except to the extent such expenditures exceeds the amount of credit received for such trade-in, and (iii) Facility Relocation Capital Expenditures to the extent not in excess of $3,900,000 in the aggregate during the term of this Agreement.

“Consolidated EBITDA” means, for any period, Consolidated Net Income for such period, plus, (a) in each case to the extent deducted in determining such Consolidated Net Income, without duplication, (i) Consolidated Interest Charges (net of interest income for such period of the Company and its Subsidiaries) for such period, (ii) federal, state, local and foreign income tax expense for such period, net of income tax credits, (iii) depreciation and amortization for such period, (iv) non-cash compensation expense, or other non-cash expenses or charges, for such period arising from the granting of stock options, stock appreciation rights or similar equity arrangements, (v) if agreed upon in writing by the Agent, non-cash expenses or losses and other non-cash charges incurred (excluding any non-cash charges representing an accrual of, or reserve for, cash charges to be paid within the next twelve months), (vi) LIFO reserves established during such period, (vii) Management Fees which have been expensed in such period, and (viii) the reasonable costs and expenses incurred by the Loan Parties in connection with the negotiation, documentation and closing of the Centrex Acquisition in an aggregate amount not to exceed $120,000 in total during the term of this Agreement and incurred no later than sixty (60) days after the Closing Date, minus (b) (i) non-cash income, gains or profits or LIFO reserves terminated during such period, in each case as determined for the Company and its Subsidiaries on a Consolidated basis, and (ii) Facility Relocation Expenses incurred and paid in cash for such period (net of (x) up to $534,000 in tenant improvement proceeds actually received in cash by CCP (or paid on its behalf directly to the applicable vendor) under the Jefferson City Lease during such period and (y) up to $500,000 actually received in cash by CCP (or paid on its behalf directly to the applicable vendor) from the City of Jefferson for building improvements at the premises leased under the Jefferson City Lease); provided that, for any period that includes a material Disposition or the Centrex Acquisition, the calculation of Consolidated EBITDA shall be subject to the adjustments set forth in Sections 1.03(c) and1.03(d).  Notwithstanding the foregoing, Consolidated EBITDA for the applicable Fiscal Quarter end as set forth in the table below shall be deemed to be the respective amount as follows:

	
Fiscal Quarter Ending on or 

Closest To

	 	
Consolidated EBITDA

	 
	
September 30, 2014

	 	
$

	
3,514,000

	 
	
December 31, 2014

	 	
$

	
1,669,000

	 
	
March 31, 2015

	 	
$

	
1,417,000

	 

“Consolidated Fixed Charge Coverage Ratio” means the ratio, determined on a Consolidated basis for the Company and its Subsidiaries for the most recent Measurement Period, of (a) Consolidated EBITDA minus Consolidated Capital Expenditures to (b) Consolidated Fixed Charges.

 

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“Consolidated Fixed Charges” means, for any period, for the Company and its Subsidiaries on a Consolidated basis, the sum of, without duplication, (a) Consolidated Interest Charges paid or required to be paid in cash during such period, (b) all principal repayments made or required to be made of Consolidated Funded Indebtedness during such period, but excluding any repayments of principal of any “Revolving Loans” under the First Lien Credit Agreement  and further excluding any such payments to the extent constituting a refinancing of such Consolidated Funded Indebtedness through the incurrence of additional Indebtedness otherwise expressly permitted under Section 8.02, (c) all Restricted Payments made in cash during such period, (d) the aggregate amount of Federal, state, local and foreign income taxes paid in cash, in each case, of or by the Company and its Subsidiaries, during such period, (e) cash contributions made to any Pension Plan or any Foreign Plan (to the extent not deducted in the calculation of the Consolidated Net Income) during such period, (f) the Monthly Equipment Amortization Amount during such period, (g) the Monthly Real Estate Amortization Amount during such period, (h) Management Fees paid in cash in such period and (i) all payments made in cash in respect of the Centrex Earnout (including Centrex Earnout Payments) during such period.

“Consolidated Funded Indebtedness” means, as of any date of determination, for the Company and its Subsidiaries on a Consolidated basis, the sum of (a) the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations hereunder) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments, (b) all purchase money Indebtedness, (c) all direct obligations arising under standby and commercial letters of credit (excluding the undrawn amount thereof), bankers’ acceptances, bank guaranties (excluding the amounts available thereunder as to which demand for payment has not yet been made), surety bonds (excluding the amounts available thereunder as to which demand for payment has not yet been made) and similar instruments, (d) all obligations in respect of the deferred purchase price of property or services (other than trade accounts payable in the Ordinary Course of Business and trade accounts payable acquired pursuant to the Centrex Acquisition), (e) Attributable Indebtedness in respect of Capital Leases and Synthetic Lease Obligations, (f) without duplication, all Guarantees with respect to outstanding Indebtedness of the types specified in clauses (a) through (e) above of Persons other than the Company or any Subsidiary, (g) all Subordinated Indebtedness, and (h) all Indebtedness of the types referred to in clauses (a) through (f) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which the Company or a Subsidiary is a general partner or joint venturer, to the extent such Indebtedness is recourse to the Company or such Subsidiary.

“Consolidated Interest Charges” means, with respect to the Company and its Subsidiaries for any period ending on the date of computation thereof, the gross interest expense of the Company and its Subsidiaries, including without limitation (a) the current amortized portion of all fees (including fees payable in respect of any Swap Contract in the nature of an interest rate hedge and all fees payable in respect of any letter of credit) payable in connection with the incurrence of Indebtedness to the extent included in gross interest expense and (b) the portion of any payments made in connection with Capital Leases allocable to interest expense, all determined on a Consolidated basis; provided, however, that Consolidated Interest Charges shall include the amount of payments in respect of Synthetic Lease Obligations that are in the nature of interest.

“Consolidated Net Income” means, for any period, for the Company and its Subsidiaries on a Consolidated basis, the net income after taxation of the Company and its Subsidiaries for that period excluding (a) net losses or gains realized in connection with (i) any sale, lease, conveyance or other disposition of any asset (other than in the Ordinary Course of Business), or (ii) repayment, repurchase or redemption of Indebtedness, and (b) extraordinary or nonrecurring gain or income (or expense), including any compensation charge incurred in connection with the Centrex Acquisition and any Facility Relocation Expenses whether or not accrued or expensed; provided, that, the following shall be excluded from Consolidated Net Income, without duplication: (x) the net income or loss of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting to the extent of the amount of dividends or distributions are not actually paid to the Company or a Subsidiary in cash, (y) net income or loss of any Person in which any other Person (other than the Company or a Subsidiary) has an ownership interest, except to the extent of the amount of dividends or other distributions actually paid in cash to the Company or a Subsidiary by such Person during such period and (z) any Person the ability of which to make Restricted Payments is restricted by any Restrictive Agreement, except to the extent of the amount of dividends or other distributions actually paid in cash to the Company or a Subsidiary by such Person during such period.  For the avoidance of doubt, Facility Relocation Expenses shall be excluded from the net income of the Company and its Subsidiaries for the purpose of calculating Consolidated Net Income.

 

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“Consolidated Working Capital” means, at any date, the excess of (a) the sum of all amounts (other than cash and Cash Equivalents) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Company and its Subsidiaries at such date over (b) the sum of all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Company and its Subsidiaries on such date, including deferred revenue but excluding, without duplication, (i) the current portion of any Consolidated Funded Indebtedness, (ii) all Indebtedness consisting of Loans, and First Lien Debt to the extent otherwise included therein, (iii) the current portion of interest and (iv) the current portion of current and deferred income taxes, if any.

“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.  Without limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly, power to vote 10% or more of the securities having ordinary voting power for the election of directors, managing general partners or the equivalent.

“Control Agreement” means, with respect to any Deposit Account, any Securities Account, commodity account, securities entitlement or commodity contract, an agreement, in form and substance reasonably satisfactory to the Agent, among the Agent, the First Lien Lender, the financial institution or other Person at which such account is maintained or with which such entitlement or contract is carried and the Borrower maintaining such account, effective to grant “control” (as defined under the applicable UCC or the Securities Transfer Act, 2006, (Ontario)) over such account to (a) the First Lien Lender, until the Payment in Full of First Lien Priority Debt, and (b) the Agent.

“Controlled Account Bank” means each bank with whom Deposit Accounts are maintained in which any funds of any of the Borrowers are concentrated and with whom a Control Agreement has been, or is required to be, executed in accordance with the terms hereof.

“Controlled Deposit Account” means each Deposit Account (including all funds on deposit therein) that is the subject of an effective Control Agreement and that is maintained by any Borrower with a financial institution approved by the Agent.

“Controlled Investment Affiliates” means, with respect to the Equity Investor, any fund or investment vehicle that is both (i) organized by the Equity Investor or an Affiliate of the Equity Investor for the purpose of making equity or debt investments in one or more companies and (ii) controlled by or under common control with the Equity Investor.  For purposes of this definition “control” means the power to direct or cause the direction of management and policies of a Person, whether by contract or otherwise.

 

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“Controlled Securities Account” means each securities account or commodity account (including all financial assets held therein and all certificates and instruments, if any, representing or evidencing such financial assets) that is the subject of an effective Control Agreement and that is maintained by any Borrower with a securities intermediary or commodity intermediary approved by the Agent.

“Core Business” means any material line of business conducted by the Company and its Subsidiaries as of the Closing Date and any business directly related thereto.

“Credit Extension” means the Borrowing.

“Credit Judgment” means the Agent’s judgment exercised in good faith, based upon its consideration of any factor that it believes (a) could adversely affect the quantity, quality, mix or value of Collateral (including any applicable Laws that may inhibit collection of an Account), the enforceability or priority of the Agent’s and the Lender’s Liens, or the amount that the Credit Parties could receive in liquidation of any Collateral; (b) suggests that any collateral report or financial information delivered by the Borrower Agent or any Borrower is incomplete, inaccurate or misleading in any material respect; (c) materially increases the likelihood of any proceeding under any Debtor Relief Law involving a Borrower; or (d) creates or could result in a Default.  In exercising such judgment, the Agent may consider any factors that could increase the credit risk of lending to Borrowers on the security of the Collateral.

“Credit Party” or “Credit Parties” means (a) the Agent, (b) the Lenders, (c) each Related Party entitled to indemnification under Section 11.04(b) hereof, and (d) the successors and assigns of each of the foregoing.

“Current Interest Rate” means a rate per annum equal to the sum of (a) the Cash Interest Rate in effect from time to time, plus (b) the PIK Interest Rate.

 “Debtor Relief Laws” means the Bankruptcy Code of the United States, the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada), the Winding-Up and Restructuring Act (Canada) and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or Canada or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would unless cured or waived be an Event of Default.

“Default Rate” means a rate equal to the Current Interest Rate plus 3% per annum.

“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property (including any Equity Interest), or part thereof, by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith, or any Event of Loss with respect to such asset or property.

 

9

“Disqualified Equity Interest” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is one hundred eighty (180) days after the Maturity Date, (b) is convertible into or exchangeable for debt securities (unless only occurring at the sole option of the issuer thereof), (c) (i) contains any repurchase obligation that may come into effect prior to, (ii) requires cash dividend payments (other than taxes) prior to, or (iii) provides the holders thereof with any rights to receive any cash upon the occurrence of a change of control or sale of assets prior to, in each case, the date that is one hundred eighty (180) days after the Maturity Date; provided, however, that (i) with respect to any Equity Interests issued to any employee or to any plan for the benefit of employees of the Company or its Subsidiaries or by any such plan to such employees, such Equity Interest shall not constitute Disqualified Equity Interests solely because it may be required to be repurchased by the Company or one of its Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, resignation, death or disability and (ii) any class of Equity Interest of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of an Equity Interest that is not a Disqualified Equity Interest, such Equity Interests shall not be deemed to be Disqualified Equity Interests and (iii) only the portion of such Equity Interests which so matures or is so mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Equity Interests.

 

“Dollar” and “$” mean lawful money of the United States.

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political subdivision of the United States (but excluding any territory or possession thereof).

“Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of a Loan Party or any of its Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

 

“Equity Investor” means Kohlberg & Company, L.L.C. and its Controlled Investment Affiliates.

 

10

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations and official guidance thereunder.

“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Company within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of the Company or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Company or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, or the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Company or any ERISA Affiliate.

“Event of Default” has the meaning specified in Section 9.01.

“Event of Loss” means, with respect to any asset or property (including Inventory, Equipment or Real Estate), any Casualty to or Condemnation of such asset or property or any portion thereof.

“Excess Cash Flow” means, with respect to any Fiscal Year of the Company and its Subsidiaries (beginning  with the Fiscal Year of the Company ending December 31, 2015), (a) Consolidated EBITDA for such period, plus, without duplication, (i) decreases in Consolidated Working Capital for such period, and (ii) receipts actually received related to the Facility Relocation from an upfront payment of a landlord incentive under the Jefferson City Lease in the amount of $1,700,000, (iii) up to $534,000 in tenant improvement proceeds actually received in cash by CCP (or paid on its behalf directly to the applicable vendor) under the Jefferson City Lease during such period, (iv) up to $500,000 actually received in cash by CCP (or paid on its behalf directly to the applicable vendor) from the City of Jefferson for building improvements at the premises leased under the Jefferson City Lease and (v) the proceeds from Dispositions permitted under Section 8.05(k) (to the extent not reinvested or permitted to be reinvested in accordance with the terms hereof), less, without duplication: (b)(i) scheduled principal payments with respect to Indebtedness of the Company and its Subsidiaries actually paid in cash during such period, (ii) Consolidated Capital Expenditures and Facility Relocation Capital Expenditures made in cash during such period not financed under capital leases or other Indebtedness (other than revolving loans under the First Lien Credit Agreement) or with the proceeds of equity issuances, (iii) cash payments made by the Company and its Subsidiaries for interest expense during such period, (iv) cash payments for income taxes made by the Company and its Subsidiaries during such period, (v) to the extent not otherwise deducted in determining Consolidated EBITDA for such period, Management Fees actually paid in cash during such Fiscal Year in accordance with, and permitted by, the terms of this Agreement, (vi) cash payments made to the First Lien Lender in accordance with the First Lien Credit Agreement during such period to cash collateralize any letter of credit obligations under the First Lien Credit Agreement to the extent not financed by Indebtedness or the proceeds of equity issuances or contributions (provided, that, upon release of any such cash collateral, such amount so released shall be included in (and shall increase) Excess Cash Flow for the period during which such release occurs), (vii) all optional prepayments of Indebtedness permitted hereunder (including Term Loans and the principal component of Capital Lease Obligations but specifically excluding prepayments of revolving loans and amounts under similar lines of credit (including First Lien Debt)) during such period to the extent not financed with Indebtedness or the proceeds of equity issuances or contributions, (viii) the amount of cash expended in respect of the purchase price of the Centrex Acquisition on the Closing Date to the extent not financed with Indebtedness or the proceeds of equity issuances or contributions, and (ix) increases in Consolidated Working Capital for such period.

 

11

“Exchange Act” means the Securities Exchange Act of 1934 and the regulations promulgated thereunder.

“Excluded Assets” means (a) all assets or property (other than Inventory or Accounts) of the Borrowers that would otherwise be included as Collateral but for the express terms of (i) any permit, lease, license, contract or other agreement or instrument constituting or applicable to such asset or (ii) applicable Law (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9‐406, 9‐407, 9‐408 or 9‐409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law or principles of equity) that, in each case, prohibits the grant to the Agent of a security interest in and to such asset or property or under which the grant to the Agent of a security interest in and to such asset or property may impair the validity or enforceability of such asset or property (including any United States intent‐to‐use trademark applications); provided, however, that such assets or Property shall constitute “Excluded Assets” only to the extent and for so long as such permit, lease, license, contract or other agreement or applicable law validly prohibits the creation of a Lien on such property in favor of the Agent (as opposed to restricting any exercise of remedies hereunder or requiring the consent of any Person (other than a Borrower) or Governmental Authority for any exercise of remedies hereunder (which exercise of remedies shall be subject to Section 9.04, but such provision shall not limit the creation, attachment or perfection of the Lien in favor of the Agent hereunder)) and, upon the termination of such prohibition (by written consent or in any other manner), such property shall cease to constitute “Excluded Assets;” (b) voting Equity Interests of any first‐tier Foreign Subsidiary in excess of 65% of the aggregate voting Equity Interests of such first‐tier Foreign Subsidiary (other than a Qualifying Foreign Subsidiary, all of the equity of which shall constitute Collateral), (c) to the extent that applicable law requires that a Subsidiary of any Borrower issue nominee or directors qualifying shares, such nominee or qualifying shares, (d) unless otherwise requested by the Agent, any motor vehicle covered by a certificate of title or other evidence of ownership to the extent that a security interest in such asset cannot be perfected by the filing of a financing statement under the UCC, and (e) other assets to the extent the Agent determines in its Credit Judgment that the cost of obtaining such pledge or security interest is excess in relation to the benefit thereof; provided, however, that Excluded Assets shall not include (x) any Proceeds of property described in clauses (a) through (c) above (unless such Proceeds are also described in such clauses) and (y) any asset that does not constitute an Excluded Asset under the First Lien Loan Documents.

“Excluded Deposit Account” means (a) Deposit Accounts the balance of which consists exclusively of (i) withheld income taxes and federal, provincial, state or local employment taxes required to be paid to the Internal Revenue Service or state or local government agencies with respect to employees of any Borrower or (ii) amounts required to be paid over to an employee benefit plan pursuant to DOL Reg. Sec. 2510.3 102 on behalf of or for the benefit of employees of any Borrower, (b) all segregated Deposit Accounts constituting (and the balance of which consists solely of funds set aside in connection with) payroll accounts, trust accounts, and accounts dedicated to the payment of accrued employee benefits, medical, dental and employee benefits claims to employees of any Borrower, (c) zero balance disbursement accounts, and (d) other Deposit Accounts maintained in the Ordinary Course of Business containing cash amounts that do not exceed at any time $10,000 for any such account and $25,000 in the aggregate for all such accounts under this clause (d).

 

12

“Excluded Perfection Actions” means the following actions, unless otherwise requested by the First Lien Lender and the Agent at any time in their sole discretion in the case of clauses (i) through (iv) below or during the continuance of a Default in the case of clauses (i) through (v) below:  the giving of notice or taking other actions (other than the filing of UCC financing statements) in respect of any (i) Chattel Paper (to the extent the value thereof does not exceed $50,000 in the aggregate), (ii) negotiable Documents (to the extent the value of all Goods covered thereby do not exceed $50,000) unless relating to Eligible Inventory under the First Lien Credit Agreement, (iii) promissory notes and other Instruments (other than checks) (to the extent the principal amount thereof does not exceed $50,000 in the aggregate), (iv) Letter-of-Credit Rights (to the extent the value thereof does not exceed $50,000 in the aggregate), but not to exceed at any time $100,000 in the aggregate for clauses (i)-(iv) and (v) Intellectual Property in any jurisdiction other than the United States, Canada or any state, province, territory or other political division thereof.

“Excluded Taxes” with respect to any Lender or any other recipient of a payment to be made by or on account of the Term Loan:  (a) taxes (i) that are (A) imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes) by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of such Lender, in which its applicable lending office is located; or (B) branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which a Borrower is located; or (ii) that are Other Connection Taxes, (b) in the case of withholding Taxes imposed on amounts payable to or for the account of such Lender or other recipient pursuant to a law in effect on the date on which (i) such Lender or other recipient acquires such interest in the Term Loan or (ii) such Lender or other recipient changes its lending office, except in each case to the extent that, pursuant to Section 3.01, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Lender’s or other recipient’s failure to comply with Section 3.01(e); and (d) any U.S. federal withholding taxes imposed pursuant to FATCA.

“Extraordinary Expenses” means all costs, expenses, liabilities or advances that Agent or any Lender may incur or make during a Default, or during the pendency of any proceeding of any Loan Party under any Debtor Relief Laws, including those relating to (a) any audit, inspection, repossession, storage, repair, appraisal, insurance, manufacture, preparation or advertising for sale, sale, collection, or other preservation of or realization upon any Collateral; (b) any action, arbitration or other proceeding (whether instituted by or against the Agent or any Lender, any Loan Party, any representative of creditors of a Loan Party or any other Person) in any way relating to any Collateral (including the validity, perfection, priority or avoidability of the Agent’s or any Lender’s Liens with respect to any Collateral), Loan Documents or Obligations, including any lender liability or other claims; (c) the exercise, protection or enforcement of any rights or remedies of the Agent or any Lender in, or the monitoring of, any proceeding applicable to any Loan Party under any Debtor Relief Laws; (d) settlement or satisfaction of any taxes, charges or Liens with respect to any Collateral; (e) any enforcement action; (f) negotiation and documentation of any modification, waiver, workout, restructuring or forbearance with respect to any Loan Documents or Obligations; and (g) fees, expenses, costs incurred by the Agent or any Lender and Loans made by the Lenders to protect the Collateral or otherwise preserve, reserve or protect its rights and remedies under this Agreement and the Loan Documents.  Such costs, expenses and advances include transfer fees, Other Taxes, storage fees, insurance costs, permit fees, utility reservation and standby fees, legal fees, appraisal fees, brokers’ fees and commissions, auctioneers’ fees and commissions, accountants’ fees, environmental study fees, wages and salaries paid to employees of any Loan Party or independent contractors in liquidating any Collateral, and travel expenses.

“Facility Relocation” has the meaning specified in Section 7.02(h).

 

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“Facility Relocation Capital Expenditures” means, with respect to the Company and its Subsidiaries on a Consolidated basis, for any period, the sum (without duplication) of all expenditures relating to the Facility Relocation (whether paid in cash or accrued as liabilities) by the Company or any Subsidiary during such period for items which should be capitalized under GAAP.

“Facility Relocation Expenses” means all fees, costs and expenses incurred by the Company and its Subsidiaries in connection with the Facility Relocation (excluding Facility Relocation Capital Expenditures).

“Facility Relocation Total Expenditures” means the sum of (a) the Facility Relocation Capital Expenditures and (b) the Facility Relocation Expenses.

“FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof.

“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to any Lender (or the First Lien Lender) on such day on such transactions as determined by the Agent.

“Fee Letter” means the letter agreement, dated as of the Closing Date, among the Borrowers and the Agent.

“Field Exam” means any visit and inspection of the properties, assets and records of any Loan Party during the term of this Agreement, which shall include access to such properties, assets and records sufficient to permit the Agent and each Lender or their representatives to examine, audit and make extracts from any Loan Party’s books and records, make examinations and audits of any Loan Party’s other financial matters and Collateral as the Agent deems appropriate in its Credit Judgment, and discussions with its officers, employees, agents, advisors and independent accountants regarding such Loan Party’s business, financial condition, assets, prospects and results of operations.

“Financed Capital Expenditures” means Consolidated Capital Expenditures that are:  (a) financed by interest bearing Indebtedness (excluding the “Revolving Loans” under the First Lien Credit Agreement); (b) made with (i) Net Cash Proceeds from any Disposition described in clauses (b) and (d) of Section 8.05 or (ii) Insurance Proceeds or Condemnation Awards arising from any Event of Loss with respect to any property or asset, in each case, or the extent such proceeds are reinvested within one hundred eighty (180) days of receipt thereof; and (c) constituting any portion of the purchase price of the Centrex Acquisition which is accounted for as a Consolidated Capital Expenditure.

“First Amendment to First Lien Credit Agreement” has the meaning given such term in the definition of First Lien Credit Agreement.

 

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“First Lien Credit Agreement” means that certain Credit and Security Agreement, dated as of February 19, 2014, by and among the Borrowers, the other Loan Parties party thereto and the First Lien Lender, as amended by that certain First Amendment to Credit and Security Agreement, dated as of the date hereof (the “First Amendment to First Lien Credit Agreement”), and as the same may be further amended, restated, refinanced, replaced, substituted, supplemented or otherwise modified from time to time.

“First Lien Debt” has the meaning assigned to it in the Intercreditor Agreement, as the First Lien Debt may be refinanced from time to time in accordance with the Intercreditor Agreement.

“First Lien Lender” means BMO Harris Bank N.A. and, in the case of a refinancing of the First Lien Debt in accordance with the Intercreditor Agreement, the agent of the holders of the First Lien Debt which has bound itself to the terms of the Intercreditor Agreement.

“First Lien Loan Documents” means the First Lien Credit Agreement and the other “Loan Documents” (as defined in the First Lien Credit Agreement), as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with the Intercreditor Agreement.

“First Lien Priority Debt” shall have the meaning assigned to it in the Intercreditor Agreement.

“Fiscal Month” means a fiscal month of a Fiscal Year as shown on Schedule 1.01A.

“Fiscal Quarter” means a fiscal quarter of a Fiscal Year as shown on Schedule 1.01A.

“Fiscal Year” means a fiscal year of the Company and its Subsidiaries, which period shall be the 12-month period ending on the date specified in Schedule 1.01A attached hereto of each calendar year.  References to a Fiscal Year with a number corresponding to any calendar year (e.g., “Fiscal Year 2014” or “2014 Fiscal Year”) refer to the Fiscal Year beginning in the calendar year of such Fiscal Year as set forth in Schedule 1.101A (e.g., “Fiscal Year 2014” began in calendar year 2014 and ends in calendar year 2014).

 

“Foreign Government Scheme or Arrangement” has the meaning specified in Section 6.12(e).

“Foreign Lender” means a Lender that is not a U.S. Person.

“Foreign Plan” has the meaning specified in Section 6.12(e).

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

“FRB” means the Board of Governors of the Federal Reserve System of the United States.

“Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

“GAAP” means generally accepted accounting principles as in effect from time to time in the United States, consistently applied.

“Governmental Authority” means the government of the United States of America, Canada or any other nation, or of any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

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“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien).  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a corresponding meaning.

“Guarantor” means each Person who executes this Agreement as a “Guarantor.”

“Guarantor Payment” has the meaning specified in Section 2.12(c).

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

“Inactive Subsidiaries” means collectively, each Subsidiary that is a dormant Subsidiary and (a) does not own any assets other than those owned at Closing, (b) is not obligated for or in respect of any indebtedness, liabilities or any other obligations (other than certain obligations and liabilities with respect to (i) environmental matters not exceeding $1,200,000 in the aggregate for all Inactive Subsidiaries (less any increase in amounts under clause (ii) below as described in the parenthetical in such clause (ii)) and (ii) legal fees, testing, employees and insurance not exceeding $300,000 during any calendar year in the aggregate (increased to the extent of any settlement of any liability referred to in the foregoing clause (i), provided that the aggregate amount of such increase shall not exceed the amount of any such settled liability and may be spread over multiple calendar years, and provided further that the aggregate amount of liabilities in clause (i) above is reduced by at least a corresponding amount) for all Inactive Subsidiaries), and (c) does not employ any Persons except consistent with practices and to the same extent as of the Closing or conduct any business or operations.  Notwithstanding the foregoing, (i) to the extent that the amounts in the parenthetical in clause (b) above are increased due to new environmental matters asserted against an Inactive Subsidiary after the Closing Date then any such entity shall continue to be an “Inactive Subsidiary,” and (ii) no Subsidiary shall be deemed an Inactive Subsidiary under the Loan Documents unless such Subsidiary also is deemed and treated as an “Inactive Subsidiary” under the First Lien Loan Documents.

 

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“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a)           all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

(b)           all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

(c)           net obligations of such Person under any Swap Contract;

(d)           all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the Ordinary Course of Business) and any accrued and unpaid obligations with respect to any earnout payments or similar payments under acquisition documents;

(e)           indebtedness secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

(f)           obligations under Capital Leases and Synthetic Lease Obligations of such Person;

(g)           all obligations of such Person with respect to the redemption, repayment or other repurchase or payment in respect of any Disqualified Equity Interest; and

 

(h)           all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, to the extent such Indebtedness is recourse to such Person.  The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.  The amount of any Capital Lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.

“Indemnitees” has the meaning specified in Section 11.04(b).

“Information” has the meaning specified in Section 11.07.

“Insurance Proceeds” means (i) with respect to an Event of Loss relating to any asset or property, the insurance claims under and the proceeds of any and all policies of insurance covering such asset or property or any part thereof, including all returned and unearned premiums with respect to any insurance relating to such asset or property, and (ii) any payments or proceeds under or with respect to any business interruption insurance policy.

 

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“Intellectual Property” means all past, present and future:  trade secrets, know-how and other proprietary information; trademarks, uniform resource locations (URLs), internet domain names, service marks, sound marks, trade dress, trade names, business names, designs, logos, slogans (and all translations, adaptations, derivations and combinations of the foregoing) indicia and other source and/or business identifiers, and the goodwill of the business relating thereto and all registrations or applications for registrations which have heretofore been or may hereafter be issued thereon throughout the world; copyrights (including copyrights for computer programs) and copyright registrations or applications for registrations which have heretofore been or may hereafter be issued throughout the world and all tangible property embodying the copyrights, unpatented inventions (whether or not patentable); patent applications and patents; industrial design applications and registered industrial designs; license agreements related to any of the foregoing and income therefrom; books, records, writings, computer tapes or disks, flow diagrams, specification sheets, computer software, source codes, object codes, executable code, data, databases and other physical manifestations, embodiments or incorporations of any of the foregoing; the right to sue for all past, present and future infringements of any of the foregoing; all other intellectual property; and all common law and other rights throughout the world in and to all of the foregoing.

“Intercreditor Agreement” means that certain Intercreditor and Subordination Agreement, dated as of the Closing Date, by and among the Agent and the First Lien Lender, as amended, restated, supplemented or otherwise modified from time to time in accordance with its terms.

“Interest Date” has the meaning provided in Section 2.07.

“Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another Person (including through the purchase of an option, warrant or convertible or similar type security), (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor Guarantees Indebtedness of such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit.  For purposes of compliance with Section 8.03, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment, less all returns of principal or equity thereon (and without adjustment by reason of the financial condition of such other Person) and shall, if made by the transfer or exchange of property other than cash, be deemed to have been made in an original principal or capital amount equal to the fair market value of such property at the time of such transfer or exchange.

“IP Rights” rights of any Person to use any Intellectual Property.

“IRS” means the United States Internal Revenue Service.

“Jefferson City Lease” means that certain commercial lease agreement, dated as of March 25, 2015, by and between CCP and 321 Wilson Drive, LLC, a Missouri limited liability company.

“Kohlberg Intercreditor Agreement” means that certain Subordination Agreement, dated as of the Closing Date, by and among the Agent, the Specified Subordinated Lenders and the Borrowers.

“Laws” means, collectively, all international, foreign, Federal, state, provincial and local statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

 

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“Leverage Ratio”  means, as of the last day of any Measurement Period, the ratio of (a) total Indebtedness of the Company and its Subsidiaries on a consolidated basis as of the last day such Measurement Period, to (b) Consolidated EBITDA of the Company and its Subsidiaries for the Measurement Period then ended.

“LIBOR (One-Month) Rate” means, at any time, the greater of (a) 0.50% per annum, and (b) the 1‐month London Interbank Offered Rate (LIBOR) as published or otherwise reported in The Wall Street Journal on the relevant Change Date (or, if such Change Date is not a Business Day, on the immediately prior Business Day), unless such rate is no longer available or published, in which case such rate shall be at a comparable publicly published index rate reasonably selected by the Agent with notice to the Borrower Agent.  The LIBOR (One-Month) Rate shall be reset on the first day of every calendar month occurring after the date hereof (herein, a “Change Date”) and remain in effect until the next Change Date.  As of the Closing date, the LIBOR (One-Month) Rate is 0.50% per annum.

“License” means any license or agreement under which a Loan Party is granted IP Rights in connection with any manufacture, marketing, distribution or disposition of Collateral, any use of assets or property or any other conduct of its business.

“Licensor” means any Person from whom a Loan Party obtains IP Rights.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest, or any preference, priority or other security agreement or preferential arrangement in the nature of a security agreement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

“Lien Waiver” means an agreement, in form and substance reasonably satisfactory to the Agent, by which (a) for any Collateral located on leased premises, the lessor waives or subordinates any Lien it may have on the Collateral, and agrees to permit the First Lien Lender or the Agent, as applicable, to enter upon the premises and remove the Collateral or to use the premises to store or dispose of the Collateral; (b) for any Collateral held by a warehouseman, processor, shipper, customs broker or freight forwarder, such Person waives or subordinates any Lien it may have on the Collateral, agrees to hold any Documents in its possession relating to the Collateral as agent for the Agent and the First Lien Lender, and agrees to deliver the Collateral to the First Lien Lender or the Agent, as applicable, upon request; (c) for any Collateral held by a repairman, mechanic or bailee, such Person acknowledges the Agent’s and the First Lien Lender’s Liens, waives or subordinates any Lien it may have on the Collateral, and agrees to deliver the Collateral to the First Lien Lender or the Agent, as applicable, upon request; and (d) for any Collateral subject to a Licensor’s IP Rights, the Licensor grants to the Agent and the First Lien Lender the right, vis-à-vis such Licensor, to enforce the Agent’s and the First Lien Lender’s Liens with respect to the Collateral, including the right to dispose of it with the benefit of the Intellectual Property, whether or not a default exists under any applicable License.

“Loan” means the extension of credit under Article II in the form of the Term Loan.

“Loan Account” has the meaning assigned to such term in Section 2.10.

 

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“Loan Documents” means this Agreement, each Note, each Security Instrument, each Compliance Certificate, the SBA Side Letter, the Kohlberg Intercreditor Agreement, the Centrex Earnout Subordination Agreement, the Intercreditor Agreement and all other instruments and documents heretofore or hereafter executed or delivered to or in favor of the Agent and the Lenders in connection with the Loans made and transactions contemplated by this Agreement.

“Loan Obligation Limit” has the meaning assigned to such term is Section 9.05.

“Loan Obligation Payment” has the meaning assigned to such term is Section 9.05.

“Loan Parties” means the Borrowers (including, without limitation, the Company), and each direct or indirect Subsidiary of the Company but excluding any Subsidiary so long as such Subsidiary is an Inactive Subsidiary.

“Management Agreement” shall mean that certain Management Agreement dated as of June 18, 2001 between Kohlberg & Company, L.L.C. and the Company, as amended, modified, supplemented or restated prior to the Closing Date, as in effect on the Closing Date, as extended.

“Management Fees” shall mean those certain fees payable by the Company pursuant to the Management Agreement, as in effect on the date hereof, in accordance with the terms of this Agreement.

“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect on, the operations, business, assets, properties, liabilities (actual or contingent), or financial condition of either (i) the Borrowers, taken as a whole or (ii) the Company and its Subsidiaries, taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party or on the ability of the Agent or any other Credit Party to collect any Obligation or realize upon any material portion of the Collateral.

“Material Contract” means any agreement or arrangement to which a Loan Party or Subsidiary is party (other than the Loan Documents) (a) that is deemed to be a material contract under any securities law applicable to such Loan Party, including the Securities Act of 1933; (b) for which breach, termination, nonperformance or failure to renew could reasonably be expected to have a Material Adverse Effect; or (c) that relates to Indebtedness in an aggregate amount of $250,000 or more.

“Material License” has the meaning assigned to such term in Section 7.17.

“Maturity Date” means April 6, 2019.

“Measurement Period” means, at any date of determination, the most recently completed twelve (12) consecutive Fiscal Months of the Company and its Subsidiaries for which financial statements have or should have been delivered in accordance with Section 7.01(a), 7.01(b) or 7.01(c).

“Monthly Equipment Amortization Amount” means $45,488.

“Monthly Real Estate Amortization Amount” means $22,500.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

 

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“Mortgage Related Documents” means, with respect to any Real Estate subject to a Mortgage, the following, in form and substance reasonably satisfactory to the Agent and with respect to Real Estate acquired after the date hereof received by the Agent for review at least fifteen (15) days prior to the effective date of the Mortgage:  (a) a mortgagee title policy (or binder therefor) covering the Agent’s interest under the Mortgage, in a form and amount and by an insurer reasonably acceptable to the Agent, which must be fully paid on such effective date; (b) such assignments of leases, estoppel letters, attornment agreements, consents, waivers and releases as the Agent may reasonably require with respect to other Persons having an interest in the real estate; (c) a ALTA Survey by a licensed surveyor reasonably acceptable to the Agent; (d) a life-of-loan flood hazard determination and, if the real estate is located in a flood plain, an acknowledged notice to borrower and flood insurance in an amount, with endorsements and by an insurer reasonably acceptable to the Agent; (e) a current appraisal of the real estate, prepared by an appraiser acceptable to the Agent, and in form and substance reasonably satisfactory to the Agent; (f) an environmental assessment, prepared by environmental engineers reasonably acceptable to the Agent, and accompanied by such reports, certificates, studies or data as the Agent may reasonably require, which shall all be in form and substance satisfactory to the Agent; and (g) an environmental indemnity agreement and such other documents, instruments or agreements as the Agent may reasonably require with respect to any environmental risks regarding the real estate.

“Mortgaged Property” means the Real Estate of the Loan Parties listed on Schedule 1.01C hereto and such other Real Estate required from time to time to be subject to a Mortgage pursuant to the terms of the Loan Documents.

“Mortgages” means the mortgages, leasehold mortgages, deeds of trust, leasehold deeds of trust or deeds to secure debt executed by an Loan Party on or about the Closing Date, or from time to time thereafter as may be required under the Loan Documents, in favor of the Agent, for the benefit of the Credit Parties, by which such Loan Party has granted to the Agent, as security for the Obligations, a Lien upon the Real Estate described therein, together with all mortgages, deeds of trust and comparable documents now or at any time hereafter securing the whole or any part of the Obligations.

“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

“Multiple Employer Plan” means a Plan which has two or more contributing sponsors (including any Loan Party or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

“Net Cash Proceeds” means:

(a)           with respect to the sale of any asset by any Loan Party or any Subsidiary, the excess, if any, of (a) the sum of the cash and cash equivalents received in connection with such sale (including any cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (b) the sum of (i) the principal amount of any Indebtedness that is secured by such asset and that is required to be repaid in connection with the sale thereof (other than Indebtedness under the Loan Documents and Indebtedness owing to the Company or any Subsidiary), (ii) the out‐of‐pocket expenses incurred by such Loan Party or any Subsidiary in connection with such sale, including any brokerage commissions, underwriting fees and discount, legal fees, finder’s fees and other similar fees and commissions, (iii) taxes paid or reasonably estimated to be payable by the Loan Party or any Subsidiary in connection with the relevant asset sale, (iv) the amount of any reasonable reserve required to be established in accordance with GAAP against liabilities (other than taxes deducted pursuant to clause (iii) above) to the extent such reserves are (x) associated with the assets that are the object of such sale and (y) retained by such Loan Party or applicable Subsidiary, and (v) the amount of any reasonable reserve for purchase price adjustments and retained fixed liabilities reasonably expected to be payable by such Loan Party or applicable Subsidiary in connection therewith to the extent such reserves are (1) associated with the assets that are the object of such sale and (2) retained by such Loan Party or applicable Subsidiary; provided that the amount of any subsequent reduction of any reserve provided for in clause (iii) or (iv) above (other than in connection with a payment in respect of such liability) shall (X) be deemed to be Net Cash Proceeds of such asset sale occurring on the date of such reduction, and (Y) immediately be applied to the prepayment of Loans in accordance with Section 2.05(b)(vii) or reinvested as permitted under Section 2.05(b)(i) within one hundred eighty (180) days after the reduction in the reserve;

 

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(b)           with respect to any Event of Loss by any Loan Party or any Subsidiary, all Insurance Proceeds and Condemnation Awards arising therefrom, net of reasonable direct costs incurred in connection with the collection of such proceeds, awards or other payments; and

(c)           with respect to any offering of equity securities of a Loan Party or any Subsidiary or the issuance of any Indebtedness by a Person,  cash and cash equivalent proceeds received by or for such Person’s account, net of reasonable legal, underwriting, and other fees and expenses incurred as a direct result thereof.

“Note” means any Second Lien Term Loan Note.

“Obligations” means all amounts owing by any Loan Party to the Lenders or any other Credit Party pursuant to or in connection with this Agreement or any other Loan Document or otherwise with respect to any Loan, including without limitation, all principal, interest (including any interest accruing after the filing of any petition in bankruptcy or the commencement of any proceeding under any Debtor Relief Law relating to any Loan Party or would accrue but for such filing or commencement, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), the Prepayment Premium, all reimbursement obligations, fees, expenses, indemnification and reimbursement payments, costs and expenses (including all out-of-pocket reasonable fees and expenses of counsel to the Credit Parties incurred pursuant to this Agreement or any other Loan Document), whether direct or indirect, absolute or contingent, liquidated or unliquidated, now existing or hereafter arising hereunder or thereunder, together with all renewals, extensions, modifications or refinancings thereof.

“Ordinary Course of Business” means the ordinary course of business of the Company and its Subsidiaries, consistent with past practices and undertaken in good faith.

“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

 

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“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment.

“PACA” means the Perishable Agriculture Commodities Act, 1930 and all regulations promulgated thereunder, as amended from time to time.

“Participant” has the meaning assigned to such term in clause  Section 11.06(b).

“PASA” means the Packers and Stockyard Act, 1921 and all regulations promulgated thereunder, as amended from time to time.

“Patent Security Agreement” means any patent security agreement pursuant to which a Loan Party grants to the Agent, for the benefit of the Credit Parties, a security interest in such Person’s interests in its patents, as security for the Obligations.

“Payment in Full” or “Paid in Full” means (a) the indefeasible payment in full in cash of all Obligations, together with all accrued and unpaid interest and fees thereon and (b) all claims of the Loan Parties against any Secured Party arising on or before the payment date shall have been released on terms acceptable to the Agent.

“Payment in Full of First Lien Priority Debt” has the meaning assigned to it in the Intercreditor Agreement.

“Payment Item” means each check, draft or other item of payment payable to a Borrower, including those constituting proceeds of any Collateral.

“Payments” has the meaning specified in Section4.02(f).

“PBGC” means the Pension Benefit Guaranty Corporation.

“Pension Act” means the Pension Protection Act of 2006.

“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and Multiemployer Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

“Pension Plan” means any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is contributed to by the Company and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

“Permitted Liens” has the meaning specified in Section 8.01.

 

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“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“PIK Amount” has the meaning set forth in Section 2.07(b).

“PIK Interest Rate” means four percent (4.00%) per annum.

“Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan), maintained for employees of the Company, any Loan Party, or any ERISA Affiliate or any such plan to which the Company, any Loan Party, or any ERISA Affiliate is required to contribute on behalf of any of its employees.

“Pledged Interests” means any Instrument, Investment Property or other Equity Interests constituting Collateral (other than Excluded Assets) hereunder, including the Pledged Interests as of the Closing Date which are set forth on Schedule 4.02 hereto.

“PPSA” means the Personal Property Security Act (Ontario); provided, that if the attachment, perfection or priority of the security interests granted to the Agent pursuant to any applicable Loan Document are governed by the personal property security laws of any jurisdiction in Canada other than Ontario, PPSA shall mean those personal property security laws in such other jurisdiction in Canada for the purpose of the provisions of any applicable Loan Document and any financing statement relating to such attachment, perfection or priority.

“Prepayment” has the meaning set forth in Section 8.11(a).

“Properly Contested” means with respect to any obligation of a Loan Party, (a) the obligation is subject to a bona fide dispute regarding amount of such Loan Party’s liability to pay; (b) the obligation is being properly contested in good faith by appropriate proceedings promptly instituted and diligently pursued; (c) appropriate reserves have been established in accordance with GAAP; (d) non-payment could not have a Material Adverse Effect, nor result in forfeiture or sale of any assets of a Loan Party; (e) no Lien is imposed on assets of a Loan Party, unless bonded and stayed to the satisfaction of the Lender; and (f) if the obligation results from entry of a judgment or other order, such judgment or order is stayed pending appeal or other judicial review.

“Qualifying Foreign Subsidiary” means 21557355 Ontario Inc., an Ontario corporation, CCP Canada, Inc., an Ontario corporation, and any other Subsidiary of the Company that is a Foreign Subsidiary that becomes a Borrower or Guarantor hereunder or that otherwise is a “Borrower” or “Guarantor” under the First Lien Loan Documents.

“Real Estate” means all land, together with the buildings, structures, parking areas, and other improvements thereon, now or hereafter owned by any Loan Party, including all easements, rights-of-way, and similar rights appurtenant thereto and all leases, tenancies, and occupancies thereof.

“Recipient” means (a) the Agent, (b) any Lender or (c) any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder, as applicable.

“Register” has the meaning specified in Section 11.06(c).

“Registered Public Accounting Firm” has the meaning specified in the Securities Laws and shall be independent of the Company as prescribed in the Securities Laws.

 

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“Reinvestment Amount” has the meaning given such term in Section 2.05(b)(i).

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty (30) day notice period referred to in Section 4043(c) of ERISA has been waived.

“Required Lenders” means, as of any date of determination, Lenders (other than the Seller-Related Lenders and any of their Affiliates, successors and assigns) holding more than fifty percent (50%) of the then aggregate outstanding principal balance of the Term Loan (other than that portion of the Term Loan held by the Seller-Related Lenders and their Affiliates, successors and assigns).

“Responsible Officer” means, with respect to each Loan Party, the chief executive officer, president, chief financial officer, treasurer, controller or assistant treasurer or any vice president of such Loan Party.  Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

“Restricted Payment” means (i) any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of the Company or any Subsidiary, (ii) any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or other Equity Interest of the Company, or on account of any return of capital to the Company’s stockholders, partners or members (or the equivalent Person thereof) or (iii) any distribution, advance or repayment of Indebtedness to or for the account of a holder of Equity Interests of the Company.

“Royalties” means all royalties, fees, expense reimbursement and other amounts payable by a Loan Party under a License.

“S&P” means Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw‐Hill Companies, Inc. and any successor thereto.

“SBA” means the Small Business Administration.

“SBA Side Letter” means that certain letter agreement, dated as of the Closing Date, by and among the Borrowers and VPC.

“SBIC” means a small business investment company licensed under the SBIC Act.

“SBIC Act” means the Small Business Investment Act of 1958, as amended.

“SBIC Regulations” means the SBIC Act, and the regulations issued by SBA thereunder, codified at Title 13 of the Code of Federal Regulations (“13 C.F.R.”), 107 and 121, as amended.

“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

 

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“Securities Laws” means the Securities Act of 1933, the Exchange Act, Sarbanes-Oxley Act of 2002 and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the Public Company Accounting Oversight Board, as each of the foregoing may be amended and in effect on any applicable date hereunder.

“Security Instruments” means, collectively or individually as the context may indicate, the Security Agreement, the Control Account Agreements, the Mortgages, the Mortgage Related Documents, the Patent Security Agreements, the Trademark Security Agreements, each Lien Waiver and all other agreements (including securities account control agreements), instruments and other documents, whether now existing or hereafter in effect, pursuant to which any Loan Party or other Person shall grant or convey to the Agent a Lien in property as security for all or any portion of the Obligations.

“Seller-Related Lenders” means, unless otherwise expressly consented to in writing by the Agent in its sole and absolute discretion, the Persons listed as “Seller-Related Lenders” on the signature pages hereto and their permitted successors and assigns; provided, that, if VPC is the successors or assign of any such Person hereunder, under no circumstances shall VPC be considered a Seller-Related Lender.

“Seller Undertakings” means, collectively, all representations, warranties, covenants and agreements made by the Sellers in favor of any Borrower or any other Loan Party, and all indemnifications by a Seller for the benefit of any Grantor relating thereto, pursuant to the Centrex Acquisition Documents.

“Sellers” means, together, Centrex Plastics, LLC, an Ohio limited liability company, and T.R. Plastics, LLC, an Ohio limited liability company.

“Solvent” means, as to any Person, such Person (a) owns property or assets whose fair salable value is greater than the amount required to pay all of its debts (including contingent, subordinated, unmatured and unliquidated liabilities and assuming that the debt and other obligations will become due at their respective maturities); (b) owns property or assets whose present fair salable value (as defined below) is greater than the probable total liabilities (including contingent, subordinated, unmatured and unliquidated liabilities and assuming that the debt and other obligations will become due at their respective maturities) of such Person as they become absolute and matured; (c) is able to pay all of its debts as they mature; (d) has capital that is not unreasonably small for its business and is sufficient to carry on its business and transactions and all business and transactions in which it is about to engage; and (e) has not incurred (by way of assumption or otherwise) any obligations or liabilities (contingent or otherwise) under any Loan Documents, or made any conveyance in connection therewith, with actual intent to hinder, delay or defraud either present or future creditors of such Person or any of its Affiliates.  “Fair salable value” means the amount that could be obtained for assets within a reasonable time, either through collection or through sale under ordinary selling conditions by a capable and diligent seller to an interested buyer who is willing (but under no compulsion) to purchase.  For purposes hereof, the amount of all contingent liabilities at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, can reasonably be expected to become an actual or matured liability.

“Special Setoff Rights” means any right of any Loan Party to cause the Centrex Earnout Payments to be reduced pursuant to the terms of the Centrex Purchase Agreement, without the payment of any cash or cash equivalent or other property by any Loan Party, or the incurrence of any Indebtedness or other obligation of any kind by any Loan Party, due to a claim for indemnification by any Loan Party for breach of any representation or warranty made by Terrence L. Reinhart or any Seller in the Centrex Acquisition Documents.

 

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“Specified Subordinated Indebtedness” means Indebtedness in the aggregate original principal amount not to exceed $1,000,000 issued by the Company in favor of the Specified Subordinated Lenders which is expressly subordinated in right of payment to the prior payment in full of the Obligations and which is in form and on terms approved in writing by Agent and is at all times subject to the Kohlberg Intercreditor Agreement.

“Specified Subordinated Indebtedness Documents” means all notes, documents and agreements executed or delivered in connection with the Specified Subordinated Indebtedness from time to time.

“Specified Subordinated Lenders” means Kohlberg Investors IV, L.P., Kohlberg TE Investors IV, L.P., Kohlberg Offshore Investors IV, L.P., Kohlberg Partners IV, L.P., Daniel B. Carroll and Wallace E. Carroll, Jr.

“Subordinated Indebtedness” means the Specified Subordinated Indebtedness, the Centrex Earnout and all other Indebtedness payable by a Borrower or any of its Subsidiaries to a Person other than another Borrower which is expressly subordinated in right of payment to the prior payment in full of the Obligations and which is in form and on terms approved in writing by the Agent and is at all times subject to an intercreditor or subordination agreement in form and substance acceptable to the Agent.

“Subordinated Indebtedness Documents” means the Specified Subordinated Indebtedness Documents and all notes, documents and agreements executed or delivered in connection with the Subordinated Indebtedness from time to time.

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity (but not a representative office of such Person) of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Company.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

“Swap Obligation” means, with respect to any Loan Party, any obligation to perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act (7 U.S.C. §1 et seq.), as amended from time to time, and any successor statute.

 

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“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts.

“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so‐called synthetic, off‐balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Technology Upgrade” has the meaning specified in Section 7.25.

“Term Loan” means any term loan made hereunder pursuant to Section 2.01.

“Term Loan Commitment” means each Lender’s obligation to make its portion of the Term Loan to the Borrowers pursuant to Section 2.01.

“Term Loan Commitment Amount” means $24,000,000.

“Term Loan Credit Facility” means the facility described in Section 2.01 providing for Term Loan to or for the benefit of the Borrowers by the Lenders, in the maximum aggregate principal amount of the Term Loan Commitment Amount.

“Termination Date” means the date as of which Payment in Full of all Obligations has occurred.

 

“Trademark Security Agreement” means any trademark security agreement pursuant to which any Loan Party grants to the Agent, for the benefit of the Credit Parties, a security interest in such Person’s interest in its trademarks as security for the Obligations.

“Transaction” means, individually or collectively, (a) the Centrex Acquisition, (b) the entering by the Borrowers of the Loan Documents to which they are a party and the funding of the Term Loan Credit Facility and (c) the transactions contemplated by the First Lien Loan Documents.

“Transition Services Agreement” means that certain Transition Services Agreement, dated as of the Closing Date, by and between CCP and Centrex Plastics LLC.

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of Illinois; provided that if, with respect to any financing statement or by reason of any mandatory provisions of law, the perfection or the effect of perfection or non-perfection of the security interests granted to the Agent, on behalf of the Credit Parties pursuant to any applicable Loan Document is governed by the Uniform Commercial Code as in effect in a jurisdiction of the United States other than Illinois, the term “UCC” shall also include the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions of this Agreement, each Loan Document and any financing statement relating to such perfection or effect of perfection or non-perfection.

 

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“United States” and “U.S.” mean the United States of America.

“U.S. Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.

1.02             Other Interpretive Provisions.  With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

(a)           The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

(b)           In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

(c)           Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

1.03           Accounting Terms.

(a)           Generally.  All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.

(b)           Changes in GAAP.  If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower Agent or the Required Lenders shall so request, the Agent and the Borrower Agent shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower Agent shall provide to the Agent financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

 

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(c)           Acquisitions and Dispositions.  All defined terms used in the calculation of Consolidated Fixed Charge Coverage Ratio hereof shall be calculated on a historical pro forma basis giving effect (by inclusion or exclusion, as applicable), during any Measurement Period that includes the Centrex Acquisition or any Disposition permitted by Sections 8.05(b), 8.05(c) or 8.05(d), to the actual historical results of the Person or line of business so acquired or asset so Disposed and which amounts shall include only adjustments as are otherwise reasonably satisfactory to the Agent; provided, the foregoing shall not permit adjustments in respect of Facility Relocation Total Expenditures.

 

(d)           Other Pro Forma Calculations.  Any pro forma calculation of the Consolidated Fixed Charge Coverage Ratio shall be made (i) as if all Indebtedness incurred or Investments or Disposition made at the time of such measurement had been incurred or made, as applicable, on the first day of the Measurement Period most recently ended for which the Borrower Agent has delivered (or was required to deliver) financial statements pursuant to Sections 7.01(a), 7.01(b) or7.01(c), (ii) as if all Indebtedness repaid at the time of such measurement had been paid on the last day of the Measurement Period most recently ended for which the Borrower Agent has delivered (or was required to deliver) financial statements pursuant to Sections 7.01(a), 7.01(b) or7.01(c), and (iii) pro forma for any other element of the relevant transaction that would affect the calculation of Consolidated Fixed Charge Coverage Ratio; provided, the foregoing shall not permit pro forma adjustments in respect of Facility Relocation Total Expenditures.

(e)           Consolidation of Variable Interest Entities.  Except as expressly provided otherwise herein, all references herein to consolidated financial statements of the Company and its Subsidiaries or to the determination of any amount for the Company and its Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that the Company is required to consolidate pursuant to FASB ASC 810 as if such variable interest entity were a Subsidiary as defined herein.

(f)           In computing financial ratios and other financial calculations of the Company and its Subsidiaries required to be submitted pursuant to this Agreement, all Indebtedness of the Company and its Subsidiaries shall be calculated at par value irrespective if the Company has elected the fair value option pursuant to FASB Interpretation No. 159 – The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115 (February 2007).

(g)          Anything herein to the contrary notwithstanding, with respect to any dollar basket or threshold set forth herein or in any Loan Document or delivery thereunder (including add backs to Consolidated Net Income included in the calculation of Consolidated EBITDA) (each a “dollar-based provision”) and for which a similar, reciprocal or counterpart basket or threshold is set forth in the First Lien Credit Agreement or any other First Lien Loan Document or delivery thereunder (each a “first lien reciprocal dollar-based provision”), if such first lien reciprocal dollar-based provision is deemed permanently utilized, expended or reduced in whole or part as a result of transactions, events or occurrences prior to the “Closing Date” (as defined in the First Lien Credit Agreement) (and which was not expressly reset as of such Closing Date), then such dollar-based provision shall be similarly deemed to have been permanently utilized, expended or reduced, as applicable, in like amount (on a dollar-for-dollar basis); provided, the foregoing provision shall be void and of no further force or effect upon and after the Payment in Full of First Lien Priority Debt.

 

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(h)          In connection with the Technology Upgrade, upon the written request of the Company, the Agent and the Company agree to use reasonable efforts for a reasonable period of time to discuss and negotiate in good faith (which discussions shall include the First Lien Lender) certain amendments to financial covenants set forth in Section 8.12 and the related definitions used therein with the intent to fairly and appropriately account for the incurrence of one-time, non-recurring reasonable and documented out-of-pocket fees, costs and expenses by the Loan Parties in connection with the Technology Upgrade (including potential add-backs in determining Consolidated EBITDA) while generally preserving the original intent of the financial covenants and related definitions and the benefits afforded to the Agent and the Lenders in respect thereof (taking into consideration, among other things, the reasonableness of the Technology Upgrade, the timeline, the material nature of the impact to the Loan Parties in light of the fees, costs and expenses and effort and to the financial covenants, and the cash position and working capital needs of the Loan Parties); provided that, (a) until so amended, if ever, such financial covenants and definitions shall continue to be computed in accordance with the terms thereof prior to any such amendment, (b) the Loan Parties shall deliver to the Agent such information and materials reasonably requested by the Agent from time to time in connection with any such request by the Company, (c) the Agent shall not be required to agree to any such amendments (but agrees to be reasonable in its analysis), and (d) as a condition to any amendment that may be effectuated in connection therewith, as a condition to its effectiveness, the counterpart financial covenants and related definitions set forth in the First Lien Loan Documents shall be amended on an identical basis concurrent with such effectiveness. Further, the Agent and the Company agree to discuss the financial covenants and related definitions after each of the first two (2) financial covenant test dates as may be requested by the Agent (or at other times as may be reasonably requested by the Agent) for purposes of analyzing the impact and results of the methodologies used to incorporate adjustments to the related definitions in respect of Facility Relocation Total Expenditures and comparing such actual impact and results with the original intent of the parties in light of such incorporation and the treatment in respect thereof.

1.04             Uniform Commercial Code.  As used herein, the following terms are defined in accordance with the UCC in effect in the State of Illinois from time to time:  “Account,” “Certificated Security,” “Chattel Paper,” “Deposit Account,” “Equipment,” “Financial Asset,” “Document,” “Electronic Chattel Paper,” Financial Asset,” “Fixture,” “General Intangibles,” Goods,” “Health‐Care‐Insurance Receivables,” “Instruments,” “Inventory,” “Investment Property,” “Letter of Credit Rights,” “Payment Intangibles,” “Proceeds,” “Record,” “Security,” “Security Entitlement,” “Software,” “Supporting Obligations,” “Tangible Chattel Paper” and “Uncertificated Security.”

1.05            Rounding.  Any financial ratios required to be maintained by the Borrowers pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

1.06             Times of Day.  Unless otherwise specified, all references herein to times of day shall be references to Central time (daylight or standard, as applicable).

1.07             Defined Terms in First Lien Loan Documents.  Any reference to a definition in a First Lien Loan Document shall be construed to also refer to any comparable term in any agreement, instrument, or other document the debt under which refinances the First Lien Debt in accordance with and subject to the Intercreditor Agreement, in each case to the extent substantially identical to the term contained in the First Lien Loan Documents in the first instance (to the extent in accordance with the terms of the Intercreditor Agreement), or as modified or permitted to be modified as expressly permitted under the Intercreditor Agreement.

 

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1.08              Disclosure Schedules.  Each of the Schedule attached to this Agreement shall reflect the Centrex Acquisition as if it had closed immediately prior to the effectiveness of this Agreement instead of immediately after the effectiveness of this Agreement; provided, however, that any representations and warranties relating to the Sellers or the business, assets or properties of the Sellers in any respect shall not be applicable until the consummation of the Closing (as defined in the Centrex Purchase Agreement).

ARTICLE II

THE TERM LOAN COMMITMENTS AND CREDIT EXTENSIONS

2.01             Term Loan Commitments.  Subject to the terms and conditions set forth herein, each Lender severally and not jointly agrees to lend to the Borrowers on the Closing Date the amount equal to such Lender’s Term Loan Commitment.  For purposes of the foregoing, the Loan Parties and the Seller-Related Lenders that are Lenders on the Closing Date hereby agree and acknowledge that, to effectuate the making of such Seller-Related Lenders’ share of the Term Loan on the Closing Date equal to their respective Term Loan Commitments, such Seller-Related Lenders shall be deemed to have elected to have loaned to the Borrowers their portion of the Term Loan equal to their respective Term Loan Commitments by offsetting the cash consideration of the purchase price that otherwise would have been paid in cash to the Sellers under the Centrex Purchase Agreement on the Closing Date by $3,000,000; and as such, such $3,000,000 then shall be deemed to have been loaned to the Borrowers on the Closing Date by such Seller-Related Lenders concurrently with the making by the other Lenders of their respect Term Loan Commitments of the Term Loan and shall constitute such Seller-Related Lenders’ share of the Term Loan.  Amounts of the Term Loan which are repaid or prepaid may not be reborrowed.

2.02             [Reserved].

2.03             [Reserved].

2.04             Repayment of Loans.  The Borrowers shall repay the outstanding principal balance of the Term Loan in installments (the “Amortization Amount”) on the dates and in the respective amounts shown below:

 

	
Date of Payment

	 	
Amount of Payment

	 
	
June 30, 2016

	 	
$

	
600,000

	 
	
September 30, 2016

	 	
$

	
600,000

	 
	
December 31, 2016

	 	
$

	
600,000

	 
	
March 31, 2017

	 	
$

	
600,000

	 
	
June 30, 2017

	 	
$

	
600,000

	 
	
September 30, 2017

	 	
$

	
600,000

	 
	
December 31, 2017

	 	
$

	
600,000

	 
	
March 31, 2018

	 	
$

	
600,000

	 
	
June 30, 2018

	 	
$

	
600,000

	 
	
September 30, 2018

	 	
$

	
600,000

	 
	
December 31, 2018

	 	
$

	
600,000

	 

	
April 6, 2019

	 Aggregate outstanding balance of the Term Loan 

 

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The Borrowers shall repay to the Lenders on the Maturity Date the aggregate principal amount of the Term Loan (which shall include all PIK Amounts) outstanding on such date, along with accrued but unpaid interest and all other Obligations then outstanding

2.05             Prepayments.

(a)           Optional.

(i)             Subject to the payment of the Prepayment Premium, the Borrowers may, upon notice to the Lenders from the Borrowers, at any time or from time to time voluntarily prepay the Term Loan in whole or in part without premium or penalty (other than the Prepayment Premium); provided that: (A) such notice must be received by the Agent not later than 11:00 a.m. three Business Days prior to any date of prepayment; and (B) subject to applicable Law (including the SBIC Regulations), any prepayment shall be in a principal amount of $1,000,000 or a whole multiple of $250,000 in excess thereof or, if less, the entire principal amount thereof then outstanding.  Each such notice shall specify the date and amount of such prepayment.  If such notice is given by the Borrower Agent, the Borrowers shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.  Any prepayment shall be accompanied by all accrued interest on the amount prepaid, together and the Prepayment Premium.  Except as otherwise provided in this Agreement, prepayments of the Obligations pursuant to this Section 2.05(a) shall be applied to repay the outstanding principal balance of the Term Loan, to the remaining installments thereof in inverse order of maturities, and shall be accompanied by the applicable Prepayment Premium.

(ii)           Notwithstanding the foregoing provisions of this Section 2.05(a), no optional prepayment of the Term Loan shall be made under this Section 2.05(a) until the Payment in Full of First Lien Priority Debt (as defined in the Intercreditor Agreement) without the prior written consent of the First Lien Lender.

(b)           Mandatory.

(i)             Asset Dispositions.  Subject to Section 2.05(b)(vi), if any Loan Party or any of its Subsidiaries Disposes of any property (other than any Disposition of any property permitted by Sections 8.05(f) and 8.05(g)),  or a Disposition arising from an Event of Loss which results in the realization by such Person of Net Cash Proceeds, the Borrowers shall prepay an aggregate principal amount of Loans equal to 100% of such Net Cash Proceeds within three (3) Business Days after receipt thereof by such Person; provided, however, that with respect to any Net Cash Proceeds realized under a Disposition of any asset or property (other than any Disposition of any property permitted by Section 8.05(f) and 8.05(g), or a Disposition with respect to any Real Estate) described in this Section 2.05(b)(i), at the election of the Borrowers (as notified by the Borrower Agent to the Agent on or prior to the date of such Disposition), and so long as no Default shall have occurred and be continuing, such Loan Party or such Subsidiary may reinvest all or any portion of such Net Cash Proceeds in operating assets (the amount of such Net Cash Proceeds to be reinvested, the “Reinvestment Amount”) so long as: (A) the Borrowers’ purchase of such replacement operating assets is consummated within one hundred (180) days after the receipt of such Net Cash Proceeds (as certified by the Borrower Agent in writing to the Agent); (B) such replacement operating assets are free and clear of Liens other than Permitted Liens; and (C) any Net Cash Proceeds not so reinvested shall be immediately applied to the prepayment of the Loans as set forth in Section 2.05(b)(i).

 

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(ii)            Equity Issuance.  Subject to Section 2.05(b)(vi), upon the sale or issuance by any Loan Party or any of its Subsidiaries of any of its Equity Interests (other than Excluded Issuances and any sales or issuances of Equity Interests to another Loan Party), the Borrowers shall prepay an aggregate principal amount of Loans equal to 100% of all Net Cash Proceeds received therefrom immediately upon receipt thereof by such Loan Party or such Subsidiary.

(iii)          Debt Incurrence.  Subject to Section 2.05(b)(vi), upon the incurrence or issuance by any Loan Party or any of its Subsidiaries of any Indebtedness (other than Indebtedness expressly permitted to be incurred or issued pursuant to Section 8.02), the Borrowers shall prepay an aggregate principal amount of Loans equal to 100% of all Net Cash Proceeds received therefrom immediately upon receipt thereof by such Loan Party or such Subsidiary.

(iv)          Extraordinary Receipts.  Subject to Section 2.05(b)(vi), upon receipt of any cash or cash equivalents by (or paid to or for the account of) any Loan Party not in the ordinary course of business, including tax refunds, pension plan reversions, Insurance Proceeds (including business interruption insurance), judgments, settlements or other payments in connection with any other Event of Loss, indemnity payments and any purchase price adjustments, and not otherwise included in clause (i), (ii) or (iii) of this Section 2.05(b) or described in Section 7.08, the Borrowers shall prepay an aggregate principal amount of Loans equal to 100% of all Net Cash Proceeds therefrom immediately upon receipt; provided, however, that with respect to any Insurance Proceeds, Condemnation Awards or similar payments (or payments in lieu thereof) or indemnity payments, at the election of the Borrowers (as notified by the Borrower Agent to the Agent on or prior to the date of receipt of such Insurance Proceeds, Condemnation Awards or indemnity payments), and so long as no Default shall have occurred and be continuing, such Loan Party or such Subsidiary may apply within one hundred (180) days after the receipt of such cash proceeds to replace or repair the equipment, fixed assets or real property in respect of which such Net Cash Proceeds were received; and provided, further, that any Net Cash Proceeds not so applied shall be immediately applied to the prepayment of the Loans as set forth in this Section 2.05(b)(iv).

(v)           Excess Cash Flow.

(A)             No later than one hundred twenty (120) days after the last day of each Fiscal Year of the Borrowers (but in any event, if earlier, on or before the thirtieth (30th) day after the date on which Borrower’s audited financial statements have been finalized for such Fiscal Year), commencing with the Fiscal Year ending December 31, 2015, the Borrowers shall prepay the Term Loan in an aggregate amount equal to twenty-five percent (25%) of the Excess Cash Flow for such Fiscal Year; provided, the foregoing notwithstanding, the aggregate amount of such prepayments from Excess Cash Flow in respect of the twelve months ending on the first anniversary of the Closing Date shall not exceed the amount as may be necessary to ensure compliance with SBA Regulation §107.845.

(B)              Concurrently with any prepayment of the Term Loan pursuant to this Section 2.05(b)(v), the Borrowers shall deliver to the Agent a certificate of a Responsible Officer thereof demonstrating the calculation of the amount of the Excess Cash Flow.  In the event that Borrower shall subsequently determine that the actual amount of such Excess Cash Flow exceeded the amount set forth in such certificate, the Borrowers shall promptly make an additional prepayment of the Term Loan in an amount equal to such excess, and the Borrowers shall concurrently therewith deliver to the Agent a certificate of a Responsible Officer thereof demonstrating the derivation of such excess

 

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(vi)         First Lien Debt.  Notwithstanding the foregoing provisions of this Section 2.05(b), no mandatory prepayment of the Term Loan, other than mandatory prepayments required under Section 2.05(b)(v), shall be required to be made under this Section 2.05(b) until Payment in Full of First Lien Priority Debt; it being agreed that nothing contained in this clause or in the Intercreditor Agreement shall restrict payments under Section 2.04.

(vii)        Application of Mandatory Prepayments.  Except as otherwise provided in this Agreement, prepayments of the Obligations made pursuant to this Section 2.05(b), shall be applied to repay the outstanding principal balance of the Term Loan, to the remaining installments thereof in the inverse order of maturities, and shall be accompanied by the applicable Prepayment Premium.

(c)          Prepayment Premium.  If the Loan Parties prepay all or any portion of the Term Loan at any time, whether voluntarily or involuntarily, by acceleration or otherwise, then the Borrowers shall pay to Agent on the date of the required prepayment, for the pro rata benefit of the applicable Lenders, as liquidated damages an amount equal to the Prepayment Premium multiplied by the principal amount of the Term Loan paid (or required to be paid) after acceleration or so prepaid.  As used herein, the term “Prepayment Premium” shall mean (x) five percent (5.0%), in the case of a prepayment made or required to be made on or prior to the first anniversary of the Closing Date, (y) three percent (3.0%), in the case of a prepayment made or required to be made after the first anniversary of the Closing Date but on or prior to the second anniversary of the Closing Date, and (z) one percent (1.0%), in the case of prepayment made or required to be made after the second anniversary of the Closing Date but on or prior to the third anniversary of the Closing Date; it being agreed and understood that no Prepayment Premium shall be charged in respect of a prepayment made or required to be made after the third anniversary of the Closing Date (unless , in the case of a mandatory prepayment, the requirement to prepay first arose prior to or on the third anniversary of the Closing Date).  The Loan Parties agree that the Prepayment Premium is a reasonable calculation of Lenders’ lost profits in view of the difficulties and impracticality of determining actual damages resulting from a prepayment and/or an early repayment of the Loans.  Notwithstanding the foregoing, no such Prepayment Premium shall become payable in connection with mandatory prepayments under Section 2.05(b)(v) or any payment under Section 2.04.

2.06              [Reserved].

2.07              Interest.  Borrowers shall pay interests on the unpaid principal amount of the Term Loan at the rates, time and manner set forth below:

(a)           Rate of Interest.  The Term Loan shall bear interest on the unpaid principal amount thereof from the date issued through the date such Term Loan is paid in full in cash (whether on the Maturity Date, by prepayment, acceleration or otherwise) at the Current Interest Rate.  Interest on the Term Loan shall be computed on the basis of a 360-day year and actual days elapsed and, subject to Section 2.07(b), shall be payable monthly, in arrears, on the last day of each calendar month (each, an “Interest Date”) during the period beginning on the Closing Date and ending on, and including, the Termination Date.  Each Interest Date shall be considered the last day of an accrual period for U.S. federal income tax purposes

(b)          Interest Payments.  On each such Interest Date, Borrowers shall (i) pay to the Agent, for the account of the Lenders, in cash monthly installments of interest (in arrears) at the Cash Interest Rate on the then outstanding principal of the Term Loan and interest on the Term Loan shall be payable in cash also at any such other time the Term Loan becomes due and payable (whether by prepayment, acceleration or otherwise) and (ii) with respect to interest at the PIK Interest Rate, as set forth below, accrue and capitalize the PIK Amounts to the outstanding principal of the Term Loan. On each Interest Date, the then outstanding principal on the Term Loan shall be increased by an amount (the “PIK Amount”) equal to the PIK Interest Rate.  Any payment of interest that accrues at the Cash Interest Rate due and owing on the Term Loan shall be made by cash only by wire transfer of immediately available funds to the Agent, for the account of the Lenders on the applicable Interest Date.  Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

 

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(c)            (i)            If any amount payable by the Borrowers under any Loan Document is not paid when due (after giving effect to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then such amount shall thereafter (from the time not paid or, if applicable, following the expiration of any applicable grace period) at the discretion of the Agent, and upon the request of the Required Lenders, bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate, payable in cash upon demand (or paid in kind, or a combination of cash and payment-in-kind, at the election of the Agent), to the fullest extent permitted by applicable Laws (including the SBIC Regulations).

(ii)           If any other Event of Default exists, then the Agent may, and upon the request of the Required Lenders shall, require (and notify the Borrowers thereof) that all outstanding Obligations shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate, which shall be payable in cash upon demand (or paid in kind, or a combination of cash and payment-in-kind, at the election of the Agent), to the fullest extent permitted by applicable Laws (including the SBIC Regulations).

(iii)         Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable in cash upon demand.

2.08             Fees.

(a)           [Reserved].

(b)          [Reserved].

(c)           Closing Fee.  The Borrowers agree to pay to the Agent, for the ratable benefit of the Lenders, the fees payable in the amounts and at the times set forth in the Fee Letter.

(d)           Generally.  All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Agent, for the ratable benefit of the Lenders.  Fees paid shall not be refundable under any circumstances.

2.09              [Reserved].

2.10             Evidence of Debt.  The Credit Extensions made by the Lenders shall be evidenced by one or more accounts or records maintained by the Agent (the “Loan Account”) in the ordinary course of business.  The accounts or records maintained by the Agent shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrowers and the interest and payments thereon.  Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations.  Upon the request of any Lender, the Borrowers shall execute and deliver to such Lender a Note, which shall evidence such Lender’s Loans in addition to such accounts or records.  The Agent may attach schedules to its Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.

 

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2.11            Payments Generally.  All payments to be made by the Borrowers shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff.  Except as otherwise expressly provided herein, all payments by the Borrowers hereunder shall be made to the Agent for the ratable account of the Lenders at the Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein.  All payments received by the Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.  If any payment to be made by the Borrowers shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected on computing interest or fees, as the case may be.

2.12              Nature and Extent of Each Borrower’s Liability.

(a)            Joint and Several Liability.  Each Borrower agrees that it is jointly and severally liable for all Obligations and all agreements under the Loan Documents.  Each Borrower agrees that its guaranty obligations hereunder constitute a continuing guaranty of payment and not of collection, that such obligations shall not be discharged until the Termination Date, and that such obligations are absolute and unconditional, irrespective of (i) the genuineness, validity, regularity, enforceability, subordination or any future modification of, or change in, any Obligations or Loan Document, or any other document, instrument or agreement to which any Borrower is or may become a party or be bound; (ii) the absence of any action to enforce this Agreement (including this Section) or any other Loan Document, or any waiver, consent or indulgence of any kind by the Agent with respect thereto; (iii) the existence, value or condition of, or failure to perfect a Lien or to preserve rights against, any security or guaranty for the Obligations or any action, or the absence of any action, by the Agent in respect thereof (including the release of any security or guaranty); (iv) the insolvency of any Borrower; (v) any election by the Agent in proceeding under Debtor Relief Laws for the application of Section 1111(b)(2) of the Bankruptcy Code; (vi) any borrowing or grant of a Lien by any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise; (vii) the disallowance of any claims of the Agent against any Borrower for the repayment of any Obligations under Section 502 of the Bankruptcy Code or otherwise; or (viii) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, except full payment in cash of all Obligations on the Termination Date.

(b)          Waivers.

 

(i)              Each Borrower expressly waives all rights that it may have now or in the future under any statute, at common law, in equity or otherwise, to compel the Credit Parties to marshal assets or to proceed against any Borrower, other Person or security for the payment or performance of any Obligations before, or as a condition to, proceeding against such Borrower.  Each Borrower waives all defenses available to a surety, guarantor or accommodation co-obligor other than full payment of all Obligations.  It is agreed among each Borrower, the Credit Parties that the provisions of this Section 2.12 are of the essence of the transaction contemplated by the Loan Documents and that, but for such provisions, the Credit Parties would decline to make Loans.  Each Borrower acknowledges that its guaranty pursuant to this Section 2.12 is necessary to the conduct and promotion of its business, and can be expected to benefit such business.

 

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(ii)            The Credit Parties may, in their discretion, pursue such rights and remedies as they deem appropriate, including realization upon Collateral by judicial foreclosure or nonjudicial sale or enforcement, without affecting any rights and remedies under this Section 2.12.  If, in taking any action in connection with the exercise of any rights or remedies, the Credit Parties shall forfeit any other rights or remedies, including the right to enter a deficiency judgment against any Borrower or other Person, whether because of any Applicable Laws pertaining to “election of remedies” or otherwise, each Borrower consents to such action and waives any claim based upon it, even if the action may result in loss of any rights of subrogation that such Borrower might otherwise have had.  Any election of remedies that results in denial or impairment of the right of the Credit Parties to seek a deficiency judgment against any Borrower shall not impair any other Borrower’s obligation to pay the full amount of the Obligations.  Each Borrower waives all rights and defenses arising out of an election of remedies, such as nonjudicial foreclosure with respect to any security for the Obligations, even though that election of remedies destroys such Borrower’s rights of subrogation against any other Person.  The Credit Parties may bid all or a portion of the Obligations at any foreclosure or trustee’s sale or at any private sale, and the amount of such bid need not be paid by the Credit Parties but shall be credited against the Obligations.  The amount of the successful bid at any such sale, whether the Credit Parties or any other Person is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral, and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under this Section 2.12, notwithstanding that any present or future law or court decision may have the effect of reducing the amount of any deficiency claim to which the Credit Parties might otherwise be entitled but for such bidding at any such sale.

 

(c)           Extent of Liability; Contribution.

(i)             Notwithstanding anything herein to the contrary, each Borrower’s liability under this Section 2.12 shall be limited to the greater of (i) all amounts for which such Borrower is primarily liable, as described below, and (ii) such Borrower’s Allocable Amount.

(ii)            If any Borrower makes a payment under this Section 2.12 of any Obligations (other than amounts for which such Borrower is primarily liable) (a “Guarantor Payment”) that, taking into account all other Guarantor Payments previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payments in the same proportion that such Borrower’s Allocable Amount bore to the total Allocable Amounts of all Borrowers, then such Borrower shall be entitled to receive contribution and indemnification payments from, and to be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment.  The “Allocable Amount” for any Borrower shall be the maximum amount that could then be recovered from such Borrower under this Section 2.12 without rendering such payment voidable under Section 548 of the Bankruptcy Code or under any applicable state fraudulent transfer or conveyance act, or similar statute or common law.

(d)          Direct Liability.  Nothing contained in this Section 2.12 shall limit the liability of any Borrower to pay Loans made directly or indirectly to that Borrower and all accrued interest, fees, expenses and other related Obligations with respect thereto, for which such Borrower shall be primarily liable for all purposes hereunder.

(e)          Joint Enterprise.  Each Borrower has requested that the Lenders make this credit facility available to Borrowers on a combined basis, in order to finance Borrowers’ business most efficiently and economically.  The Borrowers’ business is a mutual and collective enterprise, and the successful operation of each Borrower is dependent upon the successful performance of the integrated group.  The Borrowers believe that consolidation of their credit facility will enhance the borrowing power of each Borrower and ease administration of the facility, all to their mutual advantage.  The Borrowers acknowledge that the Lender’s willingness to extend credit and to administer the Collateral on a combined basis hereunder is done solely as an accommodation to Borrowers and at Borrowers’ request.

 

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(f)            Subordination.  Each Loan Party hereby subordinates any claims, including any rights at law or in equity to payment, subrogation, reimbursement, exoneration, contribution, indemnification or set off, that it may have at any time against any other Loan Party, howsoever arising, to the full payment in cash of all Obligations on the Termination Date.

(g)          Borrower Agent.

(i)             Each Borrower hereby irrevocably appoints and designates CCP (“Borrower Agent”) as its representative and agent and attorney-in-fact for all purposes under the Loan Documents, including requests for Credit Extensions, designation of interest rates, delivery or receipt of communications, preparation and delivery of financial reports, receipt and payment of Obligations, requests for waivers, amendments or other accommodations, actions under the Loan Documents (including in respect of compliance with covenants), and all other dealings with the Agent.

(ii)            Each other Loan Party hereby irrevocably appoints and designates the Borrower Agent as its agent and attorney-in-fact to receive statements on account and all other notices from the Agent with respect to the Obligations or otherwise under or in connection with this Agreement and the other Loan Documents.

(iii)          Any notice, election, representation, warranty, agreement or undertaking by or on behalf of any Loan Party by the Borrower Agent shall be deemed for all purposes to have been made by such Loan Party and shall be binding upon and enforceable against such Loan Party to the same extent as if made directly by such Loan Party.

(iv)         The Borrower Agent hereby accepts the appointment by each Loan Party hereunder to act as its agent and attorney-in-fact.

(v)           The Agent shall be entitled to rely upon, and shall be fully protected in relying upon, any notice or communication (including any notice of borrowing) delivered by Borrower Agent on behalf of any Borrower or other Loan Party.  The Agent may give any notice to or communication with a Borrower or other Loan Party hereunder to Borrower Agent on behalf of such Borrower or Loan Party.  The Agent shall have the right, in its discretion, to deal exclusively with Borrower Agent for any or all purposes under the Loan Documents.  Each Borrower and each other Loan Party agrees that any notice, election, communication, representation, agreement or undertaking made on its behalf by Borrower Agent shall be binding upon and enforceable against it.

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01           Taxes.

		(a)	Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes.

 

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(i)              Any and all payments by or on account of any obligation of the Loan Parties hereunder or under any other Loan Document shall to the extent permitted by applicable Laws be made free and clear of and without reduction or withholding for any Taxes.  If, however, applicable Laws require the Loan Parties to withhold or deduct any Tax, such Tax shall be withheld or deducted in accordance with such Laws as determined by the Borrower Agent or the Agent, as the case may be, upon the basis of the information and documentation to be delivered pursuant to subsection (d) below.

(ii)             If any Loan Party shall be required by the Code or other applicable Laws to withhold or deduct any Taxes, including both United States Federal backup withholding and withholding taxes, from any payment, then (A) the Borrowers shall withhold or make such deductions as are determined by the Agent to be required based upon the information and documentation it has received pursuant to subsection (d) below, (B) the Borrowers shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Code or other applicable Laws, as the case may be, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable by the Loan Parties shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.

(b)          Payment of Other Taxes by the Borrowers.  Without limiting the provisions of subsection (a) above, the Loan Parties shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable Law.

(c)           Tax Indemnification by the Borrowers.  Without limiting the provisions of subsection (a) or (b) above, each Loan Party shall, and does hereby, indemnify the Agent ,and shall make payment in respect thereof within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 3.01) withheld or deducted by the Loan Parties or the Agent (or the applicable Recipient) or paid by the Agent (or the applicable Recipient), as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.

(d)           Evidence of Payments.  Upon request by the Borrower Agent or the Agent (or the applicable Recipient), as the case may be, after any payment of Taxes by the Loan Parties or by the Agent (or the applicable Recipient) to a Governmental Authority as provided in this Section 3.01, the Borrower Agent shall deliver to the Agent (or the applicable Recipient) or the Agent shall deliver to the Borrower Agent, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by Laws to report such payment or other evidence of such payment reasonably satisfactory to the Borrower Agent or the Agent (or the applicable Recipient), as the case may be.

(e)           Status of Lenders.  (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrowers and the Borrower Agent, at the time or times reasonably requested by the Borrowers or the Borrower Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Borrower Agent as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if reasonably requested by the Borrowers or the Borrower Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrowers or the Borrower Agent as will enable the Borrowers or the Borrower Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 3.01(e) (ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Agent’s (or the applicable Recipient’s) reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

 

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(ii)           Without limiting the generality of the foregoing, in the event that any Borrower is a U.S. Borrower,

(A)         any Lender that is a U.S. Person shall deliver to the Borrowers and the Borrower Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrowers or the Borrower Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

(B)          any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrowers and the Borrower Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrowers or the Borrower Agent), whichever of the following is applicable:

(I)          in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W‐8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W‐8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(II)        executed originals of IRS Form W‐8ECI;

(III)       in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit E‐1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of any Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form W‐8BEN; or

(IV)       to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W‐8IMY, accompanied by IRS Form W‐8ECI, IRS Form W‐8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit E‐2 or Exhibit E‐3, IRS Form W‐9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit E‐4 on behalf of each such direct and indirect partner;

 

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(C)              any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrowers and the Borrower Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrowers or the Borrower Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrowers or the Borrower Agent to determine the withholding or deduction required to be made; and

(D)              if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable) such Lender shall deliver to the Borrowers and the Borrower Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrowers or the Borrower Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) any such additional documentation reasonably requested by the Borrowers or the Borrower Agent as may be necessary for the Borrowers and the Borrower Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for the purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(f)            Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrowers and the Borrower Agent in writing of its legal inability to do so.

(g)         Treatment of Certain Refunds.  If the Agent (or the applicable Recipient) determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by any Loan Party or with respect to which any Loan Party has paid additional amounts pursuant to this Section 3.01, it shall pay to such Loan Party an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by any Loan Party under this Section 3.01 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses incurred by the Agent (or the applicable Recipient), and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that each Loan Party, upon the request of the Agent (or the applicable Recipient), agrees to repay the amount paid over to any Loan Party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Agent (or the applicable Recipient) in the event the Agent (or the applicable Recipient) is required to repay such refund to such Governmental Authority.  This subsection shall not be construed to require the Agent (or the applicable Recipient) to make available its tax returns (or any other information relating to its taxes that it deems confidential) to any Loan Party or any other Person.

3.02             [Reserved].

 

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3.03              [Reserved].

3.04              Increased Costs; Reserves on LIBOR (One Month) Rate Loans.

(a)           Increased Costs Generally.  If any Change in Law shall:

(i)            impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, the Agent or any Lender (except any reserve requirement contemplated by Section 3.04(e));

(ii)           subject the Agent or any Lender to any tax of any kind whatsoever with respect to this Agreement  or any LIBOR (One Month) Rate Loan made by it, or change the basis of taxation of payments to the Agent or any Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by the Agent or any Lender); or

(iii)         impose on the Agent or any Lender or the London interbank market any other condition, cost or expense affecting this Agreement or LIBOR (One Month) Rate Loans made by the Agent or participation therein;

and the result of any of the foregoing shall be to increase the cost to the Agent or any Lender of making or maintaining any Loan the interest on which is determined by reference to the LIBOR (One Month) Rate (or of maintaining its obligation to make any such Loan), or to increase the cost to the Agent or any Lender of participating in, or to reduce the amount of any sum received or receivable by the Agent or any Lender hereunder (whether of principal, interest or any other amount) then, upon request of the Agent or any Lender, the Loan Parties will pay to the Agent or any Lender, as the case may be, such additional amount or amounts as will compensate the Agent or any Lender, as the case may be, for such additional costs incurred or reduction suffered.

(b)          Capital Requirements.  If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time pursuant to subsection (c) below the Loan Parties will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

(c)           Certificates for Reimbursement.  A certificate of each Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section 3.04 and delivered to the Borrower Agent shall be conclusive absent manifest error.  The Loan Parties shall pay the Agent the amount shown as due on any such certificate within 10 Business Days after receipt thereof.

(d)           Delay in Requests.  Failure or delay on the part of the Agent to demand, on behalf of the Lenders, compensation pursuant to the foregoing provisions of this Section 3.04 shall not constitute a waiver of the Agent’s or any Lender’s right to demand such compensation, provided that the Loan Parties shall not be required to compensate the Agent or any Lender pursuant to the foregoing provisions of this Section 3.04 for any increased costs incurred or reductions suffered more than nine months prior to the date that the Agent, on behalf of the Lenders, notifies the Loan Parties of the Change in Law giving rise to such increased costs or reductions and of the Agent’s or any Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine‐month period referred to above shall be extended to include the period of retroactive effect thereof).

 

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(e)           Reserves on LIBOR (One Month) Rate Loans.  The Borrowers shall pay to the Agent, for the ratable benefit of the Lenders, as long as the Agent or any Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency Liabilities”), additional interest on the unpaid principal amount of each LIBOR (One Month) Rate Loan equal to the actual costs of such reserves allocated to such Loan by the Agent (as determined by the Agent in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Borrower Agent shall have received at least ten (10) days’ prior notice of such additional interest from the Agent.  If the Agent fails to give notice ten (10) days prior to the relevant Interest date, such additional interest shall be due and payable ten (10) days from receipt of such notice.

3.05             [Reserved].

3.06             [Reserved].

3.07             Certificate of Lender.  If any Lender claims reimbursement or compensation pursuant to this Article III, the Agent, on behalf of the Agent, shall deliver to the Borrowers a certificate setting forth in reasonable detail the amount payable to each Lender hereunder and the basis therefor.

3.08             Survival.  All of the Borrowers’ obligations under this Article III shall survive the occurrence of the Termination Date.

ARTICLE IV

SECURITY AND ADMINISTRATION OF COLLATERAL

4.01              Security Interest in Collateral.  To secure the prompt payment and performance to the Credit Parties of the Obligations, each Loan Party hereby grants to the Agent, for the ratable benefit of the Credit Parties, a continuing Lien upon all of such Loan Party’s assets, including all of the following property and interests in property of such Loan Party (but, for the avoidance of doubt, expressly excluding the Excluded Assets and the Excluded Deposit Accounts), whether now owned or existing or hereafter created, acquired or arising and wheresoever located:

(a)           all Accounts;

(b)           all Goods, including, without limitation, all Equipment (including Rolling Stock), Fixtures and Inventory;

(c)           all Chattel Paper (whether tangible or electronic);

(d)           the Commercial Tort Claims specified on Schedule 4.01;

(e)           all Deposit Accounts, all cash, and all other property from time to time deposited therein or otherwise credited thereto and the monies and property in the possession or under the control of the Agent, on behalf of the Credit Parties, or any affiliate, representative, agent or correspondent of the Lender;

 

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(f)            all Documents

(g)           all General Intangibles (including, without limitation, all Payment Intangibles, Intellectual Property and Licenses);

(h)           all Instruments (including, without limitation, Promissory Notes);

(i)            all Investment Property;

(j)            all Letter‐of‐Credit Rights;

(k)            all Pledged Interests;

(l)            all Supporting Obligations;

(m)          the Centrex Acquisition Documents, Seller Undertakings and Payments;

(n)           all refunds for Taxes,

(o)           all other tangible and intangible personal property of such Loan Party (whether or not subject to the UCC or PPSA), including, without limitation, all bank and other accounts and all cash and all investments therein, all proceeds, products, offspring, accessions, rents, profits, income, benefits, substitutions and replacements of and to any of the property of such Loan Party described in the preceding clauses of this Section 4.01 hereof (including, without limitation, any Insurance Proceeds thereon and all causes of action, claims and warranties now or hereafter held by such Loan Party in respect of any of the items listed above), and all books, correspondence, files and other Records including, without limitation, all tapes, disks, cards, Software, data and computer programs in the possession or under the control of such Loan Party or any other Person from time to time acting for such Loan Party that at any time evidence or contain information relating to any of the property described in the preceding clauses of this Section 4.01 hereof or are otherwise necessary or helpful in the collection or realization thereof; and

(p)           all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of any and all of the foregoing Collateral;

(I)                  in each case howsoever such Loan Party’s interest therein may arise or appear (whether by ownership, security interest, claim or otherwise).

(II)                Notwithstanding anything herein to the contrary, for the avoidance of doubt, the term “Collateral” shall not include, and no Loan Party is pledging, nor granting a security interest hereunder in, any Excluded Assets and the Excluded Deposit Accounts.

4.02              Other Collateral.

(a)           Commercial Tort Claims.  The Loan Parties shall promptly notify the Agent in writing upon any Loan Party incurring or otherwise obtaining a Commercial Tort Claim after the Closing Date against any third party and, upon request of the Agent, promptly enter into an amendment to this Agreement and do such other acts or things deemed appropriate by the Agent to give the Agent, on behalf of the Credit Parties, a security interest in any such Commercial Tort Claim.  The Loan Parties represent and warrant that as of the date of this Agreement, to their knowledge, no Loan Party possesses any Commercial Tort Claims, except as disclosed on Schedule 4.01.

 

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(b)          Other Collateral.  The Loan Parties shall promptly notify the Agent in writing upon acquiring or otherwise obtaining any Collateral after the date hereof consisting of Deposit Accounts (other than Excluded Deposit Accounts), Investment Property, Letter of Credit Rights or Electronic Chattel Paper and, upon the request of the Agent, promptly execute such other documents, and do such other acts or things deemed appropriate by the Agent to deliver to the Agent control with respect to such Collateral; promptly notify the Agent in writing upon acquiring or otherwise obtaining any Collateral after the date hereof consisting of Documents or Instruments and, upon the request of the Lender, will promptly execute such other documents, and do such other acts or things deemed appropriate by the Agent to deliver to the Agent possession of such Documents (to the extent negotiable) and Instruments, and with respect to non-negotiable Documents, to have such non-negotiable Documents issued in the name of the Agent; and with respect to Collateral in the possession of a third party, other than Certificated Securities and Goods covered by a Document, obtain an acknowledgment from the third party that it is holding the Collateral for the benefit of the Agent.

(c)            Lien Perfection; Further Assurances.  The Loan Parties shall execute such UCC-1 or PPSA financing statements as are required by the UCC or the PPSA, as applicable and such other instruments, assignments or documents as are necessary to perfect the Agent’s Lien upon any of the Collateral and shall take such other action as may be required to perfect or to continue the perfection of the Agent’s Lien upon the Collateral, other than, in each case, Excluded Perfection Actions.  Unless prohibited by applicable law, each Loan Party hereby authorizes the Agent to execute and file any such financing statement, including financing statements that indicate the Collateral (a) as all assets of such Loan Party or words of similar effect, or (b) as being of an equal or lesser scope, or with greater or lesser detail, than as set forth in Section 4.01 on such Loan Party’s behalf.  Each Loan Party also hereby ratifies its authorization for the Agent to have filed in any jurisdiction any like financing statements or amendments thereto if filed prior to the date hereof.  At the Agent’s request, each Loan Party shall also promptly execute or cause to be executed and shall deliver to the Agent any and all documents, instruments and agreements deemed necessary by the Agent to give effect to or carry out the terms or intent of the Loan Documents, provided that no Loan Party shall be required to take any Excluded Perfection Action.

(d)           Investment Property and other Equity Interests.

(i)             Form of Pledged Interests.  At no time shall any Pledged Interests: (a) be held or maintained in the form of a security entitlement or credited to any securities account other than security entitlements credited to a securities account that is listed on Schedule 6.19 (as supplemented from time to time) and that is subject to the control of the Agent pursuant to Section 4.05; and (b) which constitute a “security” under Article 8 of any applicable UCC (or if applicable, the PPSA) be maintained in the form of uncertificated securities.  With respect to any Pledged Interests that are “securities” under Article 8 of the applicable UCC (or if applicable the PPSA), such Pledged Interests are, and shall at all times be, represented by the share certificates listed on Schedule 4.02 hereto (as supplemented from time to time), and such share certificates, with stock powers duly executed in blank by the applicable Loan Party, shall have been delivered to the Agent.

(ii)            Delivery of Certificates.  All certificates or instruments representing or evidencing any Pledged Interests shall be delivered to and held by or on behalf of the Agent pursuant hereto, shall be in suitable form for further transfer by delivery, and shall be accompanied by all necessary instruments of transfer or assignment, duly executed in blank.  The Pledged Interests consisting of Equity Interests pledged hereunder have been duly authorized and validly issued and are fully paid and non-assessable

 

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(iii)          Issuer Agreements. Upon request of the Agent, each Loan Party that is the issuer of any Pledged Interests shall and shall cause each other Person that is the issuer of any Pledged Interests to (a) acknowledge in writing the security interest and Lien of the Agent in such Collateral granted by the Loan Party owning such Pledged Interests, (b) agree in writing that, with respect to any such Pledged Interests, it will comply with the instructions originated by the Agent without further consent of any other Loan Party and (c) confirm and agree in writing that, with respect to any such Pledged Interests, it has not received notice of any other continuing Lien therein (other than the Lien in favor of the Agent hereunder) and will not comply with the instructions originated by any Person (other than the Agent) without further consent of the Agent.

 

(iv)          Distributions on Investment Property and other Equity Interests.  In the event that any cash dividend or cash distribution (a “Dividend”) is paid on any Pledged Interests of any Loan Party at a time when no Event of Default has occurred and is continuing, such Dividend may be paid directly to the applicable Loan Party.  If an Event of Default has occurred and is continuing, then, any such Dividend or payment shall be paid directly to the Agent for the benefit of the Credit Parties.

(v)          Voting Rights with respect to Equity Interests.  So long as no Event of Default has occurred and is continuing, Loan Parties shall be entitled to exercise any and all voting and other consensual rights pertaining to any of the Pledged Interests or any part thereof for any purpose not prohibited by the terms of this Agreement.  If an Event of Default shall have occurred and be continuing,  all rights of Loan Parties to exercise the voting and other consensual rights that it would otherwise be entitled to exercise shall, at the Agent’s option, be suspended, and all such rights shall, at the Agent’s option, thereupon become vested in the Agent for the benefit of the Credit Parties during the continuation of such Event of Default, and the Agent shall, at its option, thereupon have the sole right to exercise such voting and other consensual rights and during the continuation of such Event of Default and the Agent shall have the right to act with respect thereto as though it were the outright owner thereof.  After all Events of Default have been waived in accordance with the provisions hereof, and so long as the Obligations shall not have been accelerated, each Loan Party shall have the right to exercise the voting and other consensual rights and powers that it would have otherwise been entitled to pursuant to this Section 4.02(d)(v).

(vi)         Securities Accounts.  No Loan Party shall maintain any securities accounts with any securities intermediary that are not identified on Schedule 6.19 (as supplemented from time to time) and as to which such securities intermediary and such Loan Party have entered into a control agreement with the Agent in which such Loan Party irrevocably authorizes and directs such securities intermediary to dispose of such Collateral at the direction of the Agent and to comply with the instructions originated by the Agent without further consent of such Loan Party.  The Agent agrees with the Loan Parties that such instruction shall not be given by the Agent unless an Event of Default has occurred and is continuing.

(vii)       Organizational Documents.  With respect to each issuer of any Pledged Interests of each Loan Party, such Loan Party shall promptly deliver to the Agent (a) copies of the organizational documents of such issuer, together with all amendments thereto and any shareholder or similar agreement in respect of such Pledged Interests to which such Loan Party is a party and (b) at the request of the Agent, the consent of each other party to any such document or agreement to the pledge by such Loan Party of such Pledged Interests hereunder and to the transfer of such Pledged Interests to the Agent or its nominee at any time after the occurrence and during the continuance of an Event of Default.

 

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(e)           Lien on Realty.  The due and punctual payment and performance of the Loan Parties shall also be secured by the Lien created by the Mortgages upon all property of the Loan Parties described therein.  If any Loan Party shall acquire at any time or times hereafter any fee simple interest in other real property, such Loan Party agrees promptly at Agent’s option to execute and deliver to the Agent, as additional security and Collateral for the Obligations, Mortgages covering such real property.  The Mortgages shall be duly recorded (at Loan Parties’ expense) in each office where such recording is required to constitute a valid Lien on the real property covered thereby.  In respect of any Mortgage, Loan Parties shall deliver to the Agent, at Loan Parties’ expense, all Mortgage Related Documents as the Agent and its counsel may request relating to the real property subject to the Mortgages.

(f)           Centrex Acquisition Documents.  Each Borrower hereby irrevocably authorizes and empowers the Agent or its agent, in their sole discretion, to assert, either directly or on behalf of any Borrower and each other Loan Party, at any time after the occurrence of an Event of Default and during the continuance thereof, any claims any Borrower may from time to time have against any person or entity or any of their affiliates with respect to any and all of the Contract Rights or with respect to any and all payments or other obligations due from the Sellers or any of their affiliates to the Borrowers or any other Loan Party under or pursuant to the Centrex Acquisition Documents (“Payments”), and to receive and collect any damages, awards and other monies resulting therefrom and to apply the same on account of the Obligations.  After the occurrence of any Event of Default and during the continuance thereof, the Agent may provide notice to the Sellers or any of their affiliates under Centrex Acquisition Documents that all Payments shall be made to or at the direction of the Agent for so long as such Event of Default shall be continuing.  Following the delivery of any such notice, the Agent shall promptly notify the Sellers and their affiliates, as the case may be, under the Centrex Acquisition Documents upon the termination or waiver of any such Event of Default.  After the occurrence of any Event of Default and during the continuance thereof, each Borrower hereby irrevocably makes, constitutes and appoints the Agent (and all officers, employees, or agent designated by the Agent ) as such Borrower’s true and lawful attorney (and agent-in-fact) for the purpose of enabling the Agent or its agent to assert and collect such claims and to apply such monies in the manner set forth hereinabove, which appointment, being coupled with an interest, is irrevocable.  Each Borrower shall keep the Agent informed of all circumstances bearing upon any potential material claim under or with respect to the Centrex Acquisition Documents and the Seller Undertakings and such Borrower shall not, without the prior written consent of the Agent, (i) waive any of its rights or remedies under any Centrex Acquisition Document with respect to any of the Seller Undertakings in excess of $250,000.00 in the aggregate during any Fiscal Year, (ii) settle, compromise or offset any amount payable by the sellers to such Borrower under any Centrex Acquisition Document in excess of $250,000.00 in the aggregate during any Fiscal Year, or (iii) amend or otherwise modify any Centrex Acquisition Document in any manner which is materially adverse to the interests of the Agent.  Each Borrower shall and shall cause each other Loan Party to perform and observe all the material terms and conditions of each Centrex Acquisition Document to be performed by it, maintain each Centrex Acquisition Document in full force and effect, enforce each Centrex Acquisition Document in accordance with its terms and take all such action to such end as may from time to time be reasonably requested by the Borrower.  Anything herein to the contrary notwithstanding, (i) each applicable Borrower and other Loan Party shall remain liable under each Centrex Acquisition Document to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (ii) the exercise by the Agent of any of its rights hereunder shall not release any Borrower or any other Loan Party from any of its duties or obligations under any Centrex Acquisition Document and (iii) the Agent shall not have any obligation or liability under any Centrex Acquisition Document by reason of this Agreement, nor shall the Agent be obligated to perform any of the obligations or duties of any Borrower or other Loan Party thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. Each Borrower hereby irrevocably authorizes and empowers the Agent, in the Agent’s sole discretion, at any time after the occurrence and during the continuance of an Event of Default, to assert, either directly or on behalf of such Borrower or any other Loan Party, any claim such Borrower or other Loan Party may from time to time have against the Sellers under or with respect to the Centrex Acquisition Documents and to receive and collect any and all damages, awards and other monies resulting therefrom and to apply the same to the Obligations.  Each Borrower hereby irrevocably makes, constitutes and appoints Agent as its true and lawful attorney in fact for the purpose of enabling the Agent to assert and collect such claims and to apply such monies in the manner set forth above, which appointment, being coupled with an interest, is irrevocable.

 

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4.03             Collateral Administration.

(a)          Administration of Accounts.

(i)             Records and Schedules of Accounts.  Each Borrower shall keep accurate and complete records of its Accounts, including all payments and collections thereon.

(ii)           Taxes.  If an Account of any Borrower includes a charge for any Taxes, the Agent is authorized, in its discretion after the occurrence of an Event of Default and during the continuation thereof, to pay the amount thereof to the proper taxing authority for the account of such Borrower and to charge Borrowers therefor; provided, however, that the Agent shall not be liable for any Taxes that may be due from Borrowers or with respect to any Collateral.

(iii)         Account Verification.  After Payment in Full of the First Lien Priority Debt, if an Event of Default exists, the Agent shall have the right at any time, in the name of itself or any Lender, any designee of such Lender or any Borrower, to verify the validity, amount or any other matter relating to any Accounts of Borrowers by mail, telephone or otherwise.  Borrowers shall cooperate fully with the Agent in an effort to facilitate and promptly conclude any such verification process.

(iv)          Proceeds of Collateral.  Borrowers shall request in writing and otherwise take all necessary steps to ensure that all payments on Accounts or otherwise relating to Collateral are made directly to the Concentration Account (as defined in the First Lien Credit Agreement) (or a lockbox relating to the Concentration Account (as defined in the First Lien Credit Agreement) (or, after the Payment in Full of First Lien Priority Debt, in an account subject to a Control Agreement in favor of the Agent).  If any Borrower or Subsidiary receives cash or Payment Items with respect to any Collateral, it shall hold same in trust for the Agent and promptly (not later than the next Business Day) deposit same into the Concentration Account (as defined in the First Lien Credit Agreement).  Notwithstanding the foregoing, subject to Section 4.05(a), Accounts for which the Account Debtor is a Canadian entity shall be made directly to a Controlled Deposit Account or to the Concentration Account (as defined in the First Lien Credit Agreement) (or a lockbox relating to the Concentration Account (as defined in the First Lien Credit Agreement) (or, after the Payment in Full of First Lien Priority Debt, in an account subject to a Control Agreement).

(b)          Administration of Inventory.

(i)             Records and Reports of Inventory.  Each Borrower shall keep accurate and complete records of its Inventory, including costs and daily withdrawals and additions.  Each Borrower shall conduct a physical inventory at least once per calendar year (and on a more frequent basis if requested by the Agent when an Event of Default is continuing) and periodic cycle counts consistent with historical practices, and shall provide to the Agent a report based on each such inventory and count promptly upon completion thereof, together with such supporting information as the Agent may request.

 

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The Agent, in its reasonable discretion, if any Event of Default is continuing, may cause additional inventories (including physical counts) to be taken as the Agent determines (each, at the expense of the Loan Parties).  The Agent may participate in and observe each physical count.

(ii)           Returns of Inventory.  No Borrower shall return any Inventory to a supplier, vendor or other Person, whether for cash, credit or otherwise, unless (a) such return is in the Ordinary Course of Business; (b) no Event of Default exists or would result therefrom; (c) the Agent is promptly notified if the aggregate value of all Inventory returned in a particular calendar month exceeds $150,000; and (d) any payment received by a Borrower for a return is promptly remitted to the First Lien Lender, until Payment in Full of First Lien Priority Debt, for application to First Lien Priority Debt.

(iii)          Acquisition, Sale and Maintenance.  Each Borrower shall take all steps to assure that all Inventory is produced in accordance with applicable Law, including the FLSA.  No Borrower shall sell any Inventory on consignment or approval or any other basis under which the customer may return or require a Borrower to repurchase such Inventory.  The Borrowers shall use, store and maintain all Inventory with reasonable care and caution, in accordance with applicable standards of any insurance and in conformity with all applicable Laws, and shall make current rent payments (within applicable grace periods provided for in leases) at all locations where any Collateral is located.

(c)          Landlord, Processor and Storage Agreements.  Each Loan Party shall provide the Agent, upon request with copies of all agreements between any Loan Party or any of its Subsidiaries and any landlord, warehouseman, processor, bailee, distributor or consignee which owns or is the lessee of any premises at which any Collateral may, from time to time, be kept.  With respect to any lease (other than leases for sales offices), bailment, warehousing agreement, any processing agreement or similar agreement in any case entered into after the Closing Date, each Loan Party shall use commercially reasonable efforts to provide the Agent with a Lien Waiver with respect to such premises.

4.04              Further Assurances.

(a)           New Deposit Accounts and Securities Accounts.  Concurrently with or prior to the opening of a Deposit Account, Securities Account, commodities account, securities entitlement or commodity contract by any Loan Party after the Closing Date, other than any Excluded Deposit Account, such Loan Party shall deliver to the Agent a Control Agreement covering such Deposit Account, Securities Account, securities entitlement or commodity contract, duly executed by such Loan Party, the Agent, the First Lien Lender and the applicable Controlled Account Bank, securities intermediary or financial institution at which such account is maintained or with which such entitlement or contract is carried, as the case may be; provided, that prior to the Payment in Full of First Lien Priority Debt, the Loan Parties shall be required only to utilize commercially reasonable efforts to obtain a Control Agreement to which the First Lien Lender and the Agent both would be parties in respect of any such Deposit Account, Securities Account, securities entitlement or commodity contract opened after the Closing Date and if, after utilizing such commercially reasonable efforts, the Loan Parties shall have been unsuccessful in obtaining such a Control Agreement, then no such Control Agreement shall be required in respect thereof so long as the First Lien Lender continues to act as bailee and perfection agent for the benefit of the Agent in respect thereof as contemplated by the Intercreditor Agreement; it being agreed and understood that, from and after Payment in Full of First Lien Priority Debt, the Loan Parties shall be required to comply with the provisions of this clause (a) (without giving effect to this proviso).

 

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(b)          UCC and PPSA Authorization.  The Agent is hereby irrevocably authorized to execute (if necessary) and file or cause to be filed, with or if permitted by applicable law without the signature of any Borrower appearing thereon, all UCC and PPSA financing statements reflecting any Borrower as “debtor” and the Agent as “secured party,” and continuations thereof and amendments thereto, as the Agent reasonably deems necessary or advisable to give effect to the transactions contemplated hereby and by the other Loan Documents.

4.05             Cash Management.

(a)           Controlled Deposit Account.  On or prior to the Closing Date, the relevant Borrower shall enter into a Control Agreement with the Agent, the First Lien Lender and the relevant Controlled Account Bank with respect to each Deposit Account listed on Schedule 6.19 (other than Excluded Deposit Accounts), which shall include all lockboxes and related lockbox accounts used for the collection of Accounts.  Each Loan Party agrees that all invoices rendered and other requests made by any Loan Party for payment in respect of Accounts shall contain a written statement directing payment in respect of such Accounts to be paid to a Controlled Deposit Account in its name.  The Borrower Agent shall cause bank statements and/or other reports to be delivered to the Agent not less often than monthly, accurately setting forth all amounts deposited in each Deposit Account to ensure the proper transfer of funds as set forth above.  All remittances received by any Loan Party on account of Accounts, together with the proceeds of any other Collateral, shall be held as the Agent’s property, for the benefit of the Credit Parties, by such Loan Party as trustee of an express trust for the benefit of the Credit Parties and such Loan Party shall immediately deposit same in kind in a Controlled Deposit Account.  The Agent retains the right at all times after the occurrence and during the continuance of an Event of Default to notify Account Debtors that a Loan Party’s Accounts have been assigned to the Agent and to collect such Loan Party’s  Accounts directly in its own name, or in the name of the Agent’s agent, and to charge the collection costs and expenses, including reasonable attorneys’ fees, to the Loan Account.

4.06             Information Regarding Collateral.  Each Borrower represents, warrants and covenants that (a) the chief executive office of each Loan Party on the Closing Date is located at the address or addresses specified on Schedule 4.06, and (b) Schedule 4.06 contains a true and complete list of (i) the exact legal name, jurisdiction of formation, and address within the United States or Canada of each Loan Party and of each other Person that has effected any merger or consolidation with a Loan Party or contributed or transferred to a Loan Party any property constituting Collateral at any time since January 1, 2010, (excluding Persons making sales in the ordinary course of their businesses to a Loan Party of property constituting Inventory in the hands of such seller), (ii) the exact legal name, jurisdiction of formation, jurisdiction identification number, and each location of the chief executive office of each Loan Party at any time since January 1, 2010, (iii) each location within the United States or Canada in which material goods constituting Collateral are located as of the Closing Date (together with the name of each owner of the property located at such address if not the applicable Loan Party, a summary description of the relationship between the applicable Loan Party and such Person and the maximum approximate book or market value of the Collateral held or to be held at such location).  The Company shall not change, and shall not permit any other Loan Party to change, its name, jurisdiction of formation (whether by reincorporation, merger or otherwise), the location of its chief executive office or any location specified in clause (b)(iii) of the immediately preceding sentence, or use or permit any other Loan Party to use, any additional trade name, trademark or other trade style, except upon giving not less than thirty (30) days’ prior written notice to the Agent and taking or causing to be taken all such action at Borrowers’ or such other Loan Parties’ expense as may be reasonably requested by the Agent to perfect or maintain the perfection and priority of the Lien of the Agent in Collateral.  The parties acknowledge that, prior to the date of this Agreement, the Borrowers have given notice to the Agent and the Lenders of the intended Facility Relocation and that the Borrowers have terminated the lease for their chief executive office located at 303/333 Rock Industrial Park Drive, Bridgeton, Missouri, and no further notice is required with respect to the Facility Relocation under the terms of this Section 4.06.

 

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4.07              Releases.

(a)          The Agent shall, at the written request of the Borrower Agent and sole expense of the Loan Parties, release the following:

(i)             Any Collateral sold, transferred or otherwise disposed of in a Disposition permitted by this Agreement and the other Loan Documents (including pursuant to a waiver or consent), and Agent shall, within a reasonable period of time, execute and deliver to the Borrower Agent or the relevant Loan Party all releases or other documents reasonably necessary or desirable for the release of the Liens created hereby on such Collateral;

(ii)          A Borrower (other than the Company and CCP) from its Obligations if all of the Equity Interests of such Borrower are sold, transferred or otherwise disposed of in a Disposition permitted by this Agreement and the other Loan Documents (including pursuant to a waiver or consent); provided that the Borrower Agent shall have delivered to the Agent a written request at least ten (10) Business Days prior to the date for release, identifying the relevant Borrower and the terms of the sale or other disposition in reasonable detail, including the price thereof and any material expenses in connection therewith, together with a certification by the Borrower Agent stating that such transaction is in compliance with this Agreement and the other Loan Documents; and

(iii)         Any Collateral which the Agent or any Lender is required to release pursuant to the Intercreditor Agreement.

(b)          Upon Payment in Full on the Termination Date, the Collateral shall be released from the Liens created hereby, and all rights to the Collateral shall revert to the Borrowers.  At the request and sole expense of the Borrower Agent following Payment in Full, the Agent shall deliver to the Borrower Agent any Collateral held by the Agent hereunder, and execute and deliver to the Borrower Agent such documents as the Borrower Agent shall reasonably request in writing to evidence such termination and release of the Liens created hereby.

4.08         Intercreditor Agreement.  Agent, the Borrowers and First Lien Lender have entered into the Intercreditor Agreement. To the extent any provision of this Agreement conflicts with or is otherwise inconsistent with the Intercreditor Agreement, the Intercreditor Agreement shall govern and control.  Without limiting the generality of the foregoing, notwithstanding anything to the contrary in this Agreement or any other Loan Document, until the Payment in Full of First Lien Priority Debt, (a) any assignment, endorsement, delivery or transfer of Collateral hereunder to Agent shall be to First Lien Lender, (b) any delivery of any Collateral or any other item to Agent required hereunder shall be to First Lien Lender, (c) all items required to be delivered to Agent hereunder, including, without limitation, stock certificates and chattel paper, shall be delivered to First Lien Lender as contractual representative for purposes of perfection for the Agent and Lenders, (d) as and to the extent provided in the Intercreditor Agreement, all distributions, dividends or other property paid or payable with respect to any Collateral shall be paid to the First Lien Lender, and (e) notwithstanding anything herein to the contrary, all Liens created under this Agreement or any other Loan Document, and rights and remedies of the Agent (and the Lenders) in respect thereof, shall be subject to and limited by the terms of the Intercreditor Agreement (as among the First Lien Lender, the Agent and the Lenders).  Any provision of this Agreement or any other Loan Document to the contrary notwithstanding, prior to the Payment in Full of First Lien Priority Debt, no Loan Party shall be required to act or refrain from acting with respect to any Collateral if compliance by such Loan Party with such requirement would result in a breach of or constitute a default under the Intercreditor Agreement (provided, the foregoing shall not limit the deemed occurrence of, or ability of the Agent to declare, any Default or Event of Default hereunder due to such failure to act or refraining from acting, it being agreed and understood that the Intercreditor Agreement delineates the rights and powers, subject to the terms and conditions therein contained, of the First Lien Lender, the Agent and the Lenders, as among themselves).  If any Loan Party shall grant a security interest in or pledge any assets or undertake any actions to perfect or protect any Liens in connection with the Security Instruments, such Loan Party may simultaneously grant a security interest in and pledge such assets or undertake such actions with respect to such assets as necessary to comply with the provisions set forth in the Intercreditor Agreement and the First Lien Loan Documents, without further request or consent by the Agent or any other Credit Party.

 

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ARTICLE V

CONDITIONS PRECEDENT TO CREDIT EXTENSION

5.01             Conditions of Credit Extension.  The obligation of the Lenders to make the Credit Extension hereunder is subject to satisfaction of the following conditions precedent:

(a)           The Agent’s receipt of the following items, each properly executed by a Responsible Officer of the signing Loan Party, each dated as of the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Agent and its legal counsel:

(i)             executed counterparts of this Agreement and each of the Security Instruments;

(ii)           A Note executed by the Borrowers in favor of each Lender that requests a Note;

(iii)         such certificates of resolutions or other action, incumbency certificates (including specimen signatures), and/or other certificates of Responsible Officers or the Secretary or Assistant Secretary of each Loan Party as the Agent may reasonably require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party;

(iv)         such documents and certifications as the Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each Borrower is validly existing, in good standing and qualified to engage in business in its jurisdiction of organization and in any other jurisdiction in which the failure to be so qualified could reasonably be expected to have a Material Adverse Effect, including certified copies of each Loan Party’s Organization Documents, shareholders’ agreements, certificates of good standing and/or qualification to engage in business from each jurisdiction identified on Schedule 5.01 hereto;

(v)           favorable opinions of DLA Piper LLP (US), Barnes & Thornburg LLP and McMillan LLP, counsel to the Loan Parties, each addressed to the Agent and the Lenders and their successors and assigns and as to the matters concerning the Loan Parties and the Loan Documents as the Agent may reasonably request;

 

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(vi)         certificates of Responsible Officers of the Borrower Agent or the applicable Loan Parties either (A) identifying all consents, licenses and approvals required in connection with the execution, delivery and performance by each Borrower and the validity against each such Loan Party of the Loan Documents to which it is a party, and stating that such consents, licenses and approvals shall be in full force and effect, and attaching true and correct copies thereof or (B) stating that no such consents, licenses or approvals are so required;

(vii)        a certificate signed by a Responsible Officer of the Borrower Agent certifying that the conditions specified in Sections 5.01(d) and 5.01(e) have been satisfied;

 

(viii)      (A) audited financial statements of the Company and its Subsidiaries for each of the three Fiscal Years immediately preceding the Closing Date,  (B) unaudited interim financial statements for the Company and its Subsidiaries as of December 31, 2014, and (C) financial projections of the Company and its Subsidiaries for the next Fiscal Year;

(ix)          a certificate signed by the Chief Financial Officer or the Chief Accounting Officer of the Borrower Agent certifying that, after giving effect to the entering into of the Loan Documents and the consummation of all of the Transactions, the Borrowers, measured on a consolidated basis, are Solvent;

(x)           evidence that all insurance required to be maintained pursuant to the Loan Documents has been obtained and is in effect;

(xi)            [Reserved];

(xii)         [Reserved];

(xiii)       delivery of Uniform Commercial Code and/or PPSA financing statements, suitable in form and substance for filing in all places required by applicable law to perfect the Liens of the Agent and the Lenders under the Security Instruments as a second priority Lien as to items of Collateral in which a security interest may be perfected by the filing of financing statements, and such other documents and/or evidence of other actions (other than Excluded Perfection Actions) as may be reasonably necessary under applicable law to perfect the Liens of the Agent and the Lenders under such Security Instruments as a second priority Lien in and to such other Collateral as the Agent may require;

(xiv)       Uniform Commercial Code search results showing only those Liens as are acceptable to the Agent;

(xv)        evidence satisfactory to the Agent that the consummation (in compliance with all applicable laws and regulations, with the receipt of all material governmental, shareholder and third party consents and approvals relating thereto) of the Centrex Acquisition shall occur on the Closing Date;

(xvi)      copies of the Centrex Acquisition Documents, all certified as true and correct by the Borrower Agent; and

(xvii)     the items listed on the most recent Closing Checklist delivered to the Borrower Agent prior to the Closing Date.

(b)          Any fees required to be paid on or before the Closing Date shall have been paid.

 

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(c)          The Borrowers shall have paid all reasonable fees, charges and disbursements of counsel to the Agent and the Lenders to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such reasonable fees, charges and disbursements as shall constitute its reasonable estimate of such reasonable fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrowers and the Agent and the Lender).

(d)          The representations and warranties of the Loan Parties contained in Article VI,  any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein) on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein) as of such earlier date.

(e)           No Default shall have occurred and be continuing, or would result from such proposed Credit Extension or from the application of the proceeds thereof.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

To induce the Credit Parties to enter into this Agreement and to make Loans hereunder, each Loan Party represents and warrants to the Credit Parties that:

6.01             Existence, Qualification and Power.  Each Loan Party and each Subsidiary (a) is a corporation, partnership or limited liability company duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation, organization or formation, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business as is now being conducted and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party and to consummate the Transactions to which it is a party, and (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i), or (c), to the extent that failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

6.02              Authorization; No Contravention.  The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, and the consummation of the Transactions, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of the Organization Documents of any such Person; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under (i) any Contractual Obligation to which such Person is a party or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law.

6.03             Governmental Authorization; Other Consents.  No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with (a) the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document or the consummation of the Transactions, (b) the grant by any Loan Party of the Liens granted by it pursuant to the Security Instruments, (c) the perfection or maintenance of the Liens created under the Security Instruments (including the first (or, prior to the Payment in Full of First Lien Priority Debt, second) priority nature thereof) or (d) the exercise by each of the Agent and any Lender of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Security Instruments, other than the First Lien Lender in respect of First Lien Priority Debt.

 

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6.04             Binding Effect.  This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto.  This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, except (a) as rights to indemnification hereunder may be limited by applicable Law and (b) as the enforcement hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws relating to or affecting the rights and remedies of creditors or by general equitable principles.

6.05             Financial Statements; No Material Adverse Effect.

(a)          The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Company and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (iii) show all material Indebtedness and other liabilities, direct or contingent, of the Company and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.

(b)           The unaudited consolidated and consolidating balance sheet of the Company and its Subsidiaries dated as of December 31, 2014, and the related consolidated and consolidating statements of income or operations, shareholders’ equity and cash flows for the month then ended (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of the Company and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.

(c)          Since the date of the Audited Financial Statements there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

(d)          The Loan Parties, on a Consolidated basis, are Solvent.  No transfer of property has been or will be made by any Loan Party and no obligation has been or will be incurred by any Loan Party in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of any Loan Party.

6.06              Litigation.  There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of any Loan Party after due investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against any Loan Party or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document or any of the Transactions or (b) except as specifically disclosed in Schedule 6.06, either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect, and there has been no adverse change in the status, or financial effect on any Loan Party or any Subsidiary thereof, of the matters described on Schedule 6.06.

 

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6.07              No Default.  No Loan Party nor any Subsidiary is in default under or with respect to any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.  As of the Closing Date, no “Default” under the First Lien Loan Documents has occurred which is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document or any of the First Lien Loan Documents.

6.08              Ownership of Property; Liens.

(a)           Each Loan Party and each of its Subsidiaries has good record and marketable title in fee simple to or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Each Loan Party and each of its Subsidiaries has good and marketable title to, valid leasehold interests in, or valid licenses to use all personal property and assets material to the ordinary conduct of its business.

(b)           Schedule 6.08(b) (1) sets forth the address (including street address, county and state) of all Real Estate that is owned by the Loan Parties as of the Closing Date.  Each Loan Party and each of its Subsidiaries has good, marketable and insurable fee simple title to the real property owned by such Loan Party or such Subsidiary, free and clear of all Liens, other than Permitted Liens.  Schedule 6.08(b)(2) sets forth the address (including street address, county and state) of all material operating leases of the Loan Parties, together with a list of the lessor and its contact information with respect to each such lease as of the Closing Date.  Each of such leases is in full force and effect and the Loan Parties are not in default of any material terms thereof.

(c)           Schedule 8.01 sets forth a complete and accurate list of all Liens on the property or assets of each Loan Party and each of its Subsidiaries, showing as of the date hereof the lienholder thereof, the principal amount of the obligations secured thereby and the property or assets of such Loan Party or such Subsidiary subject thereto.  The property of each Loan Party and each of its Subsidiaries is subject to no Liens, other than Liens set forth on Schedule 8.01, and Permitted Liens.

6.09              Environmental Compliance.

(a)           Except as disclosed in Schedule 6.09, no Loan Party or any Subsidiary thereof (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law with respect to the Loan Party or any Subsidiary’s operations, (ii) has become subject to a pending claim with respect to any Environmental Liability or (iii) has received written notice of any claim with respect to any Environmental Liability except, in each case, as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(b)           Except as otherwise set forth in Schedule 6.09 or as would not individually or in the aggregate reasonably be expected to result in a Material Adverse Effect, (i) none of the properties currently owned or operated by any Loan Party or any Subsidiary thereof is listed or, to the knowledge of the Loan Parties, proposed for listing on the NPL or on the CERCLIS or any analogous foreign, state or local list or is adjacent to any such property; (ii) there are no and, to the knowledge of the Loan Parties, never have been any underground or above-ground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed on any property currently owned or operated by any Loan Party or any Subsidiary thereof; (iii) to the knowledge of the Loan Parties, there is no asbestos or asbestos-containing material on any property currently owned or operated by any Loan Party or Subsidiary thereof; and (iv) Hazardous Materials have not been released, discharged or disposed of by any Loan Party or Subsidiary in violation of Environmental Laws or, to the knowledge of the Loan Parties, by any other Person in violation of Environmental Laws on any property currently owned or operated by any Loan Party or any Subsidiary thereof, which could reasonably be expected to result in a Material Adverse Effect.

 

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(c)           Except as otherwise set forth on Schedule 6.09 or as would not individually or in the aggregate reasonably be expected to result in a Material Adverse Effect, no Loan Party or any Subsidiary thereof is undertaking, and no Loan Party or any Subsidiary thereof has completed, either individually or together with other potentially responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of any Governmental Authority or the requirements of any Environmental Law; and all Hazardous Materials generated, used, treated, handled or stored by any Loan Party or any Subsidiary at, or transported to or from by or on behalf of any Loan Party or any Subsidiary, any property currently owned or operated by any Loan Party or any Subsidiary thereof have, to the knowledge of the Loan Parties, been disposed of in a manner not reasonably expected to result in material liability to any Loan Party or any Subsidiary thereof.

(d)           Each Loan Party conducts in the Ordinary Course of Business a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties, and as a result thereof each Loan Party has reasonably concluded that, except as set forth on Schedule 6.09, such Environmental Laws and claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

6.10              Insurance.  The properties of the Loan Parties and their Subsidiaries are insured with financially sound and reputable insurance companies which are not Affiliates of the Loan Parties, in such amounts, with such deductibles and covering such risks (including, without limitation, workmen’s compensation, public liability, business interruption and property damage insurance) as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Loan Parties or the applicable Subsidiary operates.  Schedule 6.10 sets forth a description of all insurance maintained by or on behalf of the Loan Parties as of the Closing Date.  Each insurance policy listed on Schedule 6.10 is in full force and effect and all premiums in respect thereof that are due and payable have been paid.

6.11              Taxes.  Each Loan Party and its Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being Properly Contested and except where the failure to file such returns or reports could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  There is no proposed tax assessment against the Company or any Subsidiary that would, if made, have a Material Adverse Effect.  Neither the Company nor any Subsidiary thereof is party to any tax sharing agreement other than the Tax Sharing Agreement.

6.12             ERISA Compliance.

(a)           Each Plan is in compliance with the applicable provisions of ERISA, the Code and other Federal or state Laws, except for any noncompliance that would not reasonably be expected to have a Material Adverse Effect.  Each Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service, or the Plan is covered by an opinion or advisory letter issued by the Internal Revenue Service.  To the best knowledge of each Loan Party, nothing has occurred that would prevent or cause the loss of such tax-qualified status.

 

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(b)         There are no pending or, to the knowledge of any Loan Party, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect.  There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.

(c)          Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect: (i) no ERISA Event has occurred, and no Loan Party nor any ERISA Affiliate is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan; (ii) each Loan Party and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) as of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and no Loan Party nor any ERISA Affiliate knows of any facts or circumstances that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date; (iv) no Loan Party has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (v) no Loan Party has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan.

(d)          No Loan Party maintains or contributes to, or has any unsatisfied obligation to contribute to, or liability under, any active or terminated Pension Plan other than (A) on the Closing Date, those listed on Schedule 6.12(d) hereto and (B) thereafter, Pension Plans not otherwise prohibited by this Agreement.

(e)          With respect to each scheme or arrangement mandated by a government other than the United States (a “Foreign Government Scheme or Arrangement”) and with respect to each employee benefit plan maintained or contributed to by any Loan Party or any Subsidiary of any Loan Party that is not subject to United States law (a “Foreign Plan”), except as would not reasonably be expected to have a Material Adverse Effect:

(i)             any employer and employee contributions required by law or by the terms of any Foreign Government Scheme or Arrangement or any Foreign Plan have been made, or, if applicable, accrued, in accordance with normal accounting practices;

(ii)          the fair market value of the assets of each funded Foreign Plan, the liability of each insurer for any Foreign Plan funded through insurance or the book reserve established for any Foreign Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations, as of the Closing Date, with respect to all current and former participants in such Foreign Plan according to the actuarial assumptions and valuations most recently used to account for such obligations in accordance with applicable generally accepted accounting principles;

 

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(iii)          each Foreign Plan required to be registered has been registered and has been maintained in good standing with applicable regulatory authorities; and

(iv)         no Borrower or other Loan Party currently contributes to or is obligated to contribute to a Foreign Plan.

6.13            Subsidiaries; Equity Interests.  No Loan Party (a) has any Subsidiaries other than those specifically disclosed in part (a) of Schedule 6.13 (which Schedule sets forth the legal name, jurisdiction of incorporation or formation and authorized Equity Interests of each such Subsidiary) or created or acquired in compliance with Section 7.13 and (b) has any equity investments in any other corporation or entity other than those specifically disclosed on part (b) of Schedule 6.13 or made after the Closing Date in compliance with this Agreement and the other Loan Documents.  Each Inactive Subsidiary is designated as such on Schedule 6.13. All of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by a Loan Party (or a Subsidiary of a Loan Party) in the amounts specified on Part (a) of Schedule 6.13 free and clear of all Liens except for those created under the Security Instruments or other Liens in favor or the Lender.  All of the outstanding Equity Interests in the Loan Parties have been validly issued, and are fully paid and non-assessable and are owned in the amounts specified on part (c) of Schedule 6.13 free and clear of all Liens except for those created under the Security Instruments.

6.14             Margin Regulations; Investment Company Act.  No Loan Party is engaged nor will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.  None of the Loan Parties, any Person Controlling any Loan Party, nor any Subsidiary is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

6.15             Disclosure.  Each Loan Party has disclosed or caused the Borrower Agent to disclose to the Agent all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party or any Subsidiary to the Agent or any other Credit Party in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, each Loan Party represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time (it being acknowledged and agreed by the Agent that projections as to future events are not to be viewed as facts and are not guarantees of financial performance and that the actual results during the period or periods covered by such projections may differ from the projected results and such differences may be material).

6.16             Compliance with Laws.  Each Loan Party and each Subsidiary is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

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6.17             Intellectual Property; Licenses, Etc.  Each Loan Party and its Subsidiaries own, or possess the right to use, all of the Intellectual Property (including IP Rights) that are reasonably necessary for the operation of their respective businesses, without known conflict with the IP Rights of any other Person, except to the extent any failure so to own or possess the right to use could not reasonably be expected to have a Material Adverse Effect.  To the knowledge of each Loan Party, the operation by each Loan Party and its Subsidiaries of their respective businesses does not infringe upon any IP Rights held by any other Person.

6.18             Labor Matters.  Except as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect or as set forth on Schedule 6.18, there are no strikes, lockouts, slowdowns or other material labor disputes against any Loan Party or any Subsidiary thereof pending or, to the knowledge of any Loan Party, threatened.  The hours worked by and payments made to employees of the Loan Parties comply with the Fair Labor Standards Act and any other applicable federal, state, local or foreign Law dealing with such matters in all material respects.  No Loan Party or any of its Subsidiaries has incurred any liability or obligation under the Worker Adjustment and Retraining Act or similar state Law.  All payments due from any Loan Party and its Subsidiaries, or for which any claim may be made against any Loan Party, on account of wages and employee health and welfare insurance and other benefits, have been paid or properly accrued in all material respects in accordance with GAAP as a liability on the books of such Loan Party.  Except as set forth on Schedule 6.18 or otherwise disclosed to the Agent in writing from time to time, no Loan Party or any Subsidiary is a party to or bound by any collective bargaining agreement, management agreement, employment agreement with a senior executive in excess of $200,000 in aggregate annual compensation, or bonus arrangement with a senior executive in excess of $200,000 in the aggregate, and, as of the Closing Date, no Loan Party or any Subsidiary is a party to or bound by any restricted stock, stock option, or stock appreciation plan or agreement or any similar plan, agreement or arrangement.  There are no representation proceedings pending or, to any Loan Party’s knowledge, threatened to be filed with the National Labor Relations Board, and no labor organization or group of employees of any Loan Party or any Subsidiary has made a pending demand for recognition, except as could not reasonably be expected to result in a Material Adverse Effect.  There are no complaints, unfair labor practice charges, grievances, arbitrations, unfair employment practices charges or any other claims or complaints against any Loan Party or any Subsidiary pending or, to the knowledge of any Loan Party, threatened to be filed with any Governmental Authority or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment of any employee of any Loan Party or any of its Subsidiaries, except as could not reasonably be expected to result in a Material Adverse Effect.  The consummation of the transactions contemplated by the Loan Documents will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which any Loan Party or any of its Subsidiaries is bound.

6.19             Deposit Accounts and Securities Accounts.

(a)          Part (a) of Schedule 6.19 sets forth a list of all Deposit Accounts maintained by the Loan Parties as of the Closing Date, which Schedule includes, with respect to each Deposit Account (i) the name and address of the depository; (ii) the account number(s) maintained with such depository; and (iii) a contact person at such depository.

(b)          Part (b) of Schedule 6.19 sets forth a list of all Securities Accounts or securities entitlement or commodity contracts maintained by the Loan Parties as of the Closing Date, which Schedule includes (i) the name and address of the securities intermediary or institution holding such account or party to such contract; (ii) the account number(s) maintained with such securities intermediary or institution; and (iii) a contact person at such securities intermediary or institution.

 

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6.20             [Reserved].

6.21             Anti-Terrorism Laws and Foreign Asset Control Regulations.  Each Loan Party and its Subsidiaries is in compliance in all material respects with, and the advances of the Loans and use of the proceeds thereof will not violate, (a) the Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the “Trading With the Enemy Act”) or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) (the “Foreign Assets Control Regulations”) and any other enabling legislation or executive order relating thereto, thereto (which for the avoidance of doubt shall include, but shall not be limited to Executive Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive Order”)) and/or (b) the Uniting And Strengthening America by Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA Patriot Act of 2001).  Furthermore, none of the Borrowers or their Affiliates (a) is or will become a “blocked person” as described in the Executive Order, the Trading With the Enemy Act or the Foreign Assets Control Regulations or (b) knowingly engages or will engage in any dealings or transactions, or be otherwise associated, with any such “blocked person” or in any manner violative of any such order.  No part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977.

6.22            Brokers.  No broker or finder brought about the obtaining, making or closing of the Loans or transactions contemplated by the Loan Documents (except as disclosed in the Centrex Purchase Agreement and solely with respect to the Centrex Acquisition), and no Loan Party or Affiliate thereof has any obligation to any Person in respect of any finder’s or brokerage fees in connection therewith (except as disclosed in the Centrex Purchase Agreement and solely with respect to the Centrex Acquisition).

6.23             Customer and Trade Relations.  There exists no actual or, to the knowledge of any Loan Party, threatened, termination or cancellation of, or any modification or change in the business relationship of any Loan Party with any customers or suppliers which are, individually or in the aggregate, material to its operations, to the extent that such cancellation, modification or change could reasonably be expected to result in a Material Adverse Effect.

6.24             Material Contracts.  Schedule 6.24 sets forth all Material Contracts to which any Loan Party is a party or is bound as of the Closing Date.  The Loan Parties have delivered true, correct and complete copies of such Material Contracts to the Agent on or before the date hereof.

6.25           Casualty.  Neither the businesses nor the properties of any Loan Party or any of its Subsidiaries are affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other Casualty (whether or not covered by insurance) that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

6.26             Senior Indebtedness.  All Obligations including those to pay principal of and interest (including post-petition interest, whether or not allowed as a claim under bankruptcy or similar laws) on the Loans and other Obligations, and fees and expenses in connection therewith, constitute “Senior Indebtedness” or similar term relating to the Obligations and all such Obligations are entitled to the benefits of the subordination created by the Kohlberg Intercreditor Agreement or any other applicable Subordinated Indebtedness Document, as applicable.  Each Loan Party acknowledges that the Lenders are entering into this Agreement and are extending their Term Loan Commitments in reliance upon the subordination provisions of the Kohlberg Intercreditor Agreement.

 

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6.27              Centrex Acquisition.  As of the Closing Date, (i) each of the representations and warranties made by the Loan Parties in the Centrex Acquisition Documents is true and correct in all material respects, except to the extent that such representation and warranty relates to a specific date, in which case such representation shall be true and correct as of such earlier date, and (ii) to the knowledge of the Loan Parties, each of the representations and warranties made by a party, other than a Loan Party, to the Centrex Acquisition Documents is true and correct in all material respects, expect to the extent that such representation and warranty relates to a specific date, in which case such representation shall be true and correct as of such earlier date.  At the close of business on the Closing Date, the Centrex Acquisition shall have been consummated and completed in accordance with all applicable Laws.

6.28             Inactive Subsidiaries.  Each Subsidiary of the Company which is not a Loan Party is an Inactive Subsidiary.

ARTICLE VII

AFFIRMATIVE COVENANTS

So long as any Obligation hereunder shall remain unpaid or unsatisfied, each Loan Party shall, and shall cause each Subsidiary to:

7.01             Financial Statements.  Deliver to the Agent:

(a)           as soon as available, but in any event within ninety (90) days after the end of each Fiscal Year of the Company 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), a consolidated balance sheet of the Company and its Subsidiaries as at the end of such Fiscal Year, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by a report and opinion of a Registered Public Accounting Firm of nationally-recognized standing reasonably acceptable to the Agent (and Agent acknowledges that UHY LLP is an acceptable firm) (the “Auditor”), which report and opinion shall be prepared in accordance with audit standards of the Public Company Accounting Oversight Board and applicable Securities Laws and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit and shall include a certificate of the Auditor stating that in making the examination necessary with respect to such audit it has not become aware of any Default  in respect of any term, covenant, condition of Section 8.12 or, if any such Default shall exist, stating the nature and status of such event; provided that the Borrowers shall only be required to use reasonable efforts exercised in good faith to obtain such certificate;

(b)          Quarterly, as soon as available, but in any event within forty-five (45) days after the end of each Fiscal Quarter, unaudited consolidated balance sheets of the Company and its Subsidiaries as of the end of such quarter and the related statements of income and cash flow for such quarter and for the portion of the Fiscal Year then elapsed, on a consolidated basis for the Company and its Subsidiaries, setting forth in comparative form corresponding figures for the preceding Fiscal Year and certified by the chief financial officer of Borrower Agent as prepared in accordance with GAAP and fairly presenting the financial condition, results of operations, shareholders equity and cash flows for such month and period, subject to normal year-end adjustments consistent with historical practices and the absence of footnotes;

 

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(c)           Monthly, as soon as available, but in any event within thirty (30) days after the end of each Fiscal Month (other than for the months of March, June, September and December which shall be delivered in accordance with Section 7.01(b), unaudited consolidated balance sheets of the Company and its Subsidiaries as of the end of such month and the related statements of income and cash flow for such month and for the portion of the Fiscal Year then elapsed, on a consolidated basis for the Company and its Subsidiaries, setting forth in comparative form corresponding figures for the preceding Fiscal Year and certified by the chief financial officer of Borrower Agent as prepared in accordance with GAAP and fairly presenting the financial condition, results of operations, shareholders equity and cash flows for such month and period, subject to normal year-end adjustments consistent with historical practices and the absence of footnotes;

(d)          as soon as available but not later than thirty (30) days after the end of each Fiscal Year, annual financial projections of the Company and its Subsidiaries on a consolidated basis, in form reasonably satisfactory to the Agent, of (i) monthly consolidated balance sheets and statements of income or operations and cash flows and (ii) monthly Availability (as defined in the First Lien Credit Agreement) for Borrowers for the immediately following Fiscal Year.

  

7.02             Compliance Certificate; Other Information.  Deliver to the Agent, in form and detail reasonably satisfactory to the Agent:

(a)           on or before the Wednesday of each week from and after the date hereof, Borrower Agent shall deliver to the Agent a Borrowing Base Certificate (as defined in the First Lien Credit Agreement) as of the last day of the immediately preceding week, with such supporting materials as the First Lien Lender shall reasonably request (including weekly reporting of rolling forward accounts receivable data by reporting weekly sales, cash collections and credits and monthly reporting of gross inventory, inventory ineligibles and accounts receivable ineligibles).

(b)          on or before the twentieth (20th) day of each calendar month from and after the date hereof (or while a Default exists, more frequently upon the request of the Agent), Borrower Agent shall deliver to the Agent, (i) reconciliations of all Borrowers’ Accounts as shown on the month end Borrowing Base Certificate (as defined in the First Lien Credit Agreement) for the immediately preceding month to Borrowers’ accounts receivable agings, to Borrowers’ general ledger and to Borrowers’ most recent financial statements, (ii) accounts payable agings, (iii) accounts receivable agings, (iv) reconciliations of Borrowers’ Inventory (as defined in the First Lien Credit Agreement) as shown on Borrowers’ perpetual inventory, to Borrowers’ general ledger and to Borrowers’ financial statements and (v) Inventory status reports, all with supporting materials as the Agent shall reasonably request.

(c)           a Compliance Certificate executed by the chief financial officer of Borrower Agent which certifies compliance with Section 8.12 and provides a reasonably detailed calculation of the Fixed Charge Coverage Ratio delivered concurrently with delivery of financial statements under Sections 7.01(a), 7.01(b) and 7.01(c) above;

(d)          promptly after the same are available, copies of each annual report, proxy or financial statement sent to the stockholders of the Company, and copies of all annual, regular, periodic and special reports and registration statements which the Company may file or be required to file with the SEC under Section 13 or 15(d) of the Exchange Act, and not otherwise required to be delivered to the Agent pursuant hereto;

(e)           at the Agent’s request (but not more frequently than monthly unless a Default has occurred and is continuing), a listing of each Borrower’s trade payables, specifying the trade creditor and balance due, all in form reasonably satisfactory to the Agent;

 

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(f)            promptly, such additional information regarding the business, financial or corporate affairs of any Loan Party or any Subsidiary, or compliance with the terms of the Loan Documents, as the Agent may from time to time reasonably request;

(g)           concurrently with the furnishing thereof, any material notice, statement or report furnished to any holder of any of the First Lien Debt or to the First Lien Lender, which is not otherwise required to be delivered hereto (other than notices solely with respect to borrowings under the Revolving Loan Commitment, as defined in the First Lien Credit Agreement), but, including Borrowing Base Certificates (as defined in the First Lien Credit Agreement), supporting materials, reconciliations, agings and reports and appraisals; and

(h)                on or before April 30, 2015, a detailed, written plan in respect of the contemplated relocation of the Core Business from Bridgeton, Missouri to Jefferson City, Missouri (the “Facility Relocation”), as disclosed to the Agent prior to the Closing Date, which written plan shall (i) be reasonably acceptable to the Agent, (ii) include a detailed budget, including line items for material expenditures and incurrences, (iii) set forth any material legal requirements and notices necessary or appropriate for such relocation, and (iv) include projected milestones for each step and material action involved in respect of such relocation, including the engagement of consultants and hiring of reputable and bonded movers, anticipated dates of relocation and anticipated date of completion, and the Loan Parties shall promptly notify the Agent in writing of any variances or delays relative to such plan, budget (including cost overruns), timeline and milestones (and in the event of any such variance or delay, the Loan Parties shall keep the Agent reasonably apprised of developments and consult with the Agent).  At the written request of the Agent, the Loan Parties shall engage a consultant, reasonably satisfactory to the Agent, at the Loan Parties’ sole expense (including, without limitation, any monthly retainer fee required from the time such engagement begins through the completion of the Facility Relocation) to oversee the Facility Relocation, and the Loan Parties shall authorize and direct such consultant to discuss the engagement and Facility Relocation with the Agent from time to time.

7.03              Notices.  Promptly notify the Agent:

(a)           of the occurrence of any Default;

(b)           of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of any Loan Party or any Subsidiary or, to the knowledge of any Borrower, to the extent that any Responsible Officer is aware of such breach, non-performance or default, a breach or non-performance of, or default under, a Contractual Obligation to which any Loan Party or any Subsidiary is a party by the other party thereto; (ii) any dispute, litigation, investigation, proceeding or suspension between any Loan Party or any Subsidiary and any Governmental Authority; (iii) the commencement of, or any material development in, any litigation or proceeding affecting any Loan Party or any Subsidiary, including pursuant to any applicable Environmental Laws; (iv) the violation or receipt by any Loan Party or any Subsidiary of written assertion, to the extent a Responsible Officer is aware of such assertion, of violation of any applicable Law;

(c)           of the occurrence of any ERISA Event that could reasonably be expected to result in liability to any Loan Party of $250,000 or more;

(d)           the creation or acquisition of any Subsidiary;

(e)           of any material change in accounting policies or financial reporting practices by any Loan Party or any Subsidiary thereof;

 

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(f)            of any change in any Loan Party’s chief executive officer, president or chief financial officer;

(g)           of the discharge by any Loan Party of its present Auditors or any withdrawal or resignation by such Auditors;

(h)           of any collective bargaining agreement or other labor contract to which a Loan Party becomes a party, or the application for the certification of a collective bargaining agent;

(i)            of the filing of any Lien for unpaid Taxes against any Loan Party in excess of $25,000;

(j)            the receipt of any notice from a supplier, seller, or agent pursuant to either PACA or PASA with respect to any aggregate liability of $25,000 or more;

(k)           of any Event of Loss with respect to any material portion of the Collateral;

(l)            any facts or circumstances that could reasonably likely give rise to a Change of Control;

(m)          within two Business Days of receipt or sending, as applicable, copies of any notices (including notices of default or acceleration) received from any Subordinated Lender or the First Lien Lender or given by any Loan Party to any Subordinated Lender or the First Lien Lender;

(n)           within five Business Days following the date that any Inactive Subsidiary is no longer an Inactive Subsidiary;

(o)           of any failure by any Loan Party to pay rent at any of such Loan Party’s locations if such failure continues for more than fifteen (15) days following the day on which such rent first came due.

Each notice pursuant to this Section 7.03 shall be accompanied by a statement of a Responsible Officer of the Borrower Agent setting forth details of the occurrence referred to therein and stating what action the Borrowers have taken and proposes to take with respect thereto.  Each notice pursuant to Section 7.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

7.04             Payment of Obligations.  Pay and discharge as the same shall become due and payable (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being Properly Contested; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property, except to the extent that any such Lien would otherwise be permitted by Section 8.01 or the same are being Properly Contested; and (c) all Indebtedness having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $250,000 as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.

7.05             Preservation of Existence, Etc.  (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization or formation except in a transaction permitted by Section 8.04; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered Intellectual Property, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.

 

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7.06             Maintenance of Properties.  (a) Maintain, preserve and protect all of its properties (other than insignificant properties) and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities.

7.07              Maintenance of Insurance.

(a)           Except as provided in clause (b) below, maintain with (i) companies having an A.M. Best Rating of at least “A-” or (ii) financially sound and reputable insurance companies reasonably acceptable to the Agent and not Affiliates of the Loan Parties, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business and operating in the same or similar locations or as is required by applicable Law (including, without limitation, workmen’s compensation, public liability, business interruption and property damage insurance), of such types and in such amounts as are customarily carried under similar circumstances by such other Persons and as are reasonably acceptable to the Agent.

(b)           Maintain insurance against Casualty to the Real Estate under a policy or policies covering such risks as are presently included in “special form” (also known as “all risk”) coverage, including such risks as are ordinarily insured against by similar businesses, but in any event including fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, damage from aircraft, smoke, vandalism, and malicious mischief.  Unless otherwise agreed in writing by the Agent, such insurance shall be for the full insurable value of the Real Estate on a replacement cost basis, with a deductible amount, if any, reasonably satisfactory to the Agent.  The term “full insurable value” means one hundred percent (100%) of the actual replacement cost of the Real Estate, including tenant improvements (excluding excavation costs and costs of underground flues, pipes, drains and other uninsurable items).

(c)           Cause all Casualty policies, including fire and extended coverage policies, maintained with respect to any Collateral (including the Real Estate) to be endorsed or otherwise amended to include (i) a non-contributing mortgagee clause (regarding improvements to real property) and lenders’ loss payable clause (regarding personal property), in form and substance reasonably satisfactory to the Agent, which endorsements or amendments shall provide that the insurer shall pay all proceeds otherwise payable to the Loan Parties under the policies directly to the Agent, (ii) a provision to the effect that none of the Loan Parties, Credit Parties or any other Person shall be a co-insurer and (iii) such other provisions as the Agent may reasonably require from time to time to protect the interests of the Credit Parties.

(d)          Cause commercial general liability policies to be endorsed to name the Agent as an additional insured; and cause business interruption policies to name the Agent as a loss payee and to be endorsed or amended to include (i) a provision that, from and after the Closing Date, the insurer shall pay all proceeds otherwise payable to the Loan Parties under the policies directly to the Agent, (ii) a provision to the effect that none of the Loan Parties, the Agent or any other party shall be a co‐insurer and (iii) such other provisions as the Agent may reasonably require from time to time to protect the interests of the Credit Parties.

 

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(e)           Cause each such policy referred to in this Section 7.07 to also provide that it shall not be canceled, or not renewed (i) by reason of nonpayment of premium except upon not less than ten (10) days’ prior written notice thereof by the insurer to the Agent (giving the Agent the right to cure defaults in the payment of premiums) or (ii) for any other reason except upon not less than thirty (30) days’ prior written notice thereof by the insurer to the Agent.

(f)            Deliver to the Agent, prior to the cancellation, or non‐renewal of any such policy of insurance, a copy of a renewal or replacement policy or insurance certificate (or other evidence of renewal of a policy previously delivered to the Agent, including an insurance binder) together with evidence reasonably satisfactory to the Agent of payment of the premium then due therefor.

(g)           Permit any representatives that are designated by the Agent to inspect the insurance policies maintained by or on behalf of the Loan Parties and to inspect books and records related thereto and any properties covered thereby.  The Loan Parties shall pay the reasonable and documented, out-of-pocket fees and expenses of any representatives retained by the Agent to conduct any such inspection; provide that the Borrowers shall only be obligated to pay such fees and expenses for one (1) such inspection during any twelve (12) month period (unless an Event of Default has occurred and is continuing).

(h)           None of the Credit Parties, or their agents or employees shall be liable for any loss or damage insured by the insurance policies required to be maintained under this Section 7.07.  Each Loan Party shall look solely to its insurance companies or any other parties other than the Credit Parties for the recovery of such loss or damage and such insurance companies shall have no rights of subrogation against any Credit Party or its agents or employees.  If, however, the insurance policies do not provide waiver of subrogation rights against such parties, as required above, then the Loan Parties hereby agree, to the extent permitted by law, to waive their right of recovery, if any, against the Credit Parties and their agents and employees.  The designation of any form, type or amount of insurance coverage by the any Credit Party under this Section 7.07 shall in no event be deemed a representation, warranty or advice by such Credit Party that such insurance is adequate for the purposes of the business of the Loan Parties or the protection of their properties.

(i)            The Agent is authorized, at its sole and absolute option, to commence, appear in and prosecute, in its own or any Borrower’s name, any action or proceeding relating to any Event of Loss, and to make proof of loss for and to settle or compromise any claim in connection therewith.  In such case, subject to the Intercreditor Agreement, the Agent shall have the right to receive all Condemnation Awards and Insurance Proceeds, and may deduct therefrom any and all of its expenses incurred at any time incurred in connection therewith.  However, so long as no Event of Default has occurred and is continuing and the Borrowers are diligently pursuing their rights and remedies with respect to any claim arising from such Event of Loss, the Agent will obtain the Borrower Agent’s written consent (which consent shall not be unreasonably withheld or delayed) before making proof of loss for or settling or compromising such claim.  Each Borrower agrees to diligently assert its rights and remedies with respect to each such claim and to promptly pursue the settlement and compromise of each such claim subject to the Agent’s approval, which approval shall not be unreasonably withheld or delayed.  If, prior to the receipt by the Agent of any Condemnation Award or Insurance Proceeds, any Real Estate shall have been sold pursuant to the provisions of a Mortgage, the Agent shall have the right to receive such funds.  If any Condemnation Awards or Insurance Proceeds are paid to a Borrower, that Borrower shall receive the same in trust for the Agent.  Subject to the Intercreditor Agreement, within five (5) days after Borrower’s receipt of any Condemnation Awards or Insurance Proceeds, such Borrower shall deliver such awards or proceeds to the Agent in the form in which they were received, together with any endorsements or documents that may be necessary to effectively negotiate or transfer the same to the Agent.  Each Borrower agrees to execute and deliver from time to time, upon the request of the Agent, such further instruments or documents as may be requested by the Agent to confirm the grant and assignment to Agent of any Condemnation Awards or Insurance Proceeds.

 

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7.08             Utilization of Net Proceeds.

(a)           Net Cash Proceeds arising from any Event of Loss with respect to any Real Estate must be utilized either for payment of the Obligations or for the restoration of such Real Estate.  Net Cash Proceeds may be utilized for the restoration of such Real Estate only if no Default shall exist and only if in the reasonable judgment of the Agent (i) there has been no material adverse change in the financial viability of the improvements on such Real Estate, (ii) the Net Cash Proceeds, together with other funds deposited with the Agent for that purpose, are sufficient to pay the cost of the restoration pursuant to a budget and plans and specifications approved by the Agent, (iii) the restoration can be completed prior to the Maturity Date and prior to the date required by any purchase and sale agreement or by any Lease, and (iv) following restoration, such Real Estate will have a fair market value at least equal to its fair market value immediately prior to the Event of Loss.  Otherwise, Net Cash Proceeds shall be utilized for payment of the Obligations in such order and in such proportions as determined by the Agent in its sole discretion.

(b)           If Net Cash Proceeds are to be utilized for the restoration of such Real Estate, (i) the Borrowers shall, at their sole cost and expense, promptly commence and diligently and continuously perform to completion the restoration in a good and workmanlike manner and in compliance with all Laws and the requirements of the Permitted Liens, whether or not the Borrowers shall have satisfied the requirements of this Section 7.08 in order to cause the Net Cash Proceeds to be made available for such restoration and whether or not such insurance proceeds on account of the Casualty shall be sufficient for such purpose, and (ii) the Net Cash Proceeds, together with any other funds deposited with the Agent for that purpose, must be deposited in an account maintained by the First Lien Lender that is subject to a Control Agreement or, upon Payment in Full of First Lien Priority Debt, in an account maintained by the Agent that is subject to a Control Agreement, solely for the purposes described in this Section 7.08 (“Borrower’s Deposit Account”), which shall be a non-interest-bearing account.  Subject to the terms of Section 4.08 and this Section 7.08, the Agent shall have the exclusive right to manage and control all funds in the Borrower’s Deposit Account, but the Agent shall have no fiduciary duty with respect to such funds.  Prior to the advance by the Agent of any funds so deposited and the commencement of such restoration, the Borrowers shall take all steps necessary to avoid the imposition of any mechanics’ liens on the Real Estate or the improvements thereon.  Thereafter, the Agent will advance the deposited funds from time to time to the Borrowers for the payment of costs of restoration of the Real Estate upon presentation of evidence by the Borrowers acceptable to the Agent that such portion of the restoration has been completed satisfactorily and Lien-free.  If at any time the Agent reasonably determines that there is a deficiency in the funds available in the Borrower’s Deposit Account to complete the restoration as contemplated, then the Borrowers shall promptly deposit in the Borrower’s Deposit Account additional funds equal to the amount of the deficiency.  Any account fees and charges may be deducted from the balance, if any, in the Borrower’s Deposit Account.

(c)           Each Borrower grants to Agent, on behalf of the Credit Parties, a security interest in the Borrower’s Deposit Account and all funds hereafter deposited to such deposit account, and any proceeds thereof, as security for the Obligations.  Such security interest shall be governed by the UCC, and the Agent shall have available to it all of the rights and remedies available to a secured party thereunder.  The Borrower’s Deposit Account may be established and held in such name or names as the Agent shall deem appropriate, including in the name of the Agent.  Each Borrower hereby constitutes and appoints the Agent and any officer or agent of the Agent its true and lawful attorneys-in-fact with full power of substitution to open the Borrower’s Deposit Account and to do any and every act that Borrower might do on its own behalf to fulfill the terms of this Section 7.08; provided, however, the Agent shall not exercise such power (other than the power to open the Borrower’s Deposit Account) unless an Event of Default has occurred and is continuing.  To the extent permitted by Law, each Borrower hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof.  It is understood and agreed that this power of attorney, which shall be deemed to be a power coupled with an interest, cannot be revoked.

 

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7.09             Compliance with Laws.  Comply in all material respects with the requirements of all Laws (including without limitation all applicable Environmental Laws) and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being Properly Contested; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

7.10             Books and Records.  (a)  Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP (subject to normal year-end adjustments consistent with historical practices) consistently applied shall be made of all financial transactions and matters involving the assets and business of the Loan Parties or such Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over any Loan Party or such Subsidiary, as the case may be.

7.11             Inspection Rights and Appraisals; Meetings with the Agent and Lenders.

(a)           Permit the Agent, at its expense except as provided in Sections 7.11(b), 7.11(c) or 7.11(d), on behalf of each of the Lenders, or its designees or representatives from time to time, subject to reasonable notice and normal business hours (except, in each case, when a Default exists), to conduct Field Exams, not to exceed two (2) Field Exams during any twelve (12) month period, excluding those initiated when a Default exists, and/or appraisals of Inventory (limited to one such appraisal during any twelve (12) month period, excluding those initiated when a Default exists) and to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its officers and Auditors; provided that representatives of the Borrower Agent shall be given the opportunity to participate in any discussions with the Auditors.  Neither the Agent nor the Lenders shall have any duty to any Loan Party to share any results of any Field Exam with any Loan Party.  Appraisals may be shared with the Borrower Agent upon request.  The Loan Parties acknowledge that all Field Exams, appraisals and reports are prepared by or for the Agent and/or the Lenders for their purposes, and Loan Parties shall not be entitled to rely upon them.

(b)           If a Field Exam is initiated during a Default, all charges, costs and expenses therefor shall be reimbursed by the Loan Parties.

(c)           If an Inventory appraisal is initiated during a Default, all charges, costs and expenses therefor shall be reimbursed by the Loan Parties.

(d)           If a Real Estate and Equipment appraisal is initiated by the Agent during a Default, all charges, costs and expenses therefor shall be reimbursed by the Loan Parties.

(e)           Without limiting the foregoing, the Loan Parties will participate and will cause their key management personnel to participate in meetings with the Agent and each Lender periodically during each year, which meetings shall be held at such times and such places as may be reasonably requested by the Agent.

7.12             Use of Proceeds.  Use the proceeds of the Credit Extensions (i) to finance a portion of the Centrex Acquisition, (ii) to pay costs, fees and expenses in connection with the Transactions, and (iii) for working capital, capital expenditures, and other general corporate purposes not in contravention of any Law or of any Loan Document, it being agreed and understood that all proceeds of the Term Loans received by the Company, if any, shall be contributed to CCP (including for purposes of consummating the Centrex Acquisition on the Closing Date) and the excess, if any, to other Subsidiaries of the Company that are Borrowers (provided, further, that any such proceeds received by FTW Holdings, Inc., a Delaware corporation, shall be contributed to Fort Wayne Plastics, Inc., an Indiana corporation).

 

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7.13             New Domestic Subsidiaries and Qualifying Foreign Subsidiaries.  As soon as practicable but in any event within 3 Business Days following the acquisition or creation of any Domestic Subsidiary or Qualifying Foreign Subsidiary cause to be delivered to the Agent each of the following, as applicable:

(a)           a joinder agreement acceptable to the Agent duly executed by such Domestic Subsidiary or Qualifying Foreign Subsidiary, together with executed counterparts of each other Loan Document reasonably requested by the Agent, including all Security Instruments and other documents reasonably requested to establish and preserve the Lien of the Agent, on behalf of the Lenders in all Collateral of such Domestic Subsidiary or Qualifying Foreign Subsidiary;

(b)           (i) Uniform Commercial Code financing statements naming such Person as “Debtor” and naming the Agent for the benefit of the Credit Parties as “Secured Party,” in form, substance and number sufficient in the reasonable opinion of the Agent and its special counsel to be filed in all Uniform Commercial Code filing offices and in all jurisdictions in which filing is necessary to perfect in favor of the Agent for the benefit of the Credit Parties the Lien on the Collateral conferred under such Security Instrument to the extent such Lien may be perfected by a Uniform Commercial Code or PPSA filing, and (ii) subject to Section 4.08 hereof, pledge agreements, control agreements, Documents and original collateral (including pledged Equity Interests, Securities and Instruments) and such other documents and agreements as may be reasonably required by the Agent, all as necessary to establish and maintain a valid, perfected security interest in all Collateral in which such Domestic Subsidiary or Qualifying Foreign Subsidiary has an interest consistent with the terms of the Loan Documents, provided that notwithstanding anything to the contrary in this Section 7.13, no Loan Party shall be required to take any Excluded Perfection Action or deliver any documents or agreements with respect to an Excluded Perfection Action;

(c)           upon the request of the Agent, an opinion of counsel to each such Domestic Subsidiary or Qualifying Foreign Subsidiary and addressed to the Agent, in form and substance reasonably acceptable to the Agent, each of which opinions may be in form and substance, including assumptions and qualifications contained therein, substantially similar to those opinions of counsel delivered pursuant to Section 5.01(a); and

(d)           current copies of the Organization Documents of each such Domestic Subsidiary or Qualifying Foreign Subsidiary, minutes of duly called and conducted meetings (or duly effected consent actions) of the Board of Directors, partners, or appropriate committees or governing bodies thereof (and, if required by such Organization Documents or applicable law, of the shareholders, members or partners) of such Person authorizing the actions and the execution and delivery of documents described in this Section 7.13, all certified by the applicable Governmental Authority or appropriate officer as the Agent may elect.

7.14             New Foreign Subsidiaries.  As soon as practicable but in any event within three (3) Business Days following the acquisition or creation of any first-tier Foreign Subsidiary of the Company or a Loan Party that is a Domestic Subsidiary (other than Qualifying Foreign Subsidiaries, which are addressed in Section 7.13) cause to be delivered to the Agent, subject to Section 4.08 hereof, a pledge of 65% of the Equity Interests of each such Foreign Subsidiary, provided that notwithstanding anything to the contrary in this Section 7.14, no Loan Party shall be required to take any Excluded Perfection Action or deliver any documents or agreements with respect to an Excluded Perfection Action.

 

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7.15             Compliance with ERISA.  Do, and cause the Loan Parties and each ERISA Affiliate to do, each of the following, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect:  (a) maintain each Plan and each Foreign Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other applicable Laws; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; (c) cause each Plan and each Foreign Plan to maintain any required approvals by any Governmental Authority regulating such Plan, (d) make all required contributions to any Plan subject to the Pension Funding Rules, and (e) make all required contributions and payments to any Foreign Plans.

7.16             Further Assurances.  At the Borrowers’ cost and expense, upon request of the Agent, duly execute and deliver or cause to be duly executed and delivered, to the Agent such further instruments, documents, certificates, financing and continuation statements, and do and cause to be done such further acts that may be reasonably necessary or advisable in the reasonable opinion of the Agent to carry out more effectively the provisions and purposes of this Agreement, the Security Instruments and the other Loan Document, provided, however, unless an Event of Default has occurred no Lien on the Equity Interests or assets of an Inactive Subsidiary shall be required to be granted to Agent; and provided further, if an Event of Default has occurred then at any time thereafter within five (5) days of the Agent’s request the Company shall cause a Lien on the Equity Interests and assets of each Inactive Subsidiary to be granted in favor of the Agent, on behalf of the Credit Parties.  Notwithstanding anything to the contrary contained in this Section 7.16, each Loan Party shall be required to grant a Lien to the Agent, for the benefit of the Credit Parties, in any real or personal property in which the First Lien Lender shall have been granted a Lien.

7.17             Licenses.  (a)  Keep in full force and effect each License (i) the expiration or termination of which could reasonably be expected to materially adversely affect the realizable value in the use or sale of a material amount of Inventory or (ii) the expiration or termination of which could reasonably be expected to have a Material Adverse Effect (each a “Material License”); (b) promptly notify the Agent of (i) any material modification to any such Material License that could reasonably be expected to result in a Material Adverse Effect and (ii) entering into any new Material License, provided that the failure to deliver any new Material License shall not result in a Default or Event of Default; (c) pay all Royalties (other than immaterial Royalties or Royalties being Properly Contested) arising under such Material Licenses when due (subject to any cure or grace period applicable thereto); and (d) notify the Agent of any material default or material breach asserted in writing by any Person to have occurred under any such Material License.

7.18             Environmental Laws.  Conduct its operations and keep and maintain its Real Estate in material compliance with all Environmental Laws, other than any such non-compliance which would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect; (b) obtain and renew all environmental permits necessary for its operations and properties, other than any environmental permits the failure of which to obtain would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect; and (c) implement any and all investigation, remediation, removal and response actions that are required to comply with Environmental Laws pertaining to the presence, generation, treatment, storage, use, disposal, transportation or release of any Hazardous Materials on, at, in, under or about any of its Real Estate other than any such non-compliance which would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect.

 

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7.19             Landlord and Storage Agreements.  Except as otherwise expressly permitted hereunder, make all payments and otherwise perform all obligations in respect of all Leases of real property to which any Loan Party or any of its Subsidiaries is a party and not allow such Leases to lapse or be terminated by the applicable Loan Party or Subsidiary or any rights to renew such leases to be forfeited or cancelled by the applicable Loan Party or Subsidiary, notify the Agent of any default by the applicable Loan Party or Subsidiary with respect to such Leases and cooperate with the Agent in all respects to cure any such default by the applicable Loan Party or Subsidiary, and cause each of its Subsidiaries to do so, except, in any case, where the failure to do any of the foregoing, either individually or in the aggregate, could not be reasonably likely to have a Material Adverse Effect.

7.20             Material Contracts.  Perform and observe all the payment terms and other material terms and provisions of each Material Contract to be performed or observed by it, maintain each such Material Contract in full force and effect, enforce each such Material Contract in accordance with its terms, take all such action to such end as may be from time to time reasonably requested by the Agent and, upon reasonable request of the Agent, make to each other party to each such Material Contract such demands and requests for information and reports or for action as any Loan Party or any of its Subsidiaries is entitled to make under such Material Contract, and cause each of its Subsidiaries to do so, except, in any case, where the failure to do any of the foregoing, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

7.21             [Reserved].

7.22             Tracing of Proceeds of Loans.  Maintain, detailed and accurate accounting and records of proceeds of the Loans and transfers of proceeds of the Loans (i) received by it from Agent, (ii) transferred from it to any other Loan Party, and (iii) received by it from another Borrower.  Each Borrower acknowledges that its ability to obtain the Loans hereunder is made possible by the fact that the Borrowers are co-borrowers under this Agreement and the other Loan Documents, and are operated as one enterprise.  Each Borrower agrees that (i) the business operations of each Borrower and each other Loan Party are interrelated and complement one another, and such entities have a common business purpose and common management, and (ii) the proceeds of Loans hereunder will benefit each Borrower and each other Loan Party, severally and jointly, regardless of which Borrower or other Loan Party requests or receives part or all of any Loans.  Not in any way in limitation of any other provisions set forth herein, such books and records may be reviewed and copied by the Agent at Borrower’s expense at reasonable intervals and upon reasonable notice given by the Agent to Borrower Agent.

7.23             First Lien Debt.  Promptly cancel any First Lien Debt directly or indirectly acquired by them, any of their Subsidiaries or Affiliates, and no First Lien Debt may be issued in substitution or exchange for any such First Lien Debt. For the avoidance of doubt, this Section 7.23 is not intended and shall not prevent the Borrowers from making any payment of the First Lien Debt, including any voluntary or mandatory prepayment of the First Lien Debt contemplated by the First Lien Credit Agreement.

7.24             Board Observation Rights.  Agree that the Agent and/or one of its designated Affiliates, as the case may be, shall be entitled to have one (1) observer attend, in a non-voting capacity, whether in person or telephonically, meetings of the board of directors (or other similar body) of such Loan Party (which, in the case of the Company, shall be held at least four (4) times per calendar year) and no less frequently than once each six (6) month period) and each executive, compensation, budget or other material committee and subcommittee thereof.  Each of the Loan Parties shall provide such designated observers copies of notices, minutes, consents and other materials provided to the members of its board of directors (or other similar body) and such committees and subcommittees, substantially concurrently with the delivery thereof to such members, and shall reimburse such observer for all costs and expenses reasonably incurred in connection with attending any of such meetings.  Each of the Loan Parties agrees that no such meeting, whether in person or telephonically, shall be held unless each such designated observers shall have reasonable prior notice thereof. Notwithstanding anything to the contrary in this Section 7.24, the observer may be excused by the board of directors of any Loan Party from attending any portion of a board or committee meeting, and any Loan Party may withhold information (including by redaction) from the observer, in each case (i) to the extent that attendance by or furnishing such information to the observer would jeopardize a Loan Party’s ability to assert the attorney-client privilege with respect to matters of material importance to be discussed during a portion of any meeting as determined by the board in good faith with the advice of counsel or (ii) during which, or with respect to, matters relating to this Agreement are to be discussed; provided, that such observer shall be notified of the reasoning for being so excused or such information being withheld.

 

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7.25             Information Technology.  Commencing as soon as reasonably practicable after the Effective Date, and thereafter until completion, diligently and in good faith take steps and actions to upgrade and modernize, in a timely manner, the Loan Parties’ internal information technology and systems, including hardware and systems software as appropriate, in a manner and level consistent with industry standards and companies similarly situated (the “Technology Upgrade”), and deliver to the Agent, promptly after the Agent’s reasonable request therefor, a reasonably detailed and updated written information technology plan, which plan shall give due regard to discussions prior to the Closing among the parties and, in any case, shall include the following:  (i) list of key or material information technology personnel, employees and outside consultants employed or engaged by the Company and its Subsidiaries, if any; (ii) a timeline (in reasonable detail) of additional critical information technology projects and improvement steps; (iii) a description (in reasonable detail) of the selection process for major software and hardware upgrades; and (iv) written estimates and timelines for one-time expenditures and capitalized projects and annual, on-going related expenses; further, the Borrowers shall permit representatives of the Agent, at the Agent’s expense, to discuss the related steps and actions and consult with and advise the management of the Borrowers on significant matters relating thereto.  The aggregate amount of all costs, fees, expenditures and expenses in connection with the Technology Upgrade shall not exceed $250,000 in the aggregate.

7.26         Integration Plan.  On or before May 15, 2015, deliver to the Agent a reasonably detailed written integration plan, reasonably acceptable to the Agent, in respect of the assets and business acquired pursuant to the Centrex Acquisition, including the integration of financial, accounting and informational technology systems), and which plan shall include, without limitation, a detailed timeline, a line item budget including costs and expenditures, and a list of personnel to be dedicated to, or materially involved with, such integration.

 

ARTICLE VIII

NEGATIVE COVENANTS

So long as any Obligation hereunder shall remain unpaid or unsatisfied, no Loan Party shall, nor shall it permit any Subsidiary to, directly or indirectly:

8.01             Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following (“Permitted Liens”):

(a)           (i) Liens in favor of the Agent, on behalf of the Lenders, pursuant to any Loan Document, and (ii) Liens in favor of the First Lien Lender securing First Lien Priority Debt;

(b)           Liens existing on the date hereof and listed on Schedule 8.01 and any renewals or extensions thereof, provided that (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased from the amount outstanding on the date of renewal or extension, (iii) the direct or any contingent obligor with respect thereto is not changed, and (iv) any renewal or extension of the obligations secured or benefited thereby is otherwise permitted under Section 8.02(c);

 

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(c)           Liens for taxes, assessments or other governmental charges, not yet due or which are being Properly Contested;

(d)          Liens of carriers, warehousemen, mechanics, materialmen, repairmen, landlords or other like Liens imposed by Law or arising in the Ordinary Course of Business which are not overdue for a period of more than forty-five (45) days or which are being Properly Contested;

(e)           Liens, pledges or deposits in the Ordinary Course of Business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;

(f)            Liens on deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the Ordinary Course of Business;

(g)          (i) “Permitted Encumbrances” as defined in the Mortgages on the Mortgaged Properties, and (ii) Liens with respect to minor imperfections of title and easements, rights-of-way, covenants, consents, reservations, encroachments, variations and zoning and other similar restrictions, charges, encumbrances or title defects affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person and do not materially detract from the value of or materially impair the use by the Loan Parties in the ordinary course of its business of the property subject to or to be subject to such encumbrance;

(h)          Liens securing judgments for the payment of money not constituting an Event of Default under Section 9.01 or securing appeal or other surety bonds related to such judgments;

(i)            Liens securing Indebtedness permitted under Section 8.02(e); provided that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition;

(j)            Liens securing Assumed Indebtedness of the Loan Parties permitted pursuant to Section 8.02(f); provided that (i) such Liens do not at any time encumber any property other than property of the Subsidiary acquired, or the property acquired, and proceeds thereof in connection with such Assumed Indebtedness and shall not attach to any assets of the Loan Parties theretofore existing or (except for any such proceeds) which arise after the date thereof and (ii) the Assumed Indebtedness and other secured Indebtedness of the Loan Parties secured by any such Lien does not exceed the fair market value of the property being acquired in connection with such Assumed Indebtedness;

(k)           operating leases or subleases granted by the Loan Parties to any other Person in the Ordinary Course of Business;

(l)            non-exclusive licenses and sublicenses of intellectual property granted by a Loan Party or any Subsidiary of a Loan Party in the Ordinary Course of Business on an arm’s-length basis;

 

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(m)          Liens arising from the filing of precautionary UCC or PPSA financing statements with respect to any operating lease;

(n)          involuntary Liens securing amounts less than $50,000 in the aggregate outstanding at any one time and which are being Properly Contested;

(o)           Liens in cash securing reimbursement obligations in connection with outstanding letters of credit or other obligations under the First Lien Credit Agreement at the time of a refinancing of the First Lien Debt or Payment in Full of the First Lien Priority Debt, in each case, in accordance with the Intercreditor Agreement;

(p)           Liens in favor of collecting banks arising by operation of law under Section 4-210 of the UCC or, with respect to collecting banks, under Section 4‐208 of the UCC;

(q)           Liens (including the right of set-off) in favor of a bank or other depository institution arising as a matter of law encumbering deposits;

(r)            Liens in favor of customs and revenue authorities imposed by Law to secure payment of customs duties in connection with the importation of goods and arising in the Ordinary Course of Business which are not overdue for a period of more than thirty (30) days or which are being Properly Contested; and

(s)           Liens on insurance policies, the proceeds thereof and deposits made in the Ordinary Course of Business to secure Indebtedness owing to insurance carriers for Indebtedness permitted in Section 8.02(n).

Notwithstanding the foregoing, no Inactive Subsidiary shall grant or have any of its assets subject to a Lien other than Liens permitted under clause (c), (e) or (g) of Section 8.01.

8.02             Indebtedness.  Create, incur, assume or suffer to exist any Indebtedness or issue any Disqualified Equity Interest, except:

(a)           (i) Indebtedness under the Loan Documents, and (ii) the First Lien Debt in an aggregate principal amount not to exceed the “First Lien Cap” (as such term is defined in the Intercreditor Agreement) and otherwise on terms permitted under the Intercreditor Agreement;

(b)          Indebtedness outstanding on the date hereof and listed on Schedule 8.02 and any refinancings, refundings, renewals or extensions thereof; provided that (i) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder, (ii) the average life to maturity of any refinancing, refunding, renewal or extension of such Indebtedness permitted hereby is not less than the then average life to maturity of the Indebtedness so refinanced or replaced, (iii)  the direct or contingent obligors with respect to such Indebtedness are not changed as a result of or in connection with such refinancing, refunding, renewal or extension, (iv) any refinancing, refunding, renewal or extension of Indebtedness that is Subordinated Indebtedness shall not be permitted, (v) the interest rate applicable to any such refinancing, refunding, renewing or extending Indebtedness does not exceed the greater of the (A) interest rate for the Indebtedness being refinanced, refunded, renewed, or extended and (B) the otherwise market rate of interest for such Indebtedness, and (vi) such refinancing, renewal, or extension does not impair or restrict, in any material respect greater than as contained in the Indebtedness being refinanced, refunded, renewed or extended, the ability of the Loan Parties to make Distributions or transfer money and other property to or otherwise enter into transactions among the other Loan Parties;

 

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(c)           Guarantees of any Borrower in respect of Indebtedness otherwise permitted hereunder of any other Borrower; provided that no Loan Party or any other Subsidiary of the Company shall Guarantee (I) the Subordinated Indebtedness unless such Guarantee shall be subordinated to the Obligations on substantially the same terms as such Subordinated Indebtedness, or (II) the First Lien Priority Debt unless such Guarantee shall be subject to the terms of the Intercreditor Agreement and such Loan Party or other Subsidiary shall have guaranteed the Obligations;

(d)           obligations (contingent or otherwise) of the Borrowers existing or arising under any Swap Contract, provided that (i) such obligations are (or were) entered into by such Person in the Ordinary Course of Business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, cash flows or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a “market view;” and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;

(e)           Indebtedness in respect of Capital Leases, Synthetic Lease Obligations and purchase money obligations for real property and fixed or capital assets within the limitations set forth in Section 8.01(i); provided, however, that the aggregate amount of all such Indebtedness at any one time outstanding shall not exceed $2,000,000;

(f)            Assumed Indebtedness of the Borrowers in an aggregate principal amount not to exceed $750,000 at any time outstanding;

(g)           the endorsement of negotiable instruments for deposit or collection or similar transactions in the Ordinary Course of Business;

(h)           unsecured Indebtedness of (A) any Borrower owing to any other Borrower, (B) any Subsidiary that is not a Loan Party owing to any other Subsidiary that is not a Loan Party, (C) any Loan Party to any Subsidiary not a Loan Party, and (D) any Subsidiary that is not a Loan Party owing to any Loan Party;

(i)            surety bonds permitted under Section 8.01;

(j)            unsecured Subordinated Indebtedness, other than the Specified Subordinated Indebtedness, if the Subordinated Indebtedness is unsecured and is at all times subject to an Kohlberg Intercreditor Agreement;

(k)           unsecured Specified Subordinated Indebtedness if the Specified Subordinated Indebtedness is unsecured, does not exceed an aggregate principal amount of $1,000,000 and is at all times subject to an Kohlberg Intercreditor Agreement;

(l)            any Indebtedness constituting reimbursement obligations or other obligations described in Section 8.01(o) and that are secured by Liens expressly permitted under such Section  8.01(o), in each case to the extent constituting First Lien Priority Debt and otherwise subject to the Intercreditor Agreement;

(m)         Indebtedness arising from the financing of insurance premiums in the Ordinary Course of Business;

 

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(n)           unsecured Indebtedness representing deferred compensation to employees for actual services rendered of each Borrower and its Subsidiaries incurred in the Ordinary Course of Business and for which adequate reserves in accordance with GAAP are being maintained by such Persons;

(o)           unsecured cash management obligations and other Indebtedness in respect of netting services, automatic clearinghouse arrangements, overdraft protection, and other cash management and similar arrangements, in each case, in the Ordinary Course of Business and not relating to amounts past due for more than three (3) Business Days;

(p)          the Centrex Earnout, to the extent subject to the Centrex Earnout Subordination Agreement; and

(q)           unsecured Indebtedness owing to banks or other financial institutions under company credit cards issued to officers and employees for business-related expenses in the Ordinary Course of Business; provided that such Indebtedness is extinguished within ninety (90) days after its incurrence.

Notwithstanding the foregoing, no Inactive Subsidiary shall incur or be obligated on any Indebtedness except as permitted by Section 8.16 and Section 8.02(h).

8.03             Investments.  Make any Investments, except:

(a)           Investments held by the Loan Parties in the form of Cash Equivalents that are subject to the Lender’s Lien and control, pursuant to documentation in form and substance satisfactory to the Lender;

(b)           loans and advances to officers, directors and employees of the Loan Parties and Subsidiaries made in the Ordinary Course of Business in an aggregate amount at any one time outstanding not to exceed $100,000;

(c)           Investments by the Loan Parties and their Subsidiaries in their respective Subsidiaries outstanding on the date hereof;

(d)           Investments by the Loan Parties and their Subsidiaries in their respective Subsidiaries that are Inactive Subsidiaries that are used to immediately fund obligations and liabilities for environmental matters and related expenses which the Inactive Subsidiaries are permitted under this Agreement to incur or make;

(e)           Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the Ordinary Course of Business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;

(f)            Guarantees permitted by Section 8.02;

(g)           Investments existing as of the date hereof (including those set forth on Schedule 6.13(a) and (b)) and those as set forth in Schedule 8.03 (which Schedule 8.03 shall show, as of the date hereof, the amount, obligor or issuer and maturity, if any, of any listed Investment) and extensions or renewals thereof, provided that no such extension or renewal shall be permitted if it would (i) increase the amount of such Investment at the time of such extension or renewal or (ii) result in a Default hereunder;

 

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(h)           any unsecured Indebtedness permitted under Section 8.02(i) which is an Investment;

 

(i)            Investments acquired in connection with the settlement of delinquent Accounts in the Ordinary Course of Business or in connection with the bankruptcy or reorganization of suppliers or customers;

(j)            endorsements for collection or deposit in the Ordinary Course of Business consistent with past practice; and

(k)           the consummation of the Centrex Acquisition on the Closing Date.

Notwithstanding the foregoing, no Inactive Subsidiary shall incur or make any Investment, other than as permitted under clauses (d), (g) or (h) in this Section 8.03.

8.04             Fundamental Changes.  Merge, dissolve, liquidate, consolidate with or into another Person, except that, so long as no Default exists or would result therefrom:

(a)           any Subsidiary of the Company may merge or consolidate with or liquidate or dissolve into a Loan Party; provided, that, the Loan Party shall be the continuing or surviving Person;

(b)          any Subsidiary that is not a Loan Party may merge into any other Subsidiary that is not a Loan Party; provided, that, when any wholly-owned Subsidiary is merging with another Subsidiary that is not wholly-owned, the wholly-owned Subsidiary shall be the continuing or surviving Person; and

(c)           any Inactive Subsidiary may dissolve, liquidate or wind-down in accordance with all applicable Laws.

8.05             Dispositions.  Make any Disposition or enter into any agreement to make any Disposition, except:

 

(a)           Dispositions of Inventory in the Ordinary Course of Business;

(b)           Dispositions in the Ordinary Course of Business of Equipment or fixed assets that are obsolete, worn out or no longer useful to the Core Business (which shall include, for the sake of clarity, assets that are no longer useful to the Core Business due to the Facility Relocation) for so long as (i) no Event of Default has occurred and is continuing at the time of such Disposition, (ii) the aggregate fair market value or a book value, whichever is more, of such Equipment and fixed assets does not exceed $400,000 in any twelve-month period and (iii) all proceeds thereof are (A) remitted to the Agent for application to the Obligations in accordance with Section 2.05(b) or, prior to the Payment in Full of First Lien Priority Debt, to the First Lien Priority Debt pursuant to the First Lien Credit Agreement, or (B) applied to the replacement of such Equipment or fixed assets with Equipment or other fixed assets of like kind, function and value within one hundred eighty (180) days after any such Disposition and the replacement Equipment or other fixed assets shall be free and clear of Liens other than Permitted Liens;

(c)           Dispositions that constitute (i) an Investment permitted under Section 8.03, (ii) a Lien permitted under Section 8.01, (iii) a merger, dissolution, consolidation or liquidation permitted under Section 8.04(a), or (iv) a Distribution permitted under Section 8.06;

 

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(d)           Dispositions of assets or property that result from an Event of Loss in respect of such asset or property that do not otherwise constitute an Event of Default; provided, however, that the foregoing shall not constitute an Event of Default so long as (i) Borrower is in compliance with Section 7.08 if such Disposition is of Mortgaged Property, or (ii) Borrower is in compliance with Section 2.05(b)(i) if such Disposition is not of Mortgaged Property;

(e)           Dispositions that consist of the sale or discount in the Ordinary Course of Business of overdue accounts receivable that are otherwise permitted under the First Lien Credit Agreement, in an aggregate original amount for all such Accounts in any Fiscal Year of up to $100,000, but only in connection with the compromise or collection thereof, provided that the Net Cash Proceeds from such Disposition shall be deposited in the Concentration Account (as defined in the First Lien Credit Agreement) or, after the Payment in Full of First Lien Priority Debt, an account subject to a Control Agreement in favor of the Agent);

(f)            Dispositions among the Loan Parties or by any Subsidiary to a Loan Party;

(g)           Dispositions by any Subsidiary which is not a Loan Party to another Subsidiary that is not a Loan Party;

(h)          the lapse or abandonment in the Ordinary Course of Business of any registrations or applications for registration of any Intellectual Property which is not material to any Loan Party’s business;

(i)            Dispositions of Equipment to the extent such equipment is exchanged for credit against the purchase price of similar replacement equipment in the Ordinary Course of Business and is otherwise done in compliance with this Agreement;

(j)            Dispositions of assets or property by any Inactive Subsidiary, provided that, at the time of such Disposition, no Event of Default has occurred and is then continuing, and the Borrowers, within one (1) Business Day of the consummation of such Disposition, pay to the Agent an amount equal to 100% of the Net Cash Proceeds arising from such Disposition; and

(k)           Dispositions of assets in connection with the Facility Relocation that are no longer useful to the Core Business so long as (i) no Event of Default has occurred and is continuing at the time of such Disposition, (ii) the aggregate net book value of such assets does not exceed $1,600,000 (inclusive of $700,000 of leasehold improvements) and (iii) all proceeds thereof are (A) remitted to the Agent for application to the Obligations in accordance with Section 2.05(b) or, prior to the Payment in Full of First Lien Priority Debt, are remitted to the First Lien Lender for application to the First Lien Debt pursuant to the First Lien Credit Agreement, or (B) applied to the replacement of such assets with Equipment or other fixed assets of like kind, function and value within one hundred eighty (180) days after any such Disposition and the replacement Equipment or other fixed assets shall be free and clear of Liens other than Permitted Liens.

8.06             Restricted Payments.  Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that, in each case (except Section 8.06(a)) so long as no Default shall have occurred and be continuing (both before or as a result of the making of such Restricted Payment):

(a)           each Subsidiary may make Restricted Payments to any Borrower;

 

(b)           the Company and each Subsidiary may declare and make dividend payments or other distributions payable solely in the common stock or other common Equity Interests of such Person;

 

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(c)           the Company may make Restricted Payments to the holder the Specified Subordinated Indebtedness if permitted by the applicable Kohlberg Intercreditor Agreement; and

(d)           the Company and each Subsidiary may make Restricted Payments to redeem, purchase or acquire from officers, directors, members and employees Equity Interests of such Person provided the aggregate amount of all such Restricted Payments permitted shall not exceed, during the term of this Agreement, $100,000.

8.07             Change in Nature of Business.  Engage in any material line of business substantially different from those lines of business conducted by the Borrowers and their Subsidiaries on the date hereof or any business substantially related or incidental thereto.  Without limiting the foregoing, the Company shall not, after the date hereof, directly or indirectly engage in any new material active business and, after the date hereof, shall conduct any material business activities (including the Core Business) through wholly-owned Subsidiaries.

8.08              Transactions with Affiliates.  Enter into any transaction of any kind with any Affiliate of any Loan Party, whether or not in the Ordinary Course of Business, other than transactions on fair and reasonable terms substantially as favorable to such Borrower or such Subsidiary as would be obtainable by such Borrower or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate, provided that the foregoing restriction shall not apply to (i) transactions between or among the Loan Parties, (ii) transactions solely between Subsidiaries that are not Loan Parties and (iii) the transactions contemplated under the Management Agreement (subject to Section 8.18) including amendments to the Management Agreement that do not increase the amount of fees, expenses and indemnities payable thereunder in excess of the amounts payable thereunder on the Closing Date and which are not materially adverse to the interests of the Lender, and provided, further, that the following transactions shall be permitted:  (a) if no Event of Default has occurred and is then continuing, the Company may pay or reimburse Equity Investor or one or more Controlled Investment Affiliates, in the Ordinary Course of Business, for reasonable out-of-pocket costs and expenses, as or after the incurrence thereof by the Equity Investor or one of its Controlled Investment Affiliates, pursuant to its management of the Company’s business, (b) the Specified Subordinated Indebtedness transaction and, if no Default has occurred and is then continuing, the payment thereof to the extent permitted pursuant to the terms of this Agreement and the Kohlberg Intercreditor Agreement, (c) intercompany loans among Loan Parties and other intercompany loans, if no Default has occurred and is then continuing, to the extent permitted under Section 8.02, (d) any Investment permitted under Sections 8.03(b), (c), (d), (g), (h) and (i), and (e) any issuance of Equity Interest of the Company or other payments, grants or awards in cash, securities or otherwise pursuant to, or the fund of, any employment agreements, compensation plans, employee incentive plans, agreements or arrangements, stock option or stock appreciation plans or agreements, or similar plans, agreements or arrangements of the Company.

8.09             Burdensome Agreements.  Enter into any Contractual Obligation (other than this Agreement or any other Loan Document or the First Lien Loan Documents) that:

(a)           requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person; or

(b)          limits the ability (i) of any Subsidiary to make Restricted Payments to the Company or any Borrower or to otherwise transfer property to the Company or any Borrower, (ii) of any Subsidiary to Guarantee the Indebtedness of the Borrowers or become a direct Borrower hereunder, or (iii) of any Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person; provided, however, that this clause (iii) shall not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under Section 8.02(f) solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness.

 

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8.10             Use of Proceeds.  Use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, in any manner that might cause the Credit Extension or the application of such proceeds to violate Regulations T, U or X of the FRB, in each case as in effect on the date or dates of such Credit Extension and such use of proceeds, or otherwise use proceeds of any Credit Extension in violation of Section 7.12.

8.11             Prepayment of Indebtedness; Amendment to Material Agreements.

(a)           Prepay, redeem, purchase, repurchase, defease or otherwise satisfy prior to the scheduled maturity thereof any Indebtedness other than the First Lien Priority Debt, or make any payment in violation of any subordination terms thereof, including in each case pursuant to any change of control, sale of assets, issuance of any equity or otherwise as may be set forth in the terms thereof or available to the Borrowers at its option, except, so long as no Default shall exist prior to or immediately thereafter, prepayments, redemptions, purchases, repurchases, defeasances or other satisfaction (collectively, a “Prepayment”) of Indebtedness (other than the Subordinated Indebtedness) made with the proceeds of other Indebtedness permitted to be incurred pursuant to Section 8.02 and containing terms and conditions (including terms of subordination, security and maturity) no less favorable in any material respect to the Credit Parties than the Indebtedness subject to such Prepayment, provided, however, at no time may any of the Subordinated Indebtedness, including the Specified Subordinated Indebtedness, be prepaid prior to its stated maturity unless expressly permitted by the applicable intercreditor or subordination agreement in form and substance satisfactory to the Agent.  Notwithstanding the foregoing, the Loan Parties may at any time exercise any Special Setoff Rights to cause the Centrex Earnout Payments to be reduced pursuant to the terms of the Centrex Purchase Agreement.

(b)          Amend, modify or change in any manner any term or condition of any Indebtedness with a stated maturity date outside the Maturity Date, in each case so that the terms and conditions thereof are less favorable in any material respect to the Agent or any other Credit Party than the terms of such Indebtedness as of the Closing Date, but in no event shall terms of recourse, guarantees or credit support be any less favorable to the Credit Parties than the terms of such Indebtedness as of the Closing Date.

(c)           Amend, modify or change any Organizational Document of any Loan Party in a manner adverse to the Agent or any other Credit Party.

(d)          Change the state or jurisdiction of formation of any Loan Party whether by merger, reincorporation or otherwise.

(e)           Waive or otherwise modify any term of any First Lien Loan Document except in a manner permitted by the Intercreditor Agreement; provided, if any amendment or modification to the First Lien Loan Documents amends or modifies any representation or warranty, covenant (including any financial covenant and any definitions relating to such representation, warranties or covenants (including any financial covenants)) or event of default contained in the First Lien Loan Documents (or any related definitions) (but excluding, for purposes of clarity, any other amendment or modification to the First Lien Loan Documents in respect of the rates, the fees or any premiums relating thereto, which shall be subject to the terms of the Intercreditor Agreement), in each case, in a manner that is more restrictive than the applicable provisions permit as of the date thereof, or if any amendment or modification to the First Lien Credit Agreement or any other First Lien Loan Document adds an additional representation and warranty, covenant or event of default therein, then each Borrower acknowledges and agrees that, if requested by the Agent, this Agreement or the other Loan Documents, as the case may be, shall be automatically amended or modified to affect similar amendments or modifications with respect to this Agreement or such other Loan Documents (preserving any cushions that may exist with respect to financial or negative covenants), without the need for any further action or consent by any Borrower or any other party.  In furtherance of the foregoing, the Borrowers shall permit the Agent and Lenders to document each such similar amendment or modification to this Agreement or such other Loan Documents or insert a corresponding new representation and warranty, covenant, event of default or other provision in this Agreement or such other Loan Documents without any need for any further action or consent by any Borrower.

 

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8.12             Financial Covenants.

(a)           Consolidated Fixed Charge Coverage Ratio.  Permit the Consolidated Fixed Charge Coverage Ratio as of the last day of the Measurement Period most recently ended to be less than the ratio set forth below opposite such Fiscal Quarter, provided, however, that for (i) the June 30, 2015 calculation, such ratio shall be calculated only for such Fiscal Quarter ending on or closest to such date, (ii) the September 30, 2015 calculation, such ratio shall be calculated only for the two most recent Fiscal Quarters ended, and (iii) the December 31, 2015 calculation, such ratio shall be calculated only for the three most recent Fiscal Quarters ended:

 

	
Measurement Period Ending on or 

Closest To

	
Minimum Consolidated Fixed Charge 

Coverage Ratio

	
June 30, 2015

	
2.51 to 1.00

	
September 30, 2015

	
1.84 to 1.00

	
December 31, 2015

	
1.34 to 1.00

	
March 31, 2016

	
1.57 to 1.00

	
June 30, 2016

	
1.51 to 1.00

	
September 30, 2016

	
1.74 to 1.00

	
December 31, 2016

	
2.01 to 1.00

	
March 31, 2017

	
1.88 to 1.00

	
June30, 2017

	
1.96 to 1.00

	
September 30, 2017

	
2.00 to 1.00

	
December 31, 2017

	
2.00 to 1.00

	
March 31, 2018

	
2.00 to 1.00

	
June 30, 2018

	
2.00 to 1.00

	
September 30, 2018

	
2.00 to 1.00

	
December 31, 2018

	
2.00 to 1.00

	
Last Day of Each Fiscal Quarter Thereafter

	
2.00 to 1.00

(b)           Consolidated Capital Expenditures.  Permit the aggregate amount of Consolidated Capital Expenditures made by the Loan Parties in any Fiscal Year to exceed $3,000,000.

(c)           Minimum Consolidated EBITDA.  Permit Consolidated EBITDA as of the last day of the Measurement Period most recently ended to be less than the amount set forth below opposite such Fiscal Quarter:

 

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Measurement Period Ending on or 

Closest To

	 	
Minimum Consolidated EBITDA

	 
	
June 30, 2015

	 	
$

	
9,694,496

	 
	
September 30, 2015

	 	
$

	
7,987,462

	 
	
December 31, 2015

	 	
$

	
7,337,041

	 
	
March 31, 2016

	 	
$

	
8,808,954

	 
	
June 30, 2016

	 	
$

	
9,491,013

	 
	
September 30, 2016

	 	
$

	
11,528,087

	 
	
December 31, 2016

	 	
$

	
14,017,576

	 
	
March 31, 2017

	 	
$

	
14,261,132

	 
	
June30, 2017

	 	
$

	
14,500,000

	 
	
September 30, 2017

	 	
$

	
14,500,000

	 
	
December 31, 2017

	 	
$

	
14,500,000

	 
	
March 31, 2018

	 	
$

	
14,500,000

	 
	
June 30, 2018

	 	
$

	
14,500,000

	 
	
September 30, 2018

	 	
$

	
14,500,000

	 
	
December 31, 2018

	 	
$

	
14,500,000

	 
	
Last Day of Each Fiscal Quarter Thereafter

	 	
$

	
14,500,000

	 

(d)          Minimum Availability.  Permit Availability (as defined in the First Lien Credit Agreement), as of (i) the last day of any Fiscal Month and (ii) at any time a borrowing base certificate is required to be delivered and at each time actually delivered to the First Lien Lender pursuant to the First Lien Credit Agreement, to be less than $1,000,000.

(e)           Leverage Ratio.  Permit the Leverage Ratio as at the last day of any period of four consecutive Fiscal Quarters ending on the last day of any Fiscal Quarter set forth in the table below to be greater than the maximum ratio set forth opposite such quarter in the table below:

	
Measurement Period Ending on or 

Closest To

	
Maximum Ratio

	
June 30, 2015

	
5.25 to 1.00

	
September 30, 2015

	
6.46 to 1.00

	
December 31, 2015

	
7.12 to 1.00

	
March 31, 2016

	
5.71 to 1.00

	
June 30, 2016

	
4.98 to 1.00

	
September 30, 2016

	
3.83 to 1.00

	
December 31, 2016

	
2.95 to 1.00

	
March 31, 2017

	
2.75 to 1.00

	
June30, 2017

	
2.46 to 1.00

	
September 30, 2017

	
2.25 to 1.00

	
December 31, 2017

	
2.25 to 1.00

	
March 31, 2018

	
2.25 to 1.00

	
June 30, 2018

	
2.25 to 1.00

	
September 30, 2018

	
2.25 to 1.00

	
December 31, 2018

	
2.25 to 1.00

	
Last Day of Each Fiscal Quarter Thereafter

	
2.25 to 1.00

 

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8.13             Creation of New Subsidiaries.  Create or acquire any new Subsidiary after the Closing Date other than Domestic Subsidiaries created or acquired in accordance with Section 7.13.

8.14             Securities of Subsidiaries.  Permit any Subsidiary to issue any Equity Interests (whether for value or otherwise) to any Person other than a Loan Party.

8.15             Sale and Leaseback.  Enter into, or permit any Subsidiary to, enter into any agreement or arrangement with any other Person providing for the leasing by any Loan Party or any of the Subsidiaries of real or personal property which has been or is to be sold or transferred by any Loan Party or any of the Subsidiaries to such other Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of a Loan Party or any of the Subsidiaries.

8.16             Acquisitions.  Enter into, or permit any Subsidiary to, enter into any Acquisition other than the Centrex Acquisition.

8.17             Inactive Subsidiaries.  Notwithstanding anything to the contrary set forth herein, (A) no Inactive Subsidiary shall, and no Loan Party shall permit, or permit any of such Loan Party’s Subsidiaries to permit, any Inactive Subsidiary to (w)  own or acquire any assets other than those owned at Closing, (x) assume or incur any indebtedness, liabilities or any other obligations (other than certain obligations and liabilities with respect to (i) environmental matters not exceeding $1,200,000 in the aggregate for all Inactive Subsidiaries (less any increase in amounts under clause (ii) below as described in the parenthetical in such clause (ii)) and (ii) legal fees, testing, employees and insurance not exceeding $300,000 during any calendar year in the aggregate (increased to the extent of any settlement of any liability referred to in the foregoing clause (i), provided that the aggregate amount of such increase shall not exceed the amount of any such settled liability and may be spread over multiple calendar years, and provided, further that the aggregate amount of liabilities in clause (i) above is reduced by at least a corresponding amount) for all Inactive Subsidiaries), (y) employ any Persons except consistent with practices and to the same extent as of the Closing or conduct any business or operations, or (z) make any loans to or investments in any Person except as permitted under this Agreement, and (B) no Loan Party shall make, or permit any of such Loan Party’s Subsidiaries to make, any investment in or loan to or otherwise enter into any contractual arrangement with any Inactive Subsidiary except as permitted under this Agreement.  Notwithstanding the foregoing, to the extent that the amounts in the parenthetical in clause (x) above are increased due to new environmental matters asserted against an Inactive Subsidiary after the Closing Date then any such entity shall continue to be an “Inactive Subsidiary.”

8.18             Management Fees.  Pay any management fees to any Persons including, without limitation, the Equity Investor and its Controlled Investment Affiliates, and whether arising under the Management Agreement or otherwise, except that, if no Event of Default is then continuing, the Company may pay or reimburse the Equity Investor or one of its Controlled Investment Affiliates for reasonable out-of-pocket costs and expenses as and when incurred by the Equity Investor or one of its Controlled Investment Affiliates in the ordinary course of business pursuant to its management of Borrowers’ business.

8.19             Centrex Earnout.  Pay or otherwise redeem, exchange, purchase, retire or defease, or contribute to any sinking fund or similar arrangement in respect of, the Centrex Earnout; provided, that, the Loan Parties may pay regularly scheduled, non-accelerated payments in respect of the Centrex Earnout as and when, and on the dates, due and payable in accordance with the Centrex Purchase Agreement (as in effect on the date hereof) and subject to the terms and conditions of the Centrex Earnout Subordination Agreement.

 

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ARTICLE IX

EVENTS OF DEFAULT AND REMEDIES

9.01             Events of Default.  Any of the following shall constitute an Event of Default:

(a)           Non-Payment.  Any Borrower fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan or any interest on any Loan or other fee due hereunder, or (ii) within five (5) days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

(b)           Specific Covenants.  Any Loan Party fails to perform or observe any term, covenant or agreement contained (i) in any of Sections 2.05(b), 7.01(a), 7.01(b), 7.01(c),  7.03, 7.05, 7.07, 7.08, 7.11, 7.12, 7.13, 7.16 (last proviso thereof and the last sentence thereof), 7.24  or Article VIII, or (ii) in any of Sections 4.04, 7.02(a), 7.02(b), 7.02(c) or 7.26 and such failure continues for three (3) or more Business Days; or

(c)           Other Defaults.  Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for thirty (30) days after the earlier of (i) receipt of notice of such default by a Responsible Officer of the Borrower Agent from the Agent or any Lender, or (ii) any Responsible Officer of any Loan Party becomes aware of such default; or

(d)           Representations and Warranties.  Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Loan Party or its Subsidiaries herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading when made or deemed made in any material respect; or

(e)           Cross-Default.

(i)            Any Loan Party or its Subsidiaries (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise, and after passage of any grace period) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $250,000, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, and such default continues for more than the grace period, if any, therein specified, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateralized in respect thereof to be demanded; or

(ii)          there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which any Loan Party or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which any Loan Party or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by a Loan Party or any Subsidiary as a result thereof is greater than $250,000; or

 

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(iii)          the occurrence of an Event of Default under the First Lien Loan Documents; or

(iv)         any breach or default with respect to the Subordinated Indebtedness or under the Subordinated Indebtedness Documents, or the acceleration or attempted acceleration of the Subordinated Indebtedness, or the exercise of any right remedy against any Loan Party or any of their respective assets by any Subordinated Lender.

(f)            Insolvency Proceedings, Etc.  Any Loan Party  institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for sixty (60) calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding; or

(g)          Inability to Pay Debts; Attachment.  (i) Any Loan Party becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any Loan Party and is not released, vacated or fully bonded within thirty (30) days after its issue or levy; (iii) any Loan Party is enjoined, restrained or in any way prevented by any Governmental Authority from conducting any material part of its business; (iv) any Loan Party suffers the loss, revocation or termination of any material license, permit, lease or agreement necessary to its business; (v) there is a cessation of any material part of any Loan Party’s business for a material period of time; or (vi) any material Collateral or property or assets of a Loan Party is taken or impaired through Condemnation; or

(h)          Judgments.  There is entered against any Loan Party (i) one or more final judgments or orders for the payment of money in an aggregate amount exceeding $500,000 (to the extent not covered by insurance as to which the insurer does not dispute coverage other than by virtue of a customary reservation of rights letter), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case of clause (i) or (ii) above, such judgment or order remains unvacated and unpaid and either (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of thirty (30) consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

(i)            ERISA.  (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of any Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $250,000, (ii) a Loan Party or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan resulting in liability of any Loan Party in an aggregate amount in excess of $250,000, or (iii) any violation of Law relating to a Foreign Plan which has resulted or could reasonably be expected to result in liability of any Loan Party in an aggregate amount in excess of $250,000; or

 

87

(j)            Invalidity of Loan Documents.  Any Loan Document, or any Lien granted thereunder, at any time after its execution and delivery and for any reason, other than as expressly permitted hereunder or upon Payment in Full, ceases to be in full force and effect (except with respect to immaterial assets); or any Borrower or any other Person contests in any manner the validity or enforceability of any Loan Document or any Lien granted to the Agent pursuant to the Security Instruments; or any Borrower denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or

(k)           Breach of Contractual Obligation.  Any Loan Party or any Subsidiary thereof fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any contract to which it is party or fails to observe or perform any other agreement or condition relating to any such contract to which it is party or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the counterparty to such contract to terminate such contract, in each case which would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; or

(l)            Indictment.  (i) Any Loan Party is (A) criminally indicted or convicted of a felony for fraud or dishonesty in connection with the Loan Parties’ business, or (B) charged by a Governmental Authority under any law that would reasonably be expected to lead to forfeiture of any material portion of Collateral, or (ii) any director or senior officer of any Loan Party is (A) criminally indicted or convicted of a felony for fraud or dishonesty in connection with the Loan Parties’ business, unless such director or senior officer promptly resigns or is removed or replaced or (B) charged by a Governmental Authority under any law that would reasonably be expected to lead to forfeiture of any material portion of Collateral; or

(m)          Uninsured Loss.  A loss, theft, damage or destruction occurs with respect to any Collateral if the amount not covered by insurance exceeds $250,000; or

(n)          Centrex Acquisition.  The failure for any reason of the Centrex Acquisition to be consummated and completed in accordance with applicable Laws on the Closing Date.

(o)           Material Leases.  Any Loan Party fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any real property lease, operating lease, or capital lease that provides for annual rent in excess of $250,000 and to which it is party, or fails to observe or perform any other agreement or condition relating to any such property lease, operating lease, or capital lease (after the expiration of any applicable grace period); or

(p)          Change of Control.  There occurs any Change of Control; or

(q)          Subordinated Indebtedness.  The subordination provisions, including, without limitation, those contained in any intercreditor or subordination agreement, including the Kohlberg Intercreditor Agreement or the Centrex Earnout Subordination Agreement, relating to any Subordinated Indebtedness (the “Subordination Provisions”) shall fail to be enforceable by the Agent (which have not effectively waived the benefits thereof) in accordance with the terms thereof, or the principal or interest on any Loan or other Obligations shall fail to constitute “designated senior debt” (or any other similar term) under any document, instrument or agreement evidencing such Subordinated Indebtedness; or any Loan Party or any of its Subsidiaries shall, directly or indirectly, disavow or contest in any manner (i) the effectiveness, validity or enforceability of any of the Subordination Provisions, or (ii) that any of such Subordination Provisions exist for the benefit of the Agent; or

 

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(r)            Intercreditor Agreement.  The failure of any Loan Party or any of its Subsidiaries to comply with any material term of the Intercreditor Agreement, or if the Intercreditor Agreement becomes null and void other than in accordance with its terms; or

(s)           Material Adverse Effect.  The occurrence of any event that will have, based on the reasonable Credit Judgment of the Agent and the Lenders, a Material Adverse Effect of the type described in clause (a) or (b) of the definition thereof.

9.02             Remedies Upon Event of Default.  If any Event of Default occurs and is continuing, the Agent may, or, at the request of the Required Lenders, shall, take any or all of the following actions:

(a)           [reserved];

(b)          declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder (including the Prepayment Premium) or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrowers;

(c)           require that the Borrowers cash collateralize any Obligations that are contingent or not yet due and payable in amount determined by the Agent in accordance with this Agreement; and

(d)          exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents or applicable Law;

provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to any Borrower under the Bankruptcy Code of the United States, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable without further act of the Agent or any Lender.

No remedy herein is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or any other provision of Law.

9.03             License.  The Agent is hereby granted an irrevocable, non‐exclusive license or other right to use, license of sub‐license (without payment of royalty or other compensation to any Person) any or all Intellectual Property of Loan Parties, computer hardware and software, trade secrets, brochures, customer lists, promotional and advertising materials, labels, packaging materials and other property or asset, in advertising for sale, marketing, selling, collecting, completing manufacture of, or otherwise exercising any rights or remedies with respect to, any Collateral provided that the Agent shall not exercise any such right unless an Event of Default has occurred and is continuing.  Each Loan Party’s rights and interests under Intellectual Property shall inure to the Agent, for the benefit of the Credit Parties.

9.04             Limitation of Remedies.  Notwithstanding anything to the contrary contained in this Agreement, if any enforceable term of any promissory note, contract, agreement, permit, lease, license (including any licenses of any Intellectual Property) or other General Intangible included as a part of the Collateral, other than Accounts, requires the consent of the Person obligated on such promissory note or any Person (other than the applicable obligor) obligated on such lease, contract or agreement, or which has issued such permit or license or other General Intangible, other than Accounts, for the assignment or transfer thereof or the enforcement of such Lien not to give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination or other material remedy thereunder, then the receipt of any such necessary consent shall be a condition to any exercise of remedies against such Collateral under this Section 9.04 (but not to the creation, attachment or perfection of the Lien of the Agent for the benefit of the Credit Parties as provided herein).

 

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9.05             Joint and Several.  Each obligation and liability of each Borrower to the Credit Parties, including, without limitation, the Obligations, are the joint and several obligations of each Borrower, and the Credit Parties may proceed directly against any Borrower, or all Borrowers, or any Guarantor, or any Collateral, or all of the foregoing, or any one of the foregoing or any combination of the foregoing, without first proceeding against Borrower or any Collateral, or without joining all Persons liable or potentially liable for any portion of the Obligations in one action.  Each Borrower shall be jointly and severally liable as primary obligor and not merely as surety for repayment of all Obligations arising under the Loan Documents.  Such joint and several liability shall apply to each Borrower regardless of whether any Loan was only requested by or on behalf of or made to any other Borrower or the proceeds of any Loan were used only by or on behalf of any other Borrower or any indemnification obligation or any other obligation arose only as a result of the action of any other Borrower.  If any Borrower makes a payment in respect of the Obligations hereunder and under the other Loan Documents, it shall have the rights of contribution described in this Section below and under applicable common law against the other Borrower or Borrowers; provided that such Borrower shall not exercise its right of contribution until all of the Obligations are Paid in Full; provided, however, that Agent, for the benefit of the Credit Parties, is hereby granted a Lien in such right of contribution and may enforce such right upon the occurrence and during the continuance of Event of Default.  It is the intent of each Borrower and Lender that each Borrower’s maximum obligation to repay the Obligations hereunder and under the other Loan Documents (the “Loan Obligation Limit”) shall not exceed the greater of (i) the amount actually borrowed or received directly or indirectly by such Borrower with respect thereto and (ii) the amount which is $1.00 less than the amount which, if recorded by such Borrower as a liability, would render such Borrower not Solvent.  To the extent that any Borrower makes a payment on any of the Obligations (a “Loan Obligation Payment”), such Borrower (the “Entitled Borrower”) is entitled to contribution and indemnification from, and reimbursement by, each other Borrower (a “Contributing Borrower”) in the amount of the Contribution Obligation of such Contributing Borrower hereunder.  The “Contribution Obligation” of a Contributing Borrower with respect to the Loan Obligation Payment of an Entitled Borrower is an amount equal to the greater of (1) the lesser of (x) such Contributing Borrower’s Loan Obligation Limit at the time the Loan Obligation Payment is made and (y) such Contributing Borrower’s Allocable Share of the Loan Obligation Payment, and (2) the amount of all proceeds from the Obligations actually received by such Contributing Borrower or applied by the recipient thereof directly or indirectly for the benefit of such Contributing Borrower, less the sum of any repayments thereof and any Loan Obligation Payments made by such Contributing Borrower prior to the time the applicable Loan Obligation Payment is made.  The “Allocable Share” of a Contributing Borrower is a fraction, the numerator of which is such Contributing Borrower’s Loan Obligation Limit at the time the applicable Loan Obligation Payment is made and the denominator of which is the sum of the Loan Obligation Limits of all of the Contributing Borrowers (plus a similarly computed amount for any Guarantor which has a similar obligation to make a contribution) as of such time.

ARTICLE X

THE AGENT

 

10.01          Appointment and Authority.  Each of the Lenders hereby irrevocably appoints VPM to act on its behalf as the Agent hereunder and under the other Loan Documents (including the Intercreditor Agreement) and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to the Agent by the terms hereof or thereof (including, without limitation, acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations), together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are solely for the benefit of the Agent and the Lenders, and no Loan Party or any Subsidiary thereof shall have rights as a third party beneficiary of any of such provisions.  It is understood and agreed that the use of the terms “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law.  Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties

 

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10.02          Rights as a Lender.  The Person serving as the Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though they were not the Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Loan Parties or any Subsidiary or other Affiliate thereof as if such Person were not the Agent hereunder and without any duty to account therefor to the Lenders.

10.03          Exculpatory Provisions.  The Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing, the Agent:

(a)           shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing;

(b)           shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law; and

(c)           shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Loan Parties or any of its Affiliates that is communicated to or obtained by the Person serving as the Agent or any of its Affiliates in any capacity.

The Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 11.01 and 10.02) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a final and non-appealable judgment of a court of competent jurisdiction.

The Agent shall not be deemed to have knowledge of any Default or Event of Default unless and until notice describing such Default or Event of Default is given to the Agent by the Loan Parties or a Lender. Upon the occurrence of a Default or Event of Default, the Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Lenders.  Unless and until the Agent shall have received such direction, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to any such Default or Event of Default as it shall deem advisable in the best interest of the Credit Parties.  In no event shall the Agent be required to comply with any such directions to the extent that the Agent believes that its compliance with such directions would be unlawful.

 

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The Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or the creation, perfection or priority of any Lien purported to be created hereunder, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article V or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Agent.

10.04          Reliance by Agent.  The Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including, but not limited to, any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  The Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of the Term Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Agent may presume that such condition is satisfactory to such Lender unless the Agent shall have received written notice to the contrary from such Lender prior to the making of the Term Loan.  The Agent may consult with legal counsel (who may be counsel for any Loan Party), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

10.05          Delegation of Duties.  The Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agent appointed by the Agent.  The Agent and any such sub agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall apply to any such sub agent and to the Related Parties of the Agent and any such sub agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as the Agent.  The Agent shall not be responsible for the negligence or misconduct of any sub-agent except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Agent acted with gross negligence or willful misconduct in the selection of such sub-agent.

10.06          Resignation of Agent.  The Agent may at any time give written notice of its resignation to the Lenders and the Borrowers.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrowers, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its resignation, then the retiring Agent may on behalf of the Lenders appoint a successor Agent meeting the qualifications set forth above; provided, that if the Agent shall notify the Borrowers and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any Collateral held by the Agent on behalf of the Lenders under any of the Loan Documents, the retiring Agent shall continue to hold such collateral security until such time as a successor Agent is appointed), (2) the Agent shall deliver a copy of the Register to the Borrower Agent and (3) all payments, communications and determinations provided to be made by, to or through the Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders appoint a successor Agent as provided for above in this Section 10.06.  Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section 10.06).  The fees payable by the Borrowers to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrowers and such successor.  After the retiring Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and Section 11.04 shall continue in effect for the benefit of such retiring Agent, its sub-agent and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Agent hereunder.

 

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10.07          Non-Reliance on Agent and Other Lenders.  Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.  Except as provided in Section 10.06, the Agent shall not have any duty or responsibility to provide any Credit Party with any other credit or other information concerning the affairs, financial condition or business of any Loan Party that may come into the possession of the Agent.

10.08          Agent May File Proofs of Claim.  In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Agent (irrespective of whether the principal of the Term Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Agent shall have made any demand on the Loan Parties) shall be entitled and empowered, by intervention in such proceeding or otherwise:

(a)           to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Term Loan and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Agent and the other Credit Parties (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Agent, such Credit Parties and their respective agents and counsel and all other amounts due the Lenders, the Agent and such Credit Parties under Sections 2.08 and11.04) allowed in such judicial proceeding; and

(b)           to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Agent and, if the Agent shall consent to the making of such payments directly to the Lenders, to pay to the Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Agent and its agent and counsel, and any other amounts due the Agent under Sections 2.08 and11.04.

 

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Nothing contained herein shall be deemed to authorize the Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Agent to vote in respect of the claim of any Lender in any such proceeding.

Without limiting the generality of the powers of the Agent, as set forth above, the Agent is hereby authorized to act as collateral agent for each Credit Party pursuant to each of the Loan Documents.  In such capacity, the Agent has the right to exercise all rights and remedies available under the Loan Documents, the UCC and other applicable law, which rights and remedies shall include, in the event of a foreclosure by the Agent on any portion of the Collateral, whether pursuant to a public or private sale, the right of the Agent, as agent for all Credit Parties, to be, or form an acquisition entity to be, the purchaser of any or all of such Collateral at any such sale.  The Agent, as agent for all Credit Parties, shall be entitled, at any such sale to offset any of the Obligations against the purchase price payable by the Agent (or such acquisition entity) at such sale or to otherwise consent to a reduction of the Obligations as consideration to the applicable Loan Party in connection with such sale. The Agent shall have the authority to take such other actions as it may deem necessary or desirable to consummate a sale of the type described in the immediately preceding sentences.  The Agent shall have the authority to accept non-cash consideration in connection with the sale or other disposition of the Collateral, whether the purchaser is the Agent, an entity formed by the Agent as described above or any other Person.  Without limiting the generality of the powers of the Agent, as set forth above, in the context of any bankruptcy or other insolvency proceeding involving any Loan Party, the Agent is hereby authorized to:  (i) file proofs of claim and other documents on behalf of the Lenders in accordance with this paragraph, (ii) object or consent to the use of cash collateral, (iii) object or consent to any proposed debtor-in-possession financing, whether provided by one or more of the Credit Parties or any other Person and whether secured by Liens with priority over the Liens securing the Obligations or otherwise, (iv) object or consent to any sale of Collateral, including sales for non-cash consideration in satisfaction of a portion of the Obligations, (v) to be, or form an acquisition entity to be, the purchaser of any or all of such Collateral at any such sale under clause (iv) and to offset any of the Obligations against the purchase price payable by the Agent (or such acquisition entity) at such sale or to otherwise consent to a reduction of the Obligations as consideration to the applicable Loan Party in connection with such sale, and (vi) seek, object or consent to any Loan Party's provision of adequate protection of the interests of the Lenders in the Collateral.

10.09           Collateral and Guaranty Matters.  The Credit Parties irrevocably authorize the Agent, at its option and in its sole discretion:

(a)           to release any Lien on any property granted to or held by the Agent under any Loan Document (i) upon payment in full of all Obligations (other than contingent indemnification obligations for which no claim has been asserted), (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, (iii) is required under the Intercreditor Agreement or (iv) if approved, authorized or ratified in writing by the Lenders in accordance with Section 11.01;

(b)           to subordinate any Lien on any property granted to or held by the Agent under any Loan Document to (i) the Liens in favor of the First Lien Lender securing First Lien Priority Debt pursuant to the Intercreditor Agreement, and (ii) the holder of any Lien on such property that is permitted by Sections 8.02(a)(i) and (e) hereof; and

(c)           to release any Guarantor from its obligations hereunder if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.

 

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Upon request by the Agent at any time, the Lenders will confirm in writing the Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under a Guaranty pursuant to this Section 10.09.  In each case as specified in this Section 10.09, the Agent will, at the Loan Parties’ expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the security interest granted hereunder or to subordinate its interest in such item, or to release such Guarantor from its obligations hereunder, in each case in accordance with the terms of the Loan Documents and this Section 10.09.

 

10.10          Notice of Transfer.  The Agent may deem and treat a Lender party to this Agreement as the owner of such Lender’s portion of the Obligations for all purposes, unless and until, and except to the extent, an Assignment and Assumption shall have become effective as set forth in Section 11.06.

10.11          Reports and Financial Statements.  By signing this Agreement, each Lender:

(a)           is deemed to have requested that the Agent furnish such Lender, promptly after they become available, copies of all information, reports, financial statements, and other materials required to be delivered by the Borrowers hereunder and all commercial finance examinations and appraisals of the Collateral received by the Agent (collectively, the “Reports”);

(b)           expressly agrees and acknowledges that the Agent makes no representation or warranty as to the accuracy or completeness of any information, reports, financial statements or other materials, and shall not be liable for any information contained in any such materials (including any Report);

(c)           expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that the Agent or any other party performing any audit or examination will inspect only specific information regarding the Loan Parties and will rely significantly upon the Loan Parties’ books and records, as well as on representations of the Loan Parties’ personnel;

(d)           agrees to keep all Reports and other materials confidential in accordance with the provisions of Section 11.07 hereof; and

(e)           without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold the Agent and any such other Lender preparing a Report harmless from any action the indemnifying Lender may take or conclusion the indemnifying Lender may reach or draw from any Report in connection with the Term Loan that the indemnifying Lender has made or may make to the Borrower, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a portion of the Term Loan; and (ii) to pay and protect, and indemnify, defend, and hold the Agent and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including attorney costs) incurred by the Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.

10.12          Agency for Perfection.  Each Lender hereby appoints each other Lender as agent for the purpose of perfecting Liens for the benefit of the Agent and the Lenders in assets which, in accordance with Article 9 of the UCC or any other applicable Law of the United States, can be perfected only by possession.  Should any Lender (other than the Agent) obtain possession of any such Collateral, such Lender shall notify the Agent thereof, and, promptly upon the Agent’s request therefor shall deliver such Collateral to the Agent or otherwise deal with such Collateral in accordance with the Agent’s instructions.

 

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10.13           Indemnification of Agent.  Without limiting the obligations of the Loan Parties hereunder, the Lenders hereby agree to indemnify the Agent and any Related Party, as the case may be, ratably according to each Lender’s portion of the Term Loan, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Agent and its Related Parties in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted to be taken by the Agent and its Related Parties in connection therewith; provided, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent’s and its Related Parties’ gross negligence or willful misconduct as determined by a final and nonappealable judgment of a court of competent jurisdiction. The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of the Agent) authorized to act for, any other Lender.

10.14           Intercreditor Agreement; Subordination Agreements.  Each Lender hereby irrevocably appoints, designates and authorizes the Agent to enter into the Intercreditor Agreement and any subordination or intercreditor agreement pertaining to any Indebtedness that is subordinated to the Obligations, on its behalf and to take such action on its behalf under the provisions of any such agreement (subject to the last sentence of this Section 10.14). Each Lender further agrees to be bound by the terms and conditions of the Intercreditor Agreement and any subordination or intercreditor agreement pertaining to any Indebtedness that is subordinated to the Obligations. Each Lender hereby authorizes the Agent to issue blockages notices in connection with any Indebtedness that is subordinated to the Obligations.

ARTICLE XI

MISCELLANEOUS

11.01           Amendments, Etc.  No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrowers or any other Loan Party therefrom, shall be effective unless in writing signed by the Agent, with the consent of the Required Lenders, and the Borrowers or the applicable Borrower, as the case may be.  Each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

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Notwithstanding anything contained herein to the contrary, no Seller-Related Lender shall have any voting rights, rights to approve or disapprove any waiver, rights in respect of acceleration or any other consent rights or otherwise constitute a “Lender” or a holder or owner of a portion of any Loan (or be included in the calculation of holders of Loans holding a majority of, or all of, the Loans or determining “Required Lenders”) with respect to (A) any waiver, amendment, consent or other modification relating to this Agreement or any other Loan Document or (B) the exercise of any right or remedy hereunder or any other Loan Document; provided that no waiver, consent, amendment or modification shall be effective against any Seller-Related Lender without such Seller-Related Lender’s prior written consent (not to be unreasonably withheld, conditioned or delayed) to the extent it would (x) result in such Seller-Related Lender (in its capacity as a holder of a portion of a Loan) being treated adversely in a disproportionate and direct manner relative to the Lenders not constituting Seller-Related Lenders and/or (y) alter the pro rata treatment of principal and interest payments due to the Lenders; provided, further, that the foregoing proviso shall continue to apply in the context of any insolvency proceeding.  Further, notwithstanding the foregoing, in the event of any insolvency proceeding of any Credit Party, any vote or consent that any Seller-Related Lender may otherwise have been entitled to cast or give solely as a Lender, including but not limited to, any vote under 11 U.S.C. §1126, shall be deemed, and hereby is, assigned for all purposes to the Agent, who shall cast such vote in the same proportion as those cast by the Lenders not constituting Seller-Related Lenders and give, or refrain from giving, such consent at the direction of the Required Lenders (determined without reference to the Seller-Related Lenders or their portion of the Term Loan).  Upon the request by the Agent, each Seller-Related Lender shall execute a power of attorney in favor of the Agent, in form and substance satisfactory to the Agent, for purposes of authorizing the Agent to act in accordance with the foregoing. In addition: (i) notwithstanding anything to the contrary in this Agreement, no Seller-Related Lender shall have any right to (A) attend (including by telephone) any meeting or discussions (or portion thereof) among the Agent or any other Lender to which representatives of the Loan Parties are not invited or (B) receive any information or material prepared by the Agent or any other Lender or any communication by or among the Agent and/or one or more other Lenders, except to the extent such information or materials have been made available to any Loan Party or any representative of any Loan Party; (ii) for purposes of effectuating the terms of this Section 11.01, and notwithstanding anything to the contrary in this Section 11.01 or the definition of “Required Lenders” to the contrary, for purposes of determining whether the Required Lenders, all affected Lenders or all such Lenders have (A) consented (or not consented) to any amendment, modification, waiver, consent or other action with respect to any of the terms of any Loan Document or any departure by any Loan Party therefrom, (B) otherwise acted on any matter related to any Loan Document or (C) directed or required the Agent or any Lender to undertake any action (or refrain from taking any action) with respect to or under any Loan Document, each Seller-Related Lender shall be deemed to have voted its interest as a Lender without discretion in the same proportion as the allocation of voting with respect to such matter by the Lenders who are not Seller-Related Lenders; and  (iii) each Seller-Related Lender, solely in its capacity as a Lender, hereby agrees that, if any Loan Party shall be subject to any insolvency proceeding, (A) such Seller-Related Lender shall not take any step or action in such insolvency proceeding to object to, impede, or delay the exercise of any right or the taking of any action by the Agent (or the taking of any action by a third party that is supported by the Agent) in relation to such Seller-Related Lender’s claim with respect to its portion of the Term Loan or in its capacity as a Lender (including, without limitation, objecting to any debtor in possession financing, use of cash collateral, grant of adequate protection, sale or disposition, compromise, or plan of reorganization) so long as such Seller-Related Lender is treated in connection with such exercise or action on the same or better terms as the Lenders that do not constitute Seller-Related Lenders, (B) with respect to any matter requiring the vote of Lenders during the pendency of any such insolvency proceeding (including voting on any plan of reorganization pursuant to 11 U.S.C. §1126), the portion of the Term Loan owned or held by such Seller-Related Lender (and any claim with respect thereto) shall be deemed assigned for all purposes to the Agent, which shall cast such vote in accordance with this Section 11.01, and (C) such Seller-Related Lender shall otherwise give or refrain from giving any consent in any such insolvency proceeding at the direction of the Required Lenders or the Agent.  For the avoidance of doubt, the Lenders, the Agent and each Seller-Related Lender agree and acknowledge that the provisions set forth in this Section 11.01 in respect of such Seller-Related Lender constitute a “subordination agreement” as such term is contemplated by, and utilized in, Section 510(a) of the Bankruptcy Code, and, as such, would be enforceable for all purposes in any case where a Credit Party has filed for protection under the Bankruptcy Code.

11.02          Notices; Effectiveness; Electronic Communication.

(a)           Notices Generally.  Except in the case of notices and other communications expressly permitted to be given by telephone or in the case of notices otherwise expressly provided herein (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

 

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i.              If to a Loan Party or the Agent, to the address, telecopier number, electronic mail address or telephone number specified for such Person below, as changed pursuant to subsection (c) below:

	 	
(x)  If to the Agent:

	
Victory Park Management, LLC

c/o Victory Park Capital Advisors, LLC

227 West Monroe Street, Suite 3900

Chicago, Illinois 60606

Attn:  Scott R. Zemnick, General Counsel

Fax:  (312) 701-0794

	 		
	 	
With a copy to:

	
Katten Muchin Rosenman LLP

525 W. Monroe Street

Chicago, Illinois  60661

Attn:  Mark R. Grossmann and Michael

Jacobson

Fax:  (312) 577-8964 and (312) 902-1061

	 		
	 	
(y)  If to a Loan Party:

	
Katy Industries, Inc.

305 Rock Industrial Park Dr.

Bridgeton, Missouri 63044

Attention: James W. Shaffer,

Vice President, Treasurer,

Chief Financial Officer and 

Secretary

Facsimile No.: 314-770-9938

	 		
	 	
With a copy to:

	
DLA Piper LLP (US)

One Atlanta Center

1201 West Peachtree Street,

Suite 2800

Atlanta, Georgia 30309-3450

Attention:  Joseph B. Alexander, Jr., Esquire

Facsimile No.:  404-682-7990

ii.             If to any Lender, pursuant to the notification information set forth under its signature hereto.

iii.            Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).  Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).

(b)           Electronic Communications.  Notices and other communications to the Agent and the Lenders hereunder may be delivered or furnished by electronic communication (including e mail and Internet or intranet websites) pursuant to procedures approved by the Agent.  The Agent or the Borrowers may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

 

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Unless the Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

(c)           Change of Address, Etc.  Each of the Borrowers and the Agent and the Lenders may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto.

(d)           Reliance by the Credit Parties.  The Credit Parties shall be entitled to rely and act upon any notices purportedly given by or on behalf of the Borrowers even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.  The Borrowers shall indemnify the Credit Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrowers.  All telephonic notices to and other telephonic communications with the Credit Parties may be recorded by the Credit Parties, and each of the parties hereto hereby consents to such recording.

11.03          No Waiver; Cumulative Remedies.  No failure by the Credit Parties to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

11.04          Expenses; Indemnity; Damage Waiver.

(a)           Costs and Expenses.  The Borrowers shall pay all reasonable out-of-pocket expenses  (including any Extraordinary Expenses) incurred by the Agent, (A) in connection with this Agreement and the other Loan Documents, including without limitation the reasonable fees, charges and disbursements of (1) counsel for the Agent, (2) outside consultants for the Agent, (3) appraisers for appraisals performed in accordance with this Agreement and subject to the limitations in Sections 7.11(c) or 7.11(d), (4) Field Exams performed in accordance with this Agreement subject to the limitations in Section 7.11(b), (5) all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of the Obligations, and (6) environmental site assessments, (B) in connection with (1) the syndication of the credit facilities provided for herein, (2) the preparation, negotiation, administration, management, execution and delivery of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (3) the enforcement or protection of their rights in connection with this Agreement or the Loan Documents or efforts to preserve, protect, collect, or enforce the Collateral, or (4) any workout, restructuring or negotiations in respect of any Obligations.

 

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(b)           Indemnification by the Loan Parties.  Each Loan Party shall indemnify the Agent (and any agent thereof), each Lender and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold harmless each Indemnitee from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable out-of-pocket fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrowers or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby or, in the case of the Agent (and any agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by any Loan Party or any of its Subsidiaries, or any Environmental Liability related in any way to any Loan Party or any of its Subsidiaries, (iv) any claims of, or amounts paid by any Credit Party to, a Controlled Account Bank or other Person which has entered into a control agreement with any Credit Party hereunder or (v) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrowers or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrowers or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if such Borrower or such other Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

(c)           Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable law, the Loan Parties shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof.  No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

(d)           Payments.  All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.

(e)           Survival.  The agreements in this Section shall survive the occurrence of the Termination Date.

(f)            This Section 11.04 shall not apply to the Seller-Related Lenders as a party to any of the Centrex Acquisition Documents and, notwithstanding anything to the contrary in this Agreement, the Loan Parties shall have no obligations under this Agreement to pay any costs or expenses of the Seller-Related Lenders, to indemnify or hold harmless the Seller-Related Lenders or any Related Party of any of the Seller-Related Lenders or waive any damages arising out of, in connection with or as a result of the Centrex Acquisitions Documents.

 

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11.05           Marshalling; Payments Set Aside.  The Credit Parties shall not be under any obligation to marshal any assets in favor of any Loan Party or against any Obligations.  To the extent that any payment by or on behalf of any Loan Party is made to a Credit Party, or a Credit Party exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by such Credit Party in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.

11.06           Successors and Assigns.

(a)           Successors and Assigns Generally.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that no Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Agent and the Lenders.  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (c) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Credit Parties) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)           Assignments by Lenders.  Any Lender may at any time assign to one or more Persons all or a portion of its rights and obligations under this Agreement (including all or a portion of the Term Loan at the time owing to it); provided, that any such assignment shall be subject to the following conditions:

(i)            Minimum Amounts.

(A)            In the case of an assignment of the entire remaining amount of the assigning Lender’s Term Loan at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender, no minimum amount need be assigned; and

(B)            In any case not described in subsection (b)(i)(A) of this Section 11.06, the principal outstanding balance of the Term Loan of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $1,000,000 unless the Agent otherwise consents (such consent not to be unreasonably withheld or delayed).

(ii)           Proportionate Amounts.  Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Term Loan assigned.

(iii)         Required Consents.  No consent shall be required for any assignment other than (x) the consent of the Agent shall be required for assignments in respect of the Term Loan if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender and (y) if no Event of Default shall have occurred and be continuing, the consent of the Borrowers shall be required if such assignment is to a Competitor.

 

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(iv)        Assignment and Assumption.  The parties to each assignment shall execute and deliver to the Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500, provided, however, that the Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment.

Subject to acceptance and recording thereof by the Agent pursuant to subsection (c) of this Section 11.06, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.04and 11.04 with respect to facts and circumstances occurring prior to the effective date of such assignment.  Upon request, the Borrowers (at their expense) shall execute and deliver a Term Note to the assignee Lender.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 11.06(d).

(c)          Register.  The Agent, acting solely for this purpose as an agent of the Borrowers (and such agency being solely for tax purposes), shall maintain at the Agent’s Office a copy of each Assignment and Assumption delivered to it (or the equivalent thereof in electronic form) and a register for the recordation of the names and addresses of the Lenders, and the principal amounts and interest of the Term Loan (and any Term Note) owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, absent manifest error, and the Loan Parties, the Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrowers and any Lender at any reasonable time and from time to time upon reasonable prior notice.  Notwithstanding anything to the contrary herein, any assignment or other transfer in whole or in part of interests in this Agreement or the Term Loan (or Term Note) shall be effective only by registration in the Register. The appointment of a Registrar and maintenance of a Register is intended to result in this Agreement and the Term Loan (and Term Note) being at all times in “registered form” within the meaning of U.S. Treasury Regulations Section 1.871-14(c) and Sections 163(f), 871(h) and 881(c) of the Internal Revenue Code of 1986, as amended, and shall be interpreted and applied in a manner consistent therewith.  To avoid any doubt, the provisions of this Sections 11.06(c) and 11.06(d) shall apply to any Term Note (to the same extent applicable to a Term Loan) and to any transfer, assignment or participation of rights thereunder.

(d)           Participations.  The Lenders may at any time, without the consent of, or notice to, any Borrower sell participations to any Person (other than, so long as no Event of Default shall have occurred and be continuing, to a Competitor without the prior written consent of the Borrower) (each, a “Participant”) in all or a portion of the Lenders’ rights and/or obligations under this Agreement (including all or a portion of the Loans owing to it); provided that (i) the Lenders’ obligations under this Agreement shall remain unchanged, (ii) the Lenders shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the Borrowers shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and (iv) no Participant shall be granted any right to consent to any amendment, except to the extent any of the same pertain to (1) reducing the aggregate principal amount of, or interest rate on, or fees applicable to, any Loan or (2) extending the final stated maturity of any Loan or the stated maturity of any portion of any payment of principal of, or interest of fees applicable to, any of the Loans; provided that the rights described in this subclause (2) shall not be deemed to include the right to consent to any amendment with respect to or which has the effect of requiring any mandatory prepayment of any portion of any Loan or any amendment or waiver of any Default.

 

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Any agreement or instrument pursuant to which any Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement.  Subject to subsection (c) of this Section, the Borrowers agree that each Participant shall be entitled to the benefits of Sections 3.01, and 3.04 to the same extent as if it were such Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 11.08 as though it were such Lender.

(e)           Limitations upon Participant Rights.  A Participant shall not be entitled to receive any greater payment under Sections 3.01, 3.04 or 3.05 than a Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower Agent’s prior written consent.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower Agent is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrowers, to comply with Section 3.01(g) as though it were a Lender.

11.07          Treatment of Certain Information; Confidentiality.  Each of the Credit Parties agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, trustees, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrowers and their obligations, (g) with the consent of the Borrower Agent or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Credit Parties or any of their respective Affiliates on a nonconfidential basis from a source other than the Loan Parties.

For purposes of this Section, “Information” means all information received from any Loan Party or any Subsidiary relating to a Loan Party or any Subsidiary or any of their respective businesses, other than any such information that is available to any Credit Party on a nonconfidential basis prior to disclosure by a Loan Party or any Subsidiary, provided that, in the case of information received from a Loan Party or any Subsidiary after the date hereof, any information not marked “PUBLIC” at the time of delivery will be deemed to be confidential; provided, that any information marked “PUBLIC may also be marked “Confidential”.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

 

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Each of the Credit Parties acknowledges that (a) the Information may include material non-public information concerning a Loan Party or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including Federal and state securities Laws.

Each of the Loan Parties hereby authorize the Agent to publish the name of any Loan Party and the amount of the credit facility provided hereunder in any “tombstone” or comparable advertisement which the Agent elects to publish.  The Agent reserves the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements.

11.08          Right of Setoff.  At any time during an Event of Default, with the consent of the Agent, each Credit Party and its Affiliates are authorized, to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Credit Party or such Affiliate to or for the credit or the account of a Loan Party against any Obligations, irrespective of whether or not such Lender or such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such Obligations may be contingent or unmatured or are owed to a branch or office of such Credit Party or such Affiliate different from the branch or office holding such deposit or obligated on such indebtedness.  The rights of such Credit Party and each such Affiliate under this Section are in addition to other rights and remedies (including other rights of setoff) that such Person may have.

11.09           Interest Rate Limitation.  Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”).  If any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrowers.  In determining whether the interest contracted for, charged, or received by any Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

11.10          Counterparts; Integration; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

11.11          Survival.  All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof.  Such representations and warranties have been or will be relied upon by the Credit Parties, regardless of any investigation made by any Credit Party or on their behalf and notwithstanding that any Credit Party may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied shall remain outstanding.

Further, the provisions of Sections 3.01 and 3.04 and Article XI shall survive and remain in full force and effect regardless of the repayment of the Obligations or the termination of this Agreement or any provision hereof.  In connection with the termination of this Agreement and the release and termination of the security interests in the Collateral, the Credit Parties may require such indemnities and collateral security as they shall reasonably deem necessary or appropriate to protect the Credit Parties against loss on account of credits previously applied to the Obligations that may subsequently be reversed or revoked.

 

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11.12          Severability.  If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

11.13          Governing Law; Jurisdiction; Etc.

(a)           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS.

(b)          SUBMISSION TO JURISDICTION.  EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS SITTING IN COOK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE NORTHERN DISTRICT OF ILLINOIS, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH ILLINOIS STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE AGENT AND/OR THE LENDERS MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWERS OR THEIR PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c)          WAIVER OF VENUE.  EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(d)            SERVICE OF PROCESS.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.02.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

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11.14          Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

11.15          Electronic Execution of Assignments and Certain Other Documents.  The words “execution,” “signed,” “signature,” and words of like import in any amendment or other modification hereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

11.16          USA PATRIOT Act Notice.  Each Credit Party hereby notifies the Borrowers 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”), it is required to obtain, verify and record information that identifies the Borrowers, which information includes the name and address of the Borrowers and other information that will allow each Credit Party to identify the Borrowers in accordance with the Act.

11.17          No Advisory or Fiduciary Responsibility.  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that:  (i) (A) the arranging and other services regarding this Agreement provided by the Credit Parties are arm’s-length commercial transactions between each Loan Party, on the one hand, and the Credit Parties, on the other hand, (B) each Loan Party has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) each Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) each Credit Party is and has been acting solely as a principal and, except as 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 any Loan Party or any of its Affiliates or any other Person and (B) no Credit Party has any obligation to any Loan Party or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents, (iii) the Credit Parties may be engaged in a board range of transactions that involve interests that differ from those of the Loan Parties and their Affiliates, and no Credit Party has any obligation to disclose any of such interests to any Loan Party or its Affiliates and (iv) the Credit Parties have not provided and will not provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Loan Document) and each of the Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate.  To the fullest extent permitted by law, each Loan Party hereby waives and releases any claims that it may have against any Credit Party with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

 

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11.18          Attachments.  The exhibits, schedules and annexes attached to this Agreement are incorporated herein and shall be considered a part of this Agreement for the purposes stated herein; except, that, in the event of any conflict between any of the provisions of such exhibits and the provisions of this Agreement, the provisions of this Agreement shall prevail.

11.19          ORAL AGREEMENTS.  ORAL OR UNEXECUTED AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER(S)) AND US (CREDIT PARTIES) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THE CREDIT AGREEMENT, THE LOAN DOCUMENTS AND THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.

Each Borrower acknowledges that there are no other agreements among the Credit Parties and any Borrower, oral or written, concerning the subject matter of the Loan Documents, and that all prior agreements concerning the same subject matter, including any proposal or commitment letter, are merged into the Loan Documents and thereby extinguished.

 

11.20       Business Loan.  The Term Loan, including interest rate, fees and charges as contemplated hereby, is a business loan within the purview of 815 ILCS 205/4(l)(c), as amended from time to time.

[Remainder of page is intentionally left blank; signature page(s) follows.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

 

	
 

	
BORROWERS:

	
 

	 		
	
 

	
KATY INDUSTRIES, INC., a Delaware corporation

	
 

	
 

	
 

	
 

	
 

	 	By:	  	
	 	Name:	  	
	 	Title:	  	
	 			
	 	
CONTINENTAL COMMERCIAL PRODUCTS, LLC, a Delaware limited liability company

	
	 			
	 	By:	  	
	 	Name:	   	
	 	Title:	  	
	 			
	 	
FTW HOLDINGS, INC., a Delaware corporation

	
	 		
	 	By:	  	
	 	Name:	  	
	 	Title:	  	
	 			
	 	
FORT WAYNE PLASTICS, INC., an Indiana corporation

	
	 		
	 	By:	  	
	 	Name:	  	
	 	Title:	   	

 

Second Lien Credit and Security Agreement

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

 

	
 

	
GUARANTORS:

	
 

	 		
	
 

	
2155735 ONTARIO INC., an Ontario corporation

	
 

	
 

	
 

	
 

	
 

	 	By:	   	
	 	Name:	   	
	 	Title:	   	
	 			
	 	
CCP CANADA INC., an Ontario corporation

	
	 			
	 	By:	   	
	 	Name:	    	
	 	Title:	   	

 

Second Lien Credit and Security Agreement

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

 

	 	
AGENT:

	
	 		
	 	
VICTORY PARK MANAGEMENT, LLC

	
	 		
	 	By:	   	
	 	Name:	   	
	 	Title:	   	
	 			
	 	
LENDERS:

	
	 			
	 	
VPC SBIC I, LP

	
	 		
	 	By:	Victory Park Capital Advisors, LLC, its investment manager	

 

	 	By:	  	
	 	Name:	  	
	 	Title:	  	

 

Second Lien Credit and Security Agreement

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

 

	 	
SELLER-RELATED LENDERS:

	
	 		
	 	
CENTREX PLASTICS, LLC, an Ohio limited liability company

	
	 		
	 	By:	   	
	 	Name:	   	
	 	Title:	   	

 

Second Lien Credit and Security Agreement

 

EXHIBIT A

FORM OF SECOND LIEN TERM NOTE

SECOND LIEN TERM LOAN NOTE

 

	
$[_____________]

	
 

	
[____________], 20[__]

	
New York, New York

	
 

	
 

 

FOR VALUE RECEIVED, the undersigned (“Borrowers”), HEREBY PROMISE TO PAY [__________________] (“Lender”) at the offices of Victory Park Management, LLC, a Delaware limited liability company (“VPM”), as administrative agent for the Lenders (in such capacity “Agent”), at 227 West Monroe Street, Suite 3900, Chicago, Illinois 60606, or at such other place as Agent may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the amount of [____________________] ($[________]).  All capitalized terms used but not otherwise defined herein have the meanings given to them in the Second Lien Credit Agreement (as hereinafter defined).

This Second Lien Term Loan Note (this “Note”) is one of the Second Lien Term Loan Notes issued pursuant to that certain Second Lien Credit and Security Agreement, dated as of April 7, 2015, by and among the Borrowers, VPM, in its capacity as administrative agent and collateral agent for the Lenders, the other Persons signatory thereto from time to time as Guarantors, and the other Persons signatory thereto from time to time as Lenders (including all annexes, exhibits and schedules thereto and as from time to time amended, restated, supplemented or otherwise modified, the “Second Lien Credit Agreement”), and is entitled to the benefit and security of the Second Lien Credit Agreement and all of the other Loan Documents referred to therein.  Reference is hereby made to the Second Lien Credit Agreement for a statement of all of the terms and conditions under which the Loans evidenced hereby are made and are to be repaid.  The principal balance of the Second Lien Term Loan, the rate of interest applicable thereto and the date and amount of each payment made on account of the principal thereof, shall be recorded by Agent on its books; provided that the failure of Agent to make any such recordation shall not affect the obligations of the Borrowers to make a payment when due of any amount owing under the Second Lien Credit Agreement or this Note.

The principal amount of the indebtedness evidenced hereby shall be payable in the amounts and on the dates specified in the Second Lien Credit Agreement.  Interest thereon shall be paid until such principal amount is paid in full at such interest rate and at such times, and pursuant to such calculations, as are specified in the Second Lien Credit Agreement.  The terms of the Second Lien Credit Agreement are hereby incorporated herein by reference.

If any payment on this Note becomes due and payable on a day other than a Business Day, the payment thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.

Upon and after the occurrence and continuance of any Event of Default (and the expiration of any applicable grace periods provided in the Second Lien Credit Agreement), this Note may, as provided in the Second Lien Credit Agreement, and without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other legal requirement of any kind (all of which are hereby expressly waived by the Borrowers), be declared, and immediately shall become, due and payable.

Time is of the essence of this Note.

 

A - 1

Except as provided in the Second Lien Credit Agreement, this Note may not be assigned by Lender to any Person.

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

 

	
 

	
BORROWERS:

	
 

	 		
	
 

	
KATY INDUSTRIES, INC., a Delaware corporation

	
 

	
 

	
 

	
 

	
 

	 	By:	  	
	 	Name:	  	
	 	Title:	  	
	 			
	 	
CONTINENTAL COMMERCIAL PRODUCTS, LLC, a Delaware limited liability company

	
	 			
	 	By:	  	
	 	Name:	   	
	 	Title:	  	
	 			
	 	
FTW HOLDINGS, INC., a Delaware corporation

	
	 		
	 	By:	  	
	 	Name:	  	
	 	Title:	  	
	 			
	 	
FORT WAYNE PLASTICS, INC., an Indiana corporation

	
	 		
	 	By:	  	
	 	Name:	  	
	 	Title:	   	

 

A - 2

EXHIBIT B

[RESERVED]

B - 1

EXHIBIT C

FORM OF

COMPLIANCE CERTIFICATE

Financial Statement Date:  __________, _____

	To:	Victory Park Management, LLC, as Agent

Ladies and Gentlemen:

Reference is made to that certain Second Lien Credit and Security Agreement, dated as of April 7, 2015 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among Katy Industries, Inc., a Delaware corporation (the “Company”), and each subsidiary of the Company that is or hereafter becomes a borrower party to the Agreement (each of the Company and each such subsidiary may be referred to herein individually, as a “Borrower” and collectively, as “Borrowers”), each other Person that is or hereafter becomes a guarantor party to the Agreement, the Lenders that are or hereafter become parties to the Agreement, Victory Park Management, LLC, as Agent.

The undersigned Responsible Officer hereby certifies as of the date hereof that he is the _________________________________ of the Company, and that, as such, he is authorized to execute and deliver this Certificate to the Agent on the behalf of the Company, and that:

[Use following paragraph 1 for Fiscal Year-end financial statements]

1.                   Attached hereto as Schedule 1 are the year-end audited financial statements required by Section 7.01(a) of the Agreement for the Fiscal Year of the Company and its Subsidiaries ended as of the above date, together with the report and opinion of an independent certified public accountant required by said Section.

[Use following paragraph 1 for Fiscal Quarter-end financial statements]

1.                   Attached hereto as Schedule 1 are the unaudited financial statements required by Section 7.01(b) of the Agreement for the Fiscal Quarter of the Company and its Subsidiaries ended as of the above date.  Such financial statements fairly present the financial condition, results of operations, shareholders equity and cash flows of the Company and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to normal year-end adjustments case consistent with historical practices, and the absence of footnotes.

[Use following paragraph 1 for Fiscal Month-end financial statements]

1.                  Attached hereto as Schedule 1 are the unaudited financial statements required by Section 7.01(c) of the Agreement for the Fiscal Month of the Company and its Subsidiaries ended as of the above date.  Such financial statements fairly present the financial condition, results of operations, shareholders equity and cash flows of the Company and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to normal year-end adjustments case consistent with historical practices, and the absence of footnotes.

2.                  The undersigned has reviewed and is familiar with the terms of the Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and financial condition of the Company and its Subsidiaries during the accounting period covered by the attached financial statements.

 

C - 1

3.                   A review of the activities of the Company and its Subsidiaries during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period the Company and its Subsidiaries performed and observed all its Obligations under the Loan Documents, and each Borrower performed and observed each covenant and condition of the Loan Documents applicable to it[, including, without limitation, Section 8.12 of the Agreement, and no Default has occurred and is continuing. <<OR>> except as the following covenants or conditions have not been performed or observed and the following is a list of each such Default and its nature and status: _______________.]

4.                    The representations and warranties of the Loan Parties contained in Article VI of the Agreement, and any representations and warranties of the Loan Parties that are contained in any document furnished at any time under or in connection with the Loan Documents, are true and correct in all material respects on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date, and except that for purposes of this Compliance Certificate, the representations and warranties contained in subsections (a) and (b) of Section 6.05 of the Agreement shall be deemed to refer to the most recent financial statements furnished pursuant to clauses (a) and (b), respectively, of Section 7.01 of the Agreement, including the statements in connection with which this Compliance Certificate is delivered.

[Use following paragraph 5 for Fiscal Quarter end and Fiscal-Year -end financial statements]

5.                   The financial covenant analyses and information set forth on Schedule 2 attached hereto are true and accurate in all material respects on and as of the date of this Certificate.

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of _______________, _____.

 

	 	
CONTINENTAL COMMERCIAL PRODUCTS, LLC,

	
	 	
a Delaware limited liability company, as Borrower Agent

	
	 		
	 	By:	    	
	 	Name:	    	
	 	Title:	    	

 

For the twelve Fiscal Month period ended ___________________ (“Statement Date”)

 

C - 2

SCHEDULE 2

to the Compliance Certificate

($ in 000’s)

 

	
I.            Section 8.12(a) – Consolidated Fixed Charge Coverage Ratio.

	
 

	
 

	
 

		
 

	
A.

	
Consolidated EBITDA with respect to the Company and its Subsidiaries, on a consolidated basis, for the trailing twelve consecutive Fiscal Months (or other period specified in Section 8.12) ending on the above Statement Date (“Subject Period”):

	
 

	 			
	 	
A.1. 

	Consolidated Net Income for the Subject Period:	
$___________

	 			
	 	A.2.	
Consolidated Interest Charges for Subject Period (net of interest income of the Company and its Subsidiaries for the Subject Period):

	
$___________

	 			
	 	A.3.	
Federal, state, local and foreign income tax expense (net of income tax credits) for the Subject Period:

	
$___________

	 			
	 	A.4.	Depreciation and amortization for the Subject Period:	
$___________

	 			
	 	A.5.	Non-cash compensation expenses, or other non-cash expenses or charges, for the Subject Period arising from the granting of stock options, stock appreciation rights or similar equity arrangements:	
$___________

	 			
	 	A.6.	If agreed upon in writing by the Lender, non-cash expenses or losses and other non-cash charges incurred (excluding any non-cash charges representing an accrual of, or reserve for, cash charges to be paid within the next twelve months):	
$___________

	 			
	 	A.7.	LIFO reserves established during the Subject Period:	
$___________

	 			
	 	A.8.	Management Fees which have been expensed for the Subject Period:	
$___________

	 			
	 	A.9.	Reasonable costs and expenses incurred by the Loan Parties in connection with the negotiation, documentation and closing of the Centrex Acquisition in an aggregate amount not to exceed $120,000 in total and incurred no later than sixty (60) days after the Closing Date:	
$___________

	 			
	 	A.10.	Non-cash income, gains or profits or LIFO reserves for Subject Period, in each case as determined for the Company and its Subsidiaries on a Consolidated basis:	
$___________

 

C - 3

	 	A.11.	Facility Relocation Expenses incurred and paid in cash for such period:	
$___________

	 			
	 	A.12.	Up to $534,000 in tenant improvement proceeds actually received in cash by CCP (or paid on its behalf directly to the applicable vendor) under the Jefferson City Lease during the Subject Period:	
$___________

	 			
	 	A.13.	Up to $500,000 actually received in cash by CCP (or paid on its behalf directly to the applicable vendor) from the City of Jefferson for building improvements at the premises leased under the Jefferson City Lease) during the Subject Period:	
$___________

	 			
	 	A.14.	Net Facility Relocation Expenses (Lines I.A.11 -I.A.12. - I.A.13)	
$___________

	 			
	 	A.15.	Consolidated EBITDA (Lines I.A.1. + I.A.2. + I.A.3. + I.A.4. + I.A.5. + I.A.6. + I.A.7. + I.A.8. + I.A.9. - I.A.10. - I.A.14):	
$___________

	 			
	B.	Consolidated Fixed Charges for the Subject Period:	
	 			
	 	B.1.	Consolidated Interest Charges paid or required to be paid in cash for the Subject Period:	
$___________

	 			
	 	B.2.	All principal repayments made or required to be made of Consolidated Funded Indebtedness during the Subject Period, but excluding any repayments of principal of any Revolving Loan and further excluding any such payments to the extent constituting a refinancing of such Consolidated Funded Indebtedness through the incurrence of additional Indebtedness otherwise expressly permitted under Section 8.02 of the Agreement:	
$___________

	 			
	 	B.3.	All Restricted Payments made in cash for the Subject Period:	
$___________

	 			
	 	B.4.	Aggregate amount of Federal, state, local and foreign income taxes paid in cash, in each case, of or by Company and its Subsidiaries for the Subject Period:	
$___________

	 			
	 	B.5.	Cash contributions made to any Pension Plan or Foreign Plan (to the extent no deducted in the calculation of the Consolidated Net Income) during the Subject Period:	
$___________

	 			
	 	B.6.	Monthly Equipment Amortization Amount:	
$___________

	 			
	 	B.7.	Monthly Real Estate Amortization Amount:	
$___________

 

C - 4

	 	B.8	Management Fees paid in cash during the Subject Period:	
$___________

	 			
	 	B.9.	Payments made in cash in respect of the Centrex Earnout (including Centrex Earnout Payments) for the Subject Period:	
$___________

	 			
	 	B.10.	Consolidated Fixed Charges (Sum of I.B.1. + I.B.2. + I.B.3. + I.B.4. + I.B.5. + I.B.6. + I.B.7. + I.B.8. + I.B.9.):	
$___________

	 			
	C.	Consolidated Capital Expenditures for the Subject Period:	
	 			
	 	C.1.	Consolidated Capital Expenditures, without giving effect to the exclusions specified in the definition thereof in the Credit Agreement:	
$___________

	 			
	 	C.2.	Consolidated Capital Expenditures financed by interest bearing Indebtedness (excluding the revolving loans):	
$___________

	 			
	 	C.3.	Consolidated Capital Expenditures made with Net Cash Proceeds from any Disposition described in clauses (b) and (d) of Section 8.05:	
$___________

	 			
	 	C.4.	Consolidated Capital Expenditures made with Insurance  Proceeds or Condemnation Awards from any Event of Loss with respect to any property or asset, in each case, or the extent such proceeds and reinvested within one hundred (180) days of receipt thereof:	
$___________

	 			
	 	C.5.	Consolidated Capital Expenditures constituting any portion of the purchase price of the Centrex Acquisition which is accounted for as a Consolidated Capital Expenditure:	
$___________

	 			
	 	C.6.	Financed Capital Expenditures (excluding all Facility Relocation Capital Expenditures) (Lines I.C.2. + I.C.3. + I.C.4. + I.C.5.)	
$___________

	 			
	 	C.7.	Any expenditures for equipment or other property purchased simultaneously or substantially concurrently with the trade-in of existing equipment or property owned by any Borrower or any of its Subsidiaries for the Subject Period, except to the extent such expenditures exceeds the amount of credit received for such trade-in	
$___________

 

C - 5

	 	C.8	Facility Relocation Capital Expenditures (to the extent not exceeding $3,900,000 during the term of the Credit Agreement)	$                           
	 			
	 	C.9.	Consolidated Capital Expenditures (Lines I.C.1. - I.C.6. - I.C.7. - I.C.8.):	
$___________

	 			
	 		
Maximum Permitted:

	
$___________

	 			
	D.	Consolidated Fixed Charge Coverage Ratio ((Line I.A.15. – Line I.C.9.) ÷ Line I.B.10.):	$                          
	 			
	 		
Minimum Required:

	
___ to 1.00

	 			
	
II.            Section 8.12(e) - Leverage Ratio

	
	 			
	 	A.	Total Indebtedness	
$___________

	 			
	 	B.	Consolidated EBITDA (Line I.A.15)	
$___________

	 			
	 	C.	Leverage Ratio (Line II.A divided by Line II.B)	
___ to 1.00

	 			
	 		
Maximum Permitted:

	
___ to 1.00

 

C - 6

EXHIBIT E-1

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is made to that certain Second Lien Credit and Security Agreement, dated as of April 7, 2015 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement) by and among Katy Industries, Inc., a Delaware corporation (the “Company;”), Continental Commercial Products, LLC, a Delaware limited liability company, FTW Holdings, Inc., a Delaware corporation, Fort Wayne Plastics, Inc., an Indiana corporation (each of the foregoing, together with each other Person that joins this Agreement as a “Borrower”, individually and collectively, “Borrower” or “Borrowers”), each other Person that is or hereafter becomes party to the Agreement as a guarantor, the financial institutions and other entities that are or hereafter become parties to the Agreement as lenders (collectively, the “Lenders”), Victory Park Management, LLC, as administrative agent and collateral agent for the Lenders (in such capacity, the “Agent”).

Pursuant to the provisions of Section 3.01(g) of the Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of any Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Agent and the Borrowers with a certificate of its non-U.S. Person status on IRS Form W-8BEN.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrowers and the Agent, and (2) the undersigned shall have at all times furnished the Borrowers and the Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Agreement and used herein shall have the meanings given to them in the Agreement.

	
[NAME OF LENDER]

	 
	 	
	
By:

	  	 
	
Name:

	  	 
	
Title:

	  	 
	 	
	
Date:  ________________, 20[_]

	 

 

E-1 - 1

EXHIBIT E-2

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is made to that certain Second Lien Credit and Security Agreement, dated as of April 7, 2015 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement) by and among Katy Industries, Inc., a Delaware corporation (the “Company;”), Continental Commercial Products, LLC, a Delaware limited liability company, FTW Holdings, Inc., a Delaware corporation, Fort Wayne Plastics, Inc., an Indiana corporation (each of the foregoing, together with each other Person that joins this Agreement as a “Borrower”, individually and collectively, “Borrower” or “Borrowers”), each other Person that is or hereafter becomes party to the Agreement as a guarantor, the financial institutions and other entities that are or hereafter become parties to the Agreement as lenders (collectively, the “Lenders”), Victory Park Management, LLC, as administrative agent and collateral agent for the Lenders (in such capacity, the “Agent”).

Pursuant to the provisions of Section 3.01(g) of the Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of any Borrower within the meaning of Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Agreement and used herein shall have the meanings given to them in the Agreement.

 

	
[NAME OF PARTICIPANT]

	 
	 	
	
By:

	  	 
	
Name:

	  	 
	
Title:

	  	 
	 	
	
Date:  ________________, 20[_]

	 

 

E-2 - 1

EXHIBIT E-3

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is made to that certain Second Lien Credit and Security Agreement, dated as of April 7, 2015 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement) by and among Katy Industries, Inc., a Delaware corporation (the “Company;”), Continental Commercial Products, LLC, a Delaware limited liability company, FTW Holdings, Inc., a Delaware corporation, Fort Wayne Plastics, Inc., an Indiana corporation (each of the foregoing, together with each other Person that joins this Agreement as a “Borrower”, individually and collectively, “Borrower” or “Borrowers”), each other Person that is or hereafter becomes party to the Agreement as a guarantor, the financial institutions and other entities that are or hereafter become parties to the Agreement as lenders (collectively, the “Lenders”), Victory Park Management, LLC, as administrative agent and collateral agent for the Lenders (in such capacity, the “Agent”).

Pursuant to the provisions of Section 3.01(g) of the Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect to such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of any Borrower within the meaning of Section 871(h)(3)(B) of the Code, and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption:  (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Agreement and used herein shall have the meanings given to them in the Agreement.

 

	
[NAME OF PARTICIPANT]

	 
	 	
	
By:

	  	 
	
Name:

	  	 
	
Title:

	  	 
	 	
	
Date:  ________________, 20[_]

	 

 

E-3 - 1

EXHIBIT E-4

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is made to that certain Second Lien Credit and Security Agreement, dated as of April 7, 2015 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement) by and among Katy Industries, Inc., a Delaware corporation (the “Company;”), Continental Commercial Products, LLC, a Delaware limited liability company, FTW Holdings, Inc., a Delaware corporation, Fort Wayne Plastics, Inc., an Indiana corporation (each of the foregoing, together with each other Person that joins this Agreement as a “Borrower”, individually and collectively, “Borrower” or “Borrowers”), each other Person that is or hereafter becomes party to the Agreement as a guarantor, the financial institutions and other entities that are or hereafter become parties to the Agreement as lenders (collectively, the “Lenders”), Victory Park Management, LLC, as administrative agent and collateral agent for the Lenders (in such capacity, the “Agent”).

Pursuant to the provisions of Section 3.01(g) of the Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of any Borrower within the meaning of Section 871(h)(3)(B) of the Code, and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Agent and the Borrowers with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption:  (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrowers and the Agent, and (2) the undersigned shall have at all times furnished the Borrowers and the Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Agreement and used herein shall have the meanings given to them in the Agreement.

 

	
[NAME OF LENDER]

	 
	 	
	
By:

	  	 
	
Name:

	  	 
	
Title:

	  	 
	 	
	
Date:  ________________, 20[_]

	 

 

 

E-4 - 1Exhibit 10.3

 

ASSET PURCHASE AGREEMENT

 

between

 

Continental Commercial Products, LLC,

 

Centrex Plastics, LLC

 

T.R. Plastics, LLC

 

and

 

Terrence L. Reinhart

Dated as of April 7, 2015

 

TABLE OF CONTENTS

		 	 	
Page

		 	 	 
	
I.

	
CERTAIN INTERPRETIVE MATTERS

	
1

		
1.1

	
Certain Interpretive Matters

	
1

	
II.

	
PURCHASE AND SALE; CLOSING

	
2

		
2.1

	
Acquired Assets

	
2

		
2.2

	
Excluded Assets

	
3

		
2.3

	
Assumed Liabilities

	
3

		
2.4

	
No Other Liabilities Assumed

	
4

		
2.5

	
Closing

	
4

		
2.6

	
Transaction Consideration

	
4

		
2.7

	
Closing Payments

	
4

		
2.8

	
[Reserved.]

	
4

		
2.9

	
[Reserved.]

	
4

		
2.10

	
Cabinet Payment

	
4

		
2.11

	
Allocation of the Transaction Consideration

	
6

		
2.12

	
Proceedings

	
7

		
2.13

	
Disclosure Schedule

	
7

	
III.

	
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

	
7

		
3.1

	
Existence and Qualification

	
7

		
3.2

	
Authorization; Enforceability

	
7

		
3.3

	
Non-Contravention; Consents; Restrictive Documents

	
7

		
3.4

	
Capitalization

	
8

		
3.5

	
Financial Statements; Company's Books

	
8

		
3.6

	
No Undisclosed Liabilities

	
9

		
3.7

	
Interested Transactions

	
9

		
3.8

	
Tax Matters

	
9

		
3.9

	
Absence of Certain Changes

	
9

		
3.10

	
Contracts

	
11

		
3.11

	
Litigation

	
13

		
3.12

	
Compliance with Laws; Licenses

	
13

		
3.13

	
Properties; Sufficiency of Assets

	
13

		
3.14

	
Accounts Receivable; Accounts Payable

	
14

		
3.15

	
Inventories

	
14

 

-i-

TABLE OF CONTENTS

(continued)

	 			
Page

	 			
		
3.16

	
Intellectual Property

	
15

		
3.17

	
Environmental Matters

	
16

		
3.18

	
Plans and Material Documents

	
17

		
3.19

	
Interests in Counterparties and Others

	
18

		
3.20

	
Relationships; Employee Compensation

	
18

		
3.21

	
Other Employment Matters

	
19

		
3.22

	
Workers’ Compensation/OSHA

	
20

		
3.23

	
No Indebtedness

	
20

		
3.24

	
Customers and Suppliers

	
20

		
3.25

	
Warranties

	
20

		
3.26

	
Absence of Certain Business Practices

	
21

		
3.27

	
Products; Product Liability

	
21

		
3.28

	
Finders’ Fees

	
21

		
3.29

	
Solvency

	
21

		
3.30

	
Full Disclosure

	
21

	
IV.

	
REPRESENTATIONS AND WARRANTIES  OF THE PURCHASER

	
22

		
4.1

	
Organization

	
22

		
4.2

	
Authorization; Enforceability

	
22

		
4.3

	
Non‐Contravention

	
22

		
4.4

	
Finders’ Fees

	
22

	
V.

	
CERTAIN COVENANTS

	
22

		
5.1

	
No Liens

	
22

		
5.2

	
Further Assurances

	
23

		
5.3

	
Conduct of Business

	
23

		
5.4

	
Exclusive Dealing

	
23

		
5.5

	
Review of the Company

	
23

		
5.6

	
Reasonable Efforts

	
24

		
5.7

	
Employees of the Business

	
24

		
5.8

	
Consents; Procedures for Assets Not Transferable

	
26

		
5.9

	
Accounts Receivable

	
26

		
5.10

	
[Intentionally Omitted]

	
26

		
5.11

	
Litigation Cooperation

	
26

		
5.12

	
Restrictive Covenants

	
26

		
5.13

	
Distributions

	
26

 

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TABLE OF CONTENTS

(continued)

	 		
Page

	 		
	
VI.

	
TAX MATTERS

	
27

		
6.1

	
Transfer Taxes

	
27

		
6.2

	
Tax Cooperation; Allocation of Taxes

	
27

	
VII.

	
CONDITIONS TO CLOSING

	
28

		
7.1

	
Conditions to Obligations of the Purchaser at the Closing

	
28

		
7.2

	
Conditions to Obligations of the Company and the Member

	
29

	
VIII.

	
SURVIVAL; INDEMNIFICATION

	
30

		
8.1

	
Survival

	
30

		
8.2

	
Indemnification by the Company

	
31

		
8.3

	
Indemnification by the Purchaser

	
32

		
8.4

	
Indemnification Procedures

	
33

		
8.5

	
Miscellaneous Indemnification Provisions

	
34

	
IX.

	
MISCELLANEOUS

	
35

		
9.1

	
Termination

	
35

		
9.2

	
Notices

	
35

		
9.3

	
Amendments and Waivers

	
36

		
9.4

	
Expenses

	
36

		
9.5

	
Successors and Assigns

	
36

		
9.6

	
Company’s Representative

	
36

		
9.7

	
Third Party Beneficiaries

	
37

		
9.8

	
Governing Law; Consent to Jurisdiction

	
37

		
9.9

	
WAIVER OF JURY TRIAL

	
38

		
9.10

	
Counterparts

	
38

		
9.11

	
Headings

	
38

		
9.12

	
Entire Agreement

	
38

		
9.13

	
Confidentiality

	
38

		
9.14

	
Severability

	
39

		
9.15

	
Press Release and Announcements

	
39

 

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ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT (this “Agreement”) is dated as of April 7, 2015, by and among Continental Commercial Products, LLC, a Delaware limited liability company (the “Purchaser”), Centrex Plastics, LLC, an Ohio limited liability company (“Centrex”), T.R. Plastics, LLC, an Ohio limited liability company (“TR Plastics”, and together with Centrex, the “Company”), and Terrence L. Reinhart, a resident of the State of Ohio (the “Member”).  The Purchaser, the Company and the Member will individually be referred to as a “Party” and collectively as the “Parties.”

 

A.                  Certain capitalized terms used but not defined elsewhere in the text of this Agreement are defined in Annex I.

 

B.                 The Parties hereto desire to enter into this Agreement pursuant to which the Purchaser will acquire from the Company, and the Company will sell to the Purchaser, substantially all of the Company’s assets and business operations related to, used in or necessary for the Business (as defined below), and the Company, the Member and the Purchaser shall provide certain representations, warranties and indemnities, upon the terms and subject to the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the mutual benefits to be derived from this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

I.  CERTAIN INTERPRETIVE MATTERS.

 

1.1                 Certain Interpretive Matters.

 

1.1.1        Unless the context requires otherwise, (a) the terms “including” and “includes” mean “including or includes without limitation,” (b) reference to, and the definition of, any document shall be deemed a reference to such document as it may be amended, supplemented, revised, or modified, in writing, from time to time but disregarding any amendment, supplement, replacement or novation made in breach of this Agreement, (c) reference to any Law shall be construed as a reference to such Law as re-enacted, redesignated, amended or extended from time to time, (d) the information contained in the Schedules is disclosed solely for the purposes of this Agreement, and no information contained in any Schedule shall be deemed to be an admission by any party hereto to any third Person of any matter whatsoever, including an admission of any violation of any Laws or breach of any agreement, and (e) each of the Schedules and the disclosures therein will apply and consist of disclosures only to the corresponding section or subsection of this Agreement.

 

1.1.2           No provision of this Agreement will be interpreted in favor of, or against, any of the Parties by reason of the extent to which any such Party or its counsel participated in the drafting of this Agreement or by reason of the extent to which any such provision is inconsistent with any prior draft of this Agreement or any provision of this Agreement.

 

1.1.3           All references to the “knowledge of the Company” or to words of similar import will be deemed to be references to the actual knowledge of the Knowledge Persons, and such knowledge that would reasonably be expected to be known by such Knowledge Persons in the ordinary and usual course of the performance of their professional responsibility, in each case after due inquiry, including (without limitation) of the other personnel and records of each Company and their Affiliates.

 

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II.  PURCHASE AND SALE; CLOSING.

 

2.1                Acquired Assets.  Subject to the terms and conditions set forth in this Agreement, at the Closing, the Company shall sell, convey, assign, transfer and deliver to Purchaser, and Purchaser shall accept, purchase, acquire and take assignment and delivery of, all right, title and interest in, to and under all of the Company’s assets, business and goodwill of every kind and description, personal, tangible and intangible, whether or not carried or reflected on the books and records of the Company, wherever located and by whomever possessed, relating to, used in, or necessary for, the Business (collectively, the “Acquired Assets”) free and clear of all Liens (except for Permitted Liens), except for the Excluded Assets.  The Acquired Assets include, without limitation, the following:

 

(a)            all of the Inventories, all of which are set forth on Schedule 2.1(a);

 

(b)           all of Company’s right, title and interest under the Contracts relating to, used in, or necessary for, the Business, each of which is set forth on Schedule 2.1(b) (the “Assumed Contracts”), including, without limitation, any right to receive the benefit of all obligations thereunder, and the right to receive payment or goods and services thereunder, and to assert claims and take other rightful actions in respect of breaches, defaults and other violations thereunder;

 

(c)            all Licenses issued to or in the name of the Company relating to, used in or necessary for the Business, to the extent transferrable;

 

(d)           all data and records relating to, used in or necessary for the Business, including client and customer lists and records, referral sources, research and development reports and records, production reports and records, service and warranty records, equipment logs, operating guides and manuals, financial and accounting records, creative materials, advertising materials, promotional materials, studies, reports, correspondence, the Menards vendor number and other similar documents and, subject to legal requirements, copies of all personnel records;

 

(e)            all Intellectual Property Rights relating to, used in or necessary for the Business, including trademarks, copyrights, trade names, service marks, service names, patents and all registrations and pending applications therefore, and all goodwill related thereto, all of which are set forth on Schedule 2.1(e);

 

(f)             all other intangible property rights of the Company relating to, used in or necessary for the Business;

 

(g)           all computer equipment and devices, furniture, fixtures, equipment, machinery, tools, office equipment, supplies and other tangible personal property relating to, used in or necessary for the Business, all of which are set forth on Schedule 2.1(g);

 

(h)           all of the Accounts Receivable set forth on Schedule 2.1(h) hereto;

 

(i)              all rights of the Company relating to deposits and prepaid expenses, claims for refunds and rights to offset in respect thereof that are not excluded under Section 2.2 and that relate to, are used in or are necessary for the Business;

 

(j)             all claims of the Company against third parties relating to the Acquired Assets, whether choate or inchoate, known or unknown, contingent or noncontingent, all of which are set forth on Schedule 2.1(j);

 

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(k)            all customer and supplier relationships of the Company relating to, used in or necessary for the Business; and

 

(l)             all of the Company’s other assets, goodwill and rights of every kind, nature and description (whether tangible or intangible, wherever located and whether or not reflected on the books and records of the Company) relating to, used in or necessary for the Business.

 

Notwithstanding the foregoing, the transfer of Acquired Assets pursuant to this Agreement shall not include the assumption of any liability related to the Acquired Assets unless the Purchaser expressly assumes that liability pursuant to Section 2.3.

2.2                 Excluded Assets.  The following assets of the Company (collectively, the “Excluded Assets”) shall be retained by the Company, and are not part of the sale and purchase contemplated hereunder, and not being sold or assigned to the Purchaser hereunder:

 

(a)            all assets, properties, rights, interests, other intangible rights, claims and causes of action not relating to, used in or necessary for the Business;

 

(b)           the Company Real Property;

 

(c)            any equity interest in the Company, all minute books, equity transfer books, and other documents relating to the organization, maintenance, capitalization, and existence of the Company as a limited liability company;

 

(d)           all claims and rights of the Company under this Agreement and any Ancillary Agreement and the transactions contemplated hereby or thereby;

 

(e)            all Tax Returns of the Company and related work papers and correspondence;

 

(f)             all rights and interests of the Company under all leases, licenses, Contracts, and other agreements that are not Assumed Contracts;

 

(g)           all rights to claims, demands, lawsuits, judgments, and causes of action of any nature (including cross claims, counterclaims, contribution claims, and indemnification claims) and all rights of set-off, affirmative defenses, and rights of indemnification against any claims that are instituted against the Company (and not against the Purchaser or any of its Affiliates) by third parties relating to the Excluded Assets or Retained Liabilities;

 

(h)           all other assets, properties, rights, interests, other intangible rights, claims and causes of action arising out of or relating to the Excluded Assets or Retained Liabilities;

 

(i)             all cash, cash equivalents, certificates of deposit, commercial paper, letter of credit, and marketable securities owned by the Company; and

 

(j)             such other assets of the Company specifically listed on Schedule 2.2(j) of the Disclosure Schedule attached hereto.

 

2.3                 Assumed Liabilities.  The Purchaser shall assume the Accounts Payable listed on Schedule 2.3 to the extent that their value equals the combined value of the Accounts Receivable plus the Inventory. As part of the consideration for the Acquired Assets, subject to Section 2.4, from and after the Closing, the Parties acknowledge and agree that the Purchaser shall assume and agree to pay, perform and discharge the obligations of the Company which accrue after the Closing Date with respect to (i) all liabilities set forth on Schedule 2.3, (ii) all obligations of the Company under the Assumed Contracts, but only to the extent such liability (A) arises after the Closing, (B) does not arise from any breach by the Company of any such Assumed Contract, (C) is not required to be performed on or prior to the Closing Date, and (D) does not arise from or relate to any event, circumstance or condition occurring or existing on or prior to the Closing that, with or without notice or lapse of time, would constitute or result in a breach of such Assumed Contract; (iii) all obligations under the Licenses, in each case to the extent legally assigned to the Purchaser; and (iv) any other obligations arising out of or relating to the operation of the Business or the ownership or operation of the Acquired Assets after the Closing Date (collectively, the “Assumed Liabilities”).

 

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2.4                No Other Liabilities Assumed.  Notwithstanding anything in this Agreement to the contrary (i) Purchaser shall not assume, and in no event shall be deemed to have assumed, any liability of the Company whatsoever (collectively, the “Retained Liabilities”), other than as specifically set forth in Section 2.3, and (ii) the obligations of the Company pursuant to this section shall survive the Closing Date and the transactions contemplated by this Agreement.  To the extent the Purchaser pays or satisfies any Retained Liabilities, the Company shall reimburse the Purchaser promptly upon request and shall indemnify the Purchaser for any costs associated with such payment or satisfaction.

 

2.5                 Closing.  The closing (the “Closing”) of the transactions contemplated by this Agreement will take place at the offices of DLA Piper LLP (US), 1201 West Peachtree Street, Atlanta, GA 30309 at 10:00 A.M. Eastern Time or via electronic exchange, on the second Business Day, following the satisfaction or waiver of the conditions to the obligations of the Parties set forth in Article VII, or on such other date and at such other place agreed to by the Purchaser and the Company (the date on which the Closing occurs is referred to in this Agreement as the “Closing Date”).

 

2.6                Transaction Consideration.  On the terms and subject to the conditions set forth in this Agreement, at the Closing, (a) the Company will transfer, assign and surrender to the Purchaser all of the Acquired Assets, (b) the Purchaser will assume all of the Assumed Liabilities, and (c) the Purchaser shall pay to the Company Twenty-Three Million Eight Hundred Fifty-Five Thousand Two Hundred Dollars ($23,855,200.00), the “Transaction Consideration”).

 

2.7                 Closing Payments.  At the Closing, the Purchaser shall pay the Transaction Consideration as follows (the “Closing Payments”):

 

(a)            the Escrow Amount deposited by wire transfer of immediately available funds into the Escrow Account established pursuant to the terms of the Escrow Agreement; and

 

(b)           the balance to the Company in cash by wire transfer of immediately available funds to an account designated in writing to the Purchaser by the Company prior to the Closing.

 

2.8                 [Reserved.]

 

2.9                 [Reserved.]

 

2.10              Cabinet Payment.

 

 2.10.1       Cabinet Payment.  The Company currently produces a cabinet line of products in its Findlay, Ohio facility and a tote line of products in its Tiffin, Ohio facility. The tote line will be moved to the Findlay facility and the cabinet line will be moved to the Tiffin facility on or before July 1, 2015. The Company will be eligible to receive additional consideration as set forth below (“Cabinet Payment”) based on $2.3 million plus 22% of the average amount by which the Cabinet Line Sales recognized by the Purchaser over two (2) years following July 1, 2015 exceeds the Baseline Sales.  The Cabinet Payment will be established as follows:

 

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(a)            2.5 times the product of (A) the amount by which Cabinet Line Sales for the twelve (12) months following July 1, 2015 exceeds the Baseline Sales, times (B) 22%;

 

(b)            2.5 times the product of (A) amount by which the Cabinet Line Sales for the second twelve (12) months following July 1, 2015 exceeds the Baseline Sales, times (B) 22%; and

 

(c)            the average of (a) and (b) above, plus $2.3 million.

 

2.10.2        Cabinet Payment Statement.  Purchaser, following July 1, 2015, shall provide to the Company a monthly report on the cabinet line production and shipments. Within sixty (60) days after each of the two following twelve (12) month periods thereafter, Purchaser shall deliver to the Company’s Representative a statement setting forth the amount of the Cabinet Line Sales for that period (each, a “Statement”).  The Statement shall be prepared in accordance with the definition of Cabinet Line Sales.  For purposes of complying with the terms set forth in this Section 2.10, each Party shall cooperate with and make available to the other Parties, their respective Representatives, and the Chicago office of BDO Seidman or, if such firm declines the representation, a nationally recognized accounting firm mutually agreed on by the Company’s Representative and the Purchaser (the accounting firm ultimately chosen, the  (“Accounting Referee”), all information, records, data and working papers, and shall permit access to its facilities and personnel, as may be reasonably required in connection with the preparation and analysis of each Statement and the resolution of any disputes thereunder.

 

2.10.3        Statement Review.  If the Company’s Representative believes that a Statement is inaccurate or was not properly prepared in accordance with Section 2.10.2, the Company’s Representative shall so notify the Purchaser no later than fourteen (14) days after the Company’s Representative’s receipt thereof, setting forth in such notice its objections to such Statement with particularity and the specific changes which the Company’s Representative claims are required to be made in order to conform such Statement to the terms of Section 2.10.2.

 

2.10.4        Statement Dispute Resolution.  If the Company’s Representative timely notifies the Purchaser of an objection to a Statement in accordance with Section 2.10.3, the Purchaser and the Company’s Representative shall negotiate in good faith in an effort to resolve any dispute.  If the Parties are unable to resolve such dispute through good faith negotiations within fifteen (15) days after the Company’s Representative delivery of such notice of objection, then the Company’s Representative and the Purchaser shall mutually engage and submit such dispute to, and the same shall be finally resolved in accordance with the provisions of this Agreement by, the Accounting Referee.  The Accounting Referee shall determine and report in writing to the Company’s Representative and the Purchaser as to the resolution of all disputed matters and the effect of such determinations on such Statement within thirty (30) days after such submission or such longer period as the Accounting Referee may reasonably require, and such determinations shall be final, binding and conclusive on the Parties and upon which a judgment may be entered by a court of competent jurisdiction.  The fees and disbursements of the Accounting Referee shall be borne by the Party (i.e., the Company, on the one hand, and the Purchaser, on the other hand) that assigned amounts to items in dispute that were, on a net basis, furthest in amount from the amount finally determined by the Accounting Referee.

 

2.10.5        Final Statement.  The final amount owed by Purchaser to the Company shall become final, binding and conclusive on the Parties for all purposes of this Agreement and upon which a judgment may be entered by a court of competent jurisdiction, upon the earliest to occur of the following (the “Final Statement”):

 

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(a)            the mutual acceptance by the Company’s Representative and the Purchaser of both Statements, with such changes thereto, if any, as may be proposed by the Company’s Representative and consented to by the Purchaser;

 

(b)            the expiration of fourteen (14) days after the Company’s receipt of both Statements, without timely written objection by the Company in accordance with Section 2.10.3; or

 

(c)            the delivery to the Company’s Representative and the Purchaser by the Accounting Referee of the report of its determination of all disputed matters with respect to both Statements submitted to the Accounting Referee pursuant to Section 2.10.4.

 

2.10.6        Payment of Cabinet Payments.  Cabinet Payments, if earned, shall be paid by Purchaser to the Company in the following manner:

 

(a)            payments shall be established as set forth in (b), (c), and (d) below and be amortized over three (3) years and paid quarterly (every three (3) months);

 

(b)           the first payments will commence no later than forty-five (45) days after the end of the first twelve (12) months following July 1, 2015, and shall be based on the calculation set forth in Section 2.10.1(a) plus $766,666.66;

 

(c)            payment owed at the end of the second twelve (12) month period following July 1, 2015 will be established at the end of the second twelve (12) month period based on the calculation set forth in Section 2.10.1(b) plus $766,666.66; and

 

(d)           at the end of the second twelve (12) month period an average will be determined based on the two twelve (12) month periods and the calculation set forth in Section 2.10.1(c), which shall represent the total Cabinet Payment (the Purchaser shall receive credit for Cabinet Payments previously made).  For purposes of clarification, in no event shall the aggregate Cabinet Payments be less than $2,300,000.

 

The Purchaser shall not be required to pay, and the Company shall not be entitled to receive, any Cabinet Payment if the Cabinet Payment owed is less than zero.  If the Purchaser paid the Company in accordance with this Section 2.10.6 and the actual aggregate Cabinet Payment owed is less than the amount paid by the Purchaser for Cabinet Payments, the Company shall, no later than three (3) Business Days after the Final Statement for the Cabinet Payment is calculated, pay to the Purchaser the amount the Purchaser paid the Company in excess of the amount owed.  For Tax purposes, any payment under Section 2.10 shall be treated as an adjustment to the Transaction Consideration.

 

2.11             Allocation of the Transaction Consideration.  After the Closing, each of the Parties agrees to cooperate in the preparation of a schedule reflecting the allocation of the Transaction Consideration for the Acquired Assets as set forth on Schedule 2.11.  Such allocation is intended to comply with the requirements of Section 1060 of the Code.  The Company and the Purchaser hereby covenant and agree to cooperate in the preparation and filing of an IRS Form 8594 with its Tax Returns consistent with such allocation.  The Parties shall treat and report the transaction contemplated by this Agreement in all respects consistently for purposes of any Tax, including the calculation of gain, loss and basis with reference to the allocation made pursuant to this Section 2.11.  The Parties shall not take any action or position inconsistent with the obligations set forth in this Agreement.

 

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2.12              Proceedings.  Except as otherwise specifically provided for herein, all proceedings that will be taken and all documents that will be executed and delivered by the Parties on the Closing Date will be deemed to have been taken and executed simultaneously, and no proceeding will be deemed taken nor any document executed and delivered until all such proceedings have been taken, and all such documents have been executed and delivered.

 

2.13            Disclosure Schedule.  The Company has prepared and delivered to the Purchaser, as of the date of this Agreement, a disclosure schedule (the “Disclosure Schedule”), setting forth, among other things, certain information that, to the extent and as provided in this Agreement or the Disclosure Schedule, qualifies certain representations and warranties of the Company made in this Agreement in accordance with the terms of this Agreement, including Section 1.1.1(d) and (e).

 

III.  REPRESENTATIONS AND WARRANTIES

OF THE COMPANY

 

The Company and the Member, jointly and severally, represent and warrant to the Purchaser as follows:

 

3.1                 Existence and Qualification.  The Company is a limited liability company duly formed, validly existing and in good standing under the Laws of the State of Ohio.  The Company has the requisite corporate power and authority and all Licenses, consents, and approvals required to carry on the Business as presently conducted.  The Company is duly qualified or licensed to conduct business as a foreign entity and is in good standing in each jurisdiction where such qualification is required.  The Company is not in violation of any provision of its governing or Organizational Documents.

 

3.2               Authorization; Enforceability.  The Company has the requisite limited liability company power and authority to execute, deliver, and perform its obligations under this Agreement and each Ancillary Agreement to which the Company or the Member is or will be a party.  This Agreement and each Ancillary Agreement to which the Company is or will be a party has been duly authorized, executed and delivered by the Company or the Member, respectively.  This Agreement and each Ancillary Agreement to which the Company or the Member is or will be a party has been or will be duly authorized, executed and delivered by the Company or the Member, respectively, and once executed, will constitute, a legal, valid and binding agreement of the Company or the Member, respectively, enforceable against the Company or the Member, respectively, in accordance with their respective terms.

 

3.3                 Non-Contravention; Consents; Restrictive Documents.

 

3.3.1            Except as disclosed on Schedule 3.3.1, the execution, delivery and performance by the Company and the Member of this Agreement and each of the Ancillary Agreements to which they are, as contemplated by this Agreement, to become a party, did not and will not (a) violate the governing or Organizational Documents of the Company, (b) violate any applicable Law or Order, (c) require any filing with or permit, consent, or approval of, or require the giving of any notice to, any court or other Person (including filings, consents, or approvals required under any Licenses of the Company or any Licenses, leases, franchises, contracts, or other agreements to which the Company or the Member is or will be a party), (d) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default under, or give rise to any right of termination, cancellation, or acceleration of any right or obligation of, the Company, or to a loss of any benefit to which the Company is entitled, under any agreement or other instrument binding upon or providing rights to the Company, or any License, or other similar authorization held by the Company, or (e) result in the creation or imposition of any Lien (other than Permitted Liens) on any Acquired Asset or other asset of the Company.

 

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3.3.2            Except as disclosed on Schedule 3.3.2, the Company is not subject to, or a party to, any charter, bylaw, mortgage, Lien, lease, License, instrument, Law, Order, or any other restriction of any kind or character, that (a) has had or would reasonably be expected to have a Material Adverse Effect, (b) would prevent the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements or compliance by the Company with the terms, conditions and provisions of this Agreement and the Ancillary Agreements to which the Company is, as contemplated by this Agreement, to become a party, or the continued operation of the Business after the date of this Agreement or the Closing Date on substantially the same basis as historically operated or (c) would restrict the ability of the Company to acquire any property or assets, market, sell, or otherwise distribute products or merchandise, or provide its services or conduct the Business in any area.

 

3.4                 Capitalization.

 

3.4.1          The authorized and outstanding membership interests (“Membership Interests”) of the Company are duly authorized, validly issued and fully paid and are lawfully owned of record and beneficially held by the Member in such amounts as disclosed on Schedule 3.4.1, free and clear of any Liens.  Except as disclosed on Schedule 3.4.1, the Membership Interests are not subject to any voting trust agreement or other contract, agreement, arrangement, commitment, option, proxy, pledge, or understanding, including any contract restricting or otherwise relating to the ownership, voting rights, distribution rights, or disposition thereof.

 

3.4.2          The Company has no Subsidiaries and does not own, directly or indirectly, any capital stock, membership interests, or other securities of any Person.

 

3.5                 Financial Statements; Company’s Books.

 

3.5.1          The Company has delivered to the Purchaser the Financial Statements, copies of which are attached as Schedule 3.5.1.  The Financial Statements (i) have been prepared in accordance with GAAP, (ii) are correct and complete in all material respects, (iii) reflect the consistent application of accounting principles throughout the periods involved, (iv) except where inconsistent with GAAP, have been prepared using the same accounting principles and practices as the Company has used historically, (v) are derived from and accurately reflect the books and records (including the general ledgers) of the Company, and (vi) other than adjustments made in the Ordinary Course which are not reflected on any Financial Statements that have not been audited, fairly present the consolidated financial position of the Company at the dates thereof and the results of the operations and cash flows of the Company for the periods indicated.  Except as disclosed on Schedule 3.5.1, no financial statements of any Person other than the Company is required by GAAP to be included in the financial statements of the Company.  The Company has also made available to the Purchaser true and complete copies of material letters and similar written correspondence of any kind from the Company’s accountants to the Company during the thirty-six (36) months preceding the execution of this Agreement, together with true and complete copies of all responses thereto.

 

3.5.2          The books of account and other financial records of the Business have been made available to the Purchaser and are complete and correct and represent actual, bona fide transactions and have been maintained in accordance with applicable legal and accounting requirements and sound business practices.  The Company has never identified or been made aware of any fraud that involves the Business, its management or other employees or any claim or allegation regarding any of the foregoing, and the Company has not received any written notice from its independent accountants regarding any of the foregoing.

 

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3.6                 No Undisclosed Liabilities.  There are no liabilities or obligations of the Company related to the Business or facts or circumstances that could give rise to liabilities of the Company related to the Business, whether known or unknown, accrued, contingent, absolute, determined, determinable, or otherwise, whether due or to become due (collectively “Liabilities”), other than (a) Liabilities specifically disclosed on Schedule 3.6, (b) immaterial Liabilities incurred in the Ordinary Course, and (c) other Liabilities for legal, accounting and other professional expenses incurred in connection with the transactions contemplated by this Agreement.

 

3.7                Interested Transactions.  Schedule 3.7 contains a complete list of (i) all amounts and obligations owed between any director, officer, employee, Member or any of their Affiliates, on the one hand, and the Company, on the other hand, and (ii) transactions and services provided since December 31, 2011 between any director, officer, employee, Member or any of their Affiliates, on the one hand, and the Company, on the other hand, that relate to the Business.  Except as disclosed on Schedule 3.7, since December 31, 2014, there has not been any accrual of liability or incurrence of an obligation by the Company to the Member or any of its Affiliates or between the Company and the Member or any of its Affiliates or any action taken (other than this Agreement) or any payment of dividends or other payments of cash or property by the Company to the Member or any of its Affiliates, or the incurrence of any legal or financial obligation to any such Person.

 

3.8                Tax Matters.

 

3.8.1           All Tax Returns required to be filed by the Company have been duly and timely filed.  The Company has paid all Taxes due (whether or not shown as due and owing on such Tax Returns) as of the Closing.  The Company is not currently the beneficiary of any extension of time within which to file any Tax Return. Any unpaid Taxes of the Company with respect to the Acquired Assets did not, as of December 31, 2014, exceed the accruals and reserves for Taxes set forth on the Balance Sheet.

 

3.8.2          There are no Tax claims, audits or proceedings pending or, to the knowledge of Company, threatened against the Company.  There are no rulings, subpoenas or requests for information pending with respect to the Company with any Governmental Authority.  There are not currently in force any waivers or agreements binding upon the Company for the extension of time for the assessment or payment of any Tax.

 

3.8.3          The Company has properly withheld and/or paid all Taxes required to have been withheld and/or paid in connection with amounts paid or owing to the Member, employee, creditor, independent contractor, or other third party.  Each Person providing services to the Company has been properly classified as an employee or independent contractor, as the case may be, for all Tax purposes and with respect to all Plans.

 

3.8.4          All material elections with respect to Taxes affecting the Company have been disclosed to the Purchaser.

 

3.8.5          There are no Liens for Taxes upon any of the Acquired Assets of the Company, other than Permitted Liens.

 

3.9                Absence of Certain Changes.  Except as disclosed on Schedule 3.9 or as contemplated by this Agreement, the Company has conducted its business in the Ordinary Course and has not:

 

(a)            amended or modified its governing or Organizational Documents;

 

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(b)           (i) outside the Ordinary Course, changed any salaries or other compensation of, or paid any bonuses to, any director, manager, officer, or Business Employee, as applicable, or entered into any employment, severance, or similar agreement with any director, manager, officer, or Business Employee, (ii) granted or paid any severance or termination pay to any former officer, director, manager, or employee of the Company used in the Business, or (iii) adopted, amended or increased any benefits under any profit sharing, bonus, deferred compensation, savings, insurance, pension, retirement, or other Plan or policy;

 

(c)           outside the Ordinary Course, entered into, modified, amended, extended or terminated, or waived, released, or assigned any rights or claims under, any Material Contract or materially changed any business practice;

 

(d)           with respect to any Acquired Asset, incurred, assumed, or guaranteed any Indebtedness or granted any Lien other than a Permitted Lien;

 

(e)            made any material change in financial or Tax accounting methods or practices, except as required by an applicable Law or GAAP, or made, changed, revoked or modified any material Tax election;

 

(f)            directly or indirectly sold, leased, licensed, abandoned, mortgaged or otherwise encumbered or subjected to any Lien (other than a Permitted Lien) or otherwise disposed in whole or in part any of its material properties, assets or rights or any interest therein except in the Ordinary Course;

 

(g)           (i) written-off as uncollectible any notes or Accounts Receivable except write-offs in the Ordinary Course charged to reserves, (ii) written-off, written-up, or written-down any other material asset of the Company, or (iii) altered the customary time periods for collection of Accounts Receivable or payments of Accounts Payable;

 

(h)            with respect to the Business, paid, discharged, settled, or satisfied any claims, liabilities, or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) or any action for Damages, in each case in excess of $25,000 individually or $50,000 in the aggregate, or commenced any lawsuit related to the Business for Damages in excess of $25,000 individually or $50,000 in the aggregate, other than the payment, discharge, or satisfaction of liabilities incurred in the Ordinary Course;

 

(i)            with respect to the Business (i) entered into any compromise or settlement of, or taken any other action with respect to, any litigation, action, suit, claim, proceeding, or investigation, or (ii) waived, canceled, sold, or otherwise disposed of, for less than the face amount thereof, any claim or right it has against others;

 

(j)             incurred or committed to incur any capital expenditure or authorization or commitment with respect thereto relating to the Business;

 

(k)            caused or suffered any material damage, destruction, or other casualty loss (whether or not covered by insurance) affecting the Business or the Acquired Assets;

 

(l)             suffered any adverse change in its business, operations, or financial condition or become aware of any event which may result in any such adverse change;

 

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(m)          directly or indirectly acquired or agreed to acquire any assets that are material to the Business; or

 

(n)           committed, agreed to, or contracted to do any of the foregoing.

 

3.10              Contracts.

 

3.10.1        Except (i) for this Agreement and the Ancillary Agreements, (ii) as disclosed on Schedule 3.10.1, and (iii) for any oral agreements that were entered into in the Ordinary Course in connection with the employment of Business Employees and contractors of the Company that provide services to or on behalf of the Business (which oral agreements are terminable by the Company at will without the payment of any severance, penalty or other amount), the Company is not a party to or bound by any of the following agreements (whether written or oral):

 

(a)            any partnership, joint venture, or other similar Contract or arrangement relating to, used in or necessary for the Business, or any Contract relating to the acquisition or disposition of the Business (whether by merger, sale of stock, sale of assets, or otherwise);

 

(b)           any Contract relating to Indebtedness (in any case, whether incurred, assumed, guaranteed, or secured by any Acquired Asset);

 

(c)           any Contract that limits the Company or the Business from marketing, selling, or otherwise distributing or providing any products or services of the Business in any geographic area, or from competing in any line of business or geographic area or with any Person;

 

(d)           any Contract or arrangement relating to, used in, or necessary for, the Business with (i) the Member or any of its Affiliates, (ii) any Person directly or indirectly owning, controlling, or holding with power to vote, five percent (5%) or more of the outstanding voting securities of the Member’s Affiliates, (iii) any Person five percent (5%) or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote by the Member or any of its Affiliates or (iv) any director, manager or officer of the Company or with any “associate” or the Member of the “immediate family” (as such terms are respectively defined in Rules 12b-2 and 16a-1 of the Exchange Act) of any such director, manager or officer;

 

(e)           any management service, consulting, or any other similar type of Contract relating to, used in or necessary for the Business;

 

(f)            any warranty, guaranty, or other similar undertaking with respect to a contractual performance extended by the Company relating to, used in or necessary for the Business other than in the Ordinary Course;

 

(g)           any employment, deferred compensation, severance, bonus, retirement, or other similar Contract or plan relating to, used in or necessary for the Business;

 

(h)           any Contract relating to, used in or necessary for the Business involving payments by or to the Company of more than $10,000 in any 12-month period;

 

(i)             any Contract under which another party thereto is one of the ten (10) largest customers, if any, and ten (10) largest suppliers, of the Business, as measured by the dollar amount of sales or purchases thereby during the fiscal year ended immediately prior to the date of this Agreement;

 

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(j)             any Contract with any agency, dealer, sales representative, or distributor for the marketing, selling and distribution of the products and services of the Business;

 

(k)            any material license or similar Contract relating to, used in or necessary for the Business;

 

(l)             any Contract, the termination of which or the failure of which to be renewed, would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

(m)          any leases of Company Real Property or material personal property relating to, used in or necessary for the Business;

 

(n)           any Contract related to the Business with any labor organization;

 

(o)           any Contract or commitment providing for payments based in any manner upon the sales, purchases, receipts, income or profits of the Business;

 

(p)           any Contract that would prevent consummation of the transactions contemplated by this Agreement and the Ancillary Agreements, compliance by the Member with the terms, conditions, and provisions of this Agreement and the Ancillary Agreements (to which the Member is or will be a party), or the continued operation of the Business after the date of this Agreement or the Closing Date on substantially the same basis as historically operated;

 

(q)           any Contract relating to, used in or necessary for the Business pursuant to which the Company (i) is granted or obtains or agrees to obtain any right to use any material Intellectual Property Right (other than standard form Contracts granting rights to use readily available shrink wrap or click wrap software), (ii) is restricted in its right to use or register any Intellectual Property Rights, or (iii) permits or agrees to permit any other Person to use, enforce, or register any Company owned, used, or held, Intellectual Property Rights, including any license agreements, coexistence agreements, and covenants not to sue related to such Intellectual Property Rights;

 

(r)             any Contract that provides any customer of the Business with pricing, discounts or benefits that change based on the pricing, discounts or benefits offered to other customers of the Business, including, without limitation, contracts containing what are generally referred to as “most favored nation” provisions; or

 

(s)            any other Contract relating to, used in or necessary for the Business not made in the Ordinary Course.

 

3.10.2        Each Contract disclosed on Schedule 2.1(b) (Assumed Contracts) and Schedule 3.10.1 or any other schedule to this Agreement or required to be disclosed thereon (each a “Material Contract”) is a valid and binding Contract of the Company and, to the Company’s knowledge, is in full force and effect and not subject to any claims, charges, setoffs or defenses, and neither the Company nor any of its Affiliates nor, any other party thereto, is in default or breach under the terms of any such Material Contract.  There is no event, occurrence, condition, or act (including the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements) that, with the giving of notice or the passage of time, could become a default or event of default under any such Material Contract by any of the parties thereto.  The Company has delivered to the Purchaser true and complete copies of each written Material Contract and true and complete summaries of all oral Material Contracts (other than any oral Contracts that were entered into in the Ordinary Course in connection with the employment of the Company’s employees and are terminable by the Company at will without the payment of any severance, penalty or other amount).  Since December 31, 2012, the Company has not received any notice (a) alleging breach of any Material Contract, (b) terminating or threatening to terminate any Material Contract or (c) of intent not to renew a Material Contract.

 

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3.11             Litigation.  Except as disclosed on Schedule 3.11, there is no action, suit, investigation, arbitration, or administrative or other proceeding pending or threatened against the Company or the Member relating to or otherwise affecting the Business or any of the Acquired Assets, and to the knowledge of the Company, no event has occurred or circumstance exists that may give rise to or serve as a basis for any of the foregoing.  The Company has delivered to the Purchaser true, correct and complete copies of all pleadings, correspondence and other documents relating to each proceeding disclosed on Schedule 3.11 and each settlement or similar agreement entered into by the Company or the Member (i) during the three (3) year period prior to the date of this Agreement or (ii) with respect to which any material obligation of any party thereto is outstanding as of the date of this Agreement.  Neither the Company, the Member, nor the Business is subject to or bound by any Order that would prevent or otherwise interfere with the ability of the Company or the Member to consummate the transactions contemplated by this Agreement or that would otherwise affect the Business or any of the Acquired Assets.  None of the items described in Schedule 3.11, singly or in the aggregate, if pursued and/or resulting in a judgment or decision against the Company, would have a Material Adverse Effect or would result in the creation of a material Liability against the Company or the Member.

 

3.12              Compliance with Laws; Licenses.

 

3.12.1        Except as disclosed on Schedule 3.12.1, the Company is not and has not been in violation of any applicable Law or Order, nor does the Company have knowledge of the issuance or proposed issuance of, any notice by any Governmental Authority of any violation or any alleged violation of any Law or Order relating to the Business.

 

3.12.2        Schedule 3.12.2 sets forth a list of each License held by the Company or issued and held in respect of the Company, or required to be so issued and held, to carry on the Business as currently conducted.  Except as disclosed on Schedule 3.12.2, each License disclosed on Schedule 3.12.2 is held by the Company and is valid and in full force and effect and will not be terminated or impaired (or become terminated or impaired) as a result of the transactions contemplated by this Agreement or any Ancillary Agreement.  The Company is not in default under, and no condition exists that with notice or lapse of time or both would constitute a default or violation under, any License held by the Company.

 

3.13              Properties; Sufficiency of Assets.

 

3.13.1        The Company does not own and has not owned any Company Real Property relating to, used in or necessary for the Business except as set forth on Schedule 3.13.1 (the “Owned Real Property”).  Schedule 3.13.1 sets forth a list of all Company Real Property leased or otherwise used by the Company in connection with the Business (the “Leased Real Property”).  All leases of Leased Real Property are valid, binding, and enforceable in accordance with their respective terms against the Company and against each other party thereto, and the Company is a tenant or possessor in good standing thereunder and all rents currently due under such leases have been paid.  There does not exist under any such lease any default or any event which with notice or lapse of time or both would constitute a default.  The Company is in peaceful and undisturbed possession of the space and/or estate under each lease of which it is a tenant and has good and valid rights of ingress and egress to and from all such Leased Real Property and to the public street systems for all usual street, road and utility purposes.  Neither the Company nor has the Member received any notice of any appropriation, condemnation, or like proceeding, or of any violation of any applicable zoning Law or Order relating to or affecting the Leased Real Property, and to the knowledge of the Company, no such proceeding has been threatened or commenced.

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3.13.2        Schedule 3.13.2 sets forth a list of all tangible personal property (including equipment) necessary for the conduct of the Business and indicates whether each item of tangible personal property is owned or leased.  The Acquired Assets constitute all of the assets relating to, used in or necessary for, the Business and are sufficient to conduct the Business as presently conducted.  The Company has good and marketable title to all of the Acquired Assets, in each case, free and clear of all Liens except for Permitted Liens.  Except pursuant to this Agreement, the Company is not a party to any contract or obligation whereby there has been granted to any Person an absolute or contingent right to purchase, obtain or acquire any rights in any of the assets, properties or operations of the Company.  All tangible personal property owned or leased by the Company and set forth on Schedule 3.13.2 is in good operating condition and state of repair, subject only to ordinary wear and tear which is not such as to affect adversely the operation of the Business as presently conducted.  The Company Real Property to be leased to the Purchaser pursuant to the Real Property Lease (including, without limitation, all water, gas, electrical, and HVAC systems) is in good repair and operating condition in all material respects in light of the age and use thereof, ordinary wear and tear excepted, and constitutes all real property, buildings and other improvements necessary for the Company to conduct the Business as currently conducted.  To the knowledge of the Company, no person or improvement is encroaching upon any of the Company Real Property, and none of the activities of the Company on the Company Real Property or any of the improvements thereon are encroaching upon the property of others or easements or rights‐of‐way in favor of others.

 

3.14             Accounts Receivable; Accounts Payable.

 

3.14.1        The Accounts Receivable outstanding on the date hereof do, and the Accounts Receivable outstanding on the Closing Date will, represent sales actually made or services actually performed or to be performed in the Ordinary Course in bona fide, arms‐length transactions completed in accordance with the terms and provisions contained in any documents relating thereto and in compliance with applicable Laws.  Unless paid prior to the Closing Date, the Accounts Receivable are or will be as of the Closing Date current and collectible net of the respective reserves.  All Accounts Receivables have been fully collected or may be fully collected without offset or counterclaim, in the aggregate face amounts thereof.  The Company’s reserves for Accounts Receivable have been and will be adequate and determined in accordance with its accounting principles.  No claims of rights of setoff exist that would exceed such reserves.  The Company has not factored or discounted, or agreed to factor or discount, any Accounts Receivable.  On the Closing Date and prior to the Closing, the Company will have delivered to the Purchaser a complete and accurate list of all Accounts Receivable as of the Closing Date, which list will set forth the aging of such Accounts Receivable.  The Company has complete and correct copies of all instruments, documents and agreements evidencing all of its Accounts Receivable and of all instruments, documents or agreements creating security therefor, if any.

 

3.14.2        On the Closing Date and prior to the Closing, the Company will have delivered to the Purchaser a complete and accurate list of all Accounts Payable as of the Closing Date, which will set forth the aging of such Accounts Payable.  The Company has complete and correct copies of all instruments, documents and agreements evidencing all of its Accounts Payable and the terms thereof.  Since January 1, 2014 the Company has not altered the customary time periods for payments of Accounts Payable.

 

3.15             Inventories.  All items included in the Inventories consist of a quality and quantity usable and, with respect to finished goods, saleable, in the Ordinary Course except for obsolete items and items of below-standard quality, all of which have been written off or written down to net realizable value or on the accounting records of the Company as of the Closing Date, as the case may be.  The Company is not in possession of any inventory related to the Business not owned by the Company, including goods already sold.  The quantities of each item of Inventories (whether raw materials, work-in-process or finished goods) are not excessive but are reasonable in the present circumstances of the Company.  Work-in-process Inventories are now valued, and will be valued on the Closing Date, according to GAAP.  On the Closing Date and prior to the Closing, the Company will have delivered to the Purchaser a complete and accurate list of all Inventories as of the Closing Date.

 

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3.16              Intellectual Property.

 

3.16.1        Schedule 3.16.1(a) sets forth a complete and correct list of all of the Company’s (i) issued patents and patent applications, (ii) domain names and registered trademarks and applications therefor, (iii) registered copyrights and applications therefor, and (iv) rights in material software and all documentation, including user manuals and training material, related thereto, which is owned by the Company in any jurisdiction in the world and relates to, is used in or is necessary for the Business (the “Company Owned Intellectual Property”).  Schedule 3.16.1(b) sets forth all material licenses (other than shrink wrap licenses), sublicenses, and other similar agreements, including any ongoing software or website maintenance agreements, as to which the Company is a party and which relates to, is used in or is necessary for the Business, including the identity of all parties thereto other than licenses and shrink wrap licenses for commercial off-the-shelf software products (the “Company Licensed Intellectual Property”).

 

3.16.2       The Company owns or has valid and legally enforceable rights to use, free and clear of any Liens (other than Permitted Liens), all Intellectual Property Rights necessary to conduct the Business as currently conducted or as proposed to be conducted without any conflict with or infringement or misappropriation of any rights or property of third parties.  No action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand is pending or threatened which challenges the legality, validity, enforceability, use or ownership of such Intellectual Property Rights.

 

3.16.3        (i) To the knowledge of the Company, there is no unauthorized use, disclosure, infringement, or misappropriation of the Intellectual Property Rights or other proprietary rights of the Company relating to, used in, or necessary for, the Business, nor (ii) is there, any valid basis for any claim of infringement or misappropriation, from any third party of the Intellectual Property Rights or other proprietary rights relating to, used in, or necessary for, the Business of any third party against the Company.

 

3.16.4        Except as disclosed on Schedule 3.16.4:

 

(a)            neither the Company’s use of any Intellectual Property Rights relating to, used in, or necessary for, the Business, nor the conduct of the Business as currently conducted or as conducted in the past, infringed or infringes any Intellectual Property Rights or other proprietary rights of any other Person;

 

(b)           to the knowledge of the Company, no Person is infringing on, misappropriating, or using on an unauthorized basis, and the Company has no knowledge of any facts, circumstances or conditions that a reasonable person would conclude provide a valid basis for any such claim that any Person is infringing on, misappropriating, or using on an unauthorized basis, any Intellectual Property Rights owned, used or held for use by the Company relating to, used in, or necessary for, the Business, or that any Person is considering or threatening such a claim;

 

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(c)            no Intellectual Property Right of the Company is subject to any outstanding Order, stipulation, or agreement restricting the use thereof by the Company or restricting the licensing thereof by the Company to any Person;

 

(d)           the Company has not entered into any agreement to indemnify any other Person against any charge of infringement of any Intellectual Property Right relating to, used in, or necessary for, the Business;

 

(e)            all developers, creators, inventors, and authors of Intellectual Property Rights owned, used or held for use by the Company relating to, used in, or necessary for, the Business (other than the Company Licensed Intellectual Property), who were not employees of the Company at the time of the development, creation, invention, or authorship of such Intellectual Property Rights have assigned in writing all of their rights, title, and interest to such Intellectual Property Rights to the Company;

 

(f)            any Intellectual Property Rights developed, created, invented, or authored by individuals who were employed by the Company at the time of such development, creation, invention, or authorship is the sole property of the Company, and no such employee has any rights, title, or interest in such Intellectual Property Rights.  All employees of the Company have executed and delivered to the Company an agreement prohibiting disclosure of the Company’s confidential and proprietary information;

 

(g)            in connection with the use of the Intellectual Property Rights by the Company relating to, used in, or necessary for, the Business, the Company does not owe to any other Person any fee, royalty, or other payment as a result of the use of such Intellectual Property Rights;

 

(h)            the Company has not entered into any license or other Contract pursuant to which the Company has granted to any other Person the right to use any Intellectual Property relating to, used in, or necessary for, the Business;

 

(i)              the Business is not using, and it will not be necessary for the Business to use, (i) any inventions or other Intellectual Property Rights of any of past or present employees or contractors of the Company made prior to or outside the scope of their employment by the Company, or (ii) any confidential information or trade secrets of any former employer of any such Person;

 

(j)             there are no actions that must be taken within sixty (60) days following the Closing Date that, if not taken, would result in the loss of any Intellectual Property Rights relating to, used in, or necessary for, the Business, including the payment of any registration, maintenance, or renewal fees or the filing of any responses to U.S. Patent and Trademark Office actions, documents, applications, or certificates for the purposes of obtaining, maintaining, perfecting, or preserving or renewing any Intellectual Property Rights relating to, used in, or necessary for, the Business; and

 

(k)            the Company has taken necessary, appropriate or commercially reasonable steps to protect and preserve the confidentiality of all Intellectual Property Rights and confidential and proprietary information relating to, used in, or necessary for, the Business that is not otherwise disclosed in published patents or patent applications or registered copyrights.

 

3.17              Environmental Matters.

 

3.17.1        The Company is, and has at all times been, in compliance in all material respects with all applicable Environmental Laws.

 

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3.17.2        There are no pending or, to the knowledge of the Company, threatened Environmental Claims against the Company or the Company Real Property.

 

3.17.3        To the knowledge of the Company, there is no underground storage tanks or sumps, landfills, surface impoundments, or other units for the treatment, storage or disposal of, nor have there been any releases of, Hazardous Substances, at, on, in, or under any Company Real Property, nor, to the knowledge of the Company, has there been any releases by the Company of Hazardous Substances or petroleum constituents onto adjacent property.

 

3.17.4        Neither the Company nor the Company Real Property to be leased to the Purchaser pursuant to the Real Property Lease is listed or, to the knowledge of the Company, proposed for listing on the National Priorities List under CERCLA or on any similar federal, state, or foreign list of sites requiring investigation or clean‐up, nor has the Company received any notice as a potentially responsible party under Environmental Law.

 

3.17.5        There are no Environmental Permits relating to, used in or necessary for the Business that are nontransferable or require consent, notification, or other action to remain in full force and effect following the consummation of the transactions contemplated hereby.

 

3.17.6        The Company does not have any liability or obligation, and has not entered into an agreement or consent order assuming any liability or obligation, under any Environmental Law (including any obligation to remediate any Environmental Condition whether caused by the Company or any other Person).

 

3.17.7        The Company has delivered to the Purchaser true, correct and complete copies of all environmental investigations, studies, audits, tests, reviews, or other analyses by or on behalf of the Company or that are available to the Company.

 

3.18              Plans and Material Documents.

 

3.18.1        Schedule 3.18.1 sets forth a list of all employee benefit plans (as defined in Section 3(3) of ERISA), and all other compensation or benefit plans, programs, arrangements, contracts, or schemes, written or oral, statutory or contractual, with respect to which the Company, or any ERISA Affiliate of the Company, has any obligation or liability to contribute or that are maintained, contributed to or sponsored by the Company or any such ERISA Affiliate for the benefit of any current or former employee, officer or director of the Company used in or that otherwise provided any services to or on behalf of the Business (collectively, the “Plans”) during the six year period immediately preceding the Closing.  With respect to each Plan, the Company has delivered or made available to the Purchaser a true and complete copy of each such Plan (including all amendments thereto) and a true and complete copy of each material document (including all amendments thereto) prepared in connection with each such Plan.  Other than the Plans, neither the Company, nor any ERISA Affiliate of the Company, has made any express or implied commitment, whether legally enforceable or not, to create, incur liability with respect to or cause to exist any employee benefit plan, program, arrangement, contract, or scheme or to modify any Plan, other than as required by Law.

 

3.18.2        Each Plan is in compliance in all material respects with, and has for all relevant periods been operated in all material respects in accordance with, its terms and the requirements of all applicable Laws, and the Company and each ERISA Affiliate of the Company has satisfied in all material respects all of its statutory, regulatory, and contractual obligations with respect to each such Plan.  No action, suit, claim, or proceeding is pending or, to the knowledge of the Company, threatened with respect to any Plan (other than routine claims for benefits in the Ordinary Course) and no fact or event exists that could give rise to any such action, suit, or claim.

 

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3.18.3        All contributions, premiums, or payments required to be made with respect to each Plan have been made on or before their due dates and within the applicable time required by the Plan and applicable Law.  All such contributions have been fully deducted for income tax purposes and no such deduction has been challenged or disallowed by any Governmental Authority, and no fact or event exists which could reasonably be expected to give rise to any such challenge or disallowance.

 

3.18.4        There has been no amendment to, interpretation of, or announcement (whether or not written) by the Company or any ERISA Affiliate of the Company relating to, or change in employee participation or coverage under, any Plan, singly or in the aggregate, that would increase the expense of maintaining such Plan above the level of the expense incurred with respect thereto for the most recent fiscal year ended prior to the date of this Agreement.  Each Plan can be amended, terminated or otherwise discontinued after the Closing in accordance with its terms, without liability to the Purchaser, the Company or any ERISA Affiliate of the Company (other than ordinary administration expenses or with respect to benefits previously earned, vested or accrued thereunder).

 

3.18.5        Except as set forth on Schedule 3.18.5, no employee or former employee of the Company or any ERISA Affiliate of the Company, is, or will become, entitled to any bonus, retirement, severance, job security, or similar benefit or enhanced such benefit (including acceleration of vesting or exercise of an incentive award) as a result of the transactions contemplated by this Agreement or any of the Ancillary Agreements.  The consummation of the transactions contemplated by this Agreement or any of the Ancillary Agreements will not result in any modification to the service credits accrued by any employee or former employee under any of the Plans and no payment, deemed payment, or any other benefit under any Plan or other compensatory arrangement could be nondeductible pursuant to Section 280G of the Code or result in an excise tax under Section 4999 of the Code.

 

3.18.6        The Company is not a party to any Contract or arrangement with a Business Employee that is a “nonqualified deferred compensation plan” subject to Section 409A of the Code.

 

3.18.7        The Company has not had, within the six (6) years preceding the date of this Agreement, any ERISA Affiliates other than as set forth on Schedule 3.18.7.

 

3.19              Interests in Counterparties and Others.  Except as disclosed on Schedule 3.19, no Member and no other officer, director or manager of the Company or any of their respective Affiliates possesses, directly or indirectly, any ownership or pecuniary interest in, or is a trustee, director, manager, officer, Affiliate, or employee of, any Person that is a seller to, or supplier, lessor, lessee, licensor, or competitor of the Business, including any counterparty to any Material Contract.  No Member, officer, director or manager of the Company or any of their respective Affiliates has directly or indirectly offered or solicited any payment or other benefit that the Company considers or reasonably should consider to be improper in order to promote sales or help, procure, or maintain good relations with any seller to, or supplier, lessor, lessee, licensor, competitor, or potential competitor of the Business, including any counterparty to any Material Contract.

 

3.20             Relationships; Employee Compensation.

 

3.20.1       To the knowledge of the Company, the relationships of the Company with the lessors, suppliers, customers, vendors, and employees of the Business are good commercial working relationships.  Except as disclosed on Schedule 3.20.1, none of the lessors, suppliers, or vendors of the Business has canceled, terminated, or otherwise materially altered in writing or notified the Company in writing of any intention, or otherwise threatened, to cancel, terminate, or materially alter its relationship with the Company effective prior to, as of, or within one year after, the Closing.  There has not been, and the Company has no reason to believe that there will be, any change in relations with lessors, suppliers or vendors of the Business as a result of the transactions contemplated by this Agreement or the Ancillary Agreements.  The Company has not been notified by any Business Employee or contractor of the Company that provides services to or on behalf of the Business that such employee or contractor intends to terminate his or her employment or engagement as a result of the transactions contemplated by this Agreement.

 

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3.20.2        Schedule 3.20.2 lists all employees of the Company used in or necessary for, or that otherwise provides any services to, the Business (the “Business Employees”), and each such employee’s current annual salary and bonus and, where applicable, a description of the extent to which such Business Employee does not provide services exclusively to the Business.

 

3.20.3        Except for the agreements specifically set forth on Schedule 3.20.3, no Member or Business Employee is a party to, or is otherwise bound by, any Contract, including any employment agreement or any confidentiality, non-competition, or proprietary rights Contract, between the Member or Business Employee and any other Person that in any way adversely affects or will affect (a) the performance of his duties as a Member or Business Employee, or (b) the ability of the Business to be conducted consistent with past practice following the Closing Date.

 

3.21             Other Employment Matters.  Except as disclosed on Schedule 3.21, (a) the Company is in compliance with all Laws and other obligations respecting employment and employment practices and terms and conditions of employment, including all minimum wage and overtime Laws and wage payment Laws, employee notification, leave, affirmative action, child labor, immigration, employment discrimination, disability rights or benefits Laws, has not received any notice of an investigation, charge, citation, penalty, or assessment from any Governmental Authority with respect to such labor and employment Laws, and has not, and is not, engaged in any unfair labor practice, (b) there is no unfair labor practice charge or complaint or labor arbitration proceeding pending against the Company, (c) during the past five (5) years, there have been no and there currently are no labor strike(s), dispute(s), slowdown(s), or work stoppage(s) pending or threatened against or involving the Company, (d) the Company is not a party to any collective bargaining agreement and no collective bargaining agreement or other contract, agreement, arrangement or understanding with a labor union or labor union organization is currently being negotiated by the Company, (e) the Company has not breached a collective bargaining agreement, (f) no representation question exists respecting Business Employees, and (g) no claim regarding or on behalf of any Business Employee or related to any employment practice of the Company has been asserted and is currently pending or threatened, against the Company.  All Business Employees and agents and contractors of the Company that provide services to or on behalf of the Business are legally authorized to be employed and to work in the United States either because of their status as United States citizens, legal permanent residents, or by virtue of possessing a visa under Law relating to immigration control which visa allows for such employee to work in the United States.  The Company has properly completed all reporting and verification requirements pursuant to Law relating to immigration control for all Business Employees and agents and contractors of the Company that provide services to or on behalf of the Business including the Form I-9. The Company has not received any notice from any Governmental Authority that the Company is in violation of any Law pertaining to immigration control or that any current, former employee, agent or contractor of the Company is or was not legally authorized to be employed in the United States or is or was using an invalid social security number and there is no pending, or to the Company’s knowledge threatened, charge or complaint under the Immigration Reform and Control Act of 1986 against the Company.

 

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3.22             Workers’ Compensation/OSHA.

 

3.22.1        The Company has provided the Purchaser with all inspection reports issued under OSHA or any other occupational health and safety legislation that relate to the Business.  Except as disclosed on Schedule 3.22.1, there are no outstanding inspection orders or any pending or, to the knowledge of the Company, threatened charges under OSHA or any other applicable occupational health and safety legislation related to the Business.  Except as disclosed on Schedule 3.22.1, there have been no fatal or OSHA reportable accidents that could lead to charges under OSHA or any other applicable occupational health and safety legislation.  Except as disclosed on Schedule 3.22.1, the Company has complied in all material respects with any Orders relating to the Business issued to the Company under OSHA or any other applicable occupational health and safety legislation and there are no appeals of any Orders related to the Business that are currently outstanding.

 

3.22.2        Except as disclosed on Schedule 3.22.2, there is not pending against the Company any workers’ compensation claims related to any Business Employees and, to the knowledge of the Company, there are no facts that could reasonably be expected to give rise to such a claim or complaint.  Except as disclosed on Schedule 3.22.2, the Company has not received any notice of a citation, penalty, or assessment from any agency with responsibility for workers’ compensation or occupational safety and health.  The Company is in material compliance with all Laws respecting worker’s compensation.

 

3.23              No Indebtedness.  Except as disclosed on Schedule 3.23, the Company does not have any Indebtedness.

 

3.24              Customers and Suppliers.

 

3.24.1        Schedule 3.24.1 sets forth a list of the ten (10) largest customers and the ten (10) largest suppliers of the Business, as measured by the dollar amount of payments to or purchases therefrom, during fiscal year 2014, showing purchases by and payments to the Business from and to each such supplier and customer during such periods.  Since December 31, 2012, no customer or supplier listed on Schedule 3.24.1 has terminated its relationship with the Company or materially changed the pricing, other than pricing fluctuations in commodities in the Ordinary Course and annual price increases in the Ordinary Course, or materially changed the other terms of its business with the Company and no such customer or supplier has notified the Company, and the Company has no knowledge, that it intends to terminate or materially change the pricing or materially change the other terms of its business with the Company, other than pricing fluctuations in commodities in the Ordinary Course or annual price increases in the Ordinary Course.

 

3.24.2        Except as set forth in Schedule 3.24.2, there exists no condition or state of facts or circumstances known to the Company involving customers or suppliers of or to the Business which would reasonably be expected to have a Material Adverse Effect.

 

3.25             Warranties.  Except as set forth on Schedule 3.25, there is no currently pending claim for product liability, warranty or other claims by any third party (whether based on contract or tort and whether relating to personal injury, including death, property damage or economic loss) arising from:  (i) services rendered by the Company in connection with the Business during periods through and including the Closing Date, or (ii) the operation of the Business during the period through and including the Closing Date.  All services rendered by the Company in connection with the Business have been in conformity with all applicable contractual commitments and all express and implied warranties that may create liability for Damages (and the Company has no knowledge of any basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand giving rise to any liability) for Damages in connection therewith, except as set forth on Schedule 3.25.  No services provided by the Company in connection with the Business are subject to any guaranty, warranty, or other indemnity beyond the Company’s standard terms and conditions of sale set forth on Schedule 3.25.

 

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3.26             Absence of Certain Business Practices.  Except as disclosed on Schedule 3.26, neither the Company, nor, to the knowledge of the Company, any officer, director, manager, employee, independent contractor, or any Person acting on behalf of the Company has (a) received, directly or indirectly, any rebates, payments, commissions, promotional allowances, or any other economic benefits, regardless of their nature or type, from any customer, governmental employee or other Person with whom the Company has done business directly or indirectly in violation of any applicable Law, or (b) directly or indirectly, given or agreed to give any gift or similar benefit to any customer, governmental employee or other Person who is or may be in a position to help or hinder the Company (or assist the Company in connection with any actual or proposed transaction) in violation of any applicable Law.  Neither the Company, nor, to the knowledge of the Company, any officer, director, manager, employee, independent contractor or any Person acting on behalf of the Company has used any funds for unlawful contributions, gifts, entertainment, or other expenses relating to political activity or otherwise, or has made any direct or indirect unlawful payment to governmental officials or employees from the Company’s funds or been reimbursed from the Company’s funds for any such payment, or is aware that any other Person associated with or acting on behalf of the Company have engaged in any such activities.

 

3.27              Products; Product Liability.  The Company has never offered or agreed to any warranty on the products related to the Business (the “Products”).  There are no pending claims alleging that any Product is defective or unsafe or fails to meet any product warranty or any standards promulgated by any Governmental Authority.  There are no pending notices of recall (written or oral) with regard to any Product.  The Company has not received any claim alleging that, as a result of the actions or negligence of the Company, a Product is defective or otherwise fails to meet any applicable product warranty.  No Product packaged, warehoused, marketed, distributed or sold by the Company in the last three (3) years contains defects or otherwise fails to meet any applicable product warranty except for standard warranty claims that have been or may be made in the Ordinary Course which are not in the aggregate material to the Business.

 

3.28              Finders’ Fees.  Except as set forth on Schedule 3.28, there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of the Company, the Member or any of their respective Affiliates, who might be entitled to any fee or commission paid by the Company or the Member in connection with the transactions contemplated by this Agreement or any Ancillary Agreement.  All amounts disclosed on Schedule 3.28 and all obligations of the Company to each investment banker, broker, finder or other intermediary named thereon (including all indemnification obligations of the Company to any such investment banker, broker, finder or other intermediary) shall be paid solely by the Company.

 

3.29              Solvency.  The Company is not insolvent and will not be rendered insolvent by any of the transactions contemplated in this Agreement.  As used in this Section, “insolvent” means that the sum of the Company’s debts and other probable Liabilities does not and will not exceed the present fair saleable value of the Company’s assets.

 

3.30              Full Disclosure.  The representations and warranties of the Member and the Company contained in this Agreement and the Ancillary Agreements do not contain any untrue statement of a known material fact or omit to state a known material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading.  Neither the Member nor the Company has withheld from or failed to disclose to the Purchaser any data, documents, or other information that could reasonably be expected to affect the Member or the Company’s ability to perform their respective obligations under this Agreement and the Ancillary Agreements, or the ability of the Business to be conducted in the Ordinary Course.

 

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IV.  REPRESENTATIONS AND WARRANTIES

OF THE PURCHASER

 

The Purchaser represents and warrants to the Company as follows:

 

4.1                Organization.  The Purchaser is duly formed, validly existing, and in good standing as a limited liability company under the Laws of the State of Delaware.  The Purchaser has the requisite limited liability company power and authority and any Licenses, consents and approvals required to acquire, purchase and own the Acquired Assets and operate the Business.  The Purchaser is not in violation of any provision of its Organizational Documents.

 

4.2               Authorization; Enforceability.  The Purchaser’s execution, delivery, and performance of this Agreement and each Ancillary Agreement to which the Purchaser is or will be a party and the consummation of the transactions contemplated hereby and thereby, are within the Purchaser’s capacity, power and authority and have been duly authorized by all necessary third party action.  The Purchaser has all requisite capacity, power and authority, as the case may be, to become a party to, and to consummate the transactions contemplated by, this Agreement and each Ancillary Agreement to which the Purchaser is or will be a party.  This Agreement and each Ancillary Agreement to which the Purchaser is or will be a party has been or will be duly executed and delivered by the Purchaser, and once executed, will constitute, a legal, valid and binding agreement of the Purchaser, enforceable against the Purchaser in accordance with their respective terms.

 

4.3                Non‐Contravention.  The execution, delivery and performance by the Purchaser of this Agreement and each Ancillary Agreement to which the Purchaser is or will be a party did not and will not (a) violate the governing or Organizational Documents of the Purchaser or any of the Purchaser’s subsidiaries, (b) violate any applicable Law or Order, (c) require any filing with or permit, consent, or approval of, or require the giving of any notice to (including under any right of first refusal or similar provision), any court or other Person (including filings, consents, approvals required under any Licenses, or any leases, franchises, contracts, or other filings, consents or approvals required under any Licenses, or any leases, franchises, contracts or other agreements to which the Purchaser will be a party), (d) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default under, or give rise to any right of termination, cancellation, or acceleration of any right or obligation of, the Purchaser, or to a loss of any benefit to which the Purchaser is entitled, under any material Contract or any material Permit or (e) result in the creation or imposition of any Lien on any material assets of the Purchaser.

 

4.4                Finders’ Fees.  There is no investment banker, broker, finder, or other intermediary that has been retained by or is authorized to act on behalf of the Purchaser or any Affiliate thereof, who might be entitled to any fee or commission in connection with the transactions contemplated by this Agreement or any Ancillary Agreement.

V.  CERTAIN COVENANTS

 

5.1                 No Liens.  At or prior to the Closing, the Company shall, and the Member shall cause the Company to, terminate all Liens on or against any Acquired Assets, other than the Permitted Liens.  At Closing, or any time after the Closing, the Purchaser and its lenders, attorneys and other designees are hereby irrevocably authorized to file any and all appropriate financing statement termination statements and partial releases with respect to the Acquired Assets.

 

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5.2                 Further Assurances.  From time to time, as and when requested by any Party to this Agreement, the other Parties will execute and deliver, or cause to be executed and delivered, all such documents and instruments and will take, or cause to be taken, all such further or other actions, as the requesting Party may reasonably deem necessary or desirable to consummate the transactions contemplated by this Agreement.

 

5.3                 Conduct of Business.

 

5.3.1           During the period from the date of this Agreement through the Closing, except to the extent specifically authorized by the terms of this Agreement, the Company will, and the Member will cause the Company to, conduct the Business only in the Ordinary Course (including managing its working capital in accordance with its past practice and custom) and, without limiting the generality or effect of the foregoing, use its best efforts to: (a) preserve intact the Business, (b) keep available the services of the Business Employees, (c) pay its Indebtedness and trade and other Accounts Payable punctually when, in the Ordinary Course, and as the same will become due and payable and perform and observe, in all material respects, its duties and obligations under all Material Contracts, (d) maintain its relationships and goodwill with suppliers, franchisees, distributors, manufacturers, customers, landlords, employees, agents and others having business relationships with the Business, and (e) take any action that is required so that all representations or warranties of the Company and the Member are true and correct in all material respects (except for those qualified by materiality, which should be true in all respects) as of the Closing.  The Company will, and the Member will cause the Company to, confer with the Purchaser concerning operational matters related to the Business of a material nature and report periodically to the Purchaser concerning the operations and finances of the Business.

 

5.3.2          Without limiting the generality or effect of Section 5.3.1, prior to the Closing, the Company will not, except (i) as set forth in Schedule 5.3.2, (ii) as required by applicable Law, or (iii) as otherwise contemplated by this Agreement, without the prior written consent of the Purchaser, take any action or suffer any event described in Section 3.9.

 

5.4                Exclusive Dealing.  During the period from the date of this Agreement to the earlier of the Closing or the termination of this Agreement in accordance with its terms, the Company and the Member will not, nor shall the Member permit the Company or any director, officer, manager, employee or other representative of the Company (including advisors, agents, attorneys or consultants) to, take any action to, directly or indirectly, encourage, initiate, solicit, or engage in discussions or negotiations with, or provide any information to any Person, other than the Purchaser (and its Affiliates and Representatives), concerning any purchase of any interests or any merger, asset sale, contribution, recapitalization, investment in, or similar transaction involving the Company.  From the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms, the Company will, and the Member will cause the Company to, promptly (and in any event within two Business Days thereof) disclose to the Purchaser the existence or occurrence of any proposal or contract that it, he or she or any of their representatives described above may receive or become aware of in respect of any such transaction and the identity of the Person from whom such a proposal or Contract is received.

 

5.5                 Review of the Company.  Prior to the Closing, the Company will, and the Member will cause the Company to, permit the Purchaser and the Purchaser’s current or prospective lenders, directly or through their respective Affiliates or Representatives, to review the properties, assets, books, and records of the Company and their financial and legal conditions to the extent the Purchaser or the Purchaser’s current or prospective lenders deems it necessary or advisable to familiarize itself with such properties and other matters.  The Company will, and the Member will cause the Company to, permit the Purchaser and the Purchaser’s current or prospective lenders and their Representatives to have, after the date of execution of this Agreement, reasonable access to the premises and to all the books and records of the Company relating to, used in or necessary for the Business and to cause the officers or managers of the Company to furnish the foregoing with such financial and operating data and other information with respect to the Business as the foregoing may from time to time reasonably request.  The Company will, and the Member will cause the Company to, deliver or cause to be delivered to the Purchaser and the Purchaser’s current or prospective lenders such additional instruments, documents, and certificates as they may reasonably request for the purpose of (a) verifying the information set forth in this Agreement or on any Schedule attached to this Agreement and (b) consummating or evidencing the transactions contemplated by this Agreement.

 

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5.6                 Reasonable Efforts.

 

5.6.1          The Company will, and the Member will cause the Company to, and the Purchaser will, cooperate and use its reasonable efforts to take, or cause to be taken, all appropriate actions (and to make, or cause to be made, all filings necessary, proper or advisable under applicable Laws) to consummate and make effective the transactions contemplated by this Agreement, including their respective reasonable efforts to obtain, prior to the Closing, all Licenses and consents of parties to Contracts with the Company, as applicable, as are necessary for the consummation of the transactions contemplated by this Agreement and to fulfill the conditions to the transactions contemplated by this Agreement.  Notwithstanding any other provision of this Agreement, in no event will any Party or any of its Affiliates be required to (a) enter into or offer to enter into any divestiture, hold‐separate, business limitation, or similar agreement or undertaking in connection with this Agreement or the transactions contemplated by this Agreement, or (b) make any payment in connection with any consent or approval or condition to Closing set forth in any section of Article VII that is necessary or advisable for the Member or the Company to obtain or satisfy in order to consummate the transactions contemplated by this Agreement.

 

5.6.2          Without limiting the generality of Section 5.6.1, the Company will provide, and the Member will cause the Company and the Representatives and advisors of the Member and the Company to provide to the Purchaser, all cooperation reasonably requested by the Purchaser in connection with the arrangement of, and closing on, the financing contemplated by Section 7.1.11, which cooperation shall include, all at the sole cost and expense of the Purchaser:  (a) assisting with the syndication of the financing by having senior management, Representatives and advisors of the Company participate in a reasonable number of meetings and other direct contact with the lenders; (b) assisting in the preparation of a reasonable and customary Confidential Information Memorandum for the financing and other customary marketing materials to be used in connection with the syndication of the financing; and (c) providing such customary information regarding the Company as may be reasonably requested by the lenders in connection with the structuring, arrangement and syndication of the financing.

 

5.7                 Employees of the Business.

 

5.7.1          The Purchaser shall make offers of employment to all of the Business Employees on terms to be determined by the Purchaser in its sole discretion (such employees who accept the terms and conditions of such offer and who are employed by the Purchaser are hereinafter referred to as “Hired Employees”).  The Company agrees to terminate or transfer or cause to be terminated or transferred the employment of such Hired Employees effective at the time of the Closing.  The Purchaser shall at its discretion establish the initial terms and conditions of employment for all Hired Employees.  The Company shall be solely responsible, and the Purchaser shall have no obligations whatsoever, for any employee of the Business or the Company that is not a Hired Employee and all claims related thereto.

 

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5.7.2          The Company shall be solely responsible, and the Purchaser shall have no obligations whatsoever for, any compensation or other amounts payable to any current or former employee, officer, director, independent contractor or consultant of the Business (including Hired Employees), including, without limitation, wages, commission, bonus, salary, accrued vacation, fringe, pension or profit sharing benefits or severance pay for any period relating to the service with the Company at any time on or prior to the Closing Date and the Company shall pay all such amounts to all Hired Employees on or prior to the Closing Date and to all other entitled persons as and when due.

 

5.7.3          The Company shall remain solely responsible for the satisfaction of all claims for medical, dental, life insurance, health accident or disability benefits brought by or in respect of current or former employees, officers, directors, independent contractors or consultants of the Business (including Hired Employees) or the spouses, dependents or beneficiaries thereof, which claims relate to events occurring on or prior to the Closing Date. The Company also shall remain solely responsible for all worker’s compensation claims of any current or former employees, officers, directors, independent contractors or consultants of the Business which relate to events occurring on or prior to the Closing Date.  The Company shall pay, or cause to be paid, all such amounts to the appropriate persons as and when due.

 

5.7.4          The active participation by all Hired Employees in Plans shall cease as of the Closing Date.  The Purchaser will not assume or continue, and will have no responsibility or Liability to any Hired Employee, any Business Employee or any other Person under or with respect to, any Plans.

 

5.7.5          The Company shall continue to make or shall cause to be made all required contributions to any Plan on behalf of the Business Employees through and including the Closing Date.

 

5.7.6          The provisions of Section 5.7 are for the benefit of the Purchaser and the Company only, and no employee of the Company or any other Person shall have any rights hereunder.  Nothing herein expressed or implied shall confer upon any employee of the Company, any other employee or legal representatives or beneficiaries thereof, any rights or remedies, including any right to employment or continued employment for any specified period or to be covered under or by any Plan, or shall cause the employment status of any employee to be other than terminable at will.

 

5.7.7          The Company will be responsible for making continuation coverage under Code Section 4980B and Sections 601-608 of ERISA (“COBRA”) available to any Hired Employee and any eligible spouse or dependent who experiences a “qualifying event,” as defined in Code Section 4980B(f)(3), before or as of the Closing Date.  The Purchaser will be responsible for making continuation coverage under COBRA available to any Hired Employee and any eligible spouse or dependent who experiences a “qualifying event,” as defined in Code Section 4980B(f)(3), after the Closing Date.  The Purchaser will not pay for, fund or subsidize the purchase of COBRA continuation coverage by or on behalf of any employee of the Company or the Business who is not a Hired Employee, spouse or dependent.

 

5.7.8          The Company shall pay all Liabilities arising out of the Company’s termination of any of the Company’s employees, including (i) administration and payment of severance benefits, and if provided, out placement assistance, (ii) accrued salary, vacation and benefits, whether or not payable under an employment contract or agreement, (iii) providing COBRA benefits under applicable law, and (iv) any other related obligations.

 

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5.8                 Consents; Procedures for Assets Not Transferable.  After the Closing, the Company will use its reasonable best efforts to obtain or cause to be obtained any consents required to be obtained by the Company in connection with the transactions contemplated by this Agreement that have not been obtained prior to or at the Closing.  If there are any consents that have not yet been obtained (or otherwise are not in full force and effect) as of the Closing, with respect to any Contracts or Licenses which comprise a portion of the Acquired Assets or any other property or right included in the Assumed Liabilities or the Acquired Assets as to which such consents were not obtained (or otherwise are not in full force and effect) (collectively, the “Restricted Assets”), the Purchaser may waive the closing condition set forth in Section 7.1 as to any such consent and either: (a) elect to have the Company continue their efforts to obtain such consents (the “Continuing Consents”); or (b) elect to have the Company retain the Restricted Assets and all Liabilities arising therefrom or related thereto. Notwithstanding anything to the contrary in this Agreement, neither this Agreement, the Bill of Sale, the Assignment and Assumption Agreement nor any other document related to the consummation of the transactions contemplated hereby shall constitute a sale, conveyance, assignment, transfer or delivery or an attempted sale, conveyance, assignment, transfer or delivery of the Restricted Assets.  Following the Closing, the Parties shall cooperate with each other to obtain the Continuing Consents as quickly as practicable. Pending the obtaining of such Continuing Consents, the Parties shall cooperate with each other in any reasonable and lawful arrangements designed to provide to the Purchaser the benefits of use of the Restricted Assets related to such Continuing Consents for its term (or any right or benefit arising thereunder, including the enforcement for the benefit of the Purchaser of any and all rights of the Company against a third party thereunder). Once a Continuing Consent is obtained, the Company shall promptly convey, assign, transfer and deliver the Restricted Asset related to such Continuing Consent to the Purchaser, and the Purchaser shall assume the obligations under such Restricted Asset assigned to the Purchaser from and after the date of assignment to the Purchaser.

 

5.9                Accounts Receivable.  In the event that the Company receives any payments in respect of any Accounts Receivable included in the Acquired Assets and that are payable to, or endorsed in favor of the Company following the Closing, the Company shall immediately forward such payments to the Purchaser, and, in any event, no less frequently than on a monthly basis.

 

5.10              [Intentionally Omitted].

 

5.11              Litigation Cooperation.  If any Party to this Agreement or any of their respective Affiliates shall become engaged or participate in any other legal proceeding relating in any way to the Business, including, without limitation, the Acquired Assets, or the Assumed Liabilities, the other Parties shall cooperate with such Party in connection therewith, including, without limitation, making available to such Parties, without cost, all relevant records and using its commercially reasonable efforts to make available the employees of such Party or its Affiliates who are reasonably expected by the Party engaged in such legal proceeding to be helpful with respect to such legal proceeding and who may, from time to time, be requested to make themselves available to provide depositions, testimony and other discovery in connection with any such legal proceeding or to provide other information in connection with the defense of such matters.

 

5.12              Restrictive Covenants.  In consideration of the transactions contemplated by this Agreement, and in order to protect and preserve the legitimate business interests of the Purchaser and the goodwill to be developed by the Purchaser in the Business and the Acquired Assets after the Closing, the Company and the Member shall enter into the Restrictive Covenants Agreements substantially in the form of Exhibit A hereto and comply with the terms and conditions thereto.  From and after Closing, TR Plastics shall change its entity name and shall cease all use of the mark “TR Plastics”.

 

5.13             Distributions.  During the two (2) year period following the Closing, the Company shall not distribute or otherwise pay to its members or their Affiliates and the Member shall not accept, an aggregate of more than $1,000,000 per year in cash or other assets.

 

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VI.  TAX MATTERS

 

6.1               Transfer Taxes.  All transfer, documentary, sales, use, stamp, registration, value added, and other Taxes, including any fees and/or any penalties and interest imposed thereon, which are incurred in connection with the sale, transfer or assignment of the Acquired Assets or pursuant to this Agreement or the transactions contemplated by this Agreement will be borne and timely paid by the Company (or the Member, as applicable).

 

6.2                Tax Cooperation; Allocation of Taxes.

 

6.2.1            The Purchaser and the Company agree to furnish or cause to be furnished to each other, upon request, as promptly as practicable, such information and assistance relating to the Acquired Assets and the Business as is reasonably necessary for the filing of all Tax Returns and making of any election related to Taxes, the preparation for any audit by any Governmental Authority, and the prosecution or defense of any claim, suit or proceeding relating to any Tax Return.  The Purchaser and the Company agree to maintain or arrange for the maintenance of all records necessary to comply with this Section 6.2.1, including all Tax Returns, schedules and work papers and all material records or other documents relating thereto, until the expiration of the applicable statute of limitations (including extensions) for the taxable years to which such Tax Returns and other documents relate and, unless the relevant portions of such Tax Returns and other documents are offered to the other party, until the final determination of any payments which may be required in respect of such years under this Agreement or such longer period as may be required hereof.  Any information obtained under this Section 6.2.1 shall be kept confidential, except as may be otherwise necessary in connection with the filing of Tax Returns or claims for refund or in conducting any audit or other Tax-related proceeding.  Each Party agrees to afford the other reasonable access to such records during normal business hours.

 

6.2.2          All Taxes levied with respect to the Acquired Assets for a taxable period which includes (but does not end on) the Closing Date (collectively, the “Apportioned Obligations”) will be apportioned between the Company and the Purchaser as of the Closing Date based on the number of days of such taxable period on or prior to the Closing Date and the number of days of such taxable period after the Closing Date (it being understood (i) that the Company is responsible for the portion of each such Apportioned Obligation attributable to the number of days on or before the Closing Date in the relevant assessment period (the “Company’s Pro-Rata Share”), (ii) that the Purchaser is responsible for the portion of each such Apportioned Obligation attributable to the number of days after the Closing Date in the relevant assessment period, and (iii) that each Party shall be entitled to reimbursement for the payment of any part of the other Party’s portion of any Apportioned Obligation).

 

6.2.3          Within ninety (90) days after the Closing, the Company and the Purchaser will present a statement to the other setting forth the amount of reimbursement to which each is entitled under Section 6.2.2, together with such supporting evidence as is reasonably necessary to calculate such amount to be reimbursed.  Such amount will be paid by the Party owing it to the other within ten (10) days after delivery of such statement.  Thereafter, the Company will notify the Purchaser upon receipt of any bill for real or personal property Taxes relating to the Acquired Assets, part or all of which are attributable to the period after the Closing Date, and shall promptly deliver such bill to the Purchaser who will pay the same to the appropriate Governmental Authority; provided that if such bill covers any Apportioned Obligation, the Company shall remit, prior to the due date of assessment, to the Purchaser any previously unpaid portion of the Company’s Pro-Rata Share.  If the Company or the Purchaser thereafter makes a payment for which it is entitled to reimbursement (but has not yet received full reimbursement) under this Section 6.2.3, the other Party shall make such reimbursement promptly but in no event later than thirty (30) days after the presentation of a statement setting forth the amount of unpaid reimbursement to which the presenting Party is entitled along with such supporting evidence as is reasonably necessary to calculate the amount of reimbursement.

 

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VII.  CONDITIONS TO CLOSING

 

7.1                 Conditions to Obligations of the Purchaser at the Closing.  The obligations of the Purchaser to consummate the Closing are subject to the satisfaction of the following conditions.  Any condition specified in this Section 7.1 may be waived if consented to by the Purchaser; provided, however, that no such waiver shall be effective against the Purchaser unless it is set forth in writing signed by the Purchaser.

 

7.1.1           Representations, Warranties and Covenants of the Company and the Member.  (a) Each of the representations and warranties of the Company and the Member made in this Agreement shall be true and correct in all material respects (or, if any specific representation or warranty of the Company or the Member is expressly qualified by concepts of “materiality” or “Material Adverse Effect,” then such representations and warranties shall be true and correct in all respects) as of the date of this Agreement and as of the Closing (as if made anew at and as of the Closing); (b) the Member and the Company shall have performed and complied in all material respects with all terms, agreements and covenants contained in this Agreement required to be performed or complied with by the Member or the Company on or before the Closing Date; and (c) the Member and the Company shall have delivered to the Purchaser a certificate dated the Closing Date, confirming the satisfaction of the conditions contained in Sections 7.1.1 (Representations, Warranties and Covenants of the Company and the Member), 7.1.3 (No Injunction, Etc.), 7.1.4 (No Proceedings), 7.1.5 (Required Filings), 7.1.7 (Third Party Consents; Governmental Approvals), 7.1.8 (No Material Adverse Change), 7.1.12 (Release of Liens) and such other evidence of compliance with their obligations as the Purchaser may reasonably request.

 

7.1.2           Officer’s Certificate.  The Company shall have delivered to the Purchaser a certificate from an officer of the Company, dated as of the Closing Date, certifying that (i) the Organizational Documents of the Company attached to the certificate are true and complete; (ii) such Organizational Documents have been in full force and effect in the form attached thereto from and after the date of the adoption of the resolutions referred to in clause (iii) below and no amendment to such Organizational Documents has occurred since the date of the last amendment annexed thereto, if any; and (iii) the resolutions adopted by the Member and the board of directors of the Company (or a committee thereof duly authorized) authorizing the execution, delivery and performance of this Agreement, the Ancillary Agreements, and the consummation of all other transactions contemplated by this Agreement, to be in a form satisfactory to the Purchaser in its reasonable discretion, attached to the certificate, were duly adopted at a duly convened meeting thereof, at which a quorum was present and acting throughout or by unanimous written consent, remain in full force and effect, and have not been amended, rescinded or modified, except to the extent attached thereto.

 

7.1.3           No Injunction, Etc.  No provision of any applicable Law nor any Order or proceeding shall be in effect that shall prohibit or restrict the consummation of the Closing, or that shall impact adversely the operations of the Business.

 

7.1.4           No Proceedings.  No proceeding challenging this Agreement, the Ancillary Agreements or the transactions contemplated by this Agreement or the Ancillary Agreements or seeking to prohibit, alter, prevent, or materially delay the Closing or seeking Damages incident to this Agreement, the Ancillary Agreements or the transactions contemplated by this Agreement or the Ancillary Agreements, shall have been instituted by any Person before any Governmental Authority and be pending.

 

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7.1.5           Required Filings.  All actions by or in respect of, or filings by, the Company or the Member with any Person required to permit the consummation of the Closing shall have been taken or made.

 

7.1.6           Ancillary Agreements.  Each of the Ancillary Agreements shall have been executed and delivered by the Company, the Member and any other parties that are, as contemplated by this Agreement, to become a party thereto.

 

7.1.7           Third Party Consents; Governmental Approvals.  All consents, approvals, or waivers, if any, disclosed on any Schedule attached to this Agreement or otherwise required in connection with the consummation of the transactions contemplated by this Agreement shall have been received.  All of the consents, approvals, authorizations, exemptions, and waivers from Governmental Authorities that shall be required in order to enable the Purchaser to consummate the transactions contemplated by this Agreement shall have been obtained.

 

7.1.8           No Material Adverse Change.  The Business shall have been conducted in the Ordinary Course and no change, event, occurrence, or circumstance shall have occurred or arisen since the date of this Agreement that, individually or when considered together with all other matters, has had or would reasonably be expected to have, a Material Adverse Effect.

 

7.1.9           Good Standing Certificates.  The Company shall have delivered to the Purchaser a certificate of good standing for the Company from the Secretary of State of the State of Ohio, as of a date within ten (10) Business Days of the Closing Date.

 

7.1.10        Working Capital.  The Company Representative and the Purchaser shall have agreed on the list of specific Accounts Receivable, Inventory and Accounts Payable to be acquired by the Purchaser.

 

7.1.11        Acquisition Debt Financing.  On terms that are acceptable to it, the Purchaser shall have obtained third party debt financing in order to provide sufficient funds to consummate the transactions contemplated by this Agreement (and to pay any related transaction costs), and to provide the Company with working capital in an amount satisfactory to the Purchaser.

 

7.1.12        Release of Liens.  Except for Permitted Liens, all Liens on or against any Acquired Assets shall have been released, and the Company shall have provided the Purchaser with documentation reasonably satisfactory to the Purchaser evidencing such release.

 

7.1.13        Due Diligence.  The Purchaser shall have been satisfied with the results of its legal, accounting and financial due diligence investigations of the Company, the Business and the Acquired Assets.

 

7.1.14        [Intentionally Omitted].

 

7.1.15        Other Deliveries.  The Company and the Member shall have delivered such other usual and customary documents, instruments, and certificates as the Purchaser may reasonably request.

 

7.2                Conditions to Obligations of the Company and the Member.  The obligations of the Company and the Member to consummate the Closing are subject to the satisfaction of the following conditions.  Any condition specified in this Section 7.2 may be waived if consented to by the Company’s Representative; provided, however, that no such waiver shall be effective against the Company or the Member unless such waiver is set forth in writing signed by the Company’s Representative.

 

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7.2.1             Representations, Warranties, and Covenants of the Purchaser.  (a) Each of the representations and warranties of the Purchaser made in this Agreement shall be true and correct in all material respects (or, if any specific representation or warranty of the Purchaser is expressly qualified by concepts of “materiality” or “Material Adverse Effect,” then such representations and warranties shall be true and correct in all respects) as of the date of this Agreement and as of the Closing (as if made anew at and as of the Closing); and (b) the Purchaser shall have performed and complied with all terms, agreements and covenants contained in this Agreement required to be performed or complied with by the Purchaser on or before the Closing Date in all material respects.

 

7.2.2             No Injunction, Etc.  No provision of any applicable Law nor Order shall be in effect with respect to the Purchaser that shall prohibit the consummation of the Closing.

 

7.2.3            Ancillary Agreements.  Each of the Ancillary Agreements to which the Purchaser is a party shall have been executed and delivered by the Purchaser or its designee and any other parties (other than the Company) that are, as contemplated by this Agreement, to become a party thereto.

 

7.2.4             Required Filings.  The actions to be taken or filings to be made by the Purchaser that are set forth on Schedule 7.2.4 shall have been taken or made to permit the consummation of the Closing.

 

7.2.5           Third Party Consents; Governmental Approvals.  The consents, approvals, authorizations, exemptions, and waivers required in connection with the consummation of the transactions contemplated by this Agreement that are set forth on Schedule 7.2.5 shall have been received from Governmental Authorities and any third party.

 

VIII.  SURVIVAL; INDEMNIFICATION

 

8.1                Survival.  The representations and warranties of the Parties contained in this Agreement, the Ancillary Agreements or in any certificates or other writing delivered pursuant to this Agreement or in connection herewith will survive the Closing for two (2) years thereafter; provided, however, that (a) the representations and warranties contained in Section 3.1 (Existence and Qualification), Section 3.2 (Authorization; Enforceability), Section 3.3 (Non-Contravention; Consents; Restrictive Documents), Section 3.4 (Capitalization), Section 3.7 (Interested Transactions), Section 3.19 (Interests in Counterparties and Others), Section 3.26 (Absence of Certain Business Practices) and Section 3.28 (Finders’ Fees), Article IV (Purchaser Representations) shall survive the Closing indefinitely, (b) the representations and warranties contained in Section 3.8 (Tax Matters), Section 3.17 (Environmental Matters), and Section 3.18 (Plans and Material Documents), (collectively, all the representations and warranties listed in the foregoing clauses (a) and (b), the “Fundamental Reps”) shall survive the Closing until sixty (60) days past the expiration of the statute of limitations applicable to matters covered thereby (after giving effect to any waiver or extension thereof granted by the applicable Party or the pendency of any litigation or dispute resolution process), and (c) the representations and warranties and certifications contained in the certificates delivered pursuant to Article VII shall survive for the same duration that the representations and warranties to which they are applicable survive.  Notwithstanding the preceding sentence, any representation or warranty in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate pursuant to the preceding sentence if written notice of the inaccuracy or breach thereof giving rise to such right of indemnity has been given to the Party against whom such indemnification may be sought prior to such time.  Subject to the foregoing and any applicable statutes of limitations, all covenants and agreements of the Parties contained in this Agreement will survive the Closing indefinitely in accordance with their terms.

 

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8.2                 Indemnification by the Company.

 

8.2.1           Subject to the terms and conditions of this Article VIII, the Company shall indemnify, defend, and hold harmless the Purchaser and its equity owners, directors, managers, members, officers, employees, current or prospective lenders and Affiliates (the “Purchaser Indemnified Parties”) against any and all Damages actually incurred or suffered by the Purchaser Indemnified Parties to the extent resulting from:

 

(a)                any failure (or any claim by any third party which, if true, would constitute a failure) of any representation or warranty made by the Company or the Member in this Agreement, any Ancillary Agreement or any certificate delivered pursuant to this Agreement to be true and correct as of the date hereof and as of the Closing (provided, that for any representation or warranty that is limited by materiality, Material Adverse Effect or similar terms, a misrepresentation or breach of such representation or warranty shall be determined as if “material,” “materiality,” “Material Adverse Effect” or similar terms were not included there in);

 

(b)                any breach (or any claim by any third party which, if true, would constitute a breach) of any covenant or agreement made or to be performed by the Company or the Member pursuant to this Agreement or any Ancillary Agreement or from any misrepresentation or omission from any certificate delivered pursuant to this Agreement (provided, that for any covenant or agreement that is limited by materiality, Material Adverse Effect or similar terms, a default under such covenant or agreement shall be determined as if “material,” “materiality,” “Material Adverse Effect” or similar terms were not included therein);

 

(c)                except as expressly assumed under the terms of this Agreement, any liability arising out of the ownership or operation of the Acquired Assets or the Business prior to the Closing Date other than the Assumed Liabilities;

 

(d)                any liability arising out of or due to the failure to comply with bulk sales laws;

 

(e)               any failure by the Company to comply with or have complied with any Environmental Laws, or any contamination either resulting from Company’s ownership of the Acquired Assets or operation of Business, or being present at, threatening or emanating from any property which the Company has owned, leased or operated and attributable in any way to actions occurring or conditions existing prior to the Closing Date;

 

(f)                 any claim against the Purchaser for continuation of coverage benefits under Section 601 et seq. of the Employee Retirement Income Security Act of 1974, as amended, brought by any person who was an employee of the Company at any time prior to the Closing Date and not an employee of the Purchaser after said date, or any qualified beneficiary of such a person; or

 

(g)               any Liability for Taxes imposed on the Company, the Member or their respective Affiliates (and losses, claims and expenses related thereto), including Taxes described in Section 3.8 and Taxes imposed on the Company, the Member or their respective Affiliates as a result of the consummation of the transactions contemplated hereby, subject only to the provisions of Article VIII hereof.

 

8.2.2          Time Limitations.  The Purchaser Indemnified Parties shall have no right to recover any amounts pursuant to Section 8.2.1(a) unless on or before the relevant survival date specified in Section 8.1 (the “Survival Date”), Purchaser notifies the Company’s Representative of a claim specifying the factual basis of that claim in reasonable detail to the extent then known by the Purchaser.  Any indemnification claim by a Purchaser Indemnified Party pursuant to Sections 8.2.1(b) – (g) shall be required to be made by delivering notice to Company’s Representative no later than the expiration of the applicable statute of limitations.

 

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8.2.3           Limitations on Indemnification of the Purchaser Indemnified Parties.

 

(a)               The Purchaser Indemnified Parties shall have no right to recover any amounts pursuant to Section 8.2.1(a) until the total amount of such Damages incurred by the Purchaser Indemnified Parties under Section 8.2.1(a), in the aggregate, exceeds One Hundred Thirty-Five Thousand Dollars ($135,000) (the “Deductible”), in which case the Purchaser Indemnified Parties will be entitled to recover the aggregate amount of all Damages regardless of the Deductible; provided, however, the Deductible shall not apply to a breach of the Fundamental Reps or any covenants or in the case of fraud or intentional misrepresentation.

 

(b)              The maximum amount to which the Purchaser Indemnified Parties shall be entitled to indemnification for Damages pursuant to Section 8.2.1(a) shall not exceed Six Million Seven Hundred Fifty Thousand Dollars ($6,750,000) (the “Cap”); provided, however, the foregoing Cap shall not apply to a breach of the Fundamental Reps or any covenants or in the case of fraud or intentional misrepresentation.

 

8.2.4             Setoff.  At its sole election, to the extent it is entitled to any amounts in respect of indemnification claims pursuant to this Article VIII, the Purchaser may reduce any amounts payable to the Company or the Member pursuant to this Agreement, including any Cabinet Payment earned and payable to the Company pursuant to this Agreement, or any other amounts payable pursuant to any other agreement.

 

8.3                 Indemnification by the Purchaser.

 

8.3.1           Subject to the terms and conditions of this Article VIII, the Purchaser will indemnify, defend, and hold harmless the Company and the Member, their Affiliates and their respective officers, directors, managers, members, partners, representatives and agents (collectively, the “Company Indemnified Parties”) against any and all Damages actually incurred or suffered by the Company Indemnified Parties to the extent resulting from: (a) any failure (or claim by any third party which, if true, would constitute a failure) of any representation or warranty made by the Purchaser in this Agreement, any Ancillary Agreement or any certificate delivered pursuant to this Agreement to be true and correct as of the date hereof and as of the Closing (provided, that for any representation or warranty that is limited by materiality, Material Adverse Effect or similar terms, a misrepresentation or breach of such representation or warranty shall be determined as if “material,” “materiality,” “Material Adverse Effect” or similar terms were not included therein); (b) any breach (or any claim by any third party which, if true, would constitute a breach) of any covenant or agreement made or to be performed by the Purchaser pursuant to this Agreement or any Ancillary Agreement or from any misrepresentation or omission from any certificate delivered pursuant to this Agreement (provided, that for any covenant or agreement that is limited by materiality, Material Adverse Effect or similar terms, a default under such covenant or agreement shall be determined as if “material,” “materiality,” “Material Adverse Effect” or similar terms were not included therein); (c) any Assumed Liabilities; or (d) the operation of the Business, the Acquired Assets or any claim for services rendered by the Purchaser or any Affiliates of the Purchaser from and after the Closing Date other than to the extent arising out of or in connection with any matter with respect to which a Purchaser Indemnified Party is entitled to indemnification pursuant to Section 8.2.1.

 

8.3.2           The Company Indemnified Parties shall have no right to recover any amounts pursuant to Section 8.3.1(a) unless on or before the Survival Date, the Company notifies the Purchaser of a claim specifying the factual basis of that claim in reasonable detail to the extent then known by the Company.

 

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8.3.3          The Company Indemnified Parties shall have no right to recover any amounts pursuant to Section 8.3.1(a) until the total amount of such Damages incurred by the Company Indemnified Parties under Section 8.3.1(a), in the aggregate, exceeds the Deductible, in which case the Company Indemnified Parties will be entitled to recover the aggregate amount of all Damages regardless of the Deductible; provided, however, the Deductible shall not apply to a breach of the Fundamental Reps or any covenants or in the case of fraud or intentional misrepresentation.

 

8.3.4          The maximum amount to which the Company Indemnified Parties shall be entitled to indemnification for Damages pursuant to Section 8.3.1(a) shall not exceed the Cap; provided, however, the Cap shall not apply to a breach of the Fundamental Reps or any covenants or in the case of fraud or intentional misrepresentation.

 

8.4                 Indemnification Procedures.

 

8.4.1            Except as provided in Article VI with respect to certain Tax matters, if any Person who or which is entitled to seek indemnification under Section 8.2 or 8.3 (an “Indemnified Party”) receives notice of the assertion or commencement of any Third Party Claim against such Indemnified Party with respect to which the Person against whom or which such indemnification is being sought (an “Indemnifying Party”) is obligated to provide indemnification under this Agreement, the Indemnified Party will give such Indemnifying Party reasonably prompt written notice thereof; provided, however, that if the Indemnified Party receives a complaint, petition, or any other pleading in connection with a Third Party Claim which requires the filing of an answer or other responsive pleading, the Indemnified Party shall furnish the Indemnifying Party with a copy of such pleading at least ten (10) days prior to the date a responsive pleading thereto is required to be filed (or promptly upon receipt by the Indemnified Party, if the Indemnified Party receives such complaint, petition or other pleading within such ten (10) day period).  Such notice by the Indemnified Party will describe the Third Party Claim in reasonable detail, will include copies of all available material written evidence thereof, and will indicate the estimated amount, if reasonably practicable, of the Damages that have been or may be sustained by the Indemnified Party.  The Indemnifying Party will have the right to participate in the defense of such Third Party Claim at the Indemnifying Party’s expense, or at its option (subject to the limitations set forth in this Section 8.4.1) to assume the defense of thereof by appointing a recognized and reputable counsel reasonably acceptable to the Indemnified Party to be the lead counsel in connection with such defense; provided that:

 

(a)           The Indemnifying Party must give the Indemnified Party written notice of its election to assume control of the defense of the Third Party Claim within ten (10) days of the Indemnifying Party’s receipt of notice of the Third Party Claim.

 

(b)          The Indemnified Party shall be entitled to participate in the defense of the Third Party Claim and to employ counsel of its choice for such purpose; provided that the fees and expenses of such separate counsel shall be borne by the Indemnified Party, except that the Indemnifying Party shall pay (i) any fees and expenses of such separate counsel that are incurred prior to the date the Indemnifying Party effectively assumes control of such defense and (ii) the fees and expenses of such separate counsel if the Indemnified Party has been advised by counsel that a reasonable likelihood exists of a conflict of interest between the Indemnifying Party and the Indemnified Party.

 

(c)          The Indemnifying Party shall not be entitled to assume control of the defense of the Third Party Claim (unless otherwise agreed to in writing by the Indemnified Party) and shall pay the fees and expenses of counsel retained by the Indemnified Party if (i) the Indemnifying Party does not unconditionally acknowledge in writing its obligation to indemnify and hold the Indemnified Party harmless with respect to the Third Party Claim, (ii) the Third Party Claim relates to or arises in connection with any criminal or quasi-criminal proceeding, action, indictment, allegation or investigation, (iii) the Third Party Claim seeks injunctive or other equitable relief applicable to the Indemnified Party, or (iv) the Indemnifying Party fails to take reasonable steps necessary to defend diligently the Third Party Claim within ten (10) days after receiving written notice from the Indemnified Party that the Indemnified Party reasonably believes (upon having received advice from reputable counsel) that the Indemnifying Party has failed to take such steps.

 

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(d)           Without the prior written consent of the Indemnified Party, the Indemnifying Party will not enter into any settlement of any Third Party Claim that would lead to loss, Liability, or create any financial or other obligation on the part of the Indemnified Party for which the Indemnified Party is not entitled to indemnification hereunder, or which provides for injunctive or other non-monetary relief applicable to the Indemnified Party, or does not include an unconditional release of all Indemnified Parties.

 

8.4.2           Any claim by an Indemnified Party on account of Damages that does not result from a Third Party Claim (a “Direct Claim”) will be asserted by giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) Business Days after the Indemnified Party becomes aware of such Direct Claim.  Such notice by the Indemnified Party will describe the Direct Claim in reasonable detail, will include copies of all available material written evidence thereof, and will indicate the estimated amount, if reasonably practicable, of Damages that has been or may be sustained by the Indemnified Party.  The Indemnifying Party will have a period of five (5) Business Days within which to respond in writing to such Direct Claim.  If the Indemnifying Party does not so respond within such five (5) Business Day period, the Indemnifying Party will be deemed to have accepted such claim, in which event the Indemnified Party will be free to pursue such remedies as may be available to the Indemnified Party at the Indemnifying Party’s expense pursuant to the terms and subject to the provisions of this Agreement.

 

8.4.3          A failure to give timely notice or to include any specified information in any notice as provided in Section 8.4.1 or 8.4.2 will not affect the rights or obligations of any Party, except and only to the extent that, as a result of such failure, any Party that was entitled to receive such notice was deprived of its right to recover any payment under its applicable insurance coverage or was otherwise prejudiced as a result of such failure.

 

8.5                Miscellaneous Indemnification Provisions.

 

8.5.1            Parties’ Knowledge.  The right to indemnification or other remedy based upon the representations, warranties, covenants and agreements shall not be affected by any investigation (including any environmental investigation or assessment) conducted or any knowledge acquired or capable of being acquired at any time prior to Closing, with respect to the accuracy or inaccuracy of or compliance with any such representations, warranties, covenants and agreements.

 

8.5.2           Transaction Consideration Adjustment.  The Parties agree that any indemnification payment made pursuant to this Agreement shall be treated as an adjustment to the Transaction Consideration for Tax purposes, unless otherwise required by Law.

 

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IX.  MISCELLANEOUS.

 

9.1                Termination.

 

9.1.1          This Agreement may be terminated at any time prior to the Closing:

 

(a)                by the written consent of the Purchaser and the Company;

 

(b)               by the Purchaser, if there has been a breach by the Company or the Member of any covenant, representation, or warranty contained in this Agreement that would prevent or has prevented the satisfaction of any condition to the obligations of the Purchaser at the Closing, and such breach has not been waived by the Purchaser or, in the case of a covenant breach, cannot be or has not been cured by the Company or the Member within the earlier of (i) ten (10) Business Days after written notice thereof from the Purchaser or (ii) the Closing Date;

 

(c)                by the Company, if there has been a breach by the Purchaser of any covenant, representation, or warranty contained in this Agreement that would prevent or has prevented the satisfaction of any condition to the obligation of the Company at the Closing, and such breach has not been waived by the Company or, in the case of a covenant breach, cannot be or has not been cured by the Purchaser within the earlier of (i) ten (10) Business Days after written notice thereof by the Company or (ii) the Closing Date; or

 

(d)                the Purchaser or the Company if the transactions contemplated hereby have not been consummated by April 2, 2015, provided the party desiring to terminate has not breached this Agreement and prevented the Closing from occurring.

 

9.1.2            If this Agreement is terminated pursuant to Section 9.1.1, all further obligations of the Parties under this Agreement (other than pursuant to Section 9.4, which will continue in full force and effect) will terminate without further liability or obligation of any Party to the other Parties hereunder; provided, however, that (a) the Purchaser will not be released from liability hereunder if this Agreement is terminated and the transactions abandoned by reason of (i) failure of the Purchaser to have performed its material obligations under this Agreement or (ii) any material misrepresentation made by the Purchaser of any matter set forth in this Agreement and (b) the Company and the Member will not be released from liability hereunder if this Agreement is terminated and the transactions abandoned by reason of (i) failure of the Company or the Member to have performed its or his material obligations under this Agreement or (ii) any material misrepresentation made by the Company or the Member of any matter set forth in this Agreement.  Nothing in this Section 9.1.2 will relieve any Party to this Agreement of liability for breach of this Agreement occurring prior to any termination, or for breach of any provision of this Agreement which specifically survives termination hereunder.

 

9.2                 Notices.  Any notice, request, instruction or other document required or permitted to be given under this Agreement by any Party to another Party will be in writing and will be given to such Party (a) at its address set forth in Annex II attached to this Agreement or to such other address as the Party to whom notice is to be given may provide in a written notice to the Party giving such notice or (b) if such Party is the Company or the Member, at the address of the Company’s Representative set forth in Annex II or at an address specified in a written notice to the Purchaser.  Each such notice, request, or other communication will be effective (x) if given by certified mail, return receipt requested, with postage prepaid addressed as aforesaid, upon receipt (and refusal of receipt shall constitute receipt), (y) one Business Day after being furnished to a nationally recognized overnight courier for next Business Day delivery, or (z) on the date sent if sent by electronic mail or facsimile transmission, receipt confirmed in each case.

 

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9.3                Amendments and Waivers.

 

9.3.1          Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by the Purchaser and the Company’s Representative (or by any successor to such Party), or in the case of a waiver, by the Party against whom the waiver is to be effective (including, in the case of the Company or a Member, the Company’s Representative).

 

9.3.2           No failure or delay by any Party in exercising any right, power, or privilege under this Agreement will operate as a waiver thereof nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power, or privilege.  The rights and remedies provided will be cumulative and not exclusive of any rights or remedies provided for in this Agreement by Law.

 

9.4                Expenses.  Each Party hereto will bear its own fees and expenses incurred incident to this Agreement and the Ancillary Agreements and in preparing to consummate and consummating the transactions contemplated by this Agreement.  In the event of any litigation brought to enforce or interpret this Agreement, or arising out of its negotiation, performance, or subject matter, the Party who prevails will be entitled to recover its attorneys’ fees and costs, including those incurred at trial, in any bankruptcy or other proceeding, on appeal, and in enforcing any judgment, as determined by the court.

 

9.5                Successors and Assigns.  The provisions of this Agreement will be binding upon and inure to the benefit of the Parties and their respective successors and assigns; provided, however, that no Party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of each other Party to this Agreement; and, provided, further, that (a) the Purchaser may assign any of its rights under this Agreement to any Affiliate; and (b) the Purchaser and its Affiliates may assign their rights under this Agreement to any of its financing sources as collateral security.

 

9.6                 Company’s Representative.

 

9.6.1           Except as otherwise provided in this Agreement, any right or action that may be taken at the election of the Member or the Company will be taken by a representative of the Member and the Company (the “Company’s Representative”) on behalf thereof.  The initial Company’s Representative will be Terry Reinhart.  Upon its resignation, the holders of a majority of the voting power of the Membership Interests at the time of Closing may designate a successor Company’s Representative.  Any Company’s Representative so designated must be reasonably acceptable to the Purchaser.

 

9.6.2           Any change in the Company’s Representative will become effective upon notice in accordance with Section 9.2.  The Company and the Member will indemnify and hold the Purchaser Indemnified Parties and their representatives harmless from any claim of the Company or the Member arising out of any act or omission by the Company’s Representative in connection with the transactions contemplated by this Agreement.

 

9.6.3           Except as otherwise provided in this Agreement, any right or action that may be taken at the election of the Member will be taken by the Company’s Representative on behalf thereof. The Company and the Member hereby irrevocably appoint the Company’s Representative, the agent and attorney-in-fact of each of the Company and each Member for the purposes of acting in the name and stead of the Company and the Member in: (a) receiving, holding and distributing the Transaction Consideration and paying any associated costs and expenses of the transactions hereunder required to be paid by the Company and the Member; (b) giving and receiving all notices permitted or required by this Agreement and acting on the Company’s and Member’s behalf hereunder for all purposes specified herein; (c) agreeing with the Purchaser as to any amendments to this Agreement which the Company’s Representative may deem necessary or advisable, including the extension of time in which to consummate the transactions contemplated by this Agreement, and the waiver of any closing conditions; (d) employing legal counsel; (e) paying any legal and any other fees and expenses incurred by the Company’s Representative in consummating the transactions contemplated by this Agreement; (f) defending or settling claims arising under this Agreement or any Ancillary Agreement; and (g) making, executing, acknowledging, and delivering all such contracts, orders, receipts, notices, requests, instructions, certificates, letters, and other writings, and in general doing all things and taking all actions which the Company’s Representative, in its sole discretion, may consider necessary or proper in connection with or to carry out the terms of this Agreement, as fully as if the Company or the Member were personally present and acting, including with respect to the Cabinet Payment.  This power of attorney and all authority conferred hereby is granted and conferred subject to the interests of the other Parties to this Agreement, and in consideration of those interests and for the purpose of completing the transactions contemplated hereby, this power of attorney and all authority conferred hereby shall be irrevocable and shall not be terminated by the Company or the Member or by operation of Law, whether by the termination of the Company’s Representative or by the occurrence of any other event.  If the Member should die or become incompetent or incapacitated, all actions taken by the Company’s Representative pursuant to this Agreement shall be as valid as if such death, incompetence, or incapacity or other event had not occurred, regardless of whether the Purchaser or the Company’s Representative, or any of them, shall have received notice of such death, incompetence, incapacity, or other event.  The Company’s Representative will be promptly reimbursed by the Company or the Member for all reasonable expenses, disbursements and advances incurred by the Company’s Representative in such capacity upon demand.

 

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9.7                Third Party Beneficiaries.  Except as provided in Article VIII, this Agreement is for the sole benefit of the Parties and their permitted assigns and nothing herein expressed or implied will give or be construed to give to any Person, other than the Parties and such permitted assigns, any legal or equitable rights under this Agreement.

 

9.8                Governing Law; Consent to Jurisdiction.  This Agreement will be governed by, and construed in accordance with, the Law of the State of Ohio without regard to the conflict of Laws rules of such state.  Each of the Parties hereby irrevocably consents and agrees that it shall bring any action, suit or proceeding with respect to any matter arising under or relating to this Agreement or any Ancillary Agreement or the subject matter hereof or thereof in the United States District Court for the Northern District of Ohio, Western Division (or if jurisdiction is not available in such court, then in a state court of the State of Ohio), unless such party, based on the good faith advice of its counsel, determines that any such court may not exercise or have jurisdiction over the other Party or such matter or that a judgment rendered by such court may not be enforceable in the jurisdiction of the organization of the other Party or a jurisdiction in which such other Party’s office(s) or assets are located.  Each of the Parties hereby irrevocably accepts and submits, for itself and in respect of its properties, to the jurisdiction of the United States District Court for the Northern District of Ohio, Western Division (or if jurisdiction is not available in such court, then in a state court of the State of Ohio), in personam, generally and unconditionally, with respect to any such action, suit or proceeding.  Each of the Parties hereby irrevocably consents to the service of process in any such action, suit or proceeding in any such court by the mailing of a copy thereof by registered or certified mail, postage prepaid, to such party at the address specified in Section 9.2 for notices to such Party.  In addition to or in lieu of any such service, service of process may also be made in any other manner permitted by applicable Law.  Each of the Parties hereby irrevocably and unconditionally waives any objection or defense which it may now or hereafter have to the laying of venue to any such action, suit or proceeding in the United States District Court for the Northern District of Ohio, Western Division (or if jurisdiction is not available in such court, then in a state court of the State of Ohio) and hereby irrevocably and unconditionally waives and agrees not to plead or claim that any such action, suit or proceeding brought in such court has been brought in an inconvenient forum.

 

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9.9                WAIVER OF JURY TRIAL.  EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT OR THE SUBJECT MATTER HEREOF OR THEREOF.  EACH PARTY ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF SUCH PARTY.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MIGHT BE FILED IN ANY COURT AND THAT MAY RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT OR ANY ANCILLARY AGREEMENT, INCLUDING ALL COMMON LAW AND STATUTORY CLAIMS.  EACH PARTY FURTHER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH SUCH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, MODIFICATIONS, SUPPLEMENTS OR RESTATEMENTS HEREOF.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

9.10              Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute the same agreement, and the execution of a counterpart of the signature page to this Agreement shall be deemed the execution of a counterpart of this Agreement.  The delivery of this Agreement may be made by facsimile or portable document format (pdf), and such signatures shall be treated as original signatures for all applicable purposes.

 

9.11             Headings.  The headings in this Agreement are for convenience of reference only and will not control or affect the meaning or construction of any provisions of this Agreement.

 

9.12             Entire Agreement.  This Agreement and the Ancillary Agreements (including the Schedules, Exhibits, and Annexes hereto and thereto) constitute the entire agreement among the Parties with respect to the subject matter of this Agreement and such Ancillary Agreements, and is a complete and final integration thereof.  This Agreement and the Ancillary Agreements (including the Schedules, Exhibits, and Annexes) supersede all prior agreements and understandings, both oral and written, between the Parties with respect to the subject matter of this Agreement and such Ancillary Agreements, including the letter of intent dated December 1, 2014.

 

9.13              Confidentiality.  In consideration of the benefits of this Agreement to the Company and the Purchaser and in order to induce the Parties to enter into this Agreement, the Company and the Purchaser hereby covenant and agree that from the date of this Agreement, through and after the Closing, the Parties shall keep confidential and not disclose to any other Person or use for their own benefit or the benefit of any other Person (i) in the case of the Company or the Member, any confidential or proprietary information regarding the Business and (ii) in the case of the Purchaser, prior to the Closing any confidential or proprietary information of the Company, and after the Closing any confidential or proprietary information regarding the Company that is not directly or indirectly related to the Business.  The obligation of the Parties under this Section 9.13 shall not apply to information which: (a) is or becomes generally available to the public without breach of the commitment provided for in this Section 9.13; or (b) is required to be disclosed by Law, order or regulation of a court or tribunal or government authority; provided, however, that in any such case, the Parties’ Representatives shall notify the other Party as early as reasonably practicable prior to disclosure to allow the other Party to take appropriate measures to preserve the confidentiality of such information.  Notwithstanding the forgoing, each Party and their respective employees, representatives and agents may disclose to any and all Persons, without limitation of any kind, the Tax treatment and Tax structure of the transactions contemplated herein and all materials of any kind (including opinions and other tax analyses) that are provided to such Party or such Person relating to such Tax treatment and Tax structure.  The authorization to disclose set forth in this section does not apply to the extent non-disclosure is necessary to comply with securities Laws, and does not extend to disclosure of any other information, including: (i) any portion of any materials to the extent not related to the Tax treatment or Tax structure of the transactions contemplated herein, (ii) the identities of participants or potential participants in the transactions contemplated herein, (iii) the existence or status of any negotiations, (iv) any pricing or financial information (except to the extent such pricing or financial information is related to the Tax treatment or Tax structure of the transactions contemplated herein), or (v) any other term or detail not relevant to the Tax treatment or Tax structure of the transactions contemplated herein.

 

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9.14             Severability.  If any provision of this Agreement or the application of any such provision to any Person or circumstance is held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision and such invalid, illegal or unenforceable provision will be reformed, construed and enforced as if such provision had never been contained herein and there had been contained in this Agreement instead such valid, legal and enforceable provisions as would most nearly accomplish the intent and purpose of such invalid, illegal or unenforceable provision.

 

9.15             Press Release and Announcements.  Unless required by Law (in which case the Company or the Member, as applicable, agrees to consult with the Purchaser prior to any such disclosure as to the form and content of such disclosure), no press releases or other releases of information related to this Agreement or the transactions contemplated hereby will be issued or released by the Company or the Member or any of their Representatives without the consent of the Purchaser.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

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The Parties have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

	
PURCHASER:

	 	
COMPANY:

	
	 	 	 	 	 	
	
Continental Commercial Products, LLC

	 	
Centrex Plastics, LLC

	
	 	 	 	 	 	
	
By:

	  	 	
By:

	  	
	
Name:

	
David J. Feldman

	 	
Name:

	
Terrence L. Reinhart

	
	
Its:

	
Chief Executive Officer

	 	
Its:

	
Managing Member

	

	MEMBER:	 	
T.R. Plastics, LLC

	
	 	 	 	 	 	
		 	
By:

	
 

	
	Terrence L. Reinhart	 	
Name:

	
Terrence L. Reinhart

	
	 	 	 	
Its:

	
Managing Member

	

 

-40-

Annex I

 

Definitions

 

In addition to the terms defined elsewhere in this Agreement, the following terms have the following meanings when used herein with initial capital letters:

 

“Accounting Referee”:  as set forth in Section 2.10.2.

 

“Accounts Payable”:  all accounts payable arising out of the Business.

 

“Accounts Receivable”: all accounts receivable, including trade and miscellaneous accounts receivable, arising out of the Business set forth on Schedule 2.1(h).

 

“Acquired Assets”: as set forth in Section 2.1.

 

“Affiliate”:  with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with the first Person.  For the purposes of this definition, “control,” when used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.  With respect to any natural Person, “Affiliate” will include such Person’s grandparents, any descendants of such Person’s grandparent, such Person’s spouse, the grandparent of such Person’s spouse, and any descendants of the grandparents of such Person’s spouse (in each case, whether by blood, adoption or marriage).

 

“Agreement”:  as set forth in the introductory paragraph.

 

“Ancillary Agreements”: shall mean the Restrictive Covenants Agreements, Bill of Sale, the Assignment and Assumption Agreement, Escrow Agreement, IP Assignment Agreement, Real Property Lease, Transition Services Agreement, and Right of First Refusal Agreement, and the other documents, instruments and agreements to be entered into pursuant hereto and thereto.

 

“Apportioned Obligations”: as set forth in Section 6.2.2.

 

“Assignment and Assumption Agreement”: an assignment of all of the Acquired Assets that are intangible personal property substantially in the form as set forth in Exhibit C, which assignment shall also contain the Purchaser’s undertaking and assumption of the Assumed Liabilities, duly executed by the Company and the Purchaser.

 

“Assumed Contracts”: as set forth in Section 2.1(b).

 

“Assumed Liabilities”: as set forth in Section 2.3.

 

“Baseline Sales: means $13.2 million.

 

“Bill of Sale”: a bill of sale substantially in the form as set forth in Exhibit D for all of the Acquired Assets that are tangible personal property, duly executed by the Company, and such other good and sufficient instruments of conveyance, transfer and assignment as shall be necessary to vest in the Purchaser good and valid title to the Acquired Assets free and clear of all Liens, except for Permitted Liens;

 

“Business”:  means any plastics shelving or cabinets business of the Company or its Affiliates as currently conducted, manufactured or sold by the Company.

 

“Business Day”:  any day other than a Saturday or Sunday or a day on which the Federal Reserve Bank of New York is closed.

 

“Business Employees”:  as set forth in Section 3.20.2.

 

“Cabinet Line Sales” means, for any period, an amount equal to the net sales of the plastic cabinet products (excluding shelving products) manufactured or sold by the Company as of the date hereof, with net sales to be determined in accordance with GAAP.

 

“Cabinet Payment”: as set forth in Section 2.10.

 

“Capital Lease Obligations”:  with respect to any Person, for any applicable period, the obligations of such Person that are permitted or required to be classified and accounted for as capital obligations under GAAP, and the amount of such obligations at any date will be the capitalized amount of such obligations at such date determined in accordance with GAAP.

 

“CERCLA”:  the Federal Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. § 9601 et seq.

 

“Closing”:  as set forth in Section 2.5.

 

“Closing Date”:  as set forth in Section 2.5.

 

 “Closing Payments”:  as set forth in Section 2.7.

 

“COBRA”: as set forth in Section 5.7.7.

 

“Code”:  the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder.

 

“Company”:  as set forth in the introductory paragraph.

 

“Company Indemnified Parties”:  as set forth in Section 8.3.1.

 

“Company Licensed Intellectual Property”:  as set forth in Section 3.16.1.

 

“Company Owned Intellectual Property”:  as set forth in Section 3.16.1.

 

“Company’s Pro-Rata Share”: as set forth in Section 6.2.2.

 

“Company Real Property”:  any real property and improvements at any time owned, leased, used, operated, or occupied (whether for storage, disposal, or otherwise) by the Company.

 

“Company’s Representative”:  as set forth in Section 9.6.1.

 

“Constituent of Concern”:  any substance, material or waste (regardless of physical form or concentration) that is (a) hazardous toxic, infectious, explosive, radioactive, carcinogenic, ignitable, corrosive, reactive or otherwise harmful to living things or the environment, or (b) is or becomes identified, defined, designated, listed, restricted or otherwise regulated under Environmental Laws, including hazardous substance, hazardous waste, hazardous material, pollutant or contaminant, any petroleum hydrocarbon and any degradation product of a petroleum hydrocarbon, asbestos, PCB, airborne mysote, mold spores, or similar substance.

 

ii

“Continuing Consent”: as set forth in Section 5.8.

 

“Contracts”:  contracts, leases and subleases, franchises, agreements, licenses, arrangements, commitments, letters of intent, memoranda of understanding, promises, obligations, rights, instruments, documents, indentures, mortgages, security interests, guarantees, and other similar arrangements whether written or oral, other than the Plans.

 

“Damages”:  any and all debts, losses (including diminution in value), claims, damages, costs, fines, judgments, awards, penalties, interest, obligations, payments, settlements, suits, demands, expenses and liabilities of every type and nature, together with all reasonable costs and expenses (including reasonable attorneys’ and other legal fees and out-of-pocket expenses) actually incurred in connection with any of the foregoing and including the reasonable cost of the investigation, preparation or defense of any action in connection therewith, and the assertion of any claims under this Agreement, and the cost of any Tax, interest, penalty or addition to Tax.

 

“Deductible”:  as set forth in Section 8.2.3(a).

 

“Direct Claim”:  as set forth in Section 8.4.2.

 

“Disclosure Schedule”: as set forth in Section 2.13.

 

“Environmental Claim”: any claim; litigation; demand; action; cause of action; suit; loss; cost, including attorneys’ fees, diminution in value, and expert’s fees; losses; punitive damage, fine, penalty, expense, liability, criminal liability, strict liability, judgment, governmental or private investigation and testing; notification of potential responsibility for clean-up of any facility or for being in violation or in potential violation of any requirement of Environmental Law; proceeding; consent or administrative order, agreement, or decree; Lien; personal injury or death of any Person; or property damage (including diminution in value damages), whether threatened, sought, brought, or imposed, that is related to or that seeks to recover losses related to, or seeks to impose liability under Environmental Law, including for: (a) improper use or treatment of wetlands, pinelands, or other protected land or wildlife; (b) radioactive materials (including naturally occurring radioactive materials); (c) pollution, contamination, preservation, protection, decontamination, remediation, or clean-up of the indoor or ambient air, surface water, groundwater, soil or protected lands; (d) exposure of Persons or property to any Constituent of Concern and the effects thereof; (e) the release or threatened release (into the indoor or outdoor environment), generation, manufacture, processing, distribution in commerce, use, application, transfer, transportation, treatment, storage, disposal, or remediation of a Constituent of Concern; (f) injury to, death of, or threat to the health or safety of any Person or Persons caused directly or indirectly by any Constituent of Concern; (g) destruction of property caused directly or indirectly by any Constituent of Concern or the release or threatened release of any Constituent of Concern to any property (whether real or personal); (h) the implementation of spill prevention and/or disaster plans relating to any Constituent of Concern; (i) failure to comply with community right-to-know and other disclosure Laws; or (j) maintaining, disclosing, or reporting information to Governmental Authorities or any other third Person under, or complying or failing to comply with, any Environmental Law.  The term “Environmental Claim” also includes any losses incurred in testing related to or resulting from any of the foregoing.

 

“Environmental Condition”: a condition with respect to the environment or natural resources that has resulted or could result in losses to the Company under applicable Environmental Laws.

 

iii

“Environmental Law”: all applicable Laws, Environmental Licenses, and similar items of any Governmental Authority relating to the protection or preservation of the environment, natural resources or human health or safety, including: (a) all requirements pertaining to any obligation or liability for reporting, management, licensing, permitting, investigation, and remediation of emissions, discharges, releases, or threatened releases of a Constituent of Concern; (b) all requirements pertaining to the protection of the health and safety of employees or the other Persons; and (c) all other limitations, restrictions, conditions, standards, prohibitions, obligations, and timetables contained therein or in any notice or demand letter issued, entered, promulgated, or approved thereunder.  The term “Environmental Law” includes (i) CERCLA, the Federal Water Pollution Control Act (which includes the Federal Clean Water Act), the Federal Clean Air Act, the Federal Solid Waste Disposal Act (which includes the Resource Conservation and Recovery Act), the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, and OSHA, each as amended from time to time, any regulations promulgated pursuant thereto, and any state or local counterparts and (ii) any common Law or equitable doctrine (including injunctive relief and tort doctrines such as negligence, nuisance, trespass, strict liability, contribution and indemnification) that may impose liability or obligations for injuries or losses due to, or threatened as a result of, the presence of, effects of, or exposure to any Constituent of Concern.

 

“Environmental Licenses”: all Licenses relating to or required by Environmental Laws and necessary for or held in connection with the conduct of the Business.

 

“ERISA”:  the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate”:  any Person that would be considered a single employer within the meaning of Section 4001 of ERISA or Section 414 of the Code.

 

“Escrow Account”:  the separate account maintained by the Escrow Agent to hold the Escrow Amount pursuant to the terms of the Escrow Agreement.

 

“Escrow Agent”:  First Federal Bank of the Midwest.

 

“Escrow Amount”:  $1,000,000.

 

“Escrow Agreement”:  the Escrow Agreement, to be dated as of the Closing Date, substantially in the form of Exhibit E attached hereto.

 

“Exchange Act”:  the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Excluded Assets”: as set forth in Section 2.2.

 

“Final Statement” shall have the meaning set forth in Section 2.10.5.

 

“Financial Statements”: (i) the audited balance sheets of the Company as of December 31, 2012 and December 31, 2013, together with the related statements of income and cash flow for the 12-month periods then ended, (ii) the unaudited balance sheet of the Company as of December 31, 2014, together with the related unaudited statements of income and cash flow for the 12-month period then ended, and (iii) the statements of income of the Business for the 12-month periods ended December 31, 2013 and December 31, 2014, all of which are attached as Schedule 3.5.1.

 

“Fundamental Reps: as set forth in Section 8.1.

 

“GAAP”:  generally accepted accounting principles in effect from time to time in the United States of America, applied on a consistent basis.

 

iv

“Governmental Authority”:  any federal, state, county, city, municipal, or other local or foreign government or any subdivision, authority, commission, board, bureau, court, administrative panel, or other instrumentality thereof.

 

“Guarantee”:  of or by any Person (the “guaranteeing person”), means, without duplication, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guaranteeing person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness (whether arising by virtue of partnership arrangements, by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay or otherwise) or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (ii) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or (iv) entered into for the purpose of assuring in any other manner the holders of such Indebtedness of the payment thereof or to protect such holders against loss in respect thereof (in whole or in part) or (b) any Lien on any assets of the guaranteeing person securing any Indebtedness of any other Person, whether or not such Indebtedness is assumed by the guaranteeing person.

 

“Hired Employees”: as set forth in Section 5.7.1.

 

“Indebtedness”:  with respect to any Person, without duplication, (a) all obligations of such Person for borrowed money, whether short-term or long-term, and whether secured or unsecured, or with respect to deposits or advances of any kind (other than deposits and advances of any Person relating to the purchase of products or services of the Company in the Ordinary Course), (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid (other than trade payables incurred in the Ordinary Course), (d) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services (other than current trade payables incurred in the Ordinary Course), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all net payments that such Person would have to make in the event of an early termination, on the date Indebtedness of such Person is being determined, in respect of outstanding interest rate protection agreements, foreign currency exchange arrangements or other interest or exchange rate hedging arrangements, (j) all obligations including reimbursement obligations of such Person in respect of letters of credit, fidelity bonds, surety bonds, performance bonds and bankers’ acceptances, (l) obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any capital stock of such Person or any warrants, rights or options to acquire such capital stock, (m) renewals, extensions, refundings, deferrals, restructurings, amendments and modifications of any such Indebtedness or Guarantee and (n) any other obligation that in accordance with GAAP is required to be reflected as debt on the balance sheet of such Person (other than trade payables and current accruals incurred in the Ordinary Course).  The Indebtedness of any Person will include the Indebtedness of any partnership in which such Person is a general partner, other than to the extent that the instrument or agreement evidencing such Indebtedness expressly limits the liability of such Person in respect thereof.

 

“Indemnified Party”:  as set forth in Section 8.4.1.

 

“Indemnifying Party”:  as set forth in Section 8.4.1.

 

v

“Intellectual Property Right”:  with respect to any Person, all trademarks, trademark rights, service marks, service mark rights, tradenames, tradename rights, copyrights, works of authorship, inventions (whether patentable or not), invention disclosures, industrial models, industrial designs, utility models, certificates of invention, designs, emblems and logos, trade secrets, manufacturing formulae, technical information, patents, patent applications, moral rights, mask work registrations, franchises, franchise rights, customer and supplier lists, and related identifying information together with the goodwill associated therewith, product formulae, product designs, product packaging, business and product names, slogans, rights of publicity, improvements, processes, specifications, technology, methodologies, computer software (including all source code and object code), firmware, development tools, flow charts, annotations, all Web addresses, sites and domain names, all data bases and data collections and all rights therein, any other confidential and proprietary right or information, whether or not subject to statutory registration, as each of the foregoing rights may arise anywhere in the world, and all related technical information, manufacturing, engineering and technical drawings, know-how, and all pending applications and registrations of patents, and the right to sue for past infringement, if any, in connection with any of the foregoing, and all documents, disks, records, files, and other media on which any of the foregoing is stored, and other proprietary rights, in the case of each of the foregoing which is owned by such Person or used or held for use by such Person in connection with its respective business.

 

“Inventories”: all finished goods, all work-in-process, intermediaries and all raw materials or ingredients used or held for use by the Business.

 

“IP Assignment Agreement”: assignment agreement substantially in the form set forth as Exhibit F assigning all of the Acquired Assets that are Intellectual Property Rights to the Purchaser.

 

“Knowledge Persons” shall mean Terry Reinhart and Nick Reinhart, and all officers and directors of the Company.

 

“Law”:  any federal, state, county, city, municipal, foreign, or other governmental statute, law, rule, regulation, ordinance, order, code, treaty or requirement (including pursuant to any settlement agreement or consent decree) and any License granted under any of the foregoing, or any requirement under the common Law, or any other pronouncement having the effect of Law of any Governmental Authority, in each case as in effect as of the Closing Date.

 

“Leased Real Property”:  as set forth in Section 3.13.1.

 

“Liabilities”: as set forth in Section 3.6.

 

“License” shall mean all approvals, agreements, authorizations, permits, licenses, easements, orders, certificates, registrations, franchises, qualifications, rulings, waivers, variances or other form of permission, consent, exemption or authority issued, granted, given or otherwise made available by or under the authority of any Governmental Authority.

 

“Lien”:  with respect to any property or asset, any mortgage, deed of trust, lien, pledge, hypothecation, assignment, charge, option, preemptive purchase right, easement, encumbrance, security interest, or other adverse claim of any kind in respect of such property or asset.  For purposes of this Agreement, a Person will be deemed to own subject to a Lien any property or asset that it has acquired or holds subject to the interest of a vendor or a lessor under any conditional sale agreement, capital lease, or other title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such property or asset.

 

“Material Adverse Effect”:  any change or effect that is or would reasonably be expected to be materially adverse to (a) the assets, liabilities, condition (financial and other), results of operations or prospects of the Business, taken as a whole, or (b) the ability of the Company or the Member to timely perform their respective obligations under this Agreement or the Ancillary Agreements; but excluding (x) changes in general economic, regulatory, financial or political conditions, (y) changes affecting the industry of the Business generally or (z) changes in Law.

 

vi

“Material Contract”:  as set forth in Section 3.10.2.

 

“Member”:  as set forth in the introductory paragraph.

 

“Membership Interests”:  as set forth in Section 3.4.1.

 

“Order”:  any writ, judgment, injunction, order, or decree (including any consent decree) that is issued, promulgated or entered by or with a Governmental Authority, in each case whether preliminary or final.

 

“Ordinary Course”:  with respect to an action taken by any Person, an action that (a) is consistent in nature, scope and magnitude with the past practices of such Person, and (b) does not require authorization by the board of directors or members of such Person (or by any Person or group of Persons exercising similar authority) and does not require any other separate or special authorization of any nature.

 

“OSHA”:  the Federal Occupational Safety and Health Act of 1970, as amended from time to time.

 

“Organizational Documents” means the certificate of incorporation, certificate of formation, bylaws, operating agreement, or other similar documents of the Parties, as applicable, in each case as amended.

 

“Owned Real Property”: as set forth in Section 3.13.1.

 

“Parties”:  as set forth in the introductory paragraph.

 

 “Permitted Liens”:  (a) Liens for Taxes, assessments or other similar governmental charges that are not yet due or that are being contested in good faith by appropriate proceedings and that are fully and properly reserved for in the Balance Sheet; (b) any mechanics’, workmen’s, repairmen’s and other similar Liens arising or incurred in the Ordinary Course in respect of obligations that are not overdue and that are fully and properly reserved for in the Balance Sheet; or (c) Liens affecting the Company Real Property arising from easements, easement agreements, rights-of-way, restrictions, or minor title defects (whether or not recorded) that arise in the Ordinary Course and that do not detract materially from the value of the property subject thereto or materially impair the use of the property subject thereto; (d) Liens encumbering Leased Real Property (other than Liens based on actions or inactions of the Company); and (e) Liens relating to any equipment operating leases.

 

“Person”:  an individual, a corporation, a partnership, a limited liability company, an association, a trust, a joint stock company, a joint venture, an unincorporated organization, any Governmental Authority, or other entity or organization.

 

“Plans”:  as set forth in Section 3.18.1.

 

“Purchaser”:  as set forth in the introductory paragraph.

 

“Purchaser Indemnified Parties”:  as set forth in Section 8.2.1.

 

vii

“Real Property Lease”: the lease in the form as set forth in Exhibit H, duly executed by the Company and Reingard Enterprises, LLC;

 

“Representatives”: means, with respect to any Person, the officers, directors, employees, agents, accountants, advisors, bankers and other representatives of such Person.

 

“Restricted Assets”: as set forth in Section 5.8.

 

“Restrictive Covenants Agreements”: restrictive covenants agreements between the Purchaser, on the one hand, and each of the Company and the Member, on the other hand, substantially in the form set forth as Exhibit A.

 

“Right of First Refusal Agreement”: right of first refusal agreement between the Purchaser, on the one hand, and the Company and the Member, on the other hand, substantially in the form set forth as Exhibit K.

 

“Selling Expenses”:  all of the fees and expenses incurred by or on behalf of the Company in connection with the transactions contemplated by this Agreement or relating to the negotiation, preparation or execution of this Agreement or any documents or agreements contemplated hereby or the performance or consummation of the transactions contemplated by this Agreement, including (a) all brokers’ or finders’ fees, and (b) fees and expenses of counsel, advisors, consultants, investment bankers, accountants, and auditors and experts.

 

“Statement”: as set forth in Section 2.10.2.

 

“Subsidiary”:  with respect to any Person, (a) any corporation, of which a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote generally in the election of directors thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof or (b) any limited liability company, partnership, association, or other business entity, of which a majority of the partnership, membership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof.  For purposes of this definition, a Person or Persons will be deemed to have a majority ownership interest in a limited liability company, partnership, association, or other business entity if such Person or Persons will be allocated more than 50% of the limited liability company, partnership, association, or other business entity gains or losses, or is or controls the managing member or general partner of such limited liability company, partnership, association, or other business entity.

 

“Survival Date”:  as set forth in Section 8.2.2.

 

“Tax”:  (a) any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, value added, margins, transfer, franchise, profits, license, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental, or windfall profit tax, withholding on amounts paid to or by the Company or any of its Affiliates, custom, duty, or other tax, escheat of unclaimed funds or property, governmental fee, or other like assessment or charge of any kind whatsoever, together with any interest, penalty, addition to tax, or additional amount imposed by any Governmental Authority, (b) any liability of the Company or any of its Affiliates for the payment of any amounts of any of the foregoing types as a result of being a member of an affiliated, consolidated, combined, or unitary group, or being a party to any agreement or arrangement whereby liability of the Company or of any of its Affiliates for payment of such amounts was determined or taken into account with reference to the liability of any other Person, and (c) any liability of the Company or of any of its Affiliates for the payment of any amounts as a result of being a party to any Tax Sharing Agreements or with respect to the payment of any amounts of any of the foregoing types as a result of any express or implied obligation to indemnify any other Person.

 

viii

“Tax Returns”:  all returns, declarations, reports, claims for refund, information returns or other documents (including any related or supporting schedules, statements or information, or any amendment thereto) filed with or submitted to, or required to be filed with or submitted to, any Governmental Authority in connection with the determination, assessment or collection of any Taxes of any party or the administration, implementation, or enforcement of or compliance with any Laws relating to any Taxes.

 

“Tax Sharing Agreements”:  all existing Tax sharing agreements or arrangements (whether oral or written) binding the Company or any of its Affiliates.

 

“Third Party Claim”:  any claim, demand, action, suit, or proceeding made or brought by any Person who or that is not a party to this Agreement.

 

“Transaction Consideration”: as set forth in Section 2.6.

 

“Transition Services Agreement”: a transition services agreement substantially in the form of Exhibit I executed by the Company and the Purchaser.

ix

Annex II

Notices

To the Purchaser:

 

Continental Commercial Products, LLC

305 Rock Industrial Park Drive

Bridgeton, MO 63044

Fax:  (314) 770-9938

Attention:  Brian Nichols

Email:  bnichols@contico.com

Katy Industries, Inc.

305 Rock Industrial Park Drive

Bridgeton, MO 63044

Fax:  (314) 770-9938

Attention: James W. Shaffer

Email: jshaffer@katyindustries.com

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

 

DLA Piper LLP (US)

One Atlantic Center, Suite 2800

1201 West Peachtree Street

Atlanta, GA  30309-3450

Fax:  (404) 682-7990

Attention:  Joseph B. Alexander, Jr., Esq.

To the Company’s Representative:

 

Terrence L. Reinhart

c/o: Centrex Plastics, LLC

814 West Lima Street

Findlay, OH 45840

Fax: (419) 425-6871

Email: terry@centrexplastics.com

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

Robert B. Hollister

Oxley, Malone, Hollister, Warren & Spaeth, P.L.L.

301 East Main Cross Street

P.O. Box 1086

Findlay, OH 45839-1086

Fax: (419) 422-6495

Email: rbhollister@yahoo.com

Exhibits

 

Exhibit A – Form of Restrictive Covenants Agreement

 

Exhibit B – Reserved

 

Exhibit C – Form of Assignment and Assumption Agreement

 

Exhibit D – Form of Bill of Sale

 

Exhibit E – Escrow Agreement

 

Exhibit F – Form of IP Assignment Agreement

 

Exhibit G – Reserved

 

Exhibit H – Form of Real Property Lease

 

Exhibit I – Form of Transition Services Agreement

 

Exhibit J – Reserved

 

Exhibit K – Form of Right of First Refusal Agreement

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