Form 8-K Limbach Holdings, Inc. For: Dec 02

December 3, 2021 7:33 AM EST

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Exhibit 2.1

EXECUTION VERSION

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

by and among

 

RICHARD L. POLLARD AND MATTHEW S. POLLARD,

 

JAKE MARSHALL, LLC,

 

COATING SOLUTIONS, LLC,

 

LIMBACH HOLDINGS, INC.

 

and

 

LIMBACH FACILITY SERVICES LLC

 

dated as of

 

December 2, 2021

 

 

 

 

TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS 1
ARTICLE II PURCHASE AND SALE 9
     
Section 2.01 Purchase and Sale 9
Section 2.02 Purchase Price 9
Section 2.03 Transactions to be Effected at the Closing 9
Section 2.04 Closing 9
Section 2.05 Withholding Tax 9
Section 2.06 Deferred Payment Amount 10
Section 2.07 Parent Guarantee 13
     
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS 13
Section 3.01 Organization and Authority 14
Section 3.02 No Conflicts; Consents 14
Section 3.03 Brokers 14
     
ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANIES 14
Section 4.01 Organization, Authority and Qualification of the Companies 14
Section 4.02 Capitalization 15
Section 4.03 No Subsidiaries 15
Section 4.04 No Conflicts; Consents 15
Section 4.05 Financial Statements 16
Section 4.06 Undisclosed Liabilities 17
Section 4.07 Absence of Certain Changes, Events and Conditions 17
Section 4.08 Material Contracts 19
Section 4.09 Title to Assets; Real Property 20
Section 4.10 Condition and Sufficiency of Assets 22
Section 4.11 Intellectual Property 22
Section 4.12 Accounts Receivable; Retainage; Inventory 23
Section 4.13 Customers and Suppliers 24
Section 4.14 Insurance 24
Section 4.15 Legal Proceedings; Governmental Orders 25
Section 4.16 Compliance With Laws; Permits 25
Section 4.17 Environmental Matters 26
Section 4.18 Employee Benefit Matters 27
Section 4.19 Employment Matters 30
Section 4.20 Taxes 32
Section 4.21 Books and Records 34
Section 4.22 Brokers 34
Section 4.23 Affiliate Transactions 34
Section 4.24 Construction Projects; Warranties 34
Section 4.25 Banking Facilities 35
     
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT 35
Section 5.01 Organization and Authority 35
Section 5.02 No Conflicts; Consents 36
Section 5.03 Investment Purpose 36
Section 5.04 Brokers 36
Section 5.05 Compliance with Laws 36
Section 5.06 Legal Proceedings 36
Section 5.07 Sufficiency of Funds 36

 

ii

 

 

     
ARTICLE VI COVENANTS 36
Section 6.01 Resignations 36
Section 6.02 Confidentiality 36
Section 6.03 Non-Competition; Non-Solicitation 37
Section 6.04 Governmental Approvals and Consents 38
Section 6.05 Books and Records 38
Section 6.06 Public Announcements 39
Section 6.07 Further Assurances 39
Section 6.08 SEC Filings; Financial Statements. 39
Section 6.09 Arrangement for Repayment of Indebtedness 39
Section 6.10 Benefit Plan Matters 40
Section 6.11 Surety Bonds 40
Section 6.12 Federal Employee Retention Credit 41
     
ARTICLE VII TAX MATTERS 41
Section 7.01 Tax Covenants 41
Section 7.02 Termination of Existing Tax Sharing Agreements 42
Section 7.03 Tax Indemnification 42
Section 7.04 Straddle Period 42
Section 7.05 Contests 42
Section 7.06 Cooperation and Exchange of Information 43
Section 7.07 Tax Treatment of Indemnification Payments 43
Section 7.08 Payments to Buyer 43
Section 7.09 Survival 43
Section 7.10 Overlap 43
Section 7.11 Allocation 43
     
ARTICLE VIII CLOSING DELIVERIES AND CONDITIONS 44
Section 8.01 Conditions to Obligations of All Parties 44
Section 8.02 Conditions to Obligations of Buyer 44
Section 8.03 Conditions to Obligations of the Sellers 45
     
ARTICLE IX INDEMNIFICATION 46
Section 9.01 Survival 46
Section 9.02 Indemnification by the Sellers 46
Section 9.03 Indemnification By the Parent and the Buyer 47
Section 9.04 Certain Limitations 47
Section 9.05 Indemnification Procedures 48
Section 9.06 Payments; Escrow Funds; Setoff 50
Section 9.07 Tax Treatment of Indemnification Payments 50
Section 9.08 Exclusive Remedies 50
ARTICLE X MISCELLANEOUS 50
Section 10.01 Expenses 50
Section 10.02 Notices 50
Section 10.03 Interpretation 51
Section 10.04 Headings 51
Section 10.05 Severability 52
Section 10.06 Entire Agreement 52
Section 10.07 Successors and Assigns 52
Section 10.08 No Third-party Beneficiaries 52
Section 10.09 Amendment and Modification; Waiver 52
Section 10.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial 52
Section 10.11 Specific Performance 53
Section 10.12 Counterparts 53

 

iii

 

 

Exhibits and Schedules:

Disclosure Letter

 

Schedule 8.02(a) - Required Third Party Consents
     
Schedule 8.02(k) - Certain Related Party Contracts and Arrangements to be Terminated
     
Schedule 8.02(l) - Certain Guarantees to be Terminated and Released
     
Exhibit A - Form of Escrow Agreement

 

iv

 

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

This Membership Interest Purchase Agreement (this “Agreement”), dated as of December 2, 2021, for the purchase and sale of all of the outstanding membership interests of Jake Marshall, LLC, a Tennessee limited liability company (“JMLLC”) and Coating Solutions, LLC, a Tennessee limited liability company (“CSLLC” and, together with JMLLC, the “Companies” and each a “Company”), is entered into by and among the Companies, Richard L. Pollard (“Rick”) and Matthew S. Pollard (“Matt” and, together with Rick, the “Sellers”), Limbach Holdings, Inc., a Delaware corporation (the “Parent”), and Limbach Facility Services LLC, a Delaware limited liability company (the “Buyer”).

 

RECITALS

 

WHEREAS, the Sellers own all of the issued and outstanding membership interests of each of the Companies (the “Membership Interests”);

 

WHEREAS, the Sellers wish to sell to the Buyer, and the Buyer wishes to purchase from the Sellers, all of the Membership Interests subject to the terms and conditions set forth herein; and

 

WHEREAS, a portion of the purchase price payable by the Buyer to the Sellers shall be placed in escrow by the Buyer, the release of which shall be contingent upon certain events and conditions, all as set forth in this Agreement and the Escrow Agreement (as defined herein).

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I
DEFINITIONS

 

Except as otherwise specified or as the context may otherwise require, in addition to the capitalized terms defined elsewhere herein, the following terms have the meanings specified or referred to in this ARTICLE I:

 

Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

 

Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

Ancillary Documents” means all agreements, certificates, instruments, and other documents, other than this Agreement, entered into in connection with the consummation of the transactions contemplated by this Agreement, including the Escrow Agreement.

 

Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in Tennessee are authorized or required by Law to be closed for business.

 

1

 

 

Cash” means, without duplication, cash and cash equivalents (including marketable securities and short term investments) of the Companies, determined in accordance with GAAP applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Audited Financial Statements for the most recent fiscal year end as if such accounts were being prepared and audited as of a fiscal year end.

 

CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601 et seq., as amended.

 

Closing Date Cash Payment” means the Closing Cash Purchase Price less the Escrow Amount.

 

Closing Working Capital” means: (a) the notes and accounts receivable, prepaid expenses, retention receivable, truck/tools inventory, and other current assets of the Companies, but excluding (i) Cash, (ii) deferred Tax assets, (iii) intercompany receivables between the Companies, and (iv) receivables from employees of the Companies; less (b) the accounts payable, accrued expenses, deferred income, retention payable, subcontractor retention, and other current liabilities of the Companies, but excluding (i) deferred Tax liabilities, (ii) Transaction Expenses, (iii) the current portion of Indebtedness and accrued interest thereon, (iv) intercompany payables between the Companies, and (v) accrued annual incentive compensation for the portion of 2021 prior to the Closing; in each case, as determined in accordance with GAAP applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Audited Financial Statements for the most recent fiscal year end as if such accounts were being prepared and audited as of a fiscal year end.

 

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

 

Company Intellectual Property” means all Intellectual Property that is owned by the Companies.

 

Company IP Agreements” means all licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue, waivers, releases, permissions and other Contracts, whether written or oral, relating to Intellectual Property to which any Company is a party, beneficiary or otherwise bound.

 

Company IP Registrations” means all Company Intellectual Property that is subject to any issuance, registration or application by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including issued patents, registered trademarks, domain names and copyrights, and pending applications for any of the foregoing.

 

Contracts” means all contracts, Leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral.

 

Determination Time” means 11:59 p.m., Eastern Time, on the Closing Date; provided, however, that no calculation required to be made hereunder as of the Determination Time shall reflect the conduct of business or any action that takes place on the Closing Date after the Closing that is outside of the ordinary course of business of the Companies.

 

Disclosure Letter” means the disclosure letter delivered by the Sellers concurrently with the execution and delivery of this Agreement.

 

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Dollars or $” means the lawful currency of the United States.

 

Encumbrance” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

 

Environmental Claim” means any Action, Governmental Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the Release of, threatened Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.

 

Environmental Law” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, indoor air, soil, soil gas, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal, removal or remediation of any Hazardous Materials. The term “Environmental Law” includes the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601 et seq., as amended; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901 et seq., as amended; the Federal Water Pollution Control Act of 1972, 33 U.S.C. §§ 1251 et seq., as amended; the Toxic Substances Control Act of 1976, 15 U.S.C. §§ 2601 et seq., as amended; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq., as amended; the Clean Air Act of 1966, 42 U.S.C. §§ 7401 et seq., as amended; the Safe Drinking Water Act, 42 U.S.C. §§300f et seq., as amended; Hazardous Material Transportation Act, 49 U.S.C. §§ 5101 et seq., as amended; and the Occupational Safety and Health Act of 1970, 29 U.S.C. §§ 651 et seq., as amended.

 

Environmental Notice” means any written directive, notice of violation or infraction, special notice letter, notice of responsibility or liability, or notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.

 

Environmental Permit” means any Permit, letter, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted, given, authorized by or made pursuant to Environmental Law.

 

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

 

ERISA Affiliate” means all employers (whether or not incorporated) that would be treated together with a Company or any of its Affiliates as a “single employer” within the meaning of Section 414 of the Code or Section 4001 of ERISA.

 

Escrow Agent” means U.S. Bank, National Association.

 

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Escrow Agreement” means the Escrow Agreement to be entered into by Buyer, Sellers and Escrow Agent at the Closing, substantially in the form of Exhibit A, pursuant to which (and subject to the terms and conditions of the Escrow Agreement) the Escrow Fund would be held for the purpose of securing the obligations of the Sellers in ARTICLE IX and Section 7.08.

 

Escrow Amount” means $1,000,000 (the “Indemnity Escrow Amount”) in Cash.

 

Escrow Fund” means the Indemnity Escrow Amount plus any interest or other amounts earned thereon and less any disbursements therefrom in accordance with the Escrow Agreement (the “Indemnity Escrow Fund”).

 

Exchange Act” means the Securities Exchange Act of 1934, as amended, and any applicable rules and regulations promulgated thereunder, and any successor to such statute, rules or regulations.

 

Fundamental Representations” means the representations and warranties of the Sellers contained in Section 3.01 (Organization and Authority), Section 3.02 (No Conflicts; Consent), Section 3.03 (Brokers), Section 4.01 (Organization, Authority and Qualification of the Companies), Section 4.02 (Capitalization), Section 4.03 (No Subsidiaries), Section 4.04 (No Conflicts; Consent); Section 4.09(a) (Title to Assets); Section 4.22 (Brokers); and Section 4.23 (Affiliate Transactions).

 

GAAP” means United States generally accepted accounting principles in effect from time to time.

 

Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

 

Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

 

Hazardous Materials” means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation, and polychlorinated biphenyls.

 

Indebtedness” means, without duplication and with respect to the Companies, the principal amount, plus any related accrued and unpaid interest, fees and prepayment premiums or penalties, “breakage costs”, redemption fees or other termination fees of all (a) indebtedness for borrowed money; (b) obligations for the deferred purchase price of property or services (other than current liabilities taken into account in the calculation of Closing Working Capital), (c) long or short-term obligations evidenced by notes, bonds, debentures or other similar instruments; (d) obligations under any interest rate, currency swap or other hedging or derivative agreement or arrangement; (e) capital lease obligations; (f) any performance bond, letter of credit or surety bond, in each case, solely to the extent drawn upon or payable and not continuing, or any bank overdraft or similar charges; (g) guarantees made by any Company on behalf of any third party in respect of obligations of the kind referred to in the foregoing clauses (a) through (f); and (h) any unpaid interest, prepayment penalties, premiums, costs and fees that would arise or become due as a result of the prepayment of any of the obligations referred to in the foregoing clauses (a) through (g).

 

4

 

 

Intellectual Property” means any and all rights in, arising out of, or associated with any of the following in any jurisdiction throughout the world: (a) issued patents and patent applications (whether provisional or non-provisional), including divisionals, continuations, continuations-in-part, substitutions, reissues, reexaminations, extensions, or restorations of any of the foregoing, and other Governmental Authority-issued indicia of invention ownership (including certificates of invention, petty patents, and patent utility models) (“Patents”); (b) trademarks, service marks, brands, certification marks, logos, trade dress, trade names, and other similar indicia of source or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications for registration, and renewals of, any of the foregoing (“Trademarks”); (c) copyrights and works of authorship, whether or not copyrightable, and all registrations, applications for registration, and renewals of any of the foregoing (“Copyrights”); (d) internet domain names and social media account, and user names (including “handles”), whether or not Trademarks, all associated web addresses, URLs, websites and web pages, social media accounts and pages, and all content and data thereon or relating thereto, whether or not Copyrights; (e) mask works, and all registrations, applications for registration, and renewals thereof; (f) industrial designs, and all Patents, registrations, applications for registration, and renewals thereof; (g) trade secrets, know-how, inventions (whether or not patentable), discoveries, improvements, technology, business and technical information, databases, data compilations and collections, tools, methods, processes, techniques, customer and prospect lists, and other confidential and proprietary information and all rights therein (“Trade Secrets”); (h) computer programs, operating systems, applications, firmware, and other code, including all source code, object code, application programming interfaces, data files, databases, protocols, specifications, and other documentation thereof; (i) rights of publicity; and (j) all other intellectual or industrial property and proprietary rights.

 

Knowledge of the Companies or the Companies’ Knowledge” or any other similar knowledge qualification, means the actual knowledge of the Sellers or any of Brian Howe and Karen Burge.

 

Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

 

Leases” means those Contracts that are leases of Real Property.

 

Losses” means losses, damages, liabilities, deficiencies, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers; provided, however, that “Losses” shall not include punitive, speculative, remote, special, or indirect damages, except to the extent actually awarded to a Governmental Authority or other third party.

 

Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets of the Companies, taken as a whole, or (b) the ability of any Seller to consummate the transactions contemplated hereby on a timely basis; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Companies operate; (iii) any changes in financial or securities markets in general; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required or permitted by this Agreement, except pursuant to Sections 4.04 and 6.04; (vi) any changes in applicable Laws or accounting rules, including GAAP; or (vii) the public announcement, pendency or completion of the transactions contemplated by this Agreement; provided further, however, that any event, occurrence, fact, condition or change referred to in clauses (i) through (iv) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition or change has a disproportionate effect on the Companies compared to other participants in the industries in which the Companies conduct their businesses.

 

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Non-solicitation Period” means a period of seven years commencing on the Closing Date.

 

Permits” means all permits, licenses, franchises, approvals, authorizations, registrations, clearances, certificates, variances, waivers and similar rights obtained, or required to be obtained, from Governmental Authorities.

 

Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

 

Post-Closing Tax Period” means any taxable period beginning after the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period beginning after the Closing Date.

 

Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.

 

Pre-Closing Taxes” means Taxes of any Company for any Pre-Closing Tax Period.

 

Real Property” means the real property owned, leased or subleased by any Company, together with all buildings, structures and facilities located thereon.

 

Release” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including ambient air, surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).

 

Representative” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.

 

Restricted Business” means the business of designing, engineering, fabricating, manufacturing, coating, installing, servicing, and maintaining HVAC, plumbing, piping, and other mechanical systems, electrical systems, and other equipment and components, in commercial, institutional, and industrial facilities.

 

Restricted Period” means a period of five years commencing on the Closing Date.

 

SEC” means the United States Securities and Exchange Commission.

 

Taxes” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, including escheat and unclaimed property obligations, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.

 

Tax Return” means any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

6

 

 

Territory” means any state in which any Company operates as of the date hereof, has operated at any time in the last ten years, or is proposing to operate in the future as documented in any budget or business plan, or as reflected in any project pipeline or similar analysis.

 

Transaction Expenses” means all fees and expenses incurred by the Sellers or any Company at or prior to the Closing in connection with the preparation, negotiation and execution of this Agreement and the Ancillary Documents, and the performance and consummation of the transactions contemplated hereby and thereby.

 

WARN Act” means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses.

 

In addition to the terms defined in this ARTICLE I, set forth below is a list of terms defined elsewhere in this Agreement:

 

Term Section
“Acceleration Notice” Section 2.06(f)
“Agreement” Preamble
“Allocation Schedule” Section 7.11
“Audited Financial Statements” Section 4.05(a)
“Balance Sheet” Section 4.05(a)
“Balance Sheet Date” Section 4.05(a)
“Basket” Section 9.04(a)
“Benefit Plan” Section 4.18(a)
“Buyer” Preamble
“Buyer Indemnitees” Section 9.02
“Calculation Periods” Section 2.06(i)(ii)
“Cap” Section 9.04(a)
“Closing” Section 2.04
“Closing Cash Purchase Price” Section 2.02(a)
“Closing Date” Section 2.04
“Companies” Preamble
“Company Gross Profit” Section 2.06(i)(i)
“Company Systems” Section 4.11(h)
“Controlling Interest” Section 2.06(f)
“Copyrights” ARTICLE I
“CSLLC” Preamble
“Cumulative Maximum Deferred Payment” Section 2.06(a)
“Deferred Payment” Section 2.06(a)(ii)
“Deferred Payment Calculation” Section 2.06(b)(i)
“Deferred Payment Calculation Delivery Date” Section 2.06(b)(i)
“Deferred Payment Calculation Objection Notice” Section 2.06(b)(ii)
“Deferred Payment Calculation Statement” Section 2.06(b)(i)

 

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Term Section
“Deferred Payment Review Period” Section 2.06(b)(ii)
“Direct Claim” Section 9.05(c)
“Financial Statements” Section 4.05(a)
“First Calculation Period” Section 2.06(i)(ii)
“First Deferred Payment” Section 2.06(a)(i)
“Government Contracts” Section 4.08(a)(viii)
“Indemnified Party” Section 9.05
“Indemnifying Party” Section 9.05
“Indemnity Escrow Amount” ARTICLE I
“Indemnity Escrow Fund” ARTICLE I
“Information” Section 3.03(b)
“Insurance Policies” Section 4.14
“Interim Balance Sheet” Section 4.05(a)
“Interim Balance Sheet Date” Section 4.05(a)
“Interim Financial Statements” Section 4.05(a)
“JMLLC” Preamble
“Landlord” Section 4.09(b)
“Liabilities” Section 4.06(a)
“Material Contracts” Section 4.08(a)
“Material Customers” Section 4.13(a)
“Material Suppliers” Section 4.13(b)
“Matt” Preamble
“Membership Interests” Recitals
“Multiemployer Plan” Section 4.18(c)
“Parent” Preamble
“Patents” ARTICLE I
“Permitted Encumbrances” Section 4.09(a)
“Purchase Price” Section 2.02
“Qualified Benefit Plan” Section 4.18(c)
“Receivables” Section 4.12(a)
“Retainage Amount” Section 4.12(b)
“Rick” Preamble
“Second Calculation Period” Section 2.06(i)(ii)
“Second Deferred Payment” Section 2.06(a)(ii)
“Securities Act” Section 3.03(a)
“Sellers” Preamble
“Seller Indemnitees” Section 9.03
“Senior Indebtedness” Section 2.06(h)
“Single Employer Plan” Section 4.18(e)
“Straddle Period” Section 7.04
“Surety Bonds” Section 4.05(b)
“Tax Claim” Section 7.05
“Third Party Claim” Section 9.05(a)
“Trademarks” ARTICLE I
“Trade Secrets” ARTICLE I
“Triggering Event” Section 2.06(f)
“Uncompleted Contract” Section 4.05(d)
“Union” Section 4.19(b)
   

 

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ARTICLE II

PURCHASE AND SALE

 

Section 2.01 Purchase and Sale. Subject to the terms and conditions set forth herein, at the Closing, the Sellers shall sell to the Buyer, and the Buyer shall purchase from the Sellers, the Membership Interests, free and clear of all Encumbrances, for the consideration specified in Section 2.02.

 

Section 2.02 Purchase Price. The aggregate purchase price for the Membership Interests (the “Purchase Price”) shall consist of:

 

(a)       $21,312,548.25 (the “Closing Cash Purchase Price”); and

 

(b)       the Deferred Payment, if any.

 

Section 2.03 Transactions to be Effected at the Closing.

 

(a)       At the Closing, the Buyer shall:

 

(i)       deliver to the Sellers: (A) the Closing Date Cash Payment by wire transfer of immediately available funds to an account designated in writing by the Seller to the Buyer no later than five Business Days prior to the Closing Date; and (B) the Ancillary Documents and all other agreements, documents, instruments or certificates required to be delivered by the Buyer at or prior to the Closing pursuant to Section 8.03 of this Agreement.

 

(ii)        deliver to the Escrow Agent: (A) the Escrow Amount by wire transfer of immediately available funds to accounts designated by the Escrow Agent,; and (B) the Escrow Agreement.

 

(b)       At the Closing, the Sellers shall deliver to the Buyer:

 

(i)       an assignment of the Membership Interests in form and substance satisfactory to the Buyer, duly executed by each Seller, with all required transfer tax stamps affixed thereto; and

 

(ii)       the Ancillary Documents and all other agreements, documents, instruments or certificates required to be delivered by the Sellers at or prior to the Closing pursuant to Section 8.02 of this Agreement.

 

Section 2.04 Closing. Subject to the terms and conditions of this Agreement, the purchase and sale of the Membership Interests contemplated hereby shall take place at a closing (the “Closing”) via the electronic exchange of documents and signatures immediately following the execution and delivery of this Agreement on December 2, 2021 and at the offices of Chambliss, Bahner & Stophel, 605 Chestnut Street, Suite 1700, Chattanooga, TN 37450, or at such other time or on such other date or at such other place as the Sellers and the Buyer may mutually agree upon in writing (the day on which the Closing takes place being the “Closing Date”).

 

Section 2.05 Withholding Tax. The Buyer and the Companies shall be entitled to deduct and withhold from the Purchase Price all Taxes that the Buyer and the Companies may be required to deduct and withhold under any provision of Tax Law. All such withheld amounts shall be treated as delivered to the Sellers hereunder.

 

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Section 2.06 Deferred Payment Amount.

 

(a)       Deferred Payments. As additional consideration for the Membership Interests, at such times as provided in this Section 2.06, the Buyer shall pay to the Sellers:

 

(i)       with respect to the First Calculation Period an amount, if any (the “First Deferred Payment”), equal to $3,000,000 if the Company Gross Profit for the First Calculation Period equals or exceeds $10,000,000;

 

(ii)       with respect to the Second Calculation Period an amount, if any (the “Second Deferred Payment” and, collectively with the First Deferred Payment, the “Deferred Payment”), equal to $3,000,000 if the Company Gross Profit for the Second Calculation Period equals or exceeds $10,000,000;

 

provided, however, that to the extent that the Company Gross Profit for a Calculation Period is less than $10,000,000 but exceeds $8,000,000, then the Deferred Payment for such Calculation Period shall be made on a pro rata basis (for example, if Company Gross Profit for a Calculation Period is $9,000,000, then the Deferred Payment for such Calculation Period would be $1,500,000); provided further, that in no event shall the Buyer be obligated to pay the Sellers more than $6,000,000 in the aggregate for all Calculation Periods (the “Cumulative Maximum Deferred Payment”). If the Company Gross Profit for a particular Calculation Period does not exceed the applicable thresholds set forth above, no Deferred Payment shall be due for such Calculation Period.

 

(b)       Procedures Applicable to Determination of the Deferred Payments.

 

(i)       On or before the date which is 120 days after the last day of each Calculation Period (each such date, a “Deferred Payment Calculation Delivery Date”), the Buyer shall prepare and deliver to the Sellers a written statement (in each case, a “Deferred Payment Calculation Statement”) setting forth in reasonable detail its determination of Company Gross Profit for the applicable Calculation Period and its calculation of the resulting Deferred Payment (in each case, an “Deferred Payment Calculation”).

 

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(ii)       The Sellers shall have 30 days after receipt of the Deferred Payment Calculation Statement for each Calculation Period (in each case, the “Deferred Payment Review Period”) to review the Deferred Payment Calculation Statement and the Deferred Payment Calculation set forth therein. During the Deferred Payment Review Period, the Sellers and their accountants shall have the right to inspect the Companies’ books and records during normal business hours at the Companies’ offices, upon reasonable prior notice and solely for purposes reasonably related to the determinations of Company Gross Profit and the resulting Deferred Payment. Prior to the expiration of the Deferred Payment Review Period, the Sellers may object to the Deferred Payment Calculation set forth in the Deferred Payment Calculation Statement for the applicable Calculation Period by delivering a written notice of objection (a “Deferred Payment Calculation Objection Notice”) to the Buyer. Any Deferred Payment Calculation Objection Notice shall specify the items in the applicable Deferred Payment Calculation disputed by the Sellers and shall describe in reasonable detail the basis for such objection, as well as the amount in dispute. If the Sellers fail to deliver a Deferred Payment Calculation Objection Notice to the Buyer prior to the expiration of the Deferred Payment Review Period, then the Deferred Payment Calculation set forth in the Deferred Payment Calculation Statement shall be final and binding on the parties hereto. If the Sellers timely deliver a Deferred Payment Calculation Objection Notice, the Buyer and the Sellers shall negotiate in good faith to resolve the disputed items and agree upon the resulting amount of the Company Gross Profit and the Deferred Payment for the applicable Calculation Period. If the Buyer and the Sellers are unable to reach agreement within 30 days after such a Deferred Payment Calculation Objection Notice has been given, all unresolved disputed items shall be promptly referred to the office of Grant Thornton LLP or, if Grant Thornton LLP is unable to serve, the Buyer and the Sellers shall appoint by mutual agreement the office of an impartial nationally recognized firm of independent certified public accountants (the “Independent Accountant”). The Independent Accountant shall be directed to render a written report on the unresolved disputed items with respect to the applicable Deferred Payment Calculation as promptly as practicable, but in no event greater than 30 days after such submission to the Independent Accountant, and to resolve only those unresolved disputed items set forth in the Deferred Payment Calculation Objection Notice. If unresolved disputed items are submitted to the Independent Accountant, the Buyer and the Sellers shall each furnish to the Independent Accountant such work papers, schedules and other documents and information relating to the unresolved disputed items as the Independent Accountant may reasonably request. The Independent Accountant shall resolve the disputed items based solely on the applicable definitions and other terms in the Agreement and the presentations by the Buyer and the Sellers, and not by independent review. The resolution of the dispute and the calculation of Company Gross Profit that is the subject of the applicable Deferred Payment Calculation Objection Notice by the Independent Accountant shall be final and binding on the parties hereto. The fees and expenses of the Independent Accountant shall be borne by the Sellers and the Buyer in proportion to the amounts by which their respective calculations of Company Gross Profit differ from Company Gross Profit as finally determined by the Independent Accountant.

 

(c)       Independence of Deferred Payments. The Buyer’s obligation to pay each of the Deferred Payments to the Sellers in accordance with this Section 2.06 is an independent obligation of the Buyer and is not otherwise conditioned or contingent upon the satisfaction of any conditions precedent to any preceding or subsequent Deferred Payment and the obligation to pay a Deferred Payment to the Sellers shall not obligate the Buyer to pay any preceding or subsequent Deferred Payment. For the avoidance of doubt and by way of example, if the conditions precedent to the payment of the Deferred Payment for the First Calculation Period are not satisfied, but the conditions precedent to the payment of the Deferred Payment for the Second Calculation Period are satisfied, then the Buyer would be obligated to pay such Deferred Payment for the Second Calculation Period for which the corresponding conditions precedent have been satisfied, and not the Deferred Payment for the First Calculation Period.

 

(d)       Timing of Payment of Deferred Payments. Subject to Section 2.06(b), any Deferred Payment that the Buyer is required to pay pursuant to Section 2.06(a) hereof shall be paid in full no later than 5 Business Days following the date upon which the determination of Company Gross Profit for the applicable Calculation Period becomes final and binding upon the parties as provided in Section 2.06(b)(ii) (including any final resolution of any dispute raised by the Sellers in any Deferred Payment Calculation Objection Notice). The Buyer shall pay to the Sellers the applicable Deferred Payment in cash by wire transfer of immediately available funds to the bank account for the Sellers designated by the Sellers at least two Business Days prior to the date of payment.

 

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(e)       Acceleration upon Buyer’s Election. At any time after the Closing Date, the Buyer may, in its sole discretion, elect to make a payment to the Sellers in the amount equal to (i) the Cumulative Maximum Deferred Payment less (ii) the aggregate sum of all Deferred Payments made prior to such date which, upon payment thereof, shall fully release and discharge the Buyer, its successors and assigns from any further liability or obligation pursuant to this Section 2.06.

 

(f)       Acceleration upon Certain Events. In the event that after the end of the First Calculation Period (i) the First Deferred Payment was paid or required to be paid under this Section 2.06 and (ii) there occurs a sale or other disposition of all or substantially all of the assets of Buyer, or a merger, consolidation, recapitalization or other transaction in which any Person becomes the beneficial owner, directly or indirectly, of 50% or more of the combined voting power of all interests in Buyer (“Controlling Interest”) but did not hold a Controlling Interest on the Closing Date, (a “Triggering Event”), the Sellers may, in their sole discretion, upon notice to Buyer (such notice, the “Acceleration Notice”), elect to have paid in full by Buyer the Second Deferred Payment. The obligation to pay such amounts as the result of a Triggering Event shall not be excused or limited as the result of any previous or subsequent financial performance of the Companies.

 

(g)       Post-closing Operation of the Companies. Subject to the terms of this Agreement, subsequent to the Closing, the Buyer shall have sole discretion with regard to all matters relating to the operation of the Companies; provided, however, that Buyer undertakes to the Sellers that, for the duration of the First and Second Calculation Periods: (i) Buyer shall maintain separate books, records and unaudited financial information of the Companies that is not consolidated with any other business unit of the Buyer to enable the accounting of all items necessary to calculate Company Gross Profit for each Calculation Period; (ii) Buyer shall not take any action in bad faith to distort the financial performance of the Companies, or with the principal purposes of avoiding or reducing the amount of any Deferred Payment; (iii) Buyer shall not cause either Company to cease to carry on all or a material part of its operations or otherwise wind up either Company’s operations with the principal purposes of avoiding or reducing the amount of any Deferred Payment; (iv) Buyer shall not cause or permit any management charges, fees, interest payments, borrowings or other intra-group charges to be levied on the Companies by another Buyer Affiliate in a manner that would reduce the amount of Company Gross Profit; and (v) neither Buyer nor any of its Affiliates shall divert or redirect any trading, business opportunities or revenues or any major customer or supplier away from the Companies with the principal purpose of avoiding or reducing the amount of any Deferred Payment. This Agreement is not intended to, and does not, create or impose any fiduciary duty on any of the parties or their respective Affiliates. Further, each party hereby waives any fiduciary duties that, absent such waiver, may be implied by applicable Law, and in doing so, recognizes, acknowledges and agrees that the duties and obligations of the parties to each other are only as expressly set forth in this Agreement. Notwithstanding anything to the contrary set forth herein, each Seller acknowledges and agrees that (a) there is no assurance that such party or any of its Affiliates will receive any Deferred Payments under this Agreement or otherwise, and none of the Buyer or any of its Affiliates have promised or projected any amounts to be received by any Seller or its Affiliates under this Agreement as Deferred Payments or otherwise and (b) the parties intend the express provisions of this Agreement to govern their contractual relationship.

 

(h)       Right of Set-off. The Buyer shall have the right to withhold and set off against any amount otherwise due to be paid pursuant to this Section 2.06 the amount of any amounts to which any Buyer Indemnitee may be entitled under Section 7.08 or ARTICLE IX of the Agreement; provided, that Buyer shall first seek recovery from the Indemnity Escrow Fund prior to exercising any right of set off pursuant to this Section 2.06(h).

 

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(i)       No Security. The parties hereto understand and agree that (i) the contingent rights to receive any Deferred Payment shall not be represented by any form of certificate or other instrument, are not transferable, except by operation of applicable Laws relating to descent and distribution, divorce and community property, and do not constitute an equity or ownership interest in the Buyer or any of its Affiliates (including any Company), (ii) the Sellers shall not have any rights as a securityholder of the Buyer or any of its Affiliates (including any Company) as a result of the Sellers’ contingent right to receive any Deferred Payment hereunder, and (iii) no interest is payable with respect to any Deferred Payment. The Buyer’s obligation to make any Deferred Payment hereunder is an unsecured obligation and any such Deferred Payment shall be subordinate to the Senior Indebtedness in existence on the Closing Date in accordance with the terms and conditions of that certain Letter Agreement of even date herewith (the “Subordination Agreement”) by and among Sellers, Buyer and Wheaton Bank & Trust Company, N.A., a subsidiary of Wintrust Financial Corporation, as administrative agent for the Senior Lenders (as defined in the Subordination Agreement). Other than the Subordination Agreement and the Intercreditor Agreement between Travelers Casualty and Surety Company of America and Wheaton Bank & Trust Company, N.A., a subsidiary of Wintrust Financial Corporation, as administrative agent for the Senior Lenders (as defined therein), there is not any other indebtedness or agreements currently in existence that would restrict or otherwise limit Buyer from making the Deferred Payments. If Buyer is prohibited from paying and Sellers from receiving any of the Deferred Payments as a result of the provisions of the Subordination Agreement or otherwise, interest shall accrue at the rate of 8% per annum on the amount of any earned but unpaid Deferred Payments. Subject to the Subordination Agreement, accrued interest shall be paid on each June 30 and December 31. “Senior Indebtedness” means any indebtedness incurred under the Senior Credit Agreement (as defined in the Subordination Agreement).

 

(j)       Except as otherwise specified or as the context may otherwise require, in addition to the capitalized terms defined elsewhere herein, the following terms have the meanings specified or referred to in this Section 2.06:

 

(i)       “Company Gross Profit” means, with respect to any Calculation Period, the gross revenues of the Companies less costs of revenues, determined in accordance with GAAP. In no event shall costs of revenues include overhead and other expenses of the Buyer and any Affiliates (other than the Companies) that are allocated to the Companies and that were not expenses of the Companies prior to Closing.

 

(ii)       “Calculation Periods” means (a) the period beginning on the Closing Date and ending on December 31, 2022 (the “First Calculation Period”), and (b) the period beginning on January 1, 2023 and ending on December 31, 2023 (the “Second Calculation Period”).

 

Section 2.07 Parent Guarantee. Notwithstanding anything to the contrary herein, Parent hereby guarantees all of the Buyer’s duties and obligations under this ARTICLE II, including, without limitation, Buyer’s obligation to pay Sellers the Closing Cash Purchase Price (and any adjustments thereto), the Deferred Payments (if any) and any other amounts due Sellers under this ARTICLE II.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS

 

Except as set forth in the correspondingly numbered Section of the Disclosure Letter that relates to such Section or in another Section of the Disclosure Schedules to the extent that it is reasonably apparent on the face of such disclosure that such is applicable to such Section, each of the Sellers represents and warrants to the Buyer as to such Seller that the statements contained in this ARTICLE III are true and correct as of the date hereof.

 

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Section 3.01 Organization and Authority. Such Seller has full power and authority to enter into this Agreement and the Ancillary Documents to which such Seller is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by such Seller of this Agreement and any Ancillary Document to which the Seller is a party, the performance by the Seller of its obligations hereunder and thereunder, and the consummation by such Seller of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of the Seller. This Agreement has been duly executed and delivered by such Seller, and (assuming due authorization, execution and delivery by the Buyer) this Agreement constitutes a legal, valid and binding obligation of such Seller enforceable against such Seller in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). When each Ancillary Document to which such Seller is or will be a party has been duly executed and delivered by such Seller (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Document will constitute a legal and binding obligation of such Seller enforceable against it in accordance with its terms.

 

Section 3.02 No Conflicts; Consents. The execution, delivery and performance by such Seller of this Agreement and the Ancillary Documents to which it is a party, as applicable, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to such Seller; (b) require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to which such Seller is a party or by which such Seller is bound or to which any of its properties and assets are subject or any Permit affecting the properties, assets or business of such Seller; or (c) result in the creation or imposition of any Encumbrance, on any properties or assets of such Seller. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to such Seller in connection with the execution and delivery of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby.

 

Section 3.03 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any Ancillary Document based upon arrangements made by or on behalf of such Seller.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANIES

 

Except as set forth in the correspondingly numbered Section of the Disclosure Letter that relates to such Section or in another Section of the Disclosure Schedules to the extent that it is reasonably apparent on the face of such disclosure that such is applicable to such Section, the Sellers represent and warrant to the Buyer that the statements contained in this ARTICLE IV are true and correct as of the date hereof.

 

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Section 4.01 Organization, Authority and Qualification of the Companies. Each Company is a limited liability company duly organized, validly existing and in good standing under the Laws of the state of Tennessee and has full limited liability company power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it has been and is currently conducted. Section 4.01 of the Disclosure Letter sets forth each jurisdiction in which each Company is licensed or qualified to do business, and each Company is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary. All corporate actions taken by each Company in connection with this Agreement and the Ancillary Documents will be duly authorized on or prior to the Closing.

 

Section 4.02 Capitalization.

 

(a)       The Sellers are the sole record owners of, and have good and valid title to, the Membership Interests, free and clear of all Encumbrances. The Membership Interests constitute 100% of the total issued and outstanding membership interests in each Company. The Membership Interests have been duly authorized and are validly issued, fully-paid and non-assessable. Upon consummation of the transactions contemplated by this Agreement, Buyer shall own all of the Membership Interests, free and clear of all Encumbrances. The Membership Interests were issued in compliance with applicable Laws. The Membership Interests were not issued in violation of the organizational documents of any Company or any other agreement, arrangement, or commitment to which any Seller or any Company is a party and are not subject to or in violation of any preemptive or similar rights of any Person.

 

(b)       No Company has outstanding or authorized any equity appreciation, phantom equity, profit participation or similar rights. There are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to any membership interests in any Company or obligating any Seller or any Company to issue or sell any membership interests (including the Membership Interests), or any other interest, in any Company. Other than the organizational documents of each Company, there are no voting trusts, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Membership Interests.

 

Section 4.03 No Subsidiaries. Except as set forth on Section 4.03 of the Disclosure Letter, each Company does not own, or have any interest in any shares or have an ownership interest in, any other Person.

 

Section 4.04 No Conflicts; Consents. Except as set forth on Section 4.04 of the Disclosure Letter, the execution, delivery and performance by each of the Sellers and each Company of this Agreement and the Ancillary Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the organizational documents of any Company; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to any Company; (c) require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Material Contract to which any Company is a party or by which any Company is bound or to which any of its properties and assets are subject or any Permit affecting the properties, assets or business of any Company; or (d) result in the loss or forfeiture of, or creation or imposition of any Encumbrance other than Permitted Encumbrances on, any properties or assets of any Company. Except as set forth on Section 4.04 of the Disclosure Letter, no consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to any Company in connection with the execution and delivery of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby.

 

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Section 4.05 Financial Statements.

 

(a)       Complete copies of the Companies’ audited consolidated financial statements consisting of the balance sheet of the Companies as at December 31 in each of the years 2018, 2019, and 2020 and the related statements of income and retained earnings, members’ equity and cash flow for the years then ended (the “Audited Financial Statements”), and unaudited financial statements consisting of the balance sheet of the Companies as at September 30, 2021 and the related statements of income and retained earnings, members’ equity and cash flow for the 9-month period then ended (the “Interim Financial Statements” and together with the Audited Financial Statements, the “Financial Statements”) are included in the Disclosure Letter. The Financial Statements have been prepared in good faith in accordance with GAAP applied on a consistent basis throughout the period involved, subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments (the effect of which will not be materially adverse) and the absence of notes (that, if presented, would not differ materially from those presented in the Audited Financial Statements). The Financial Statements are based on the books and records of the Companies, and fairly present in all material respects the financial condition of the Companies as of the respective dates they were prepared and the results of the operations of the Companies for the periods indicated. The balance sheet of the Companies as of December 31, 2020, is referred to herein as the “Balance Sheet” and the date thereof as the “Balance Sheet Date” and the balance sheet of the Companies as of September 30, 2021, is referred to herein as the “Interim Balance Sheet” and the date thereof as the “Interim Balance Sheet Date”. The Companies maintain a standard system of accounting established and administered in accordance with GAAP.

 

(b)       The Companies have posted all deposits, letters of credit, trust funds, bid bonds, performance bonds, reclamation bonds, surety bonds and all such similar undertakings (collectively, “Surety Bonds”) required to be posted in connection with its operations. Section 4.05(b) of the Disclosure Letter contains a true and complete list of all Surety Bonds, including the name of each surety and the cost of completion for the project or job secured by such Surety Bond as of the Interim Balance Sheet Date. Each Company is in compliance in all material respects with all Surety Bonds.

 

(c)       To the Knowledge of the Companies, all financial projections of the Companies provided by the Sellers or the Companies prior to the date of this Agreement have been prepared in good faith, on the basis of assumptions believed at the time made to be reasonable in all material respects in light of the facts and circumstances known to the Sellers and the Companies at the time made.

 

(d)       The Financial Statements use the “percentage-of-completion” method for revenue and cost recognition. The revenues reflected in the Financial Statements have been measured by the relationship of all contract costs incurred to total estimated contract costs. The contracts in progress schedules attached to the Financial Statements present fairly and accurately all of the uncompleted contracts under which any Company is obligated to provide construction services (each an “Uncompleted Contract”). The Financial Statements present fairly and accurately with respect to each Uncompleted Contract (i) the costs and expenses incurred as of the date of such Financial Statement, as applicable, and (ii) the estimated costs and expenses remaining under such Uncompleted Contract. Except for the costs and expenses listed on the Financial Statements, each Company does not have any additional costs and expenses with respect to any such Uncompleted Contract which were required to be recorded on such Financial Statements in accordance with GAAP.

 

(e)       Attached to Section 4.05(e) of the Disclosure Letter is the Companies’ calculation of Cash and Closing Working Capital as of November 30, 2021, which calculation was prepared in good faith and in accordance with this Agreement and the books and records of the Companies.

 

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Section 4.06 Undisclosed Liabilities.

 

(a)       No Company has any liabilities, obligations or commitments of a type required to be reflected on a balance sheet prepared in accordance with GAAP (“Liabilities”), except (a) those which are adequately reflected or reserved against on the Balance Sheet as of the Balance Sheet Date, and (b) those which have been incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date and which are not, individually or in the aggregate, material in amount.

 

(b)       Section 4.06(b) of the Disclosure Letter sets forth a correct and complete list of all Indebtedness and, with respect to Indebtedness for borrowed money, if any, sets forth the borrower, the original lender and the current holder (if different), the original principal balance, and the outstanding principal and interest as of the date of this Agreement.

 

Section 4.07 Absence of Certain Changes, Events and Conditions. Since the Balance Sheet Date, and other than in the ordinary course of business consistent with past practice, there has not been, with respect to any Company, any:

 

(a)       event, occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

(b)       amendment of the organizational documents of any Company;

 

(c)       split, combination or reclassification of any of its membership interests;

 

(d)       issuance, sale or other disposition of any of its membership interests, or grant of any options, warrants or other rights to purchase or obtain (including upon conversion, exchange or exercise) any of its membership interests;

 

(e)       declaration or payment of any dividends or distributions on or in respect of any of its membership interests or redemption, purchase or acquisition of its membership interests;

 

(f)       material change in any method of accounting or accounting practice of any Company, except as required by GAAP or as disclosed in the notes to the Financial Statements;

 

(g)       material change in any Company’s cash management practices and its policies, practices and procedures with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts, accrual of accounts receivable, inventory control, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits;

 

(h)       except as set forth on Section 4.07(h) of the Disclosure Letter, entry into any Contract that would constitute a Material Contract;

 

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(i)       incurrence, assumption or guarantee of any indebtedness for borrowed money except unsecured current obligations and Liabilities incurred in the ordinary course of business consistent with past practice;

 

(j)       except as set forth on Section 4.07(j) of the Disclosure Letter, transfer, assignment, sale or other disposition of any of the assets shown or reflected in the Balance Sheet or cancellation of any debts or entitlements;

 

(k)       transfer, assignment, or grant of any license or sublicense under or with respect to any Company Intellectual Property or Company IP Agreements;

 

(l)       abandonment of, lapse of, or failure to maintain in full force and effect any Company IP Registration;

 

(m)       material damage, destruction or loss (whether or not covered by insurance) to its property;

 

(n)       any capital investment in, or any loan to, any other Person;

 

(o)       acceleration, termination, material modification to, or cancellation of any material Contract (including, but not limited to, any Material Contract) to which any Company is a party or by which it is bound;

 

(p)       any material capital expenditures;

 

(q)       imposition of any Encumbrance upon any of any Company properties, membership interests or assets, tangible or intangible;

 

(r)       (i) grant of any bonuses, whether monetary or otherwise, or increase in any wages, salary, severance, pension or other compensation or benefits in respect of its current or former employees, officers, directors, independent contractors or consultants, other than as provided for in any written agreements or required by applicable Law, (ii) change in the terms of employment for any employee, or any termination of any employees, for which employee the aggregate compensation exceeds $100,000, or (iii) action to accelerate the vesting or payment of any compensation or benefit for any current or former employee, officer, director, independent contractor or consultant;

 

(s)       hiring or promoting any person as an officer, except to fill a vacancy in the ordinary course of business;

 

(t)       adoption, modification or termination of any: (i) employment, severance, retention or other agreement with any current or former employee, officer, director, independent contractor or consultant, (ii) Benefit Plan or (iii) collective bargaining or other agreement with a Union, in each case whether written or oral;

 

(u)       any loan to (or forgiveness of any loan to), or entry into any other transaction with, any of its members or current or former directors, officers and employees;

 

(v)       entry into a new line of business or abandonment or discontinuance of existing lines of business;

 

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(w)       adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law;

 

(x)       purchase, lease or other acquisition of the right to own, use or lease any property or assets for an amount in excess of $10,000, individually (in the case of a lease, per annum) or $25,000 in the aggregate (in the case of a lease, for the entire term of the lease, not including any option term), except for purchases of supplies in the ordinary course of business consistent with past practice;

 

(y)       acquisition by merger or consolidation with, or by purchase of a substantial portion of the assets or stock of, or by any other manner, any business or any Person or any division thereof;

 

(z)       action by any Company to make, change or rescind any Tax election, amend any Tax Return or take any position on any Tax Return, take any action, omit to take any action or enter into any other transaction that would have the effect of increasing the Tax liability or reducing any Tax asset of Buyer in respect of any Post-Closing Tax Period; or

 

(aa) any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.

 

Section 4.08 Material Contracts.

 

(a)       Section 4.08 of the Disclosure Letter lists each of the following Contracts of any Company (such Contracts, together with all Contracts concerning the occupancy, management or operation of any Real Property listed or otherwise disclosed in Section 4.09(b) of the Disclosure Letter and all Company IP Agreements set forth in Section 4.11(b) of the Disclosure Letter, being “Material Contracts”):

 

(i)       each Contract of any Company involving aggregate consideration in excess of $25,000 and which, in each case, cannot be cancelled by such Company without penalty or without more than 90 days’ notice; provided, however, that Section 4.08(a) of the Disclosure Letter need not list any such Contract entered into in the ordinary course of business consistent with past practice (but such Contract shall otherwise constitute a Material Contract for the purposes of this Agreement);

 

(ii)       all Contracts that require any Company to purchase its total requirements of any product or service exclusively from a single third party or that contain “take or pay” provisions;

 

(iii)       all Contracts that provide for the indemnification by any Company of any Person or the assumption of any Tax, environmental or other Liability of any Person;

 

(iv)       all Contracts that relate to the acquisition or disposition of any business, a material amount of stock or assets of any other Person or any real property (whether by merger, sale of stock, sale of assets or otherwise);

 

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(v)       all broker, distributor, dealer, manufacturer’s representative, franchise, agency, sales promotion, market research, marketing consulting and advertising Contracts to which any Company is a party;

 

(vi)       all employment agreements and Contracts with independent contractors or consultants (or similar arrangements) to which any Company is a party and which are not cancellable without material penalty or without more than 30 days’ notice;

 

(vii)       except for Contracts relating to trade receivables, all Contracts relating to Indebtedness (including guarantees);

 

(viii)       all Contracts with (i) any Governmental Authority (ii) any prime contractor of a Governmental Authority in its capacity as a prime contractor, or (iii) any higher-tier subcontractor of a Governmental Authority in its capacity as a subcontractor, on the other hand, in each case to which any Company is a party (“Government Contracts”);

 

(ix)       all Contracts that limit or purport to limit the ability of any Company to compete in any line of business or with any Person or in any geographic area or during any period of time;

 

(x)       any Contracts to which any Company is a party that provide for any joint venture, partnership or similar arrangement by such Company;

 

(xi)       all Contracts between or among any Company on the one hand and Seller or any Affiliate of Seller (other than a Company) on the other hand;

 

(xii)       all collective bargaining agreements or Contracts with any Union to which any Company is a party; and

 

(xiii)       any other Contract that is material to any Company and not previously disclosed pursuant to this Section 4.08.

 

(b)       Each Material Contract is valid and binding on such Company in accordance with its terms and is in full force and effect. None of such Company or, to Companies’ Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under) in any material respect, or has provided or received any notice of any intention to terminate, any Material Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. Complete and correct copies of each Material Contract (including all modifications, amendments and supplements thereto and waivers thereunder) have been delivered to the Buyer.

 

Section 4.09 Title to Assets; Real Property.

 

(a)       Except as set forth in Section 4.09 of the Disclosure Letter, each Company has good and valid title to, or a valid leasehold interest in, all Real Property and tangible personal property and other assets reflected in the Audited Financial Statements or acquired after the Balance Sheet Date, other than properties and assets sold or otherwise disposed of in the ordinary course of business consistent with past practice since the Balance Sheet Date. All such properties and assets (including leasehold interests) are free and clear of Encumbrances except for the following (collectively referred to as “Permitted Encumbrances”):

 

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(i)       liens for Taxes not yet due and payable;

 

(ii)       mechanics, carriers’, workmen’s, repairmen’s or other like liens arising or incurred in the ordinary course of business consistent with past practice or amounts that are not delinquent and which are not, individually or in the aggregate, material to the business of the Companies;

 

(iii)       easements, rights of way, zoning ordinances and other similar encumbrances affecting Real Property which are not, individually or in the aggregate, material to the business of the Companies; or

 

(iv)       other than with respect to owned Real Property, liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business consistent with past practice which are not, individually or in the aggregate, material to the business of the Companies.

 

(b)       No Company owns any Real Property. Section 4.09(b) of the Disclosure Letter lists (i) the street address of each parcel of Real Property owned, leased or subleased by any Company; (ii) the landlord under the Lease (the “Landlord”), the rental amount currently being paid, and the expiration of the term of such lease or sublease for each leased or subleased property; and (iii) the current use of such property. With respect to leased Real Property, Seller has delivered or made available to Buyer true, complete and correct copies of any Leases and any amendments thereto affecting the Real Property. No Company is a sublessor or grantor under any sublease or other instrument granting to any other Person any right to the possession, lease, occupancy or enjoyment of any leased Real Property. The use and operation of the Real Property in the conduct of the Companies’ business does not violate in any material respect any Law, covenant, condition, restriction, easement, license, permit or agreement. No material improvements constituting a part of the Real Property encroach on real property owned or leased by a Person other than the Companies. There are no Actions pending nor, to the Companies’ Knowledge, threatened against or affecting the Real Property or any portion thereof or interest therein in the nature or in lieu of condemnation or eminent domain proceedings.

 

(c)       With respect to each Lease: (i) Section 4.09(c) of the Disclosure Letter sets forth the current annual base rent payable pursuant to the terms of such Lease and the allocation of additional rental pursuant to the Lease (including building operating costs and Taxes); (ii) such Lease is in full force and effect and has not been assigned, modified, supplemented or amended in any way; (iii) such Lease represents the entire agreement between each Landlord and such Company as to the leasing of the applicable Real Property; (iv) there are no existing defenses or offsets, claims or counterclaims which such Company has against the enforcement of such Leases by the Landlord; (v) no rental has been paid in advance and no security has been deposited with the Landlord except for the security deposit described in Section 4.09(c) of the Disclosure Letter; (vi) there are no existing breaches or defaults by such Company or, to the Knowledge of the Companies, by the Landlord, under such Lease; (vii) the term of such Lease is set forth in Section 4.09(c) of the Disclosure Letter, as well as any option to terminate or cancel such Lease; (viii) such Company has accepted possession of the applicable Real Property and there are no outstanding Landlord obligations to perform tenant improvements, and such Company has no obligation to restore the Real Property upon the expiration or earlier termination of such Lease; (ix) such Company has not transferred, assigned, or sublet any portion of the applicable Real Property nor entered into any license or concession agreements with respect thereto; and (x) all monthly installments of base rent and any building operating costs and Taxes with respect to such Lease have been paid when due through the date of this Agreement.

 

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Section 4.10 Condition and Sufficiency of Assets. The buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property of the Companies are structurally sound, are in good operating condition and repair, and are adequate for the uses to which they are being put, and none of such buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. The buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property currently owned or leased by the Companies, together with all other properties and assets of the Companies, are sufficient for the continued conduct of the Companies’ business after the Closing in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets necessary to conduct the business of the Companies as currently conducted.

 

Section 4.11 Intellectual Property.

 

(a)       Section 4.11(a) of the Disclosure Letter contains a correct, current, and complete list of all (i) Company IP Registrations, specifying as to each, as applicable: the title, mark, or design; the record owner and inventor(s), if any, and registrant, if applicable; the jurisdiction by or in which it has been issued, registered, or filed; the patent, registration, or application serial number; the issue, registration, or filing date; and the current status; (ii) all unregistered Trademarks included in the Company Intellectual Property; (iii) all proprietary software of any Company; and (iv) all other Company Intellectual Property material to the business as currently conducted. All required filings and fees related to the Company IP Registrations have been timely filed with and paid to the relevant Governmental Authorities and authorized registrars, and all Company IP Registrations are otherwise in good standing. Seller has provided Buyer with true and complete copies of file histories, documents, certificates, office actions, correspondence and other materials related to all Company IP Registrations.

 

(b)       Section 4.11(b) of the Disclosure Letter contains a correct, current, and complete list of all Company IP Agreements. Seller has provided Buyer with true and complete copies (or in the case of any oral agreements, a complete and correct written description) of all such Company IP Agreements, including all modifications, amendments and supplements thereto and waivers thereunder. Each Company IP Agreement is valid and binding on such Company in accordance with its terms and is in full force and effect. Neither any Company nor, to Companies’ Knowledge, any other party thereto is, or is alleged to be, in breach of or default under, or has provided or received any notice of breach of, default under, or intention to terminate (including by non-renewal), any Company IP Agreement. Neither any Company nor, to Companies’ Knowledge, any other party thereto has exceeded any seat, user or other similar limitation of any Company IP Agreement.

 

(c)       A Company is the sole and exclusive legal and beneficial, and with respect to the Company IP Registrations, record, owner of all right, title, and interest in and to the Company Intellectual Property, and has the valid and enforceable right to use all other Intellectual Property used or held for use in or necessary for the conduct of the Companies’ business as currently conducted, in each case, free and clear of Encumbrances other than Permitted Encumbrances.

 

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(d)       Neither the execution, delivery or performance of this Agreement, nor the consummation of the transactions contemplated hereunder, will result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other Person in respect of, any Company’s right to own or use any Company Intellectual Property or any Intellectual Property subject to any Company IP Agreement.

 

(e)       All of the Company Intellectual Property is valid and enforceable, and all Company IP Registrations are subsisting and in full force and effect.

 

(f)       The conduct of the Companies’ business as currently and formerly conducted, and the current and former products, processes and services of the Companies, have not infringed, misappropriated or otherwise violated, and will not infringe, misappropriate or otherwise violate, the Intellectual Property or other rights of any Person. To Companies’ Knowledge, no Person has infringed, misappropriated or otherwise violated any Company Intellectual Property.

 

(g)       There are no Actions (including any opposition, cancellation, revocation, review, or other proceeding) settled, pending or, to Companies’ Knowledge, threatened (including in the form of offers to obtain a license): (i) alleging any infringement, misappropriation, or other violation by any Company of the Intellectual Property of any Person; (ii) challenging the validity, enforceability, registrability, patentability, or ownership of any Company Intellectual Property; or (iii) by any Company or any other Person alleging any infringement, misappropriation, or violation by any Person of the Company Intellectual Property. Neither Seller nor any Company is aware of any facts or circumstances that could reasonably be expected to give rise to any such Action. No Company is subject to any outstanding or prospective Governmental Order (including any motion or petition therefor) that does or could reasonably be expected to restrict or impair the use of any Company Intellectual Property.

 

(h)       To the Companies’ Knowledge, the computer hardware, servers, networks, platforms, peripherals, data communication lines, and other information technology equipment and related systems that are owned or used by any Company (“Company Systems”) are reasonably sufficient for the current needs of the Companies’ business. In the past 36 months, there has been no unauthorized access, use, intrusion, or breach of security, or material failure, breakdown, performance reduction, or other adverse event affecting any Company Systems, that has caused or could reasonably be expected to cause any: (i) substantial disruption of or interruption in or to the use of such Company Systems or the conduct of the Companies’ business; (ii) material loss, destruction, damage, or harm of or to any Company or its operations, personnel, property, or other assets; (iii) material liability of any kind to any Company; or (iv) obligation of the part of any Company to notify any Person of the unauthorized access, use, intrusion, or security breach or loss of data. The Companies have taken all reasonable actions, consistent with applicable industry best practices, to protect the integrity and security of the Company Systems and the data and other information stored or processed thereon. The Companies (i) maintain commercially reasonable backup and data recovery, disaster recovery, and business continuity plans, procedures, and facilities; (ii) act in material compliance therewith; (iii) test such plans and procedures on a regular basis, and such plans and procedures have been proven effective in all material respects upon such testing and (iv) promptly apply all manufacturer’s or licensor’s patches to the Company Systems in their control.

 

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Section 4.12 Accounts Receivable; Retainage; Inventory.

 

(a)       The accounts receivable (collectively, “Receivables”) reflected on the Interim Balance Sheet and the Receivables arising after the date thereof (a) have arisen from bona fide transactions entered into by a Company involving the sale of goods or the rendering of services in the ordinary course of business consistent with past practice; (b) constitute only valid, undisputed claims of a Company not subject to claims of set-off or other defenses or counterclaims other than normal cash discounts accrued in the ordinary course of business consistent with past practice; and (c) subject to a reserve for bad debts shown on the Interim Balance Sheet or, with respect to Receivables arising after the Interim Balance Sheet Date, as reflected in the books and records of the Companies, are, to the Companies’ Knowledge, collectible in full within 90 days after billing (except for Receivables that constitute retainage amounts that will be collectible when due under any applicable Contract). The reserve for bad debts shown on the Interim Balance Sheet or, with respect to accounts receivable arising after the Interim Balance Sheet Date, on the accounting records of the Companies have been determined in accordance with GAAP, consistently applied, subject to normal year-end adjustments and the absence of disclosures normally made in footnotes.

 

(b)       Certain of the Receivables relate to retainage amounts held by the customers of the Companies pending completion of the applicable project or development (each, a “Retainage Amount”). Section 4.12(b) of the Disclosure Letter sets forth the Retainage Amount as of the Interim Balance Sheet Date, which has been calculated in accordance with GAAP, consistently applied.

 

(c)       The inventory reflected on the Financial Statements was acquired and has been maintained, in all material respects, in the ordinary course of business consistent with past practice. Such inventory consists of a quantity, quality and condition usable for its intended purpose and saleable in the ordinary course of business consistent with past practice, except for obsolete items or items of below-standard quality, all of which have been written off or written down to net realizable value on the Financial Statements, determined in accordance with GAAP, consistently applied.

 

Section 4.13 Customers and Suppliers.

 

(a)       Section 4.13(a) of the Disclosure Letter sets forth (i) each customer who has paid aggregate consideration to the Companies for goods or services rendered in an amount greater than or equal to $250,000 for each of the two most recent fiscal years (collectively, the “Material Customers”); and (ii) the amount of consideration paid by each Material Customer during such periods. The Companies have not received any notice, and have no reason to believe, that any of their Material Customers intends to terminate or materially reduce its relationship with the Companies. The Companies have no reason to believe that any of their current or potential customers has refused to award any business to the Companies, in whole or in part, as a result of its workers’ compensation MOD rate.

 

(b)       Section 4.13(b) of the Disclosure Letter sets forth (i) each supplier to whom the Companies have paid consideration for goods or services rendered in an amount greater than or equal to $100,000 for each of the two most recent fiscal years (collectively, the “Material Suppliers”); and (ii) the amount of purchases from each Material Supplier during such periods. The Companies have not received any notice, and have no reason to believe, that any of their Material Suppliers has ceased, or intends to cease, to supply goods or services to the Companies or to otherwise terminate or materially reduce its relationship with the Companies.

 

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Section 4.14 Insurance. Section 4.14 of the Disclosure Letter sets forth a true and complete list of all current policies or binders of fire, liability, product liability, umbrella liability, real and personal property, workers’ compensation, vehicular, directors’ and officers’ liability, fiduciary liability and other casualty and property insurance maintained by Seller or its Affiliates (including any Company) and relating to the assets, business, operations, employees, officers and directors of any Company (collectively, the “Insurance Policies”) and true and complete copies of such Insurance Policies have been delivered to the Buyer. Such Insurance Policies are in full force and effect and shall remain in full force and effect following the consummation of the transactions contemplated by this Agreement. Neither the Seller nor any of its Affiliates (including any Company) has received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have either been paid or, if due and payable prior to Closing, will be paid prior to Closing in accordance with the payment terms of each Insurance Policy. The Insurance Policies do not provide for any retrospective premium adjustment or other experience-based liability on the part of any Company. All such Insurance Policies (a) are valid and binding in accordance with their terms; (b) to Companies’ Knowledge, are provided by carriers who are financially solvent; and (c) have not been subject to any lapse in coverage. There are no claims related to the business of the Companies pending under any such Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. None of Seller or any of its Affiliates (including any Company) is in default under, or has otherwise failed to comply with, in any material respect, any provision contained in any such Insurance Policy. The Insurance Policies are of the type and in the amounts customarily carried by Persons conducting a business similar to the Companies and are sufficient for compliance with all applicable Laws and Contracts to which any Company is a party or by which it is bound.

 

Section 4.15 Legal Proceedings; Governmental Orders.

 

(a)       Except as set forth on Section 4.15 of the Disclosure Letter, there are no Actions pending or, to Companies’ Knowledge, threatened (a) against or by any Company affecting any of its business, properties or assets (or by or against the Seller or any Affiliate thereof and relating to any Company); or (b) against or by any Company, any Seller or any Affiliate of any Seller that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. To Companies’ Knowledge, no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.

 

(b)       There are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards against or affecting any Company or any of its business, properties or assets. The Companies are in compliance with the terms of any Governmental Order set forth in Section 4.15(b) of the Disclosure Letter. No event has occurred or circumstances exist that may constitute or result in (with or without notice or lapse of time) a violation of any such Governmental Order.

 

Section 4.16 Compliance With Laws; Permits.

 

(a)       Each Company is, and since September 1, 2016, has been in compliance in all material respects with all Laws applicable to it or its business, properties or assets.

 

(b)       All Permits required for any Company to conduct its business have been obtained by it and are valid and in full force and effect. All fees and charges with respect to such Permits as of the date hereof have been paid in full. Section 4.16(b) of the Disclosure Letter lists all Permits issued within the past five years to any Company, including the names of each Permit and each Permit’s respective date of issuance and expiration. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit set forth in Section 4.16(b) of the Disclosure Letter. During the previous five year period, there has been no revocation, suspension, lapse or limitation of or violation or default under any Permit held by or issued to any Company.

 

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(c)       To Companies’ Knowledge, no agent, Affiliate, employee or other Person associated with or acting on behalf of any Company or the Sellers has: (i) made, in violation of any Law, any contribution, gift, bribe, rebate, payoff, influence payment, kickback or other payment to any Person, private or public, regardless of form, whether in money, property or services (A) to obtain favorable treatment in securing business, (B) to pay for favorable treatment for business secured, (C) to obtain special concessions or for special concessions already obtained or (D) for any other illegal or improper purpose; (ii) established or maintained any fund or asset for the benefit of any Company that has not been recorded in the books and records of any Company; or (iii) violated any Laws prohibiting bribery and corruption, including the U.S. Foreign Corrupt Practices Act of 1977, 15 U.S.C. §§ 78dd-1, et seq., as amended, the General Federal Bribery Statute, 18 U.S.C § 201, and any other applicable equivalent or comparable anti-corruption Laws.

 

Section 4.17 Environmental Matters.

 

(a)       Each Company is currently and has been in compliance in all material respects with all Environmental Laws, and has not received, and neither it nor any Seller has received from any Person any: (i) Environmental Notice or Environmental Claim; or (ii) any written request for information pursuant to any Environmental Law, except as disclosed in Section 4.17(a) of the Disclosure Letter.

 

(b)       Each Company has obtained, and is in compliance in all material respects with, all Environmental Permits (each of which is disclosed in Section 4.17(b) of the Disclosure Letter) necessary for the ownership, lease, operation or use of the business or assets of the Companies. All such Environmental Permits are in full force and effect, and shall be maintained in full force and effect by each Company, through the Closing Date in accordance with all applicable Environmental Laws, and neither the Sellers nor any Company is aware of any condition, event or circumstance that might prevent or impede, after the Closing Date, the ownership, lease, operation or use of the business or assets of the Companies as currently carried out. With respect to any such Environmental Permits, the Sellers have undertaken, or will undertake prior to the Closing Date, all measures necessary to facilitate the transferability of same, and neither any Company nor the Sellers is aware of any condition, event or circumstance that might prevent or impede the transferability of same, nor have they received any Environmental Notice or written communication regarding any material adverse change in the status or terms and conditions of the same.

 

(c)       No real property currently or formerly owned, operated or leased by any Company is listed on, or has been proposed for listing on, the National Priorities List (or CERCLIS) under CERCLA, or any similar state list.

 

(d)       There has been no Release of Hazardous Materials that could give rise to liability or responsibility under Environmental Laws with respect to the business or assets of the Companies or any real property currently owned, operated, leased or used by any Company, and neither any Company nor any Seller has received any environmental information, any environmental reports or any Environmental Notices that any real property currently or formerly owned, operated, leased, or used in connection with the business of the Companies (including soils, soil gas, groundwater, surface water, buildings and other structures located on any such real property) has been contaminated with any Hazardous Material which could reasonably be expected to result in an Environmental Claim against, or a violation of Environmental Laws or terms of any Environmental Permit, by any Seller or any Company.

 

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(e)       Section 4.17(e) of the Disclosure Letter contains a complete and accurate list of all off-site Hazardous Materials treatment, storage, or disposal facilities or locations used by any Company or any Seller and any predecessors used by any Company or any Seller and none of these facilities or locations has been placed or proposed for placement on the National Priorities List (or CERCLIS) under CERCLA, or any similar state list, and neither any Seller nor any Company has received any Environmental Notice regarding potential liabilities with respect to such off-site Hazardous Materials treatment, storage, or disposal facilities or locations used by any Company or any Seller.

 

(f)       Neither any Seller nor any Company has retained or assumed, by contract or operation of Law, any liabilities or obligations of third parties under Environmental Law.

 

(g)       The Sellers have provided or otherwise made available to Buyer and listed in Section 4.17(g) of the Disclosure Letter: (i) any and all environmental reports, studies, audits, records, sampling data, site assessments, risk assessments, economic models and other similar documents with respect to the business or assets of the Companies or any currently or formerly owned, operated or leased real property which are in the possession or control of any Seller or any Company, including but not limited to those related to compliance with Environmental Laws, Environmental Claims or an Environmental Notice regarding the Release of Hazardous Materials; and (ii) any and all documents concerning planned or anticipated capital expenditures required to reduce, offset, limit or otherwise control pollution and/or emissions, manage waste or otherwise ensure compliance with current or future Environmental Laws (including costs of remediation, pollution control equipment and operational changes).

 

(h)       Neither any Seller nor any Company is aware of or reasonably anticipates, as of the Closing Date, any condition, event or circumstance concerning the Release or regulation of Hazardous Materials that might, after the Closing Date, prevent, impede or materially increase the costs associated with the ownership, lease, operation, performance or use of the business or assets of the Companies as currently carried out.

 

Section 4.18 Employee Benefit Matters.

 

(a)       Section 4.18(a) of the Disclosure Letter contains a true and complete list of each pension, benefit, retirement, compensation, employment, consulting, profit-sharing, deferred compensation, incentive, bonus, performance award, phantom equity, stock or stock-based, change in control, retention, severance, vacation, paid time off (PTO), medical, vision, dental, disability, welfare, Code Section 125 cafeteria, fringe benefit and other similar agreement, plan, policy, program or arrangement (and any amendments thereto), in each case whether or not reduced to writing and whether funded or unfunded, including each “employee benefit plan” within the meaning of Section 3(3) of ERISA, whether or not tax-qualified and whether or not subject to ERISA, which is or has been maintained, sponsored, contributed to, or required to be contributed to by any Company for the benefit of any current or former employee, officer, director, retiree, independent contractor or consultant of any Company or any spouse or dependent of such individual, or under which any Company or any of its ERISA Affiliates has or may have any Liability, or with respect to which Buyer or any of its Affiliates would reasonably be expected to have any Liability, contingent or otherwise (as listed on Section 4.18(a) of the Disclosure Letter, each, a “Benefit Plan”). The Companies have separately identified in Section 4.18(a) of the Disclosure Letter each Benefit Plan that contains a change in control provision.

 

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(b)       With respect to each Benefit Plan, Sellers have made available to Buyer accurate, current and complete copies of each of the following: (i) where the Benefit Plan has been reduced to writing, the plan document together with all amendments; (ii) where the Benefit Plan has not been reduced to writing, a written summary of all material plan terms; (iii) where applicable, copies of any trust agreements or other funding arrangements, custodial agreements, insurance policies and contracts, administration agreements and similar agreements, and investment management or investment advisory agreements, now in effect or required in the future as a result of the transactions contemplated by this Agreement or otherwise; (iv) copies of any summary plan descriptions, summaries of material modifications, summaries of benefits and coverage, COBRA communications, employee handbooks and any other written communications (or a description of any oral communications) relating to any Benefit Plan; (v) in the case of any Benefit Plan that is intended to be qualified under Section 401(a) of the Code, a copy of the most recent determination, opinion or advisory letter from the Internal Revenue Service and any legal opinions issued thereafter with respect to such Benefit Plan’s continued qualification; (vi) in the case of any Benefit Plan for which a Form 5500 must be filed, a copy of the three most recently filed Forms 5500, with all corresponding schedules and financial statements attached; (vii) actuarial valuations and reports related to any Benefit Plans with respect to the two most recently completed plan years; (viii) the most recent nondiscrimination tests performed under the Code; and (ix) copies of material notices, letters or other correspondence from the Internal Revenue Service, Department of Labor, Department of Health and Human Services, Pension Benefit Guaranty Corporation or other Governmental Authority relating to the Benefit Plan.

 

(c)       Each Benefit Plan and any related trust (other than any multiemployer plan within the meaning of Section 3(37) of ERISA (each a “Multiemployer Plan”)) has been established, administered and maintained in accordance with its terms and in compliance with all applicable Laws (including ERISA, the Code and any applicable local Laws). Each Benefit Plan that is intended to be qualified within the meaning of Section 401(a) of the Code (a “Qualified Benefit Plan”) is so qualified and received a favorable and current determination letter from the Internal Revenue Service with respect to the most recent five year filing cycle, or with respect to a prototype or volume submitter plan, can rely on an opinion letter from the Internal Revenue Service to the prototype plan or volume submitter plan sponsor, to the effect that such Qualified Benefit Plan is so qualified and that the plan and the trust related thereto are exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code, and nothing has occurred that could reasonably be expected to adversely affect the qualified status of any Qualified Benefit Plan. Nothing has occurred with respect to any Benefit Plan that has subjected or could reasonably be expected to subject any Company or any of its ERISA Affiliates or, with respect to any period on or after the Closing Date, Buyer or any of its Affiliates, to a penalty under Section 502 of ERISA or to tax or penalty under Sections 4975 of the Code.

 

(d)       No Benefit Plan is subject to minimum funding requirements. No Benefit Plan which is a defined benefit plan has an “adjusted funding target attainment percentage,” as defined in Section 436 of the Code, less than 80%. All benefits, contributions and premiums relating to each Benefit Plan have been timely paid in accordance with the terms of such Benefit Plan and all applicable Laws and accounting principles, and all benefits accrued under any unfunded Benefit Plan have been paid, accrued or otherwise adequately reserved to the extent required by, and in accordance with, GAAP.

 

(e)       Neither any Company nor any of its ERISA Affiliates has (i) incurred or reasonably expects to incur, either directly or indirectly, any material Liability under Title I or Title IV of ERISA or related provisions of the Code or applicable local Law relating to employee benefit plans; (ii) failed to timely pay premiums to the Pension Benefit Guaranty Corporation; (iii) withdrawn from any Benefit Plan; (iv) engaged in any transaction which would give rise to liability under Section 4069 or Section 4212(c) of ERISA; (v) incurred taxes under Section 4971 of the Code with respect to any pension plan (other than a Multiemployer Plan) which is subject to minimum funding requirements, including any multiple employer plan (a “Single Employer Plan”); or (vi) participated in a multiple employer welfare arrangements (MEWAs).

 

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(f)       Each Benefit Plan (other than a Multiemployer Plan) can be amended, terminated or otherwise discontinued after the Closing in accordance with its terms, without material liabilities to Buyer, any Company or any of their Affiliates other than ordinary administrative expenses typically incurred in a termination event. No Company has any commitment or obligation and has not made any representations to any employee, officer, director, independent contractor or consultant, whether or not legally binding, to adopt, amend, modify or terminate any Benefit Plan or any collective bargaining agreement, in connection with the consummation of the transactions contemplated by this Agreement or otherwise.

 

(g)       Other than as required under Sections 601 to 608 of ERISA or other applicable Law, no Benefit Plan provides post-termination or retiree health benefits to any individual for any reason, and neither any Company nor any of its ERISA Affiliates has any Liability to provide post-termination or retiree health benefits to any individual or ever represented, promised or contracted to any individual that such individual would be provided with post-termination or retiree health benefits.

 

(h)       There is no pending or, to Companies’ Knowledge, threatened Action relating to a Benefit Plan (other than routine claims for benefits), and no Benefit Plan has within the three years prior to the date hereof been the subject of an examination or audit by a Governmental Authority or the subject of an application or filing under or is a participant in, an amnesty, voluntary compliance, self-correction or similar program sponsored by any Governmental Authority.

 

(i)       There has been no amendment to, announcement by any Seller, any Company or any of their Affiliates relating to, or change in employee participation or coverage under, any Benefit Plan or collective bargaining agreement that would increase the annual expense of maintaining such plan above the level of the expense incurred for the most recently completed fiscal year (other than on a de minimis basis) with respect to any director, officer, employee, independent contractor or consultant, as applicable. None of Sellers, any Company, nor any of their Affiliates has any commitment or obligation or has made any representations to any director, officer, employee, independent contractor or consultant, whether or not legally binding, to adopt, amend, modify or terminate any Benefit Plan or any collective bargaining agreement.

 

(j)       Each Benefit Plan that is subject to Section 409A of the Code has been administered in material compliance with its terms and the operational and documentary requirements of Section 409A of the Code and all applicable regulatory guidance (including notices, rulings and proposed and final regulations) thereunder. No Company has any obligation to gross up, indemnify or otherwise reimburse any individual for any excise taxes, interest or penalties incurred pursuant to Section 409A of the Code.

 

(k)       Each individual who is classified by any Company as an independent contractor has been properly classified for purposes of participation and benefit accrual under each Benefit Plan.

 

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(l)       Neither the execution of this Agreement nor any of the transactions contemplated by this Agreement will (either alone or upon the occurrence of any additional or subsequent events): (i) entitle any current or former director, officer, employee, independent contractor or consultant of any Company to severance pay or any other payment; (ii) accelerate the time of payment, funding or vesting, or increase the amount of compensation (including stock-based compensation) due to any such individual; (iii) limit or restrict the right of any Company to merge, amend, or terminate any Benefit Plan; (iv) increase the amount payable under or result in any other material obligation pursuant to any Benefit Plan; (v) result in “excess parachute payments” within the meaning of Section 280G(b) of the Code; or (vi) require a “gross-up” or other payment to any “disqualified individual” within the meaning of Section 280G(c) of the Code. The Sellers have delivered to the Buyer true and complete copies of any Section 280G calculations prepared (whether or not final) with respect to any disqualified individual in connection with the transactions.

 

(m)       Section 4.18(m) of the Disclosure Letter contains a true and complete list of each Benefit Plan that is a Multiemployer Plan. With respect to each Multiemployer Plan, a Company has made available to the Buyer a copy of the most recently filed Form 5500, with all corresponding schedules and financial statements attached.

 

(n)       Except as set forth in Section 4.18(n) of the Disclosure Letter, with respect to each Multiemployer Plan, (i) all contributions required to be paid by any Company or its ERISA Affiliates have been timely paid to the applicable Multiemployer Plan; (ii) neither any Company nor, to the Companies’ Knowledge, any ERISA Affiliate has received notice of the assessment of any withdrawal Liability under Title IV of ERISA which remains unsatisfied and, to the Knowledge of the Companies, nothing has occurred that could reasonably be expected to give rise to an assessment of withdrawal Liability, (iii) there are currently no claims or allegations by Multiemployer Plan administrators or trustees pending or, to the Knowledge of the Companies, threatened, against any Company for missed or insufficient contributions and (iv) the Companies have provided the Buyer with the most recent withdrawal liability estimate related to such Multiemployer Plan actually received by the Companies, and (v) except as set forth in Section 4.18(n) of the Disclosure Letter, to the Companies’ Knowledge, no Multiemployer Plan is in critical, endangered, or seriously endangered status.

 

(o)       Neither any Company nor, to the Companies’ Knowledge, any employee or director thereof have engaged in a prohibited transaction with respect to any Multiemployer Plan, and there are no actions with respect to any Multiemployer Plan that are pending or threatened that could reasonably be expected to result in Liability to any Company.

 

(p)       Each Company (i) has complied in all material respects with the requirements of the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, and the regulations and related guidance promulgated thereunder, (ii) has no and has had no Liability for a penalty or assessable payment under Section 4980H of the Code and does not reasonably expect to, have any Liability for such a penalty or assessable payment for any month, (iii) has timely and accurately filed and distributed Forms 1094-C and 1095-C in accordance with the requirements of Sections 6055 and 6056 of the Code and the regulations and related guidance promulgated thereunder, and (iv) for each month during 2015 and through the date hereof, have properly identified each employee who is a “full-time employee”, as defined in Section 4980H of the Code and the regulations and related guidance promulgated thereto.

 

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Section 4.19 Employment Matters.

 

(a)       Section 4.19 of the Disclosure Letter contains a list of all persons who are employees, independent contractors or consultants of any Company as of the date hereof, including any employee who is on a leave of absence of any nature, paid or unpaid, authorized or unauthorized, and sets forth for each such individual the following: (i) name; (ii) status as an employee (including whether full or part-time) or independent contractor/consultant; (iii) title or position; (iv) hire or retention date; (v) current annual base compensation rate or contract fee; (vi) commission, bonus or other incentive-based compensation; and (vii) a description of the fringe benefits provided to each such individual as of the date hereof. As of the date hereof, all remuneration and compensation, including wages, commissions, bonuses, fees and other compensation, payable to all employees, independent contractors or consultants of any Company for services performed on or prior to the date hereof have been paid in full, and there are no outstanding agreements, understandings or commitments of any Company with respect to any compensation, commissions, bonuses or fees.

 

(b)       Except as set forth in Section 4.19(b) of the Disclosure Letter, no Company is, and no Company has been for the past five years, a party to, bound by, or negotiating any collective bargaining agreement or other Contract with a union, works council or labor organization (collectively, “Union”), and there is not, and has not been for the past five years, any Union representing or purporting to represent any employee of any Company, and, to the Companies’ Knowledge, no Union or group of employees is seeking or has sought to organize employees for the purpose of collective bargaining. There has never been, nor has there been any threat of, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor disruption or dispute affecting any Company or any of its employees. Except as set forth in Section 4.19(b) of the Disclosure Letter, no Company has any duty to bargain with any Union and will not be bound to any collective bargaining agreement or other Agreement currently being negotiated by a third party with a Union.

 

(c)       Each Company is and has been in compliance in all material respects with the terms of the collective bargaining agreements and other Contracts listed on Section 4.19(b) of the Disclosure Letter and all applicable Laws pertaining to employment and employment practices to the extent they relate to employees, volunteers, interns, consultants and independent contractors of such Company, including all Laws relating to labor relations, equal employment opportunities, fair employment practices, whistleblower protections, prohibitions on retaliation for protected conduct, pre-hire inquiries of applicants and candidates for employment, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, vacation pay, hours, overtime compensation, child labor, obtaining and using background checks and other consumer reports and investigative consumer reports (as those terms are defined under the Fair Credit Reporting Act and analogous state laws), hiring, promotion, discipline, termination, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence, use of leave benefits, paid sick leave and other paid time off benefits, and unemployment insurance. All individuals characterized and treated by any Company as independent contractors or consultants are properly treated as independent contractors under all applicable Laws. All employees of any Company classified as exempt under the Fair Labor Standards Act and state and local wage and hour laws are properly classified. Each Company is in compliance with and has complied in all material respects with all immigration laws, including Form I-9 requirements and any applicable mandatory E-Verify obligations. There are no Actions against any Company pending, or to the Companies’ Knowledge, threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the engagement, employment, termination of employment, termination of engagement or denial of employment or engagement of any current or former applicant, employee, consultant, volunteer, intern or independent contractor of any Company, including any charge, investigation or claim relating to unfair labor practices, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, employee classification, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence, paid sick leave, unemployment insurance or any other employment related matter arising under applicable Laws.

 

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(d)       Each Company has complied with the WARN Act and analogous state laws, and it has no plans to undertake any action that would trigger any notice requirements or other actions by any Company under the WARN Act or analogous state laws.

 

Section 4.20 Taxes.

 

(a)       Each Company has, at all times since its organization, elected to be classified as a partnership for Tax purposes, and each Company will be a partnership for Tax purposes as of the Closing Date.

 

(b)       All Tax Returns required to be filed on or before the Closing Date by any Company have been, or will be, timely filed. Such Tax Returns are, or will be, true, complete and correct in all material respects. All Taxes due and owing by any Company (whether or not shown on any Tax Return) have been, or will be, timely paid.

 

(c)       Each Company has withheld and paid each Tax required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, customer, member, or other party, and complied with all information reporting and backup withholding provisions of applicable Law.

 

(d)       No claim has been made by any taxing authority in any jurisdiction where any Company does not file Tax Returns that it is, or may be, subject to Tax by that jurisdiction.

 

(e)       No extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of any Company.

 

(f)       The amount of the Companies’ Liability for unpaid Taxes for all periods ending on or before September 30, 2021, does not, in the aggregate, exceed the amount of accruals for Taxes (excluding reserves for deferred Taxes) reflected on the Financial Statements. The amount of the Companies’ Liability for unpaid Taxes for all periods following the end of the recent period covered by the Financial Statements shall not, in the aggregate, exceed the amount of accruals for Taxes (excluding reserves for deferred Taxes) as adjusted for the passage of time in accordance with the past custom and practice of the Companies (and which accruals shall not exceed comparable amounts incurred in similar periods in prior years).

 

(g)       Section 4.20(g) of the Disclosure Letter sets forth:

 

(i)       the taxable years of each Company as to which the applicable statutes of limitations on the assessment and collection of Taxes have not expired;

 

(ii)       those years for which examinations by the taxing authorities have been completed; and

 

(iii)       those taxable years for which examinations by taxing authorities are presently being conducted.

 

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(h)       All deficiencies asserted, or assessments made, against any Company as a result of any examinations by any taxing authority have been fully paid.

 

(i)       No Company is a party to any Action by any taxing authority. There are no pending or threatened Actions by any taxing authority.

 

(j)       Sellers have delivered to Buyer copies of all federal, state, local and foreign income, franchise and similar Tax Returns, examination reports, and statements of deficiencies assessed against, or agreed to by, each Company for all Tax periods ending after December 31, 2016.

 

(k)       There are no Encumbrances for Taxes (other than for current Taxes not yet due and payable) upon the assets of any Company.

 

(l)       No Company is a party to, or bound by, any Tax indemnity, Tax sharing or Tax allocation agreement.

 

(m)       No private letter rulings, technical advice memoranda or similar agreement or rulings have been requested, entered into or issued by any taxing authority with respect to any Company.

 

(n)       No Company has been a member of an affiliated, combined, consolidated or unitary Tax group for Tax purposes. No Company has any Liability for Taxes of any Person (other than such Company) under Treasury Regulations Section 1.1502-6 (or any corresponding provision of state, local or foreign Law), as transferee or successor, by contract or otherwise.

 

(o)       No Company will be required to include any item of income in, or exclude any item or deduction from, taxable income for any taxable period or portion thereof ending after the Closing Date as a result of:

 

(i)       any change in a method of accounting under Section 481 of the Code (or any comparable provision of state, local or foreign Tax Laws), or use of an improper method of accounting, for a taxable period ending on or prior to the Closing Date;

 

(ii)       an installment sale or open transaction occurring on or prior to the Closing Date;

 

(iii)       a prepaid amount received on or before the Closing Date;

 

(iv)       any closing agreement under Section 7121 of the Code, or similar provision of state, local or foreign Law; or

 

(v)       any election under Section 108(i) of the Code.

 

(p)       No Seller is a “foreign person” as that term is used in Treasury Regulations Section 1.1445-2. Each Company is not, nor has it been, a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(a) of the Code.

 

(q)       No Company has been a “distributing corporation” or a “controlled corporation” in connection with a distribution described in Section 355 of the Code.

 

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(r)       Each Company is not, and has not been, a party to, or a promoter of, a “reportable transaction” within the meaning of Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011-4(b).

 

(s)       There is currently no limitation on the utilization of net operating losses, capital losses, built-in losses, tax credits or similar items of any Company under Sections 269, 382, 383, 384 or 1502 of the Code and the Treasury Regulations thereunder (and comparable provisions of state, local or foreign Law).

 

(t)       No property owned by any Company is (i) required to be treated as being owned by another person pursuant to the so-called “safe harbor lease” provisions of former Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, (ii) subject to Section 168(g)(1)(A) of the Code, or (iii) subject to a disqualified leaseback or long-term agreement as defined in Section 467 of the Code.

 

Section 4.21 Books and Records. The minute books and stock record books of the Companies, all of which have been made available to Buyer, are complete and correct and, to the Companies’ Knowledge, have been maintained in accordance with sound business practices. Except as set forth in Section 4.21 of the Disclosure Letter, the minute books of the Companies contain accurate and complete records of all meetings, and actions taken by written consent of, the members, the board of directors and any committees of the board of directors of the Companies, and no meeting, or action taken by written consent, of any such members, board of directors or committee has been held for which minutes have not been prepared and are not contained in such minute books. At the Closing, all of those books and records will be in the possession of the Companies.

 

Section 4.22 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Ancillary Document based upon arrangements made by or on behalf of any Company or any Seller.

 

Section 4.23 Affiliate Transactions. Except as set forth in Section 4.23 of the Disclosure Letter, none of the Sellers and any of their Affiliates, and none of any Company’s directors, officers or employees, has (a) been involved in any business arrangement or relationship with any Company within the past 12 months, (b) engaged in competition with any Company, or (c) is a party to any Contract with any Company. None of the Sellers and any of their Affiliates, and none of any Company’s directors, officer or employees, owns any asset, tangible or intangible, that is used in the business of any Company.

 

Section 4.24 Construction Projects; Warranties.

 

(a)       Each Company has caused all of its construction projects to be prosecuted with commercially reasonable diligence in a good and workmanlike manner, in material accordance with the plans and specifications and in material compliance with all Laws applicable to such projects.

 

(b)       There are no pending, nor to the Companies’ Knowledge, threatened, claims under or pursuant to any warranty, whether expressed or implied, on the products or services sold by any Company that are not disclosed or referred to in the Financial Statements and that are not fully reserved against in the Companies’ books and records in accordance with GAAP. No Company incurred any material Liabilities with respect to warranty claims during, or with respect to, the fiscal years ended December 31, 2020 that are not disclosed or referred to in the Financial Statements and that are not fully reserved on the Balance Sheet in accordance with GAAP.

 

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(c)       There is no claim against any Company for injury to person or property of employees or any third Persons suffered as a result of the manufacture, sale or distribution of any product or the performance of any service by any Company, including claims arising out of the allegedly defective or unsafe nature of structures or projects built or otherwise worked on by any Company. There is no pending or, to the Companies’ Knowledge, threatened investigation by any Governmental Authority of the construction of any structure or projects where services were provided by any Company.

 

(d)       There are no pending, nor to the Companies’ Knowledge, threatened, claims by any subcontractor or supplier of any Company with respect to any pending or completed construction projects that are not disclosed or referred to in the Financial Statements and that are not fully reserved against in the Companies’ books and records in accordance with GAAP. No Company incurred any material Liabilities with respect to any claims by subcontractors or suppliers during, or with respect to, the fiscal year ended December 31, 2020 that are not disclosed or referred to in the Financial Statements and that are not fully reserved on the Balance Sheet in accordance with GAAP.

 

Section 4.25 Banking Facilities. Section 4.25 of the Disclosure Letter sets forth a true, correct and complete list of: (a) each bank, savings and loan or similar financial institution with or at which any Company has an account or safety deposit box and the account numbers of such accounts and identifying numbers for each such safety deposit box; (b) the names of all Persons authorized to draw on any such account or to have access to any such safety deposit box facility; and (c) any outstanding powers of attorney executed by or on behalf of any Company in connection with such accounts or safety deposit boxes.

 

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT

 

The Buyer and the Parent, jointly and severally, represent and warrant to the Sellers that the statements contained in this ARTICLE V are true and correct as of the date hereof.

 

Section 5.01 Organization and Authority. The Buyer is a limited liability company duly organized, validly existing and in good standing under the Laws of the state of Delaware. The Parent is a corporation duly organized, validly existing and in good standing under the Laws of the state of Delaware. Each of the Buyer and the Parent has full corporate power and authority to enter into this Agreement and the Ancillary Documents to which the Buyer or Parent, as applicable, is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by each of the Buyer and the Parent of this Agreement and any Ancillary Document to which either of the Buyer or the Parent is a party, the performance by each of the Buyer and the Parent of its respective obligations hereunder and thereunder and the consummation by the Buyer and the Parent of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of the Buyer and the Parent. This Agreement has been duly executed and delivered by each of the Buyer and the Parent, and (assuming due authorization, execution and delivery by the Sellers and the Companies) this Agreement constitutes a legal, valid and binding obligation of each of the Buyer and the Parent enforceable against each of the Buyer and the Parent, respectively, in accordance with its terms. When each Ancillary Document to which either the Buyer or the Parent is or will be a party has been duly executed and delivered by the Buyer or the Parent, as applicable, (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Document will constitute a legal and binding obligation of the Buyer or the Parent, as applicable, enforceable against it in accordance with its terms.

 

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Section 5.02 No Conflicts; Consents. The execution, delivery and performance by each of the Buyer and the Parent of this Agreement and the Ancillary Documents to which either the Buyer or the Parent is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other organizational documents of the Buyer or the Parent; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to the Buyer or the Parent; or (c) require the consent, notice or other action by any Person under any material Contract to which the Buyer or the Parent is a party. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to the Buyer or the Parent in connection with the execution and delivery of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, except for a Current Report on Form 8-K with respect to this Agreement and the transactions contemplated hereby and such other consents, approvals, Permits, Governmental Orders, declarations, filings or notices as would not materially delay the completion of the transactions contemplated by this Agreement.

 

Section 5.03 Investment Purpose. The Buyer is acquiring the Membership Interests solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. The Buyer acknowledges that the Membership Interests are not registered under the Securities Act or any state securities laws, and that the Membership Interests may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable.

 

Section 5.04 Brokers. Except for Carriage Hill Management, LLC, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any Ancillary Document based upon arrangements made by or on behalf of the Buyer or the Parent.

 

Section 5.05 Compliance with Laws. The Buyer and the Parent are each in compliance in all material respects with all Laws applicable to the transactions contemplated by this Agreement.

 

Section 5.06 Legal Proceedings. There are no Actions pending or, to the Buyer’s knowledge, threatened against or by the Buyer or any Affiliate of Buyer that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.

 

Section 5.07 Sufficiency of Funds. The Buyer has sufficient cash on hand or other sources of immediately available funds to enable it to make payment of the Purchase Price and consummate the transactions contemplated by this Agreement.

 

ARTICLE VI
COVENANTS

 

Section 6.01 Resignations. The Sellers shall deliver to the Buyer written resignations, effective as of the Closing Date, of the officers and directors of the Companies requested by the Buyer at least five Business Days prior to the Closing.

 

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Section 6.02 Confidentiality. From and after the Closing, each of the Sellers shall, and shall cause its Affiliates to, hold, and shall use its reasonable best efforts to cause its or their respective Representatives to hold, in confidence any and all information, whether written or oral, concerning the Companies, except to the extent that the Sellers can show that such information (a) is generally available to and known by the public through no fault of the Sellers, any of their Affiliates or their respective Representatives; (b) is lawfully acquired by the Sellers, any of their Affiliates or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation or (c) was known by Sellers from a third party source before disclosure on or on behalf of Buyer. If the Sellers or any of their Affiliates or their respective Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law, the Sellers shall promptly notify Buyer in writing and shall disclose only that portion of such information which the Sellers are advised by their counsel in writing is legally required to be disclosed, provided that the Sellers shall use reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

 

Section 6.03 Non-Competition; Non-Solicitation.

 

(a)       During the Restricted Period, each of the Sellers shall not, and shall not permit any of their respective Affiliates to, directly or indirectly, (i) engage in or assist others in engaging in the Restricted Business in the Territory; (ii) have an interest in any Person that engages directly or indirectly in the Restricted Business in the Territory in any capacity, including as a partner, shareholder, member, employee, principal, agent, trustee or consultant; or (iii) intentionally interfere with the business relationships (whether formed prior to or after the date of this Agreement) between any Company and customers or suppliers of such Company. Notwithstanding the foregoing, a Seller may own, directly or indirectly, solely as an investment, securities of any Person traded on any national securities exchange if such Seller is not a controlling Person of, or a member of a group which controls, such Person and does not, directly or indirectly, own 2% or more of any class of securities of such Person.

 

(b)       During the Non-solicitation Period, each of the Sellers shall not, and shall not permit any of their respective Affiliates to, directly or indirectly, hire or solicit any employee of any Company or encourage any such employee to leave such employment or hire any such employee who has left such employment (except for any employee who was previously terminated by any Company or the Buyer, to whom this Section 6.03(b) shall not apply), except pursuant to a general solicitation which is not directed specifically to any such employees.

 

(c)       During the Restricted Period, each of the Sellers shall not, and shall not permit any of their respective Affiliates to, directly or indirectly, solicit or entice, or attempt to solicit or entice, any clients or customers of any Company or potential clients or customers of any Company for purposes of diverting their business or services or prospective business from any Company.

 

(d)       Each of the Sellers acknowledges that a breach or threatened breach of this Section 6.03 would give rise to irreparable harm to the Buyer, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by any Seller of any such obligations, the Buyer shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).

 

(e)       Each of the Sellers acknowledges that the restrictions contained in this Section 6.03 are reasonable and necessary to protect the legitimate interests of the Buyer and constitute a material inducement to the Buyer to enter into this Agreement and consummate the transactions contemplated by this Agreement. In the event that any covenant contained in this Section 6.03 should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable Law. The covenants contained in this Section 6.03 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.

 

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Section 6.04 Governmental Approvals and Consents.

 

(a)       Each party hereto shall, as promptly as possible, (i) make, or cause or be made, all filings and submissions required under any Law applicable to such party or any of its Affiliates; and (ii) use commercially reasonable efforts to obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all Governmental Authorities that may be or become necessary for its execution and delivery of this Agreement and the performance of its obligations pursuant to this Agreement and the Ancillary Documents. Each party shall cooperate fully with the other party and its Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals. The parties hereto shall not willfully take any action that will have the effect of delaying, impairing or impeding the receipt of any required consents, authorizations, orders and approvals.

 

(b)       Sellers and Buyer shall use commercially reasonable efforts to give all notices to, and obtain all consents from, all third parties that are described in Section 4.04 of the Disclosure Letter.

 

(c)       If any consent, approval or authorization necessary to preserve any right or benefit under any Contract to which a Company is a party is not obtained prior to the Closing, the Sellers shall, subsequent to the Closing, cooperate with the Buyer and the Companies in attempting to obtain such consent, approval or authorization as promptly thereafter as practicable. If such consent, approval or authorization cannot be obtained, each of the Sellers shall use its reasonable best efforts to provide such Company with the rights and benefits of the affected Contract for the term thereof.

 

Section 6.05 Books and Records.

 

(a)       In order to facilitate the resolution of any claims made against or incurred by the Sellers prior to the Closing, or for any other reasonable purpose, for a period of six years after the Closing, the Buyer shall (i) retain the books and records (including personnel files) of the Companies relating to periods prior to the Closing in a manner reasonably consistent with the prior practices of the Companies; and (ii) upon reasonable notice, afford the Representatives of the Sellers reasonable access (including the right to make, at the Sellers’ expense, photocopies), during normal business hours, to such books and records; provided, however, that any books and records related to Tax matters shall be retained pursuant to the periods set forth in ARTICLE VII.

 

(b)       In order to facilitate the resolution of any claims made by or against or incurred by the Buyer or the Companies after the Closing, or for any other reasonable purpose, for a period of five years following the Closing, the Sellers shall: (i) retain the books and records (including personnel files) of the Sellers which relate to any Company and its operations for periods prior to the Closing; and (ii) upon reasonable notice, afford the Representatives of the Buyer or any Company reasonable access (including the right to make, at the Buyer’s expense, photocopies), during normal business hours, to such books and records; provided, however, that any books and records related to Tax matters shall be retained pursuant to the periods set forth in ARTICLE VII.

 

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(c)       Neither the Buyer nor the Sellers shall be obligated to provide the other party with access to any books or records (including personnel files) pursuant to this Section 6.05 where such access would violate any Law.

 

Section 6.06 Public Announcements. Unless otherwise required by applicable Law or stock exchange requirements (based upon the reasonable advice of counsel), no party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other party (which consent shall not be unreasonably withheld or delayed), and, except as set forth below in Section 6.08(a), the parties shall cooperate as to the timing and contents of any such announcement.

 

Section 6.07 Further Assurances. Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.

 

Section 6.08 SEC Filings; Financial Statements.

 

(a)       As promptly as practicable, the Parent shall prepare and file a Current Report on Form 8-K to report the execution of this Agreement and the Closing, together with, or incorporating by reference, such information that may be required to be disclosed with respect to the transaction contemplated by this Agreement in any report or form to be filed with the SEC, and the Parent shall reasonably consider any comments of the Sellers provided in advance of filing of such Form 8-K.

 

(b)       The Sellers shall use their commercially reasonable efforts to prepare, or assist the Parent in causing to be prepared, as promptly as practicable, and in any event no later than 75 days following the Closing Date, any financial statements of the Companies that the Parent is required to file pursuant to Form 8-K, Rule 3-05 or Article 11 of Regulation S-X under the Exchange Act or pursuant to the Securities Act, and shall use its commercially reasonable efforts to obtain the consents of the Companies’ auditor with respect thereto as may be required by applicable Law, all in a form reasonably acceptable to the Parent for the Parent to satisfy its reporting obligations under applicable Law, a securities exchange, a securities market or a self-regulatory agency (including financial reporting obligations and filing of financial statements related thereto).

 

(c)       With respect to any material weaknesses (or a series of control deficiencies that collectively are deemed to constitute a material weakness) in the effectiveness of the Companies’ internal control over financial reporting identified by any Company or the Companies’ auditors prior to Closing, the Companies shall promptly notify the Parent thereof and use its commercially reasonable efforts to rectify such material weakness or series of control deficiencies, as the case may be.

 

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Section 6.09 Arrangement for Repayment of Indebtedness. The Sellers shall obtain payoff letters and Encumbrance releases (to be filed contemporaneously with the Closing) of all collateral related to all of the Indebtedness (including any Indebtedness to any Seller) and make arrangements for the termination of any guarantees and/or estoppel letters with respect to all such Indebtedness contemporaneous with the Closing out of the Closing Cash Purchase Price as contemplated in Section 2.03, in a form satisfactory to the Buyer, in its reasonable discretion, such that the Buyer can repay such Indebtedness contemporaneous with the Closing out of the Closing Cash Purchase Price. The Sellers will provide all required applicable advance notices required in connection with its intention to repay all outstanding Indebtedness and to terminate the commitments thereunder as of the Closing Date.

 

Section 6.10 Benefit Plan Matters.

 

(a) With respect to the Jake Marshall, LLC 401(k) Profit Sharing Plan (the “401(k) Plan”), to the extent permitted by applicable Law and the terms of the 401(k) Plan, the Sellers and the Companies shall take such measures as may be necessary or required to properly cause the 401(k) Plan to be terminated no later than one (1) day prior to the Closing Date. The Sellers and the Companies shall provide Buyer with evidence that the 401(k) Plan has been terminated (the form and substance of which shall be subject to review and approval by Buyer) not later than the day immediately preceding the Closing Date.

 

(b) Prior to the Closing Date, the Sellers and the Companies shall take any and all actions as may be required, including amendments to the 401(k) Plan (the form and substance of which shall be subject to review and approval by Buyer), to (1) permit each participant in the 401(k) Plan who is an employee of the Companies who will be employed by the Companies or Buyer following the Closing (the “Continuing Employees”) to make rollover contributions of “eligible rollover distributions” (within the meaning of Section 401(a)(31) of the Code), in an amount equal to the full account balance distributed or distributable to such Continuing Employees from the 401(k) Plan (including the balance of each Continuing Employee loan under the 401(k) Plan, to the extent permitted by Law) to the Buyer’s 401(k) retirement plan, and (2) obtain from the IRS a favorable determination letter on termination for the 401(k) Plan. Each Continuing Employee shall become a participant in the Buyer 401(k) Plan on the Closing Date (giving effect to the service crediting provisions that follow); it being agreed that there shall be no gap in participation in a tax-qualified defined contribution plan. For purposes of eligibility to participate under the Buyer’s 401(k) retirement plan, Buyer shall use commercially reasonable efforts to give each Continuing Employee credit for such individual’s years of service with the Companies or the Companies’ predecessors before the Closing Date, as if such service had been performed with Buyer.

 

(c)       Effective no later than the day immediately preceding the Closing Date, the Sellers and the Companies shall terminate any Benefit Plan maintained by the Companies that the Buyer has requested to be terminated; provided, however, that any such plan can be terminated in accordance with its terms and applicable Law without any adverse consequences with respect to any ERISA Affiliate. No later than the day immediately preceding the Closing Date, the Sellers and the Companies shall provide the Buyer evidence (the form and substance of which shall be subject to review and approval by Buyer) that such Benefit Plans have been terminated.

 

(d)       From and after the Closing, Parent shall honor and shall cause the Companies to honor all Benefit Plans of the Companies set forth in Section 6.10(d) of the Disclosure Letter, in each case in accordance with their terms as in effect immediately before the Closing; provided, that this Section shall not prevent the amendment or termination of any specific Benefit Plan or Contract in accordance with the terms thereof.

 

Section 6.11 Surety Bonds. The parties acknowledge that following the Closing, the Buyer intends to replace each Surety Bond set forth on Section 4.05(b) of the Disclosure Letter. To the extent that the replacement of any such Surety Bond results in any refund of any premium or other payment with respect to any such Surety Bond, the parties acknowledge that the Sellers shall have no right to any such refund and that the applicable Company shall retain any such refund or payment.

 

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Section 6.12 Federal Employee Retention Credit. The Sellers represent and warrant that JMLLC applied and was approved for a Federal Employee Retention Credit (the “FER Credit”) and that, as a result of such credit, JMLLC has a receivable in the amount of $2,338,778.07 at Closing with respect to such FER Credit (the “FER Receivable”). The parties acknowledge and agree that the FER Receivable shall be excluded from the calculation of Closing Working Capital. Buyer shall cause JMLLC to pay the amount of the FER Credit to Sellers within five (5) days after receipt and shall have no deduction or setoff rights with respect to the FER Credit.

 

ARTICLE VII
TAX MATTERS

 

Section 7.01 Tax Covenants.

 

(a)       Sellers shall cause to be timely prepared and filed all income Tax Returns of the Sellers, and shall cause to be timely prepared and filed all Tax Returns required to be filed by any Company up until Closing. Without the prior written consent of the Buyer (which consent shall not be unreasonably withheld or delayed), the Sellers (and, prior to the Closing, none of the Company, its Affiliates and their respective Representatives) shall, to the extent it may affect, or relate to, any Company, make, change or rescind any Tax election, amend any Tax Return or take any position on any Tax Return, take any action, omit to take any action or enter into any other transaction that would have the effect of increasing the Tax liability or reducing any Tax asset of the Buyer or any Company in respect of any Post-Closing Tax Period. The Sellers agree that the Buyer is to have no liability for any Tax resulting from any action of Sellers, any Company, their Affiliates or any of their respective Representatives, and agree to indemnify and hold harmless the Buyer (and, after the Closing Date, each Company) against any such Tax or reduction of any Tax asset.

 

(b)       All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the Ancillary Documents shall be borne and paid by the Sellers when due. The Sellers shall, at their own expense, timely file any Tax Return or other document with respect to such Taxes or fees (and the Buyer shall cooperate with respect thereto as necessary).

 

(c)       Sellers shall prepare, or cause to be prepared, all Tax Returns required to be filed by any Company after the Closing Date with respect to a Pre-Closing Tax Period. Any such Tax Return shall be prepared in a manner consistent with past practice (unless otherwise required by Law) and without a change of any election or any accounting method and shall be submitted by the Sellers to the Buyer (together with schedules, statements and, to the extent reasonably requested by the Buyer, supporting documentation) at least 45 days prior to the due date (including extensions) of such Tax Return. If the Buyer objects to any item on any such Tax Return, Buyer shall, within ten days after delivery of such Tax Return, notify the Sellers in writing that Buyer so objects, specifying with particularity any such item and stating the specific factual or legal basis for any such objection. If a notice of objection shall be duly delivered, the Buyer and the Sellers shall negotiate in good faith and use their reasonable best efforts to resolve such items. If the Buyer and the Sellers are unable to reach such agreement within ten days after receipt by the Sellers of such notice, the disputed items shall be resolved by the Independent Accountant and any determination by the Independent Accountant shall be final. The Independent Accountant shall resolve any disputed items within 20 days of having the item referred to it pursuant to such procedures as it may require. If the Independent Accountant is unable to resolve any disputed items before the due date for such Tax Return, the Tax Return shall be filed as prepared by the Sellers and then amended to reflect the Independent Accountant’s resolution. The costs, fees and expenses of the Independent Accountant shall be borne equally by the Buyer, on the one hand, and the Sellers, on the other hand. The preparation and filing of any Tax Return of any Company that does not relate to a Pre-Closing Tax Period shall be exclusively within the control of the Buyer.

 

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Section 7.02 Termination of Existing Tax Sharing Agreements. Any and all existing Tax sharing agreements (whether written or not) binding upon any Company shall be terminated as of the Closing Date. After such date none of the Companies, the Sellers or any of Sellers’ Affiliates and their respective Representatives shall have any further rights or liabilities thereunder.

 

Section 7.03 Tax Indemnification. Except to the extent specifically treated as a liability in the calculation of Closing Working Capital, the Sellers shall indemnify each Company, the Buyer, and each Buyer Indemnitee and hold them harmless from and against (a) any Loss attributable to any breach of or inaccuracy in any representation or warranty made in Section 4.20; (b) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in ARTICLE VII; (c) all Taxes of any Company or relating to the business of any Company for all Pre-Closing Tax Periods; (d) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which any Company (or any predecessor of any Company) is or was a member on or prior to the Closing Date by reason of a liability under Treasury Regulation Section 1.1502-6 or any comparable provisions of foreign, state or local Law; and (e) any and all Taxes of any Person imposed on any Company arising under the principles of transferee or successor liability or by contract, relating to an event or transaction occurring before the Closing Date, in each of the above cases, together with any out-of-pocket fees and expenses (including attorneys’ and accountants’ fees) incurred in connection therewith. The Sellers shall reimburse the Buyer for any Taxes of any Company that are the responsibility of the Sellers pursuant to this Section 7.03 within ten Business Days after payment of such Taxes by the Buyer or any Company.

 

Section 7.04 Straddle Period. In the case of Taxes that are payable with respect to a taxable period that begins before and ends after the Closing Date (each such period, a “Straddle Period”), the portion of any such Taxes that are treated as Pre-Closing Taxes for purposes of this Agreement shall be:

 

(a)       in the case of Taxes (i) based upon, or related to, income, receipts, profits, wages, capital or net worth, (ii) imposed in connection with the sale, transfer or assignment of property, or (iii) required to be withheld, deemed equal to the amount which would be payable if the taxable year ended with the Closing Date; and

 

(b)       in the case of other Taxes, deemed to be the amount of such Taxes for the entire period multiplied by a fraction the numerator of which is the number of days in the period ending on the Closing Date and the denominator of which is the number of days in the entire period.

 

Section 7.05 Contests. The Buyer agrees to give written notice to the Sellers of the receipt of any written notice by any Company, the Buyer or any of Buyer’s Affiliates which involves the assertion of any claim, or the commencement of any Action, in respect of which an indemnity may be sought by the Buyer pursuant to this ARTICLE VII (a “Tax Claim”); provided, that failure to comply with this provision shall not affect the Buyer’s right to indemnification hereunder. The Buyer shall control the contest or resolution of any Tax Claim; provided, however, that the Buyer shall obtain the prior written consent of the Sellers (which consent shall not be unreasonably withheld or delayed) before entering into any settlement of a claim or ceasing to defend such claim; and, provided further, that the Sellers shall be entitled to participate in the defense of such claim and to employ counsel of its choice for such purpose, the fees and expenses of which separate counsel shall be borne solely by the Sellers.

 

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Section 7.06 Cooperation and Exchange of Information. The Sellers and the Buyer shall provide each other with such cooperation and information as either of them reasonably may request of the other in filing any Tax Return pursuant to this ARTICLE VII or in connection with any audit or other proceeding in respect of Taxes of any Company. Such cooperation and information shall include providing copies of relevant Tax Returns or portions thereof, together with accompanying schedules, related work papers and documents relating to rulings or other determinations by tax authorities. Each of the Sellers and Buyer shall retain all Tax Returns, schedules and work papers, records and other documents in its possession relating to Tax matters of any Company for any taxable period beginning before the Closing Date until the expiration of the statute of limitations of the taxable periods to which such Tax Returns and other documents relate, without regard to extensions except to the extent notified by the other party in writing of such extensions for the respective Tax periods. Prior to transferring, destroying or discarding any Tax Returns, schedules and work papers, records and other documents in its possession relating to Tax matters of any Company for any taxable period beginning before the Closing Date, the Sellers or Buyer (as the case may be) shall provide the other parties with reasonable written notice and offer the other party the opportunity to take custody of such materials.

 

Section 7.07 Tax Treatment of Indemnification Payments. Any indemnification payments pursuant to this ARTICLE VII shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required by Law.

 

Section 7.08 Payments to Buyer. Any amounts payable to the Buyer pursuant to this ARTICLE VII shall be satisfied: (i) from the Indemnity Escrow Fund; and (ii) to the extent such amounts exceed the amounts available to the Buyer Indemnitees in the Indemnity Escrow Fund, (A) by setting off against and deducting from any Deferred Payment to the extend earned hereunder or (B) from the Sellers. Neither the exercise of nor failure to exercise any rights under this Section 9.06(b) will constitute an election of remedies or limit any Buyer Indemnitee in any manner in the enforcement of any other remedies available to it.

 

Section 7.09 Survival. Notwithstanding anything in this Agreement to the contrary, the provisions of Section 4.20 and this ARTICLE VII shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus 30 days.

 

Section 7.10 Overlap. To the extent that any obligation or responsibility pursuant to ARTICLE IX may overlap with an obligation or responsibility pursuant to this ARTICLE VII, the provisions of this ARTICLE VII shall govern.

 

Section 7.11 Allocation. The Sellers and the Buyer agree that the Purchase Price shall be allocated among the assets of the Companies for Tax purposes in accordance with Section 1060 of the Code. A draft allocation schedule shall be prepared by the Buyer using the principles set forth on Schedule 7.11 hereof and delivered to the Sellers within 120 days following the Closing Date. If the Sellers notify the Buyer in writing that the Sellers object to one or more items reflected in the allocation schedule, the Sellers and the Buyer shall negotiate in good faith to resolve such dispute; provided, however, that if the Sellers and the Buyer are unable to resolve any dispute with respect to the allocation schedule within 180 days following the Closing Date, such dispute shall be resolved by the Independent Accountant (such allocation schedule as finally agreed to by the Buyer and the Sellers, the “Allocation Schedule”). The fees and expenses of such accounting firm shall be borne equally by the Sellers and the Buyer. The Buyer and the Sellers shall file all Tax Returns (including amended returns, claims for refund and IRS Form 8594) in a manner consistent with the Allocation Schedule. Any adjustments to the Purchase Price shall be allocated in a manner consistent with the Allocation Schedule. Notwithstanding anything to the contrary herein, the parties agree to allocate $100,000 of the Purchase Price to the restrictive covenants set forth in Section 6.04 above. The parties further agree that such allocated amount will be deemed to have been paid out of the Closing Cash Purchase Price.

 

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ARTICLE VIII
CLOSING DELIVERIES AND CONDITIONS

 

Section 8.01 Conditions to Obligations of All Parties. The obligations of each party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:

 

(a)       No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.

 

(b)       The Sellers shall have received all consents, authorizations, orders and approvals from the Governmental Authorities referred to in Section 4.04 and the Buyer shall have received all consents, authorizations, orders and approvals from the Governmental Authorities referred to in Section 5.02, in each case, in form and substance reasonably satisfactory to the Buyer and the Sellers, and no such consent, authorization, order and approval shall have been revoked.

 

Section 8.02 Conditions to Obligations of Buyer. The obligations of the Buyer to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or the Buyer’s waiver, at or prior to the Closing, of each of the following conditions:

 

(a)       All approvals, consents and waivers that are listed on Schedule 8.02(a) shall have been received (including all consents required under the Leases), and executed counterparts thereof shall have been delivered to the Buyer at or prior to the Closing.

 

(b)       The Ancillary Documents shall have been executed and delivered by the parties thereto and true and complete copies thereof shall have been delivered to the Buyer.

 

(c)       The Buyer shall have received resignations of the directors and officers of the Companies pursuant to Section 6.01.

 

(d)       The Sellers shall have delivered to the Buyer a good standing certificate (or its equivalent) for each Company from the secretary of state or similar Governmental Authority of the jurisdiction under the Laws in which each Company is organized.

 

(e)       Each Seller shall have delivered to the Buyer a certificate pursuant to Treasury Regulations Section 1.1445-2(b) that such Seller is not a foreign person within the meaning of Section 1445 of the Code.

 

(f)       Each Seller shall have executed and delivered the assignment of Membership Interests to Buyer, free and clear of Encumbrances, with all required transfer tax stamps affixed.

 

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(g)       The Buyer shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of each Company certifying (i) that attached thereto are true and complete copies of all resolutions adopted by the board of directors of such Company authorizing the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby, and (ii) the names and signatures of the officers of such Company authorized to sign this Agreement, the Ancillary Documents and the other documents to be delivered hereunder and thereunder.

 

(h)       The Sellers shall have provided satisfactory written evidence, in the sole discretion of the Buyer, that all Encumbrances relating to the Indebtedness shall have been released in full.

 

(i)       The Contracts and other arrangements listed in Schedule 8.02(k) shall have been terminated to the satisfaction of the Buyer.

 

(j)       The Companies shall have received a termination and release of the guaranty listed in Schedule 8.02(l) to the satisfaction of the Buyer.

 

(k)       A Lease Agreement between JMLLC and RMP II, G.P. for the lease of the Real Property set forth on Section 4.09(b) of the Disclosure Letter shall have been executed by the parties thereto and delivered to the Buyer.

 

(l)       The Escrow Agreement shall have been executed and delivered by the parties thereto and true and complete copies thereof shall have been delivered to the Buyer.

 

(m)       The Sellers shall have delivered evidence to the reasonable satisfaction of the Buyer that all of the Company’s qualified employer-sponsored retirement plans (i.e., the 401(k) Plan) and such other Benefit Plans that the Buyer has requested to be terminated have been amended, as necessary, and terminated in accordance with the provisions of Section 6.10 hereof no later than one (1) day prior to the Closing Date.

 

(n)       The Company shall have transferred the employee receivables set forth on Section 4.23 of the Disclosure Letter.

 

Section 8.03 Conditions to Obligations of the Sellers. The obligations of the Sellers to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or the Sellers’ waiver, at or prior to the Closing, of each of the following conditions:

 

(a)       The Buyer shall have delivered to Sellers the Closing Cash Purchase Price pursuant to Section 2.02(a).

 

(b)       The Ancillary Documents shall have been executed and delivered by the parties thereto and true and complete copies thereof shall have been delivered to the Sellers.

 

(c)       The Buyer shall have delivered to the Escrow Agent by wire transfer of immediately available funds the Escrow Amount.

 

(d)       The Sellers shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of the Buyer certifying (i) that attached thereto are true and complete copies of all resolutions adopted by the board of directors of Buyer authorizing the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby; and (ii) the names and signatures of the officers of the Buyer authorized to sign this Agreement, the Ancillary Documents and the other documents to be delivered hereunder and thereunder.

 

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(e)       A Lease Agreement between JMLLC and RMP II, G.P. for the lease of the Real Property set forth on Section 4.09(b) of the Disclosure Letter shall have been executed by the parties thereto and delivered to the Buyer.

 

(f)       The Escrow Agreement shall have been executed and delivered by the parties thereto and true and complete copies thereof shall have been delivered to the Sellers.

 

ARTICLE IX
INDEMNIFICATION

 

Section 9.01 Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein (other than any representations or warranties contained in Section 4.20 which are subject to ARTICLE VII) shall survive the Closing and shall remain in full force and effect until the date that is eighteen months from the Closing Date; provided, that (i) the representations and warranties set forth in Section 4.17 (Environmental Matters) shall survive for the full period of all applicable statutes of limitations plus 30 days and (ii) the Fundamental Representations shall survive indefinitely. All covenants and agreements of the parties contained herein (other than any covenants or agreements contained in ARTICLE VII which are subject to ARTICLE VII) shall survive the Closing indefinitely or for the period explicitly specified therein. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.

 

Section 9.02 Indemnification by the Sellers. Subject to the other terms and conditions of this ARTICLE IX, the Sellers shall, jointly and severally, indemnify and defend each of the Buyer and its Affiliates (including the Companies) and their respective Representatives (collectively, the “Buyer Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Buyer Indemnitees based upon, arising out of, with respect to or by reason of:

 

(a)       any inaccuracy in or breach of any of the representations or warranties of the Sellers contained in this Agreement or in any certificate or instrument delivered by or on behalf of any Seller pursuant to this Agreement (other than in respect of Section 4.20, it being understood that the sole remedy for any such inaccuracy in or breach thereof shall be pursuant to ARTICLE VII), as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date);

 

(b)       any breach or non-fulfillment of any covenant, agreement or obligation to be performed by the Sellers pursuant to this Agreement (other than any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in ARTICLE VII, it being understood that the sole remedy for any such breach, violation or failure shall be pursuant to ARTICLE VII);

 

(c)       any unpaid Transaction Expenses as of the Determination Time or Indebtedness outstanding as of the Determination Time; or

 

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(d)       any Action or threatened Action with respect to items 1 and 4 (including the events referenced therein) set forth on Section 4.15 of the Disclosure Letter.

 

Section 9.03 Indemnification By the Parent and the Buyer. Subject to the other terms and conditions of this ARTICLE IX, the Parent and the Buyer shall, jointly and severally, indemnify and defend each of the Sellers and their Affiliates and their respective Representatives (collectively, the “Seller Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Seller Indemnitees based upon, arising out of, with respect to or by reason of:

 

(a)       any inaccuracy in or breach of any of the representations or warranties of the Buyer or Parent contained in this Agreement or in any certificate or instrument delivered by or on behalf of the Buyer or Parent pursuant to this Agreement, as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date); or

 

(b)       any breach or non-fulfillment of any covenant, agreement or obligation to be performed by the Buyer or Parent pursuant to this Agreement (other than ARTICLE VII, it being understood that the sole remedy for any such breach thereof shall be pursuant to ARTICLE VII).

 

Section 9.04 Certain Limitations. The indemnification provided for in Section 9.02 and Section 9.03 shall be subject to the following limitations:

 

(a)       The Sellers shall not be liable to the Buyer Indemnitees for indemnification under Section 9.02(a) until the aggregate amount of all Losses in respect of indemnification under Section 9.02(a) exceeds $250,000 (the “Basket”), in which event the Sellers shall be required to pay or be liable for all such Losses over and above the Basket. The aggregate amount of all Losses for which the Sellers shall be liable pursuant to Section 9.02(a) shall not exceed $2,000,000 (the “Cap”).

 

(b)       Notwithstanding the foregoing, the limitations set forth in Section 9.04(a) shall not apply to Losses based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any Fundamental Representation, or fraud, gross negligence, or willful misconduct.

 

(c)       For purposes of this ARTICLE IX, any inaccuracy in or breach of any representation or warranty other than a Fundamental Representation shall be determined without regard to any materiality, Material Adverse Effect, or other similar qualification contained in or otherwise applicable to such representation or warranty.

 

(d)       Payments by an Indemnifying Party pursuant to Section 9.02 or Section 9.03 in respect of any Loss shall be limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds and any indemnity, contribution or other similar payment actually received by the Indemnified Party (or the Companies) in respect of any such claim after deducting all out-of-pocket costs and expenses incurred in recovering such proceeds or payment. The Indemnified Party shall use its commercially reasonable efforts to recover under insurance policies or indemnity, contribution or other similar agreements for any Losses.

 

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(e)       The representations, warranties and covenants of the Indemnifying Party, and the Indemnified Party’s right to indemnification with respect thereto, shall not be affected or deemed waived by reason of any investigation made by or on behalf of the Indemnified Party (including by any of its Representatives) or by reason of the fact that the Indemnified Party or any of its Representatives knew or should have known that any such representation or warranty is, was or might be inaccurate or by reason of the Indemnified Party’s waiver of any condition set forth in Section 8.02 or Section 8.03, as the case may be.

 

Section 9.05 Indemnification Procedures. The party making a claim under this ARTICLE IX is referred to as the “Indemnified Party”, and the party against whom such claims are asserted under this ARTICLE IX is referred to as the “Indemnifying Party”.

 

(a)       Third Party Claims. If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a “Third Party Claim”) against such Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 30 calendar days after receipt of such notice of such Third Party Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume the defense of any Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own counsel, and the Indemnified Party shall cooperate in good faith in such defense; provided, that if the Indemnifying Party is a Seller, such Indemnifying Party shall not have the right to defend or direct the defense of any such Third Party Claim that (x) is asserted directly by or on behalf of a Person that is a direct or indirect supplier or customer of any Company if in the reasonable judgment of the Buyer Indemnitee (which may be asserted at any time) the Indemnifying Party’s defense of such Third Party Claim could reasonably be expected to have an adverse effect on the Buyer Indemnitee’s (or the Company’s) existing or prospective relationship with such supplier or customer, or (y) seeks an injunction or other equitable relief against the Indemnified Party. In the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to Section 9.05(b), it shall have the right to take such action as it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying Party’s right to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Party, provided, that if in the reasonable opinion of counsel to the Indemnified Party, (A) there are legal defenses available to an Indemnified Party that are different from or additional to those available to the Indemnifying Party; or (B) there exists a conflict of interest between the Indemnifying Party and the Indemnified Party that cannot be waived, the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnified Party in each jurisdiction for which the Indemnified Party determines counsel is required. If the Indemnifying Party elects not to compromise or defend such Third Party Claim, fails to promptly notify the Indemnified Party in writing of its election to defend as provided in this Agreement, or fails to diligently prosecute the defense of such Third Party Claim, the Indemnified Party may, subject to Section 9.05(b), pay, compromise, defend such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third Party Claim. Seller and Buyer shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available (subject to the provisions of Section 6.02) records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third Party Claim.

 

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(b)       Settlement of Third Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided in this Section 9.05(b). If a firm offer is made to settle a Third Party Claim without leading to liability or the creation of a financial or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within ten days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to Section 9.05(a), it shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).

 

(c)       Direct Claims. Any Action by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a “Direct Claim”) shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 30 days after the Indemnified Party becomes aware of such Direct Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have 30 days after its receipt of such notice to respond in writing to such Direct Claim. The Indemnified Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s investigation by giving such information and assistance (including access to the Companies’ premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond within such 30 day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.

 

(d)       Tax Claims. Notwithstanding any other provision of this Agreement, the control of any claim, assertion, event or proceeding in respect of Taxes of any Company (including, but not limited to, any such claim in respect of a breach of the representations and warranties in Section 4.20 hereof or any breach or violation of or failure to fully perform any covenant, agreement, undertaking or obligation in ARTICLE VII) shall be governed exclusively by ARTICLE VII hereof.

 

49

 

 

Section 9.06 Payments; Escrow Funds; Setoff.

 

(a)       Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this ARTICLE IX, the Indemnifying Party shall satisfy its obligations within ten Business Days of such final, non-appealable adjudication by wire transfer of immediately available funds.

 

(b)       Any Losses payable to a Buyer Indemnitee pursuant to this ARTICLE IX shall be satisfied: (i) from the Indemnity Escrow Fund; and (ii) to the extent the amount of Losses exceeds the amounts available to the Buyer Indemnitees in the Indemnity Escrow Fund, (A) by setting off against and deducting from any Deferred Payment to the extent earned hereunder or (B) from the Sellers. Neither the exercise of nor failure to exercise any rights under this Section 9.06(b) will constitute an election of remedies or limit any Buyer Indemnitee in any manner in the enforcement of any other remedies available to it.

 

Section 9.07 Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

 

Section 9.08 Exclusive Remedies. Subject to Section 2.06(b), Section 6.03 and Section 10.11, the parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from intentional fraud, criminal activity or willful misconduct on the part of a party hereto in connection with the transactions contemplated by this Agreement) for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in ARTICLE VII and this ARTICLE IX. In furtherance of the foregoing, each party hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement it may have against the other parties hereto and their Affiliates and each of their respective Representatives arising under or based upon any Law, except pursuant to the indemnification provisions set forth in ARTICLE VII and this ARTICLE IX. Nothing in this Section 9.08 shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled or to seek any remedy on account of any party’s intentional fraud or criminal or intentional misconduct.

 

ARTICLE X
MISCELLANEOUS

 

Section 10.01 Expenses. Except as otherwise expressly provided herein, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.

 

Section 10.02 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.02):

 

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If to the Sellers:Richard L. Pollard
  Matthew S. Pollard
  P.O. Box 4327
  Chattanooga, TN 37405
   
 with a copy to:Chambliss, Bahner & Stophel, P.C.
  Liberty Tower
  605 Chestnut Street, Suite 1700
  Chattanooga, TN 37450
  Attention: Mark Turner and Douglas S. Griswold
  Email: mturner@chamblisslaw.com
  dgriswold@chamblisslaw.com
   
 If to the Buyer or the Parent:c/o Limbach Holdings, Inc.
  1251 Waterfront Place, Suite 201
  Pittsburgh, Pennsylvania 15222 15201
  Attention: Scott Wright, Senior Vice President and General Counsel
  E-mail: scott.wright@limbachinc.com
   
 with a copy to:Holland & Knight LLP
  200 South Orange Avenue, Suite 2600
  Orlando, Florida 32801
  Attention: Tom McAleavey
  Email: tom.mcaleavey@hklaw.com

 

If a deadline provided in this Agreement or any Ancillary Document falls on a day other than a Business Day, such deadline shall be extended until the first Business Day thereafter.

 

Section 10.03 Interpretation. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Letter and Exhibits mean the Articles and Sections of, and Disclosure Letter and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Disclosure Letter and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

 

Section 10.04 Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

 

51

 

 

Section 10.05 Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Except as provided in Section 6.03(e), upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

Section 10.06 Entire Agreement. This Agreement and the Ancillary Documents constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in the Ancillary Documents, the Exhibits and Disclosure Letter (other than an exception expressly set forth as such in the Disclosure Letter), the statements in the body of this Agreement will control.

 

Section 10.07 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.

 

Section 10.08 No Third-party Beneficiaries. Except as provided in Section 7.03 and ARTICLE IX, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

Section 10.09 Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed 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.

 

Section 10.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

 

(a)       This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction).

 

52

 

 

(b)       ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF DELAWARE OR THE STATE OF TENNESSEE, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

(c)       EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE ANCILLARY DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.10(c).

 

Section 10.11 Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.

 

Section 10.12 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

53

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

 

LIMBACH HOLDINGS, INC.
   
 By:/s/ Charles A. Bacon, III
  Charles A. Bacon, III, President, Chief Executive
  Officer and Director

 

LIMBACH FACILITY SERVICES LLC
   
 By:/s/ Charles A. Bacon, III
  Charles A. Bacon, III, President and Chief
   Executive Officer

 

  JAKE MARSHALL, LLC
     
  By: /s/ Richard L. Pollard
    Richard L. Pollard, Chief Manager
     

 

  COATING SOLUTIONS, LLC
   
  By: Jake Marshall, LLC, Manager
     
  By: /s/ Richard L. Pollard
    Richard L. Pollard, Chief Manager
     

 

 /s/ Richard L. Pollard
  RICHARD L. POLLARD

 

 /s/ Matthew S. Pollard
  MATTHEW S. POLLARD

 

[Signature Page to Membership Interest Purchase Agreement]

 

 

 

 

Exhibit 10.1

Execution Version

 

 

Amended and Restated Credit Agreement

 

among

 

Limbach Facility Services LLC, a Delaware limited liability company,
as Borrower,

 

Limbach Holdings LLC, a Delaware limited liability company,

as Intermediate Holdco,

 

The Guarantors
from time to time party hereto,

 

The Lenders

from time to time party hereto,

 

Wheaton Bank & Trust Company, N.A.,

a subsidiary of Wintrust Financial Corporation,

as Administrative Agent, and L/C Issuer,

 

Bank of the West,

as Documentation Agent

 

M&T Bank,

as Syndication Agent

 

and

Wheaton Bank & Trust Company, N.A., a Subsidiary of Wintrust Financial
Corporation, as Lead Arranger and Sole Book Runner

 

Dated as of December 2, 2021

 

 

 

 

 

Table of Contents    

 

Section Heading Page
     
Section 1. Definitions; Interpretation  1
     
Section 1.1. Definitions 2
Section 1.2. Interpretation 42
Section 1.3. Change in Accounting Principles 44
Section 1.4. Rounding 44
Section 1.5. Pro Forma Treatment 44
Section 1.6. Rates 44
     
Section 2. The Credit Facilities 44
     
Section 2.1. Term Loan Commitments 44
Section 2.2. Revolving Credit Commitments 45
Section 2.3. Letters of Credit 45
Section 2.4. Applicable Interest Rates 49
Section 2.5. Manner of Borrowing Loans and Designating Applicable Interest Rates 50
Section 2.6. Minimum Borrowing Amounts; Maximum SOFR Loans 52
Section 2.7. Maturity of Loans 52
Section 2.8. Prepayments 53
Section 2.9. Place and Application of Payments 55
Section 2.10. Voluntary Commitment Terminations 57
Section 2.11. [Reserved] 58
Section 2.12. Evidence of Indebtedness 58
Section 2.13. Fees 58
Section 2.14. Account Debit 59
Section 2.15. Assignment and Reallocation of Original Commitments and Original Loans 60
     
Section 3. Conditions Precedent 61
     
Section 3.1. All Credit Events 60
Section 3.2. Initial Credit Event 61
     
Section 4. The Collateral and Guaranties 64
     
Section 4.1. Collateral 64
Section 4.2. Liens on Real Property 65
Section 4.3. Guaranties 65
Section 4.4. Further Assurances 65
Section 4.5. Cash Collateral 66
     
Section 5. Representations and Warranties 67
     
Section 5.1. Organization and Qualification 67

 

 

 

 

Section 5.2. Authority and Enforceability 67
Section 5.3. Financial Reports 68
Section 5.4. No Material Adverse Change 68
Section 5.5. Litigation and Other Controversies 69
Section 5.6. True and Complete Disclosure 69
Section 5.7. Use of Proceeds; Margin Stock 69
Section 5.8. Taxes 69
Section 5.9. ERISA 69
Section 5.10. Subsidiaries 70
Section 5.11. Compliance with Laws 70
Section 5.12. Environmental Matters 70
Section 5.13. Investment Company 71
Section 5.14. Intellectual Property 71
Section 5.15. Good Title 71
Section 5.16. Labor Relations 71
Section 5.17. Governmental Authority and Licensing 71
Section 5.18. Approvals 72
Section 5.19. Affiliate Transactions 72
Section 5.20. Solvency 72
Section 5.21. No Broker Fees 72
Section 5.22. No Default 72
Section 5.23. Compliance with Anti-Corruption Laws and Sanctions Programs 72
Section 5.24. Bonding Facility 73
Section 5.25. Other Agreements and Documents 73
Section 5.26. Accuracy of Borrowing Base 73
Section 5.27. Beneficial Ownership Certification 73
Section 5.28. EEA Financial Institution 73
     
Section 6. Covenants 73
     
Section 6.1. Information Covenants 73
Section 6.2. Inspections; Field Examinations 78
Section 6.3. Maintenance of Property and Insurance; Environmental Matters 78
Section 6.4. Compliance with Laws and Material Agreements 79
Section 6.5. ERISA 79
Section 6.6. Payment of Taxes 80
Section 6.7. Preservation of Existence 80
Section 6.8. Contracts with Affiliates 80
Section 6.9. Restrictions or Changes and Amendments 80
Section 6.10. Change in the Nature of Business 81
Section 6.11. Indebtedness 81
Section 6.12. Liens 82
Section 6.13. Consolidation, Merger, and Sale of Assets 84
Section 6.14. Advances, Investments, and Loans 85

 

 

 

 

Section 6.15. Restricted Payments 86
Section 6.16. Limitation on Restrictions 87
Section 6.17. Limitation on Issuances of New Ownership Interests by Subsidiaries 87
Section 6.18. Limitation on the Creation of Subsidiaries 87
Section 6.19. Operating Accounts 88
Section 6.20. Financial Covenants 88
Section 6.21. Compliance with Anti-Corruption Laws and Sanctions Programs 88
Section 6.22. Subordinated Debt 89
Section 6.23. Change in Accounts 89
Section 6.24. [Reserved] 89
Section 6.25. Limitations on Intermediate Holdco 90
Section 6.26. Bonding Capacity 90
Section 6.27. Use of Proceeds 91
Section 6.28. Post-Closing Matters 91
     
Section 7. Events of Default and Remedies 91
     
Section 7.1. Events of Default 91
Section 7.2. Non-Bankruptcy Defaults 94
Section 7.3. Bankruptcy Defaults 95
Section 7.4. Collateral for Undrawn Letters of Credit 95
Section 7.5. Notice of Default 95
     
Section 8. Change in Circumstances and Contingencies 95
     
Section 8.1. Funding Indemnity 95
Section 8.2. Illegality 96
Section 8.3. Inability to Determine Rates; Benchmark Replacement 96
Section 8.4. Increased Costs 100
Section 8.5. Discretion of Lender as to Manner of Funding 101
Section 8.6. Defaulting Lenders 101
     
Section 9. The Administrative Agent 104
     
Section 9.1. Appointment and Authorization of Administrative Agent 104
Section 9.2. Administrative Agent and Its Affiliates 104
Section 9.3. Exculpatory Provisions 104
Section 9.4. Reliance by Administrative Agent 106
Section 9.5. Delegation of Duties 106
Section 9.6. Non-Reliance on Administrative Agent and Other Lenders 107
Section 9.7. Resignation of Administrative Agent and Successor Administrative Agent 107
Section 9.8. L/C Issuer. 108
Section 9.9. Hedging Liability and Bank Product Liability Arrangements 108

 

 

 

 

Section 9.10. No Other Duties; Designation of Additional Agents 108
Section 9.11. Authorization to Enter into, and Enforcement of, the Collateral Documents and Guaranty 109
Section 9.12. Administrative Agent May File Proofs of Claim 109
Section 9.13. Collateral and Guaranty Matters 110
Section 9.14. Credit Bidding 111
Section 9.15. ERISA 111
     
Section 10. Miscellaneous 112
     
Section 10.1. Taxes 112
Section 10.2. Mitigation Obligations; Replacement of Lenders 116
Section 10.3. No Waiver, Cumulative Remedies 117
Section 10.4. Non-Business Days 117
Section 10.5. Survival of Representations 118
Section 10.6. Survival of Indemnities 118
Section 10.7. Sharing of Payments by Lenders 118
Section 10.8. Notices; Effectiveness; Electronic Communication 118
Section 10.9. Successors and Assigns; Assignments and Participations 122
Section 10.10. Amendments 127
Section 10.11. Headings 128
Section 10.12. Expenses; Indemnity; Damage Waiver 128
Section 10.13. Set-off 130
Section 10.14. Governing Law, Jurisdiction, Etc. 131
Section 10.15. Severability of Provisions 132
Section 10.16. Excess Interest 132
Section 10.17. Construction 132
Section 10.18. Lender’s and L/C Issuer’s Obligations Several 133
Section 10.19. USA Patriot Act 133
Section 10.20. Waiver of Jury Trial 133
Section 10.21. Treatment of Certain Information; Confidentiality 133
Section 10.22. Counterparts; Integration; Effectiveness 134
Section 10.23. All Powers Coupled with Interest 135
Section 10.24. Acknowledgment Regarding Any Supported QFCs 135
Section 10.25. Electronic Execution; Electronic Records 135
Section 10.26. Acknowledgement and COnsent to Bail-In of AFfected Financial Institutions 135
Section 10.27. Effectiveness of Amendment and Restatement 135
     
Section 11. The Guarantees 137
     
Section 11.1. The Guarantees 137
Section 11.2. Guarantee Unconditional 138
Section 11.3. Discharge Only upon Facility Termination Date; Reinstatement in Certain Circumstances 139
Section 11.4. Subrogation 139
Section 11.5. Subordination 139

 

 

 

 

Section 11.6. Waivers 139
Section 11.7. Limit on Recovery 140
Section 11.8. Stay of Acceleration 140
Section 11.9. Benefit to Guarantors 140
Section 11.10. Keepwell 140
Section 11.11. Guarantor Covenants 140
     
Signature Pages S-1  

 

Exhibit A Notice of Payment Request
Exhibit B Notice of Borrowing
Exhibit C Notice of Continuation/Conversion
Exhibit D-1 Term Note
Exhibit D-2 Revolving Note
Exhibit E Compliance Certificate
Exhibit F Assignment and Assumption
Exhibit G Additional Guarantor Supplement
Exhibit H Borrowing Base Certificate
Exhibit I Forms of U.S. Tax Compliance Certificates
Schedule 1 Commitments
Schedule 1-A Capital Leases
Schedule 2.3 Existing Letters of Credit
Schedule 5.5 Litigation
Schedule 5.9 ERISA
Schedule 5.10 Subsidiaries
Schedule 5.16 Labor Relations
Schedule 5.25 Material Agreements
Schedule 6.11 Existing Indebtedness
Schedule 6.12 Existing Liens
Schedule 6.14 Existing Investments
Schedule 6.28 Post-Closing Matters

 

 

 

 

Amended and Restated Credit Agreement

 

This Amended and Restated Credit Agreement is entered into as of December 2, 2021, by and among Limbach Facility Services LLC, a Delaware limited liability company (the “Borrower”), Limbach Holdings LLC, a Delaware limited liability company (the “Intermediate Holdco”), and the direct and indirect Subsidiaries of the Borrower from time to time party to this Agreement, as Guarantors, the various institutions from time to time party to this Agreement, as Lenders, Wheaton Bank & Trust Company, N.A., a subsidiary of Wintrust Financial Corporation (“Wintrust”), as Administrative Agent and L/C Issuer, Bank of the West, as Documentation Agent and M&T Bank, as Syndication Agent.

 

WHEREAS, the Borrower, the Intermediate Holdco and the other Loan Parties party thereto, the lenders party thereto, the Documentation Agent, the Syndication Agent and the Administrative Agent were, immediately prior to the Restatement Effective Date, party to that certain Credit Agreement, dated as of February 24, 2021 (the “Original Credit Agreement”) pursuant to which the lenders party thereto (such lenders, the “Original Lenders”) provided a credit facility to the Borrower in an initial aggregate principal amount of $55,000,000, pursuant to which the Original Lenders made extensions of credit (including loans (the “Original Loans”)) to the Borrower on the terms and conditions set forth therein;

 

WHEREAS, the Borrower has requested that the Original Credit Agreement be amended and restated in its entirety to become effective and binding on the Borrower pursuant to the terms of this Agreement, and the Lenders (including the Original Lenders) have agreed (subject to the terms of this Agreement) to amend and restate the Original Credit Agreement in its entirety to read as set forth in this Agreement, and it has been agreed by the parties to the Original Credit Agreement that (a) the commitments which the Original Lenders have agreed to extend to the Borrower under the Original Credit Agreement shall be extended or advanced upon the amended and restated terms and conditions contained in this Agreement; and (b) the Original Loans and other Obligations (as defined in the Original Credit Agreement) outstanding under the Original Credit Agreement shall be governed by and deemed to be outstanding under the amended and restated terms and conditions contained in this Agreement, with the intent that the terms of this Agreement shall supersede the terms of the Original Credit Agreement (each of which shall hereafter have no further effect upon the parties thereto, other than for accrued fees and expenses, and indemnification provisions accrued and owing, under the terms of the Original Credit Agreement prior to the Restatement Effective Date or arising (in the case of indemnification) under the terms of the Original Credit Agreement);

 

WHEREAS, without limiting any of the foregoing, it is the intent of the parties hereto that this Agreement not constitute a novation of the “Obligations” under and as defined in the Original Credit Agreement;

 

WHEREAS, it is the intent of the Loan Parties to confirm that all Obligations shall continue in full force and effect and that, from and after the Restatement Effective Date, all references to the “Credit Agreement” contained in the Loan Documents shall be deemed to refer to this Agreement; and

 

 

 

 

WHEREAS, the Lenders have indicated their willingness to extend, or continue to extend, as applicable, credit and the L/C Issuer has indicated its willingness to issue, or continue to issue, as applicable, Letters of Credit, in each case, subject to the terms and conditions set forth herein.

 

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

 

Section 1. Definitions; Interpretation.

 

Section 1.1. Definitions. The following terms when used herein shall have the following meanings:

 

“Account Debtor” means each Person obligated in any way on or in connection with an Account.

 

“Accounts” means “accounts” as defined in the UCC, including all present and future accounts receivable and other rights of each Loan Party to payment for goods sold or leased or for services rendered, which are not evidenced by instruments or chattel paper, and whether or not they have been earned by performance.

 

“Acquired Business” means the entity or assets acquired by the Borrower or another Loan Party in an Acquisition, whether before or after the date hereof.

 

Acquired Indebtedness” means Indebtedness of an Acquired Business acquired by a Loan Party in a Permitted Acquisition; provided, that such Indebtedness (a) is either purchase money Indebtedness or a Capitalized Lease Obligation with respect to equipment or mortgage financing with respect to real property, (b) was in existence prior to the date of such Permitted Acquisition, (c) was not incurred in connection with, or in contemplation of, such Permitted Acquisition, and (d) neither Parent nor any Subsidiary thereof (other than such Person or any other Person that such Person merges with or that acquires the assets of such Person) shall have any liability or other obligation with respect to such Indebtedness.

 

“Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of any business or division of a Person, (b) the acquisition of in excess of 50% of the Ownership Interests of any Person (other than a Person that is a Subsidiary), or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with another Person (other than a Person that is a Subsidiary), provided that the Borrower or another Loan Party is the surviving entity. For the avoidance of doubt, entering into a Special Purpose Joint Venture shall not be deemed to be an Acquisition hereunder.

 

“Administrative Agent” means Wheaton Bank & Trust Company, N.A., as contractual representative for itself and the other Lenders and any successor in such capacity pursuant to Section 9.7.

 

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“Administrative Questionnaire” means, with respect to each Lender, an Administrative Questionnaire in a form supplied by the Administrative Agent and duly completed by such Lender.

 

Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.

 

“Affiliate” means any Person directly or indirectly controlling (including all stockholders, members, directors, partners, managers, and officers of such Person) or controlled by, or under direct or indirect common control with, another Person. A Person shall be deemed to control another Person for the purposes of this definition if such Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of the other Person, whether through the ownership of voting securities, common directors, managers, trustees or officers, by contract or otherwise; provided that, in any event for purposes of this definition, any Person that owns, directly or indirectly, 10% or more of the securities having the ordinary voting power for the election of directors, managers or governing body of a corporation or 10% or more of the partnership or other ownership interest of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person. For the avoidance of doubt, a Special Purpose Joint Venture shall not be considered an Affiliate hereunder.

 

“Agreement” means this Amended and Restated Credit Agreement.

 

Anti-Corruption Laws” means all Laws applicable to any Loan Party or any Affiliate thereof from time to time concerning or relating to bribery or corruption.

 

Anti-Money Laundering Laws” means any and all laws, statutes, regulations or obligatory government orders, decrees, ordinances or rules applicable to any Loan Party or any Affiliate thereof related to terrorism financing or money laundering, including any applicable provision of the Patriot Act and The Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act,” 31 U.S.C. §§ 5311-5330 and 12U.S.C. §§ 1818(s), 1820(b) and 1951-1959).

 

“Applicable ECF Percentage” means, (i) for the fiscal year ending December 31, 2021, 75%, and for each fiscal year thereafter, (ii) (a) 75%, if the Senior Leverage Ratio as of the last day of such fiscal year is greater than or equal to 2.00:1.00, (b) 50%, if the Senior Leverage Ratio as of the last day of such fiscal year is less than 2.00:1.00 but greater than 1.50:1.00, or (c) 25%, if the Senior Leverage Ratio is less than or equal to 1.50:1.00.

 

“Applicable Margin” means, with respect to Loans, Reimbursement Obligations and the commitment fees payable under Section 2.13(a), (i) prior to the first Pricing Date, the rates per annum shown opposite Level I below, and (ii) thereafter from one Pricing Date to the next, the Applicable Margin means the rates per annum determined in accordance with the following schedule:

 

Level  Senior Leverage Ratio
for
such Pricing Date
  Applicable Margin for Prime
term loans shall be:
   Applicable Margin for
Prime Revolving Loans
shall be:
   Applicable Margin for
commitment fee shall
be:
 
I  Greater than 1.00 to 1.00   1.00%   0.50%   0.25%
II  Less than or equal to 1.00 to 1.00   0.25%   0.00%   0.25%

 

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Level  Senior
Leverage
Ratio for
such Pricing
Date
  Applicable
Margin for 1
month sofr term
loans shall be:
   Applicable
Margin for 3
month sofr
term loans
shall be:
   Applicable
Margin for 6
month sofr
term loans
shall be:
   Applicable
Margin for 1
month sofr
Revolver
loans shall
be
   Applicable
Margin for 3
month sofr
Revolver
loans shall
be:
   Applicable
Margin for 6
month sofr
Revolver
loans shall
be
 
I  Greater than 1.00 to 1.00   4.10%   4.26%   4.42%   3.60%   3.76%   3.92%
II  Less than or equal to 1.00 to 1.00   3.60%   3.76%   3.92%   3.10%   3.26%   3.42%

 

For purposes hereof, the term “Pricing Date” means, for any fiscal quarter of the Borrower ending on or after December 31, 2021, the date on which the Administrative Agent is in receipt of the Borrower’s most recent financial statements (and, in the case of the year-end financial statements, audit report) for the fiscal quarter then ended, pursuant to Section 6.1. The Applicable Margin shall be established based on the Senior Leverage Ratio for the most recently completed fiscal quarter and the Applicable Margin established on a Pricing Date shall remain in effect until the next Pricing Date. If the Borrower has not delivered its financial statements by the date such financial statements (and, in the case of the year-end financial statements, audit report) are required to be delivered under Section 6.1, until such financial statements and audit report are delivered, the Applicable Margin shall be the highest Applicable Margin (i.e., the Senior Leverage Ratio shall be deemed to be greater than 1.00 to 1.00). If the Borrower subsequently delivers such financial statements before the next Pricing Date, the Applicable Margin established by such late delivered financial statements shall take effect from the date of delivery until the next Pricing Date. In all other circumstances, the Applicable Margin established by such financial statements shall be in effect from the Pricing Date that occurs immediately after the end of the fiscal quarter covered by such financial statements until the next Pricing Date. Each determination of the Applicable Margin made by the Administrative Agent in accordance with the foregoing shall be conclusive and binding on the Borrower and the Lenders absent manifest error. Notwithstanding the foregoing, if, as a result of any restatement of or other adjustment to the financial statements of the Borrower or for any reason, the Lenders determine that (a) Senior Leverage Ratio as calculated on any Pricing Date was inaccurate and (b) a proper calculation of Senior Leverage Ratio would have resulted in a higher Applicable Margin for any period, then the Borrower shall automatically and retroactively be obligated to pay to the Administrative Agent for the benefit of the Lenders, promptly on demand by the Administrative Agent, an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period.

 

“Application” is defined in Section 2.3(b).

 

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“Approved 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 and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.9(b)(iii)), and accepted by the Administrative Agent, in substantially the form of Exhibit F or any other form approved by the Administrative Agent.

 

“Authorized Representative” means those persons shown on the list of officers provided by the Borrower pursuant to Section 3.2 or on any update of any such list provided by the Borrower to the Administrative Agent, or any further or different officers of the Borrower so named by any Authorized Representative of the Borrower in a written notice to the Administrative Agent.

 

Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.

 

Bail-In Legislation” means, (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, rule, regulation or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).

 

“Bank Product Liability” of the Loan Parties means any and all of their obligations, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor) in connection with Bank Products.

 

“Bank Products” means each and any of the following bank products and services provided to any Loan Party by any Lender or any of its Affiliates: (a) credit cards for commercial customers (including “commercial credit cards” and purchasing cards), (b) stored value cards, and (c) depository, cash management, and treasury management services (including controlled disbursement, automated clearinghouse transactions, return items, overdrafts and interstate depository network services).

 

Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.

 

Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

 

Bonded Contract” has the meaning specified in the Surety Intercreditor Agreement.

 

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“Bonding Agreements” means, collectively, all agreements entered into between the Loan Parties and the Bonding Company from time to time in connection with establishing the Required Bonding Facility which are subject to the Surety Intercreditor Agreement (together, and in each case, as amended, modified, supplemented or restated from time to time if and to the extent permitted under the Surety Intercreditor Agreement).

 

“Bonding Company” means Travelers Casualty and Surety Company of America, a Connecticut corporation, or any other nationally recognized bonding company reasonably satisfactory to the Administrative Agent (provided that any such nationally recognized bonding company shall be deemed to be acceptable if its bonds, undertakings or instruments of guaranty are accepted by contract providers for the Borrower and its Subsidiaries and if such Person shall have entered into a Surety Intercreditor Agreement).

 

“Bonds” means, collectively, all bonds issued by the Bonding Company pursuant to the Bonding Agreements.

 

“Borrower” is defined in the introductory paragraph of this Agreement.

 

“Borrowing” means the total of Loans of a single type advanced. Borrowings of Loans are made and maintained ratably from each of the Lenders under a Credit according to their Percentages of such Credit. A Borrowing is “advanced” on the day Lenders advance funds comprising such Borrowing to the Borrower, is “continued” on the date a new Interest Period for the same type of Loans commences for such Borrowing, and is “converted” when such Borrowing is changed from one type of Loans to the other, all as requested by the Borrower pursuant to Section 2.5(a).

 

“Borrowing Base” means, as of any date, without duplication, an amount equal to (a) eighty percent (80%) of the face amount (less discounts, credits, Retainages and allowances which have knowingly been taken by or granted to Account Debtors in connection therewith) of all existing Eligible Accounts that are set forth in the Schedule of Accounts then most recently delivered by the Borrower to the Administrative Agent, minus (b) any reserves established by the Administrative Agent from time to time pursuant to Section 2.2(a).

 

“Borrowing Base Certificate” means a certificate, substantially in the form of Exhibit H, which has been completed and duly executed by the Chief Financial Officer of the Borrower.

 

“Business Day” means any day (other than a Saturday or Sunday) on which banks are not authorized or required to close in Chicago, Illinois.

 

“Capital Expenditures” means, with respect to any Person for any period, the aggregate amount of all expenditures (whether paid in cash or accrued as a liability) by such Person during that period for the acquisition or leasing (pursuant to a Capital Lease) of fixed or capital assets or additions to property, plant, or equipment (including replacements, capitalized repairs, and improvements) which should be capitalized on the balance sheet of such Person in accordance with GAAP excluding (i) expenditures made in connection with the replacement, substitution, restoration or repair of assets to the extent financed with (x) insurance proceeds paid on account of the loss or damage to the assets being replaced, restored or repaired or (y) awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced, (ii) that portion of the gross purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment that represents the credit granted by the seller of such equipment for the equipment being traded in at such time, or (iii) the purchase of assets that would otherwise constitute Capital Expenditures to the extent financed with the proceeds of any Disposition permitted hereunder. Notwithstanding anything herein to the contrary, (x) vehicle leases entered into in the ordinary course of business shall not constitute Capital Expenditures and (y) Permitted Acquisitions of all or substantially all of the assets of a Person shall not constitute Capital Expenditures.

 

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“Capital Lease” means any lease of Property which in accordance with GAAP is required to be capitalized on the balance sheet of the lessee; provided that, no operating lease shall constitute a Capital Lease by virtue of a change in GAAP occurring after the Original Closing Date. Each Capital Lease in effect on the Restatement Effective Date is set forth on Schedule 1-A attached hereto.

 

“Capitalized Lease Obligation” means, for any Person, the amount of the liability shown on the balance sheet of such Person in respect of a Capital Lease determined in accordance with GAAP.

 

CARES Act” means the Coronavirus Aid, Relief and Economic Security Act signed into law on March 27, 2020, as supplemented and amended by the interim rule effective April 2, 2020, as further supplemented and amended by the interim rule effective April 3, 2020, as may be further supplemented and amended from time to time, and any successor statute that may be enacted from time to time.

 

“Cash Collateral” shall have a meaning correlative to the cash or deposit account balances referred to in the definition of Cash Collateralize set forth in this Section 1.1 and shall include the proceeds of such cash collateral and other credit support.

 

“Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of one or more of the Administrative Agent, the L/C Issuer, and the Lenders, as collateral for L/C Obligations, or obligations of Lenders to fund participations in respect of either thereof (as the context may require), cash or deposit account balances or, if the L/C Issuer benefiting from such collateral shall agree in its sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to (a) the Administrative Agent and (b) the L/C Issuer, as applicable.

 

“Cash Equivalents” means, as to any Person: (a) investments in direct obligations of, or fully guaranteed by, the United States of America or of any agency or instrumentality thereof whose obligations constitute full faith and credit obligations of the United States of America, provided that any such obligations shall mature within one year of the date of acquisition thereof; (b) investments in commercial paper rated at least P-1 by Moody’s or at least A-1 by S&P (or, if at any time neither Moody’s or S&P shall be rating such obligations, an equivalent rating from another nationally recognized rating service) maturing within one year of the date of issuance thereof; (c) certificates of deposit or bankers’ acceptances maturing within one year from the date of acquisition thereof and issued or accepted by any Lender or by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that (i) is at least “adequately capitalized” (as defined in the regulations of its primary federal banking regulator) and (ii) has Tier 1 capital (as defined in such regulations) of not less than $100,000,000; (d) investments in repurchase obligations with a term of not more than seven (7) days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (c) above, provided all such agreements require physical delivery of the securities securing such repurchase agreement, except those delivered through the Federal Reserve Book Entry System; and (e) marketable short-term money market or similar securities having a rating of at least P-2 by Moody’s or A-2 by S&P (or, if at any time neither Moody’s or S&P shall be rating such obligations, an equivalent rating from another nationally recognized rating service).

 

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“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, regulations, 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 any of (a) the acquisition by any “person” or “group” (as such terms are used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) at any time of beneficial ownership of fifty percent (50%) or more of the outstanding Ownership Interests of Parent on a fully-diluted basis; (b) Parent shall fail to own one hundred percent (100%) of the Ownership Interests of the Intermediate Holdco; (c) the Intermediate Holdco shall fail to own one hundred percent (100%) of the Ownership Interests of the Borrower or any of its other Subsidiaries; (d) the Borrower shall fail to own, directly or indirectly, one hundred percent (100%) of the Ownership Interests of any of its Subsidiaries that are Guarantors or that are required to be Guarantors under this Agreement; or (e) during any period of six (6) consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower 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.

 

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“Coating Solutions” means Coating Solutions, LLC, a Tennessee limited liability company.

 

“Code” means the Internal Revenue Code of 1986, or any successor statute thereto.

 

“Collateral” means all properties, rights, interests, and privileges from time to time subject to the Liens granted to the Administrative Agent, or any security trustee therefor, by the Collateral Documents.

 

“Collateral Access Agreement” means any landlord waiver, warehouse, processor or other bailee letter or other agreement, in form and substance satisfactory to the Administrative Agent, between the Administrative Agent and any third party (including any bailee, consignee, customs broker, or other similar Person) in possession of any Collateral or any landlord of the Borrower or any Subsidiary for any real property where any Collateral is located, as such landlord waiver, bailee letter or other agreement may be amended, restated, or otherwise modified from time to time.

 

“Collateral Account” is defined in Section 4.5(a).

 

“Collateral Documents” means the Mortgages, the Security Agreement, and all other security agreements, pledge agreements, control agreements, assignments, financing statements and other documents pursuant to which Liens are granted to the Administrative Agent by the Loan Parties or such Liens are perfected, and as shall from time to time secure or relate to the Secured Obligations or any part thereof, but not including any Hedge Agreements or agreements governing Bank Product Liabilities.

 

“Collateral Report” means a Schedule of Accounts and a Schedule of Retainage, each as of the last day of the immediately preceding month and in form and substance reasonably satisfactory to the Administrative Agent.

 

“Commitments” means the Revolving Credit Commitments and the Term Loan Commitments.

 

Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.).

 

“Communications” is defined in Section 10.8(d)(ii).

 

“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

 

Consolidated Current Assets” means, as of any date of determination, all assets of Parent and its Subsidiaries that would, in accordance with GAAP, be classified on a consolidated balance sheet of Parent and its Subsidiaries as current assets as of such date.

 

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Consolidated Current Liabilities” means, as of any date of determination, all current liabilities (without duplication), and including without limitation, the aggregate outstanding principal amount of short-term Indebtedness, all current maturities of long-term Indebtedness that would, in accordance with GAAP, be classified on a consolidated balance sheet of Parent and its Subsidiaries as current liabilities as of such date and all Revolving Loans then outstanding of Parent and its Subsidiaries regardless of whether or not those Revolving Loan balances would be classified as current liabilities in accordance to GAAP.

 

Consolidated Working Capital” means, as of any date of determination, Consolidated Current Assets as of such date minus Consolidated Current Liabilities as of such date.

 

“Contingent Obligation” means as to any Person, any obligation of such Person guaranteeing any Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, any obligation of such Person, whether or not contingent, (a) to purchase any such primary obligation or any Property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (d) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided, however, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business or any obligation entered into in the ordinary course of business in connection with any contractual arrangement, including any Acquisition, Capital Expenditure, Investment or disposition of assets permitted under this Agreement (other than such obligations with respect to Indebtedness). The amount of any Contingent Obligation shall be deemed to be the amount required to be reflected on the financial statements of a Person determined in accordance with GAAP.

 

“Controlled Group” means all members of a controlled group of corporations, limited liability companies, partnerships and all trades or businesses (whether or not incorporated) under common control which, together with any Loan Party, are treated as a single employer under Section 414(b) or (c) of the Code and, for purposes of Section 302 of ERISA and Section 412 of the Code, under Section 414(b), (c), (m), and (o) of the Code.

 

Covered Entity” means any of the following: (a) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (b) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (c) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

 

“Credit” means any of the Revolving Credit and the Term Credit.

 

“Credit Event” means the advancing of any Loan, the continuation of or conversion into a SOFR Loan (but excluding an advance of a Loan made for the purpose of paying unpaid Reimbursement Obligations), or the issuance of, or extension of the expiration date or increase in the amount of, any Letter of Credit.

 

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“Damages” means all damages, including punitive damages (if payable to a third party), liabilities, costs, expenses, losses, judgments, fines, penalties, demands, claims, cost recovery actions, lawsuits, administrative proceedings, orders, response action, removal and remedial costs, compliance costs, investigation expenses, consultant fees, attorneys’ and paralegals’ fees and litigation expenses.

 

“Debtor Relief Laws” means the United States Bankruptcy Code 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 of America or other applicable jurisdictions from time to time in effect.

 

“Default” means any event or condition the occurrence of which constitutes an Event of Default, or would, with the passage of time or the giving of notice, or both, constitute an Event of Default.

 

“Defaulting Lender” means, subject to Section 8.6(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, the L/C Issuer, or any other Lender any other amount required to be paid by it hereunder (including in respect of its Loans or participation in Letters of Credit) within two (2) Business Days of the date required to be funded by it hereunder, (b) has notified the Borrower, the Administrative Agent or the L/C Issuer in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) became the subject of a Bail-in Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 8.6(b)) upon delivery of written notice of such determination to the Borrower, the L/C Issuer, and each Lender.

 

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“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

 

“Disposition” means the sale, lease, conveyance or other disposition of Property, other than sales or other dispositions expressly permitted under Sections 6.13(a), (c), (d), (e), (h), and (i).

 

“Disproportionate Advance” is defined in Section 2.5(e).

 

“Disqualified Ownership Interests” means any Ownership Interest that, by its terms (or by the terms of any security or other Ownership Interest into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition, (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations and the termination of the Commitments), (b) is redeemable at the option of the holder thereof, in whole or in part, (c) provides for the scheduled payments of dividends or distributions in cash, or (d) is convertible into or exchangeable for (i) Indebtedness or (ii) any other Ownership Interests that would constitute Disqualified Ownership Interests, in each case of clauses (a) through (d), prior to the date that is twelve (12) months after the Term Loan Termination Date.

 

“Dollars” and “$” each means the lawful currency of the United States of America.

 

“Duly Authorized Officer” means the President, Chief Executive Officer, the Chief Financial Officer, any Vice-President, the Treasurer (if at any time applicable), and the Secretary of each Loan Party, as applicable.

 

EBITDA” means, with reference to any period, Net Income for such period plus, without duplication, the sum of all amounts deducted in arriving at such Net Income amount in respect of (a) Interest Expense for such period; (b) federal, state, and local income taxes for such period; (c) depreciation of fixed assets and amortization of intangible assets for such period; (d) non-cash charges including, (i) stock based compensation expenses, (ii) loss on extinguishment of Indebtedness under the Existing Credit Agreements or the Original Credit Agreement, (iii) change in fair value of warrants, or (iv) hedging obligations; (e) transaction expenses paid on or before that date occurring six months after the Original Closing Date in connection with the transactions contemplated by the Loan Documents or Original Credit Agreement in an aggregate amount not to exceed $500,000; (f) non-recurring costs, fees, expenses and charges related to any Permitted Acquisition, Investments permitted under Section 6.14, or Equity Issuance (in each case, whether or not consummated) in an aggregate amount not to exceed (i) with regard to issuance costs in connection with any Equity Issuance, $1,000,000, (ii) with regard to any other such event such costs, fees and expenses in an amount not to exceed $150,000 for any such individual action or $300,000 in any consecutive twelve (12) month period; (g) restructuring (including lease termination fees) and severance expenses in an amount not to exceed $250,000 in any consecutive twelve (12) month period; (h) legal expenses related to pursuing claim recoveries for Legacy Claims in an amount not to exceed $250,000 in any consecutive twelve (12) month period; (i) transaction expenses paid on or before that date occurring six months after the Restatement Effective Date in connection with the Jake Marshall Acquisition and this Amendment and Restatement of the Original Credit Agreement in an aggregate amount not to exceed $1,100,000 and (j) any costs incurred (including prepayment premiums) paid in connection with the repayment in full of the obligations outstanding under the Existing Credit Agreements, minus, without duplication and to the extent reflected as a gain or otherwise included in the calculation of Net Income for such period, non-cash gains (for the avoidance of doubt, in connection with any Pro Forma calculation with regard to the Jake Marshall Acquisition, any income attributable to any PPP loan or the Employee Retention Credit shall be treated as non-cash gains for any calculation of EBITDA).

 

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EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

 

EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

 

EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

 

“Eligible Accounts” means those Accounts of each of the Loan Parties as to which the Administrative Agent has a first priority perfected Lien that comply with all of the representations and warranties made to the Administrative Agent and the Lenders under this Agreement and the other Loan Documents; provided, that the following Accounts of the Loan Parties are not Eligible Accounts:

 

(a)     Accounts which remain unpaid more than ninety (90) calendar days from the invoice date;

 

(b)     Accounts with respect to which the Account Debtor is a director, officer, employee, equity holder, or Affiliate of any Loan Party, including any Account Debtor of which an officer, director or employee is a holder of equity in any Loan Party;

 

(c)     Accounts with respect to which the Account Debtor is not a resident of the United States or Canada or who is not subject to service of process within the continental United States or Canada, unless such Accounts are supported by irrevocable letters of credit or other credit support in amount and on terms reasonably satisfactory to the Administrative Agent, the proceeds of which are assigned to the Administrative Agent in a manner reasonably satisfactory to the Administrative Agent, each in the Administrative Agent’s sole determination;

 

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(d)     Accounts in dispute (but only to the extent of such disputed amount) or with respect to which the Account Debtor has asserted, or any Loan Party or the Administrative Agent has reason to believe the Account Debtor is entitled to assert, a counterclaim or right of setoff (but only to the extent of such counterclaim or setoff amount);

 

(e)     Accounts with respect to which the prospect of payment or performance by the Account Debtor is or will be impaired, as determined by the Administrative Agent in the exercise of its Permitted Discretion;

 

(f)     Accounts that are not valid, legally enforceable obligations of the Account Debtor thereunder;

 

(g)     Accounts with respect to which the Account Debtor is the subject of bankruptcy or a similar insolvency proceeding or has made an assignment for the benefit of creditors or whose assets have been conveyed to a receiver or trustee (other than post petition accounts payable of an Account Debtor that is a debtor-in-possession under the United States Bankruptcy Code);

 

(h)     Accounts with respect to which the Account Debtor’s obligation to pay the Account is conditional upon the Account Debtor’s approval or is otherwise subject to any repurchase obligation or return right, as with sales made on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval or consignment basis;

 

(i)     Accounts which arise out of sales not made in the ordinary course of the applicable Loan Party’s business;

 

(j)     any Account with respect to which the Account Debtor has returned to the applicable Loan Party twenty percent (20%) or more of the Inventory of the applicable Loan Party the sale of which gave rise to such Account,

 

(k)     Accounts with respect to which any document or agreement executed or delivered in connection therewith, or any procedure used in connection with any such document or agreement, fails in any material respect to comply with the requirements of applicable law, or with respect to which any representation or warranty contained in this Agreement is untrue or misleading in any material respect;

 

(l)     Accounts with respect to which any Loan Party is or may become liable to the Account Debtor for goods sold or services rendered by the Account Debtor to such Loan Party, to the extent of the Loan Parties’ existing or potential liability to such Account Debtor;

 

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(m)     Accounts which, if evidenced by chattel paper or an instrument, the originals of such chattel paper or instrument have not been endorsed and/or assigned and delivered to the Administrative Agent, or in the case of electronic chattel paper, are not in the control of the Administrative Agent, in each case in a manner reasonably satisfactory to the Administrative Agent;

 

(n)     if any Loan Party maintains a credit limit for an Account Debtor, any Account owed by such Account Debtor to the extent that it exceeds such credit limit;

 

(o)     Accounts with respect to which the possession and/or control of the goods sold giving rise thereto is held, maintained or retained by any Loan Party for the account of, or subject to, further and/or future direction from the Account Debtor with respect thereto;

 

(p)     Accounts with respect to an Account Debtor that is located in any jurisdiction that has adopted a statute or other requirement with respect to which any Person that obtains business from within such jurisdiction must file a notice of business activities report or make any other required filings in a timely manner in order to enforce its claims in such jurisdiction’s courts unless (i) such notice of business activities report has been duly and timely filed or the applicable Loan Party is exempt from filing such report and the Borrower has provided the Administrative Agent with satisfactory evidence of such exemption or (ii) the failure to make such filings may be cured retroactively by the Borrower for a nominal fee;

 

(q)     Accounts that arise out of a contract or order which, by its terms, forbids or makes void or unenforceable the assignment thereof by the applicable Loan Party to the Administrative Agent or may be unassignable for any other reason;

 

(r)     Accounts which are subject to any counterclaim, credit, trade or volume discount, allowance, discount, rebate or adjustment by the Account Debtor with respect thereto (but only to the extent of such counterclaim, credit, discount, allowance, rebate or adjustment);

 

(s)     Accounts in which the Administrative Agent (for the benefit of the Lenders) does not have a valid and enforceable first priority perfected security interest; and

 

(t)     is an Account that is otherwise determined by the Administrative Agent in its Permitted Discretion to be ineligible.

 

In addition to the foregoing, all Accounts owed by an Account Debtor will not be Eligible Accounts if, with respect to such Account Debtor, twenty-five percent (25%) or more of the aggregate amount of outstanding Accounts owed at such time by such Account Debtor with respect to a specific job or project only (and not all jobs and projects with such Account Debtor) are not Eligible Accounts solely with respect to clause (a) of this definition; provided that, notwithstanding this additional eligibility condition (the “Additional Eligibility Condition”), up to $2,000,000 of such Accounts in the aggregate across all such Account Debtors, which remain unpaid for not more than one-hundred twenty (120) calendar days past the original invoice date therefore, may be Eligible Accounts if they would be eligible but for the Additional Eligibility Condition; provided further that, notwithstanding the foregoing proviso, the eligibility of all Accounts that do not satisfy the Additional Eligibility Condition shall end on December 31, 2021.

 

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Any Account which is at any time an Eligible Account but which subsequently fails to meet any of the foregoing requirements shall forthwith cease to be an Eligible Account, and further, with respect to any Account, if the Administrative Agent at any time hereafter determines in its Permitted Discretion that the prospect of payment or performance by the Account Debtor with respect thereto is materially impaired for any reason whatsoever, such Account shall cease to be an Eligible Account after notice of such determination is given to the Borrower.

 

For the avoidance of doubt, any Account which is bonded under a Bonding Agreement shall not be an Eligible Account.

 

“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.9(b)(iii), 10.9(b)(v) and 10.9(b)(vi) (subject to such consents, if any, as may be required under Section 10.9(b)(iii)).

 

Employee Retention Credit” means the receivable with respect to a Federal Employee Retention Credit in an amount not to exceed $2,338,778.07 which is to be paid to the Sellers pursuant to the Jake Marshall Acquisition Agreement.

 

“Environmental Claim” means any investigation, notice of violation, demand, allegation, action, suit, injunction, judgment, order, consent decree, penalty, fine, lien, proceeding or claim (whether administrative, judicial or private in nature) arising pursuant to or in connection with: (a) an actual or alleged violation of any applicable Environmental Law, (b) any Hazardous Material, (c) any actual or threatened abatement, removal, investigation, remediation or corrective or response action required by applicable Environmental Laws or any Governmental Authority, or (d) any actual or alleged damage, injury, threat or harm to human health, safety natural resources or the environment.

 

“Environmental Law” means any applicable Legal Requirement pertaining to (a) the protection, conservation, use or management of the environment, human health and safety, natural resources and wildlife, (b) the protection or use of surface water or groundwater, (c) the management, manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, Release, threatened Release, investigation, abatement, removal, remediation or handling of, or exposure to, any Hazardous Material, or (d) any Release of Hazardous Materials to air, land, surface water or groundwater, and any amendment, rule, regulation, order or directive issued thereunder.

 

“Equity Issuance” means, any issuance by any Loan Party or any Subsidiary to any Person of its Ownership Interests, other than (a) any issuance of its Ownership Interests pursuant to the exercise of options or warrants, (b) any issuance of its Ownership Interests pursuant to the conversion of any debt securities to equity or the conversion of any class of equity securities to any other class of equity securities, (c) any issuance of options or warrants relating to its Ownership Interests, and (d) any issuance by the Borrower of its Ownership Interests as consideration for a Permitted Acquisition. The term “Equity Issuance” shall not be deemed to include any Disposition or the issuance by any Loan Party or any Subsidiary of any non-permitted Indebtedness.

 

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“ERISA” means the Employee Retirement Income Security Act of 1974.

 

“ERISA Event” means (a) a reportable event as described in Section 4043(c) of ERISA (unless the 30-day notice requirement has been waived under applicable regulations) with respect to a Plan; (b) the withdrawal of the Loan Party or any member of its Controlled Group from a 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 Loan Party or any member of its Controlled Group from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of reorganization, insolvency or termination (or the treatment of a plan amendment as a termination) under Section 4041 or 4041A of ERISA; (e) the termination of a Plan or the filing of a notice to terminate a Plan under Section 4041(c) of ERISA; (f) the institution by the PBGC of proceedings to terminate a Plan; (g) 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 Plan; (h) the determination that any Plan is considered an at-risk plan within the meaning of Section 430 of the Code or Section 303 of ERISA; (i) the determination that any Multiemployer Plan is in critical or at-risk status within the meaning of Section 432 of the Code or Section 305 of ERISA; (j) 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 Loan Party or any member of its Controlled Group; or (k) a failure by the Loan Party or any member of its Controlled Group to meet all applicable requirements regarding minimum required contributions set forth in Sections 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA in respect of a Plan, whether or not waived, or the failure by the Loan Party or any member of its Controlled Group to make any required contribution to a Multiemployer Plan.

 

EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

 

“Event of Default” means any event or condition identified as such in Section 7.1.

 

“Event of Loss” means, with respect to any Property, any of the following: (a) any loss, destruction or damage of such Property or (b) any condemnation, seizure, or taking, by exercise of the power of eminent domain or otherwise, of such Property, or confiscation of such Property or the requisition of the use of such Property.

 

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“Excess Cash Flow” means, with respect to any period, the amount (if any) by which (a) EBITDA (without giving effect to any pro forma adjustments made pursuant to the definition of Net Income) during such period exceeds (b) the sum (without duplication) of (i) the aggregate amount of all scheduled payments of principal on debt (including the Term Loans) actually paid in cash during such period, plus (ii) the aggregate amount of Capital Expenditures paid in cash during such period and not financed with proceeds of Indebtedness (but excluding credit extended under the Revolving Loan), plus (iii) the aggregate amount of all federal, state and local taxes paid in cash with respect to such period, plus (iv) the aggregate amount of Interest Expense for such period paid in cash, plus (v) the cash portion of Restricted Payments of the type referred to in Section 6.15 actually made for such period, including Tax Distributions, to the extent permitted to be made under the Loan Documents plus (vi) any costs incurred (including prepayment premiums) and paid in connection with the repayment in full of the obligations outstanding under the Existing Credit Agreements plus (vii) amounts added back to EBITDA pursuant to clauses (f), (g), (h) and (i) of the definition thereof, plus (viii) cash payments actually made in such period in respect of social security taxes that had been deferred in accordance with the CARES Act, plus (ix) the aggregate amount of any Jake Marshall Earn-Outs actually paid in cash.

 

Excess Interest” is defined in Section 10.16.

 

“Excluded Deposit Account” means a deposit account the balance of which consists exclusively of (and is identified when established as an account established solely for the purposes of) (a) withheld income Taxes and federal, state, local or foreign employment Taxes in such amounts as are required in the reasonable judgment of a Loan Party to be paid to the Internal Revenue Service or any other U.S., federal, state or local or foreign government agencies within the following month with respect to employees of such Loan Party, (b) 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 Loan Party, (c) amounts which are required to be pledged or otherwise provided as security pursuant to any requirement of any Governmental Authority or foreign pension requirement, (d) amounts to be used to fund payroll obligations (including, but not limited to, amounts payable to any employment contracts between any Loan Party and their respective employees), (e) any deposit accounts which funds on deposit solely constitute cash collateral supporting the Existing Letters of Credit in an aggregate amount not exceeding 105% of the face amount thereof and (f) other deposit accounts maintained in the ordinary course of business containing cash amounts that do not exceed at any time $50,000 for any such account and $100,000 in the aggregate for all such accounts under this clause (f), unless requested by the Administrative Agent.

 

Excluded Equity Issuances” means the issuance by any Subsidiary of equity securities to the Borrower or any Guarantor, as applicable.

 

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“Excluded Property” means (a) any fee-owned real property with a fair market value of less than $250,000, unless requested by the Administrative Agent; (b) any leased real property with a fair market value of less than $250,000, unless requested by the Administrative Agent; (c) any goods securing purchase money indebtedness or Capitalized Lease Obligations if the granting of a Lien to any third party is prohibited by the agreement(s) setting forth the terms and conditions applicable to such Indebtedness, but only if such Indebtedness and the Liens securing the same are permitted by Sections 6.11(d) and 6.12(e) of the Credit Agreement; provided that if and when the prohibition which prevents the granting of a Lien in any such Property is removed, terminated or otherwise becomes unenforceable as a matter of law (including, without limitation, the termination of any such security interest resulting from the satisfaction of the Indebtedness secured thereby), and notwithstanding any previous release of Lien provided by the Administrative Agent requested in connection with respect to any such Indebtedness, the Excluded Property will no longer include such Property and the Administrative Agent will be deemed to have, and at all times to have had, a security interest in such property and the Collateral will be deemed to include, and at all times to have included, such Property without further action or notice by any Person; (d) any permit or license issued to any Loan Party as the permit holder or licensee thereof or any lease to which any Loan Party is lessee thereof, in each case only to the extent and for so long as the terms of such permit, license, or lease effectively (after giving effect to Sections 9-406 through 9-409, inclusive, of the Uniform Commercial Code in the applicable state (or any successor provision or provisions) or any other applicable law) prohibit the creation by such Loan Party of a security interest in such permit, license, or lease in favor of the Administrative Agent or would result in an effective invalidation, termination or breach of the terms of any such permit, license or lease (after giving effect to Sections 9-406 through 9-409, inclusive, of the Uniform Commercial Code in the applicable state (or any successor provision or provisions) or any other applicable law), in each case unless and until any required consents are obtained (e) Excluded Deposit Accounts; (f) Ownership Interests in any Special Purpose Joint Venture to the extent prohibited by its Organization Documents; (g) the real property located at 926 Featherstone Road, Pontiac, Oakland County, MI 48342, so long as such real property is not subject to any Lien (other than Permitted Liens (other than Liens of the type referred to in clause (i) or (m) of Section 6.12)); (h) motor vehicles subject to a certificate of title with an aggregate fair market value not to exceed $150,000; and (i) those assets as to which the Administrative Agent and the Loan Parties agree in writing that the cost of obtaining such a security interest or perfection thereof are excessive in relation to the benefit to the Lenders of the security to be afforded thereby; provided that the Excluded Property will not include, and the Collateral shall include and the security interest granted in the Collateral shall attach to, (x) all proceeds, substitutions or replacements of any such excluded items referred to herein unless such proceeds, substitutions or replacements would constitute excluded items hereunder, (y) all rights to payment due or to become due under any such excluded items referred to herein, and (z) if and when the prohibition which prevents the granting of a security interest in any such Property is removed, terminated, or otherwise becomes unenforceable as a matter of law, the Administrative Agent will be deemed to have, and at all times to have had, a security interest in such property, and the Collateral will be deemed to include, and at all times to have included, such Property without further action or notice by any Person.

 

Excluded Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation, or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason not to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such related Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.

 

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“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment (or otherwise pursuant to any Loan Document) pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment or becomes a party to this Agreement (other than pursuant to an assignment request by the Borrower under Section 10.2(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 10.1, 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 failure to comply with Section 10.1(g), and (d) any U.S. federal withholding Taxes imposed under FATCA.

 

“Existing Credit Agreements” means (i) that certain Financing Agreement dated as of April 12, 2019, by and among Parent, the Loan Parties, the lenders from time to time party thereto (each a “TL Lender” and collectively, the “TL Lenders”), Cortland Capital Market Services LLC, as collateral agent and administrative agent for the TL Lenders, and CB Agent Services LLC, as origination agent for the TL Lenders (as amended, supplemented, amended and restated, or otherwise modified from time to time through the date hereof) and (ii) that certain ABL Financing Agreement dated as of April 12, 2019, by and among Parent, the Loan Parties, the lenders from time to time party thereof (each an “ABL Lender” and collectively, the “ABL Lenders”) and Citizens Bank, N.A., as collateral agent, administrative agent and origination agent for the ABL Lenders (as amended, supplemented, amended and restated, or otherwise modified from time to time through the date hereof).

 

“Existing Letters of Credit” means and includes those letters of credit listed on Schedule 2.3 attached hereto issued prior to, and outstanding on, the Restatement Effective Date.

 

“Facility Termination Date” means the date on which the Commitments are terminated, all Letters of Credit that are not Cash Collateralized pursuant to Section 4.5 have expired, and the principal of and interest on the Loans and all other Obligations payable by the Borrower and the other Loan Parties under this Agreement and all other Loan Documents (other than any contingent or indemnification obligations not then due) and, if then outstanding and unpaid, all Hedging Liability and Bank Product Liability shall have been paid in full or collateralized in a manner reasonably acceptable to the Lender or Affiliate of a Lender to whom such obligations are owed.

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version of such sections that are substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof (including any Revenue Ruling, Revenue Procedure Notice or similar guidance issued by the U.S. Internal Revenue Service as a precondition to relief or exemption from taxes under such provisions), and any agreements entered into pursuant to Section 1471(b)(1) of the Code and any intergovernmental agreement entered into in connection with the implementation of such Sections.

 

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“Federal Funds Rate” means for any day, the rate per annum (based on a year of 365 or 366 days, as the case may be, and the actual number of days elapsed and rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement, or, if such rate is not so published for any day that is a Business Day, the average (rounded upward, if necessary, to the next higher 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

 

“Fixed Charge Coverage Ratio” means, at any time the same is to be determined, the ratio of (a) EBITDA for the four consecutive fiscal quarters of Parent and its Subsidiaries then most recently ended, less (i) Unfinanced Capital Expenditures made by the Borrower and its Subsidiaries during the same four consecutive fiscal quarters, less (ii) without duplication federal, state, and local income taxes paid in cash by the Borrower and its Subsidiaries during such period, less (iii) Restricted Payments made by the Borrower and its Subsidiaries during such period pursuant to Sections 6.15(b), (c) and (d) to the extent such amounts did not reduce EBITDA, less (iv) the aggregate amount of any Jake Marshall Earn-Outs actually paid in cash to (b) Fixed Charges for the same four consecutive fiscal quarters (without duplication of any amount included in clause (a)(iii)).

 

“Fixed Charges” means, with reference to any period, the sum of (a) all scheduled payments of principal on Total Funded Debt, plus (b) the cash portion of any Interest Expense for such period.

 

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

 

“Fronting Exposure” means, at any time there is a Defaulting Lender, such Defaulting Lender’s Percentage of the outstanding L/C Obligations other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with Section 4.5.

 

“GAAP” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination.

 

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state 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” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) 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 other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

 

“Guarantors” means and includes the Intermediate Holdco, each direct and indirect Subsidiary of the Borrower, and the Borrower, in its capacity as a guarantor of the Secured Obligations of another Loan Party.

 

“Guaranty Agreements” means and includes the Guarantee of the Loan Parties provided for in Section 11, and any other guaranty agreement executed and delivered in order to guarantee the Secured Obligations or any part thereof in form and substance acceptable to the Administrative Agent, in each case, as reaffirmed on the Restatement Effective Date pursuant to the Reaffirmation Agreement.

 

“Hazardous Material” means any hazardous, toxic or harmful chemical, substance, waste, compound, material, product or byproduct subject to or regulated under applicable Environmental Laws, including but not limited to radon, asbestos, polychlorinated biphenyls, petroleum (including crude oil or any fraction thereof) and lead.

 

“Hedge Agreement” means any (a) agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of any Loan Party or its Subsidiaries shall be a Hedge Agreement or (b) any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other similar master agreement.

 

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“Hedging Liability” means the liability (after taking into account the effect of any legally enforceable netting agreements related thereto and not including any Excluded Swap Obligations or obligations under Bonding Agreements) of any Loan Party to any of the Lenders, or any Affiliates of such Lenders, in respect of any Hedge Agreement as such Loan Party, as the case may be, may from time to time enter into with any one or more of the Lenders party to this Agreement or their Affiliates, equal to (a) for any such date on or after the date such Hedge Agreement has been closed out and termination value determined in accordance therewith, such termination value and (b) for any date before the date referenced in clause (a), the amount determined as the mark-to market value for such Hedge Agreement; provided, however, that, with respect to any Guarantor, Hedging Liability Guaranteed by such Guarantor shall exclude all Excluded Swap Obligations and obligations under Bonding Agreements.

 

“Hostile Acquisition” means the acquisition of the Ownership Interests of a Person through a tender offer or similar solicitation of the owners of such Ownership Interests which has not been approved (prior to such acquisition) by resolutions of the board of directors of such Person or by similar action if such Person is not a corporation, and, if such acquisition has been so approved, as to which such approval has not been withdrawn.

 

“Indebtedness” means for any Person (without duplication) (a) all indebtedness of such Person for borrowed money, whether current or funded, or secured or unsecured, (b) all indebtedness of such Person for the deferred purchase price of Property or services, (c) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to Property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of a default are limited to repossession or sale of such Property), (d) all indebtedness of such Person secured by a purchase money mortgage or other Lien to secure all or part of the purchase price of Property subject to such mortgage or Lien, whether or not such Person has assumed or become liable for the payment of such indebtedness, (e) all indebtedness secured by any Lien upon property of such Person, (f) all Capitalized Lease Obligations of such Person, (g) any existing reimbursement, payment or similar obligations of such Person in respect of bankers’ acceptances, letters of credit and other extensions of credit whether or not representing obligations for borrowed money, (h) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Disqualified Ownership Interest in such Person or any other Person or any warrant, right or option to acquire such Disqualified Ownership Interest, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (i) all obligations of such Person under any Hedge Agreement (in each case valued as the termination value thereof computed in accordance with a method approved by the International Swap Dealers Association and agreed to by such Person in the applicable agreement, if any), (j) any indebtedness, whether or not assumed, secured by Liens on Property acquired by such Person at the time of acquisition thereof, (k) all obligations under any so-called “synthetic lease” transaction entered into by such Person, (l) all obligations under any so-called “asset securitization” transaction entered into by such Person, and (m) all Contingent Obligations of such Person in respect of indebtedness referred to in clauses (a) through (l) above, it being understood that the term “Indebtedness” shall not include (i) payables, purchase orders, and accrued expenses arising in the ordinary course of business (including, for the avoidance of doubt, social security tax payments deferred in accordance with the CARES Act) or (ii)  obligations of such Person in respect of (w) obligations under any cash collateralized letters of credit, to the extent such indebtedness is cash collateralized, (x) payment of bonuses or other deferred compensation to employees of such Person or any of its Subsidiaries, (y) any purchase price adjustment, earnout or deferred payment obligation of a similar nature incurred in connection with an Acquisition, and (z) deposits from customers. For the avoidance of doubt, any premiums payable under the Bonding Agreements shall not be Indebtedness unless not paid when due, and the Indebtedness of any Person shall not include the Indebtedness of any partnership of or joint venture in which such Person is a general partner or a joint venture unless such Indebtedness is recourse to such Person.

 

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“Indemnified Taxes” means (a) all 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 (a), Other Taxes.

 

“Indemnitee” is defined in Section 10.12(b).

 

“Interest Expense” means, with reference to any period, the sum of all interest charges (including imputed interest charges with respect to Capitalized Lease Obligations and all amortization of debt discount and expense, and other banking fees, discounts, charges and commissions) of the Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP.

 

“Interest Payment Date” means (a) with respect to any SOFR Loan, the last day of each Interest Period with respect to such SOFR Loan and on the maturity date and, if the applicable Interest Period is longer than three (3) months, on each day occurring every three (3) months after the commencement of such Interest Period, and (b) with respect to any Prime Rate Loan, the last Business Day of every calendar month and on the maturity date.

 

“Interest Period” means, the period commencing on the date a Borrowing of SOFR Loans is advanced, continued or created by conversion and ending: one (1), three (3), or six (6) months thereafter, as the Borrower may elect; provided, however, that:

 

(i)     no Interest Period with respect to any Revolving Loans shall extend beyond the Revolving Credit Termination Date and no Interest Period with respect to any portion of the Term Loans shall extend beyond the final maturity date of the Term Loans;

 

(ii)     whenever the last day of any Interest Period would otherwise be a day that is not a Business Day, the last day of such Interest Period shall be extended to the next succeeding Business Day, provided that, if such extension would cause the last day of an Interest Period for a Borrowing of SOFR Loans to occur in the following calendar month, the last day of such Interest Period shall be the immediately preceding Business Day; and

 

(iii)     for purposes of determining an Interest Period for a Borrowing of SOFR Loans, a month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month; provided, however, that if there is no numerically corresponding day in the month in which such an Interest Period is to end or if such an Interest Period begins on the last Business Day of a calendar month, then such Interest Period shall end on the last Business Day of the calendar month in which such Interest Period is to end.

 

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“Intermediate Holdco” is defined in the introductory paragraph of this Agreement.

 

“Inventory” means “inventory” as defined in the UCC, including, without limitation, any and all inventory and goods of each Loan Party, wheresoever located, whether now owned or hereafter acquired by such Loan Party, which are held for sale or lease, furnished under any contract of service or held as raw materials, work-in-process or supplies, and all materials used or consumed in such Loan Party’s business, and shall include such property the sale or other disposition of which has given rise to Accounts and which has been returned to or repossessed or stopped in transit by such Loan Party.

 

“Investment” means any investment in any Person, whether by means of a loan or advance, guarantee of obligations, purchase of equity or obligations, acquisition of all or any substantial part of the assets or business of any Person or any division thereof, entry into joint ventures or partnerships, purchase or ownership of a futures contract or otherwise becoming liable for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract; provided that the periodic funding (in the nature of funding certain operating expenses (including, for instance, equipment purchases), as opposed to ongoing working capital needs) of Special Purpose Joint Ventures in connection with the cash management operations of the Loan Parties and such Special Purpose Joint Ventures to facilitate the performance under the contracts and subcontracts of such entities shall not constitute Investments.

 

“IRS” means the United States Internal Revenue Service.

 

Jake Marshall” means Jake Marshall LLC, a Tennessee limited liability company.

 

Jake Marshall Acquisition” means the acquisition of Jake Marshall and Coating Solutions pursuant to the Jake Marshall Acquisition Agreement.

 

Jake Marshall Acquisition Agreement” means that certain Membership Interest Purchase Agreement dated as of event date herewith by and among Borrower, as the buyer, the Sellers, Jake Marshall, Coating Solutions and the Intermediate Holdco.

 

Jake Marshall Earn-Out” means the deferred payment obligations incurred in connection with the closing of the Jake Marshall Acquisition.

 

Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

 

“L/C Issuer” means (i) Wheaton Bank & Trust Company, N.A., through itself or through one of its designated Affiliates or branch offices, and any successor pursuant to Section 10.9(g), or (ii) such other Lender selected by the Borrower to the extent such Lender has agreed in its sole discretion to act as an “L/C Issuer” hereunder and that has been approved in writing by the Borrower and the Administrative Agent as an “L/C Issuer” hereunder, in each case in its capacity as issuer of any Letter of Credit.

 

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“L/C Obligations” means, at any time the same is to be determined, the sum of (i) the full amount available for drawing under all outstanding Letters of Credit and (ii) all unpaid Reimbursement Obligations.

 

“L/C Participation Fee” is defined in Section 2.13(b).

 

“L/C Sublimit” means $5,000,000, as reduced pursuant to the terms hereof.

 

“Legacy Claims” means the claims or proceedings set forth in the Legacy Claims Letter.

 

Legacy Claims Letter” means that certain letter agreement dated as of the Original Closing Date among the Loan Parties and the Administrative Agent.

 

“Legal Requirement” means any treaty, convention, statute, law, common law, regulation, ordinance, license, permit, governmental approval, injunction, judgment, order, consent decree, restriction or other requirement of any Governmental Authority.

 

“Lenders” means and includes the banks, financial institutions and other lenders from time to time party to this Agreement, as a “Lender” hereunder, including each assignee Lender pursuant to Section 10.9.

 

“Letter of Credit” is defined in Section 2.3(a).

 

“Lien” means any lien, mortgage, deed of trust, pledge, assignment as collateral security, security interest, charge, or encumbrance in the nature of security in respect of any Property, including the interests of a vendor or lessor under any conditional sale, Capital Lease or other title retention arrangement, and any option, trust, authorized UCC financing statement or other preferential arrangement having the practical effect of any of the foregoing.

 

“Loan” means any Revolving Loan or Term Loan, whether outstanding as a Prime Rate Loan or SOFR Loan or otherwise as permitted hereunder, each of which is a “type” of Loan hereunder.

 

“Loan Documents” means this Agreement, the Notes (if any), the Applications, the Collateral Documents, the Guaranty Agreements, the Seller Subordination Agreement, the Reaffirmation Agreement, the Surety Intercreditor Agreement, the Subordination Agreements, any letter agreement between any Loan Party and each other agreement, instrument or document to be delivered hereunder or thereunder or otherwise in connection therewith, other than Hedge Agreements. In no event shall any Hedge Agreements or agreements governing Bank Product Liabilities constitute a Loan Document.

 

“Loan Party” means the Borrower and each of the Guarantors.

 

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“Margin Stock” shall have the meaning given to such term in Regulation U of the Board of Governors of the Federal Reserve System.

 

“Material Adverse Effect” means, (a) a material adverse change in, or material adverse effect upon, the business, financial condition or results of operations of the Borrower or of the Loan Parties taken as a whole, (b) a material impairment of the ability of the Loan Parties, taken as a whole, to perform their material obligations under any Loan Document or (c) a material adverse effect upon (i) the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document or the rights and remedies of the Administrative Agent and the Lenders thereunder or (ii) the perfection or priority of any Lien granted under any Collateral Document.

 

“Material Agreement” means:

 

(a)     any Bonding Agreement;

 

(b)     any agreement (or group of related agreements) which involves consideration payable in excess of $750,000 in any fiscal year (other than construction contracts entered into in the ordinary course of business, purchase orders in the ordinary course of business and contracts that by their terms may be terminated in the ordinary course of business upon less than sixty (60) days’ notice without penalty or premium);

 

(c)     any agreement concerning a partnership or joint venture (other than (i) any such contract with respect to a Special Purpose Joint Venture entered into in the ordinary course of business and (ii) any such agreement constituting an Organization Document of a Loan Party); or

 

(d)     any agreement under which the consequences of a default or termination would have a Material Adverse Effect.

 

“Maximum Rate” is defined in Section 10.16.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Mortgages” means, collectively, any and all mortgages or deeds of trust delivered to the Administrative Agent pursuant to Section 4.2.

 

“Multiemployer Plan” means any employee benefit plan described in Section 4001(a)(3) of ERISA, to which a Loan Party or any member of the Controlled Group makes or is obligated to make contributions, or during the preceding five plan years, has made or has been obligated to make contributions or to which a Loan Party or member of the Controlled Group may have liability.

 

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“Net Cash Proceeds” means, as applicable, (a) with respect to any Disposition by a Person, cash and cash equivalent proceeds received by or for such Person’s account, net of (i) reasonable direct costs relating to such Disposition, (ii) sale, use or other transactional taxes paid or payable (or, without duplication Tax Distributions) by such Person as a direct result of such Disposition, (iii) the amount of any reserves established to fund contingent liabilities reasonably estimated to be payable (the “Reserve Cash Proceeds”), in each case during the year that such Disposition occurred or in the next succeeding year (the “Reserve Period”) and that are directly attributable to such Disposition (as determined reasonably and in good faith by a Duly Authorized Officer); provided that (A) the Borrower has provided the Administrative Agent written notice of such Reserve Cash Proceeds prior to or contemporaneously upon receiving such cash proceeds and (B) any and all Reserve Cash Proceeds that have not been used to pay such liabilities shall be promptly paid to the Administrative Agent on the last day of the applicable Reserve Period, and (iv) the amount of any Indebtedness secured by a Lien on the asset and discharged from the proceeds of such Disposition, (b) with respect to any Event of Loss of a Person, cash and cash equivalent proceeds received by or for such Person’s account (whether as a result of payments made under any applicable insurance policy therefor or in connection with condemnation proceedings or otherwise), net of (i) reasonable direct costs incurred in connection with the collection of such proceeds, awards or other payments and (ii) all money actually applied to repair or reconstruct the damaged Property or Property affected by the condemnation or taking, and (c) with respect to any offering of Ownership Interests of a Person 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.

 

“Net Claim Proceeds” means, the dollar amount of any claim proceeds received by the Borrower or any other Loan Party pursuant to the Legacy Claims, minus any amounts due and owing to any subcontractors, service providers, vendors and other third parties utilized for such construction project.

 

Net Income” means, with reference to the applicable period, the net income (or net loss) of Parent and its Subsidiaries for such period computed on a consolidated basis in accordance with GAAP; provided that there shall be excluded from Net Income: (a) extraordinary gains and losses reasonably acceptable to the Administrative Agent in its Permitted Discretion, (b) non-cash gains and losses realized on any Disposition, (c) the cumulative effect of a change in accounting principles and (d) non-cash write ups and write downs resulting from purchase accounting adjustments, other than goodwill, inventory and accounts receivable in connection with a Permitted Acquisition; provided further that there shall also be excluded from Net Income (x) the net income (or net loss) of any Person accrued prior to the date it becomes a Subsidiary of, or has merged into or consolidated with, the Borrower or another Subsidiary, except to the extent that the Borrower has delivered the financial statements of the Acquired Business for such period, which financial statements shall have been reviewed or audited by an independent accounting firm reasonably satisfactory to the Administrative Agent, and the Administrative Agent agrees to the inclusion of such net income (or net loss) of such Person, (y) the net income (or net loss) of any Person (other than a Subsidiary) in which Parent or any of its Subsidiaries has an Ownership Interest in, except to the extent of the amount of dividends or other distributions actually paid to Parent or any of its Subsidiaries during such period, and (z) the undistributed earnings of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractual obligation (other than under any Loan Document) or Legal Requirement applicable to such Subsidiary. For the avoidance of doubt, and notwithstanding anything in this definition to the contrary, no gain (or loss) resulting from any claim recovery in any Legacy Claim shall be included in any calculation of Net Income, whether or not GAAP would require or permit otherwise.

 

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“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of all affected Lenders or all Lenders, in each instance in accordance with the terms of Section 10.10, and (b) has been approved by the Required Lenders.

 

“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender at such time.

 

“Note” and “Notes” mean and include the Revolving Notes and the Term Notes.

 

“Obligations” means all obligations of the Borrower to pay principal and interest on the Loans (including all after the commencement of an insolvency proceeding regardless of whether allowed or allowable in whole or in part as a claim in such insolvency proceeding), all Reimbursement Obligations owing under the Applications, all fees and charges payable hereunder, and all other payment obligations of any Loan Party arising under or in relation to any Loan Document, in each case whether now existing or hereafter arising, due or to become due, direct or indirect, absolute or contingent, and howsoever evidenced, held or acquired, and including all interest costs, fees, and charges after commencement of an insolvency proceeding regardless of whether allowed or allowable in whole or in part as a claim in such insolvency proceeding.

 

OFAC” means the United States Department of Treasury Office of Foreign Assets Control.

 

“Organization Documents” means, (a) for any corporation, the certificate or articles of incorporation, the bylaws, or code of regulations, or other similar document and any certificate of designations or instrument relating to the rights of shareholders of such corporation, (b) for any partnership, the partnership agreement or other similar agreement and, if applicable, certificate of limited partnership, (c) for any limited liability company, the operating agreement, limited liability company agreement, or other similar agreement, and articles or certificate of formation of such limited liability company, and (d) with respect to any joint venture, trust or other form of business entity, the 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.

 

Original Closing Date” means February 24, 2021.

 

Original Credit Agreement” has the meaning specified in the recitals hereto.

 

Original Lenders” has the meaning specified in the recitals hereto.

 

Original Loans” has the meaning specified in the recitals hereto.

 

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“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 Lien 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).

 

“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 (other than an assignment made pursuant to Section 10.2(b)).

 

“Ownership Interest” means all shares, interests, participations, rights to purchase, rights to transfer, rights to control, options, warrants, general or limited partnership interests, limited liability company interests or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity, whether voting or nonvoting, including common stock, preferred stock or any other “equity security” (as such term is defined in Rule 3a11-1 of the Rules and Regulations promulgated by the SEC (17 C.F.R. § 240.3a11-1) under the Securities and Exchange Act of 1934).

 

“Parent” means Limbach Holdings, Inc., a Delaware corporation.

 

“Parent Entity” is defined in Section 6.1(o).

 

“Participant” is defined in Section 10.9(d).

 

“Participant Register” is defined in Section 10.9(d).

 

“Participating Interest” is defined in Section 2.3(d).

 

“Participating Lender” is defined in Section 2.3(d).

 

“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any Person succeeding to any or all of its functions under ERISA.

 

“Percentage” means for any Lender its Revolver Percentage or Term Loan Percentage, as applicable; and where the term “Percentage” is applied on an aggregate basis (including Section 10.12(c)), such aggregate percentage shall be calculated by aggregating the separate components of the Revolver Percentage and Term Loan Percentage, and expressing such components on a single percentage basis.

 

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“Perfection Certificate” means that certain Perfection Certificate dated as of the Restatement Effective Date from Jake Marshall and Coating Solutions to the Administrative Agent.

 

“Permitted Acquisition” means any Acquisition with respect to which all of the following conditions shall have been satisfied:

 

(a)     the Acquired Business is in the same line of business engaged in or reasonably related or ancillary to such business as of the date of this Agreement by the Borrower and any of its Subsidiaries or a Related Line of Business and has its primary operations in the United States of America;

 

(b)     the Acquisition shall not be a Hostile Acquisition;

 

(c)     except for the Jake Marshall Acquisition, the Total Consideration for the Acquired Business, when taken together with the Total Consideration for all Acquired Businesses acquired during the same fiscal year, shall not exceed $5,000,000 in the aggregate during such fiscal year;

 

(d)     the Borrower shall have notified the Administrative Agent and Lenders not less than fifteen (15) days (or such shorter time period as may be agreed to by the Administrative Agent) prior to any such Permitted Acquisition;

 

(e)     if a new Subsidiary is formed or acquired as a result of or in connection with the Acquisition, the Borrower shall have complied with the requirements of Section 4 in connection therewith;

 

(f)     the financial statements of the Acquired Business shall have been audited by a nationally recognized independent accounting firm or have undergone a review by an accounting firm reasonably acceptable to the Administrative Agent or a quality of earnings report shall have been furnished to the Administrative Agent from a firm reasonably acceptable to the Administrative Agent; and

 

(g)     (i) immediately before and immediately after giving Pro Forma Effect to the Acquisition, the Loan Parties shall have Consolidated Working Capital of at least $30,000,000, (ii) no Event of Default shall have occurred and be continuing both before and after giving effect to such Acquisition, and (iii) and Borrower is in compliance with the financial covenants set forth in Section 6.20 on a pro forma basis.

 

For the avoidance of doubt, the Loan Parties may enter into joint ventures (including Special Purpose Joint Ventures) in accordance with the terms of this Agreement, and no joint venture shall be required to satisfy the definition of Permitted Acquisition hereunder.

 

“Permitted Discretion” means a reasonable determination made by the Administrative Agent in good faith and in the exercise of reasonable business judgment from the perspective of a secured asset-based lender.

 

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“Permitted Lien” is defined in Section 6.12.

 

Permitted Refinancing Indebtedness” means the extension of maturity, refinancing or modification of the terms of Indebtedness so long as:

 

(a) after giving effect to such extension, refinancing or modification, the amount of such Indebtedness is not greater than the amount of Indebtedness outstanding immediately prior to such extension, refinancing or modification, plus the amount of any accrued interest, prepayment, termination or similar fees and costs incurred with respect to such Indebtedness in connection with such extension, refinancing or modification;

 

(b) such extension, refinancing or modification does not result in the final stated maturity and Weighted Average Life to Maturity to be prior to or shorter than (measured as of the extension, refinancing or modification) the Indebtedness so extended, refinanced or modified;

 

(c) the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), standstill and related terms (if any), and other material terms taken as a whole, of any such extension, refinancing or modification, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable to the Loan Parties or the Lenders than the terms of any agreement or instrument governing the Indebtedness being extended refinanced or modified and the interest rate applicable to any such extended refinanced or modified Indebtedness does not exceed the then applicable market interest rate;

 

(d) the Indebtedness that is extended, refinanced or modified is not guaranteed by or otherwise recourse to any Loan Party or any of its Subsidiaries that is liable on account of the obligations other than those Persons which were obligated with respect to the Indebtedness that was refinanced, renewed, or extended; and

 

(e) no Default or Event of Default shall have occurred and be continuing at the time of, or would result from, such extension, refinancing or modification.

 

Permitted Seller Debt” means any unsecured Indebtedness consisting of earn-out obligations or other Indebtedness owing to sellers in Permitted Acquisitions, in an aggregate amount not to exceed $5,000,000 for all Permitted Acquisitions in any fiscal year (provided, if any portion of the Jake Marshall Earn-Out is blocked pursuant to the terms of the Seller Subordination Agreement, such blocked amount when eligible to be paid in accordance with the Seller Subordination Agreement, may, when combined with all other Permitted Seller Debt exceed $5,000,000 for the applicable fiscal year), which shall be subordinated to the Loans to the written satisfaction of the Administrative Agent.

 

“Person” means any natural person, partnership, corporation, limited liability company, association, trust, unincorporated organization or any other entity or organization, including a Governmental Authority.

 

“Plan” means any employee pension benefit plan covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code, but excluding any Multiemployer Plan, that is maintained or contributed to, or during the preceding five plan years, has been maintained or contributed to by a Loan Party or by a member of the Controlled Group or to which a Loan Party or member of the Controlled Group may have liability.

 

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“Platform” is defined in Section 10.8(d)(i).

 

Prime Rate” means, the floating per annum rate of interest most recently published in the Money Rates column of the Wall Street Journal as the prime or base rate. If publication of the Wall Street Journal is discontinued, Administrative Agent, in its sole discretion shall designate another daily financial or governmental publication of national circulation to be used to determine Prime Rate. The effective date of any change in the Prime Rate shall, for purposes hereof, be the date the Prime Rate is changed by Administrative Agent. Administrative Agent shall not be obligated to give notice of any change in Prime Rate. The “Prime Rate” is not necessarily the lowest rate of interest that Lenders charge their customers. If the rate of interest announced by the Administrative Agent as its Prime Rate at any time is less than three percent (3.0%), then for purposes of this Agreement the Prime Rate shall be deemed to be three percent (3.0%).

 

“Prime Rate Loan” means a Loan bearing interest at a rate specified in Section 2.4(a).

 

Pro Forma Basis” and “Pro Forma Effect” means, for any Disposition of all or substantially all of a division or a line of business or for any Acquisition, whether actual or proposed, for purposes of determining compliance with the financial covenants set forth in Section 6.20, each such transaction or proposed transaction shall be deemed to have occurred on and as of the first day of the relevant measurement period, and the following pro forma adjustments shall be made:

 

(a)       in the case of an actual or proposed Disposition, all income statement items (whether positive or negative) attributable to the line of business or the Person subject to such Disposition shall be excluded from the results of the Loan Parties and their Subsidiaries for such measurement period;

 

(b)       in the case of an actual or proposed Acquisition, income statement items (whether positive or negative) attributable to the property, line of business or the Person subject to such Acquisition shall be included in the results of the Loan Parties and their Subsidiaries for such measurement period;

 

(c)       interest accrued during the relevant measurement period on, and the principal of, any Indebtedness repaid or to be repaid or refinanced in such transaction shall be excluded from the results of the Loan Parties and their Subsidiaries for such measurement period; and

 

(d)       any Indebtedness actually or proposed to be incurred or assumed in such transaction shall be deemed to have been incurred as of the first day of the applicable measurement period, and interest thereon shall be deemed to have accrued from such day on such Indebtedness at the applicable rates provided therefor (and in the case of interest that does or would accrue at a formula or floating rate, at the rate in effect at the time of determination) and shall be included in the results of the Loan Parties and their Subsidiaries for such measurement period.

 

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“Property” means, as to any Person, all types of real, personal, tangible, intangible or mixed property owned by such Person whether or not included in the most recent balance sheet of such Person and its Subsidiaries under GAAP.

 

QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

 

QFC Credit Support” has the meaning specified in Section 10.24.

 

Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Loan Party that has total assets exceeding $10,000,000 at the time the relevant Guarantee or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other Person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another Person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

“Reaffirmation Agreement” means the Reaffirmation Agreement, dated as of the Restatement Effective Date, executed and delivered by each of the Loan Parties, in favor of the Administrative Agent.

 

“Recipient” means (a) the Administrative Agent, (b) any Lender, and (c) the L/C Issuer.

 

Register” is defined in Section 10.9(c).

 

“Reimbursement Obligation” is defined in Section 2.3(c).

 

“Related Line of Business” means any product or service that is directly or indirectly applicable or relevant to the design, engineering, construction, installation, service, maintenance, measurement, monitoring and control of building structures, including electrical, mechanical, fire protection and other building systems and indoor environments.

 

“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.

 

“Release” means any placing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing or migrating into the environment, including the exacerbation of existing environmental conditions and the abandonment or discarding of barrels, drums, containers, tanks or other receptacles containing or previously containing any Hazardous Material.

 

Relevant Governmental Bodymeans the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.

 

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“Removal Effective Date” is defined in Section 9.7(b).

 

“Required Bonding Facility” means a bonding facility of adequate size to support the work program of the Borrower and its Subsidiaries and which is otherwise reasonably satisfactory to the Administrative Agent.

 

“Required Lenders” means, as of the date of determination thereof, Lenders whose outstanding Loans and interests in Letters of Credit and Unused Revolving Credit Commitments constitute more than 50% of the sum of the total outstanding Loans, interests in Letters of Credit and Unused Revolving Credit Commitments; provided that, the Commitment of, and the portion of the outstanding Loans, interests in Letters of Credit and Unused Revolving Credit Commitments held or deemed held by, any Defaulting Lender shall, so long as such Lender is a Defaulting Lender, be disregarded for purposes of making a determination of Required Lenders. For the purposes of this definition, (a) any Lender and its Affiliates shall constitute a single Lender, and (b) in no event shall Required Lenders include fewer than two (2) Lenders at any time there are two (2) or more Lenders.

 

“Resignation Effective Date” is defined in Section 9.7(a).

 

Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.

 

Restatement Effective Date” means the first date upon which each condition described in Section 3.2 shall be satisfied or waived in a manner acceptable to the Administrative Agent in its discretion.

 

Restricted Payments” means (i) any dividends on or any other distributions in respect of any class or series of Ownership Interests and (ii) any purchase, redemption or other acquisition or retirement of Ownership Interests.

 

“Retainage” means any all compensation withheld from the Borrower by customers pursuant to the common construction contracting practice commonly called or referred to as “retainage”.

 

“Revolver Percentage” means, for each Lender, the percentage of the aggregate Revolving Credit Commitments represented by such Lender’s Revolving Credit Commitment or, if the Revolving Credit Commitments have been terminated or have expired, the percentage held by such Lender (including through participation interests in Reimbursement Obligations) of the aggregate principal amount of all Revolving Loans and L/C Obligations then outstanding.

 

“Revolving Credit” means the credit facility for making Revolving Loans and issuing Letters of Credit described in Sections 2.2, and 2.3.

 

“Revolving Credit Commitment” means, as to any Lender, the obligation of such Lender to make Revolving Loans and to participate in Letters of Credit issued for the account of the Borrower hereunder in an aggregate principal or face amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 1 attached hereto and made a part hereof, as the same may be reduced, increased or otherwise modified at any time or from time to time pursuant to the terms hereof. The Borrower and the Lenders acknowledge and agree that the Revolving Credit Commitments of the Lenders aggregate $25,000,000 on the Restatement Effective Date.

 

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“Revolving Credit Termination Date” means February 24, 2026 or such earlier date on which the Revolving Credit Commitments are terminated in whole pursuant to Section 2.10, 7.2 or 7.3.

 

“Revolving Loan” is defined in Section 2.2 and, as so defined, includes a Prime Rate Loan or a SOFR Loan, each of which is a “type” of Revolving Loan hereunder.

 

“Revolving Note” is defined in Section 2.12(d).

 

“S&P” means Standard & Poor’s Ratings Services Group, a Standard & Poor’s Financial Services LLC business.

 

Sanctioned Country” means a country or territory that is the subject of a Sanctions Program.

 

Sanctioned Person” means (a) a Person named on a Sanctions List, each Person owned or controlled by a Person named on a Sanctions List, and each other Person that is subject to a Sanctions Program, (b) an agency or government of a Sanctioned Country, (c) an organization controlled directly or indirectly by a Sanctioned Country, or (d) a Person resident in a Sanctioned Country, to the extent subject to a Sanctions Program.

 

Sanctions Event” means the event specified in Section 6.21(c).

 

Sanctions Lists” means, and includes, (a) the list of the Specially Designated Nationals and Blocked Persons maintained by OFAC, (b) the list of Sectoral Sanctions Identifications maintained by the U.S. Department of Treasury, (c) the list of Foreign Sanctions Evaders maintained by the U.S. Department of Treasury, and (d) any similar list maintained by the U.S. State Department, the U.S. Department of Commerce, the U.S. Department of Treasury, or any other U.S. Governmental Authority, or maintained by a Canadian Governmental Authority, the United Nations Security Council, or the European Union.

 

Sanctions Programs” means (a) all economic, trade, and financial sanctions programs administered by OFAC (including all laws, regulations, and Executive Orders administered by OFAC), the U.S. State Department, and any other U.S. Governmental Authority, including the Bank Secrecy Act, Anti-Money Laundering Laws, and any and all similar United States federal laws, regulations or Executive Orders, and any similar laws, regulations or orders adopted by any State within the United States, and (b) to the extent applicable, all similar economic, trade, and financial sanctions programs administered, enacted, or enforced by the United Nations Security Council, the European Union, Her Majesty’s Treasury (“HMT”) or other relevant sanctions authority.

 

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“Schedule of Accounts” means an aged trial balance and reconciliation to the Borrowing Base in form and substance reasonably satisfactory to the Administrative Agent (which may in the Administrative Agent’s Permitted Discretion include copies of original invoices) listing the Accounts of each Loan Party, certified on behalf of each Loan Party by a Duly Authorized Officer of the Borrower, to be delivered on a monthly basis to the Administrative Agent by the Borrower pursuant to Section 6.1(i).

 

“Schedule of Retainage” means a schedule of Retainage in form and substance reasonably satisfactory to the Administrative Agent listing in reasonable detail any and all outstanding Retainage, certified on behalf of each Loan Party by a Duly Authorized Officer of the Borrower, to be delivered on a monthly basis to the Administrative Agent by the Borrower pursuant to Section 6.1(i).

 

SEC” means the Securities and Exchange Commission or any other similar or successor agency of the Federal government administering the Securities Act.

 

“Secured Obligations” means the Obligations, Hedging Liability, and Bank Product Liability, in each case whether now existing or hereafter arising, due or to become due, direct or indirect, absolute or contingent, and howsoever evidenced, held or acquired (including all interest, costs, fees, and charges after the entry of an order for relief against any Loan Party in a case under the United States Bankruptcy Code or any similar proceeding, whether or not such interest, costs, fees and charges would be an allowed claim against such Loan Party in any such proceeding); provided, however, that, with respect to any Guarantor, Secured Obligations Guaranteed by such Guarantor shall exclude all Excluded Swap Obligations.

 

Securities Act” means the Securities Act of 1933, as amended, or any similar Federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect from time to time.

 

“Security Agreement” means, that certain Security Agreement dated as of the Original Closing Date among the Loan Parties and the Administrative Agent, as reaffirmed on the Restatement Effective Date pursuant to the Reaffirmation Agreement.

 

Seller Subordination Agreement” means, a subordination agreement dated as of the date hereof by and among the Administrative Agent and the Sellers relating to the Jake Marshall Earn-Out, pursuant to which the Seller’s rights are made subordinate to the rights of the Administrative Agent and the Lenders on the terms set forth therein.

 

Sellers” means, individually and collectively Richard L. Pollard and Matthew S. Pollard.

 

“Senior Funded Debt” means, at any time the same is to be determined, (a) Total Funded Debt at such time less (b) the Subordinated Debt at such time.

 

“Senior Leverage Ratio” means, as of the date of determination thereof, the ratio of (a) Senior Funded Debt of the Parent and its Subsidiaries as of such date to (b) EBITDA for the most recently ended four fiscal quarters.

 

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SOFRmeans a rate equal to the secured overnight financing rate as administered by the Term SOFR Administrator.

 

SOFR Loan” means any Loan bearing interest at a rate based on Term SOFR as provided in Section 2.4(b).

 

“Solvent” or “Solvency” means, when used with respect to any Person, that, as at any date of determination, (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise” as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (c) such Person will be able to pay its debts as they mature. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

Special Purpose Joint Venture” means a joint venture entered into by one of the Loan Parties with another Person solely with respect to a particular contract, project or job and in which a subcontract is awarded to one of the Loan Parties from such joint venture entity which subcontract is subject to a perfected first priority Lien in favor of the Administrative Agent.

 

Subordinated Debt” means the Jake Marshall Earn-Out and any other Indebtedness of the Parent and its Subsidiaries owing to a Person by that is subordinated in right of payment to the prior payment of the Secured Obligations pursuant to subordination provisions approved in writing by the Administrative Agent in its reasonable discretion, which Indebtedness shall have interest rates, payment terms, maturities, amortization schedules, covenants, defaults, remedies and other material terms that are acceptable in form and substance to the Administrative Agent and which subordination provisions shall contain restrictions on enforcement, restrictions on payment, subordination terms, and other material terms that are acceptable in form and substance to the Administrative Agent.

 

“Subordination Agreements” means, any subordination agreements entered into with respect to Subordinated Debt.

 

“Subsidiary” means, as to any particular parent corporation or organization, any other corporation or organization more than 50% of the outstanding Voting Interests of which is at the time directly or indirectly owned by such parent corporation or organization or by any one or more other entities which are themselves subsidiaries of such parent corporation or organization. Unless otherwise expressly noted herein, the term “Subsidiary” means a Subsidiary of the Borrower or of any of its direct or indirect Subsidiaries; provided, however, that no entity formed for the sole purpose of being a Special Purpose Joint Venture shall be deemed a Subsidiary of the Borrower.

 

“Supported QFC” has the meaning specified in Section 10.24.

 

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“Surety Intercreditor Agreement” means that certain Intercreditor Agreement dated as of the Original Closing Date by and between the Bonding Company and the Administrative Agent, and any other intercreditor agreement entered into by a Bonding Company and the Administrative Agent after the Original Closing Date which is in form and substance satisfactory to the Administrative Agent in its sole and absolute discretion.

 

Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract, or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

 

“Tax Distributions” means distributions made by a Loan Party to Parent for the payment of taxes by Parent in quarterly installments, based on Parent’s good-faith and reasonable estimate of income to be generated by Parent’s and its Subsidiaries’ business in such year to allow Parent to meet its tax obligations on such income taking into account the carryforward of net operating losses for any previous tax year that begins on or after the Restatement Effective Date, but only to the extent such carryforward is permitted under applicable law and has not already been utilized to reduce, in any tax year during which this Agreement is in effect, the amount of any distribution otherwise permitted hereunder.

 

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

 

“Term Credit” means the credit facility for the Term Loans described in Section 2.1.

 

“Term Loan” is defined in Section 2.1 and, as so defined, includes a Prime Rate Loan or a SOFR Loan, each of which is a “type” of Term Loan hereunder.

 

“Term Loan Commitment” means, as to any Lender, the obligation of such Lender to make its Term Loan on the Restatement Effective Date in the principal amount not to exceed the amount set forth opposite such Lender’s name on Schedule 1 attached hereto and made a part hereof. The Term Loan Commitments of the Lenders aggregate $35,500,000 on the Restatement Effective Date.

 

“Term Loan Percentage” means, for each Lender, the percentage of the Term Loan Commitments represented by such Lender’s Term Loan Commitment or, if the Term Loan Commitments have been terminated or have expired, the percentage held by such Lender of the aggregate principal amount of all Term Loans then outstanding.

 

“Term Loan Termination Date” means February 24, 2026 or such earlier date on which the Term Loan Commitments are terminated in whole pursuant to Section 2.10, 7.2 or 7.3

 

“Term Note” is defined in Section 2.12(d).

 

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Term SOFR” means, for any Interest Period, a rate per annum equal to the CME Term SOFR Reference Rate that is administered by the Term SOFR Administrator for such Interest Period that appears on the applicable page of the CME Group website that sets forth CME Term SOFR Reference Rates (or that is distributed by such other service selected by the Administrative Agent from time to time that provides quotations of Term SOFR) on the day (the “Rate Setting Date”) two Business Days prior the first day of such Interest Period; provided that:

 

(i)        if such rate is not so published for any Interest Period, the rate used for such Interest Period shall be the CME Term SOFR Reference Rate most recently published prior to such Rate Setting Date for a period with a duration that is the same as that of such Interest Period so long as the date such most recently published rate was published is not more than three Business Days prior to such Rate Setting Date, and

 

(ii)       if Term SOFR for any Interest Period would otherwise be less than 0.15%, Term SOFR for such Interest Period will be deemed to be 0.15%.

 

“Term SOFR Administrator” means CME Benchmark Administration Limited (or any successor).

 

“Total Consideration” means the sum (but without duplication) of (a) cash paid or payable (net of any cash acquired in connection with such Acquisition) by any Loan Party in connection with any Acquisition, whether paid at or prior to or after the closing thereof, plus (b) Indebtedness payable by any Loan Party to the seller in connection with such Acquisition, plus (c) purchase price payments which are required to be made over a period of time and are not contingent upon the Borrower or any other Loan Party meeting financial performance objectives (exclusive of salaries paid in the ordinary course of business) (discounted at the Prime Rate), but only to the extent not included in clause (a) or (b) above.

 

“Total Funded Debt” means, at any time the same is to be determined, for Parent and its Subsidiaries on a consolidated basis, the sum (but without duplication) 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) the aggregate amount of Capitalized Lease Obligations; (c) the maximum amount available to be drawn (less any amount of cash collateral in respect of such maximum amount) under issued and outstanding letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, and similar instruments (other than any premiums payable under the Bonding Agreements, unless not paid when due); (d) all Guarantees with respect to outstanding Indebtedness of the types specified in clauses (a) through (c) above; and (e) all Indebtedness of the types referred to in clauses (a) through (d) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which the Borrower or a Subsidiary is a general partner or joint venturer, unless such Indebtedness is expressly made non-recourse to the Borrower or such Subsidiary.

 

UCC” is defined in Section 1.2.

 

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UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person subject to IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.

 

UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

 

Unfinanced Capital Expenditures” means, for any period, Capital Expenditures made during such period which are not financed from the proceeds of any Indebtedness (other than the Revolving Loans; it being understood and agreed that, to the extent any Capital Expenditures are financed with Revolving Loans, such Capital Expenditures shall be deemed Unfinanced Capital Expenditures).

 

“Unused Revolving Credit Commitments” means, at any time, the difference between (a) the Revolving Credit Commitments then in effect and (b) the aggregate outstanding principal amount of Revolving Loans and L/C Obligations then outstanding (other than L/C Obligations that are Cash Collateralized).

 

“U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

 

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

 

“U.S. Tax Compliance Certificate” is defined in Section 10.1(g)(iii).

 

“Voting Interests” of any Person means Ownership Interests of any class or classes (however designated) having ordinary power for the election of directors or other similar governing body of such Person (including general partners of a partnership), other than Ownership Interests having such power only by reason of the happening of a contingency.

 

Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness, in each case of clauses (a) and (b), without giving effect to the application of any prior prepayment to such installment, sinking fund, serial maturity or other required payment of principal.

 

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“Welfare Plan” means a “welfare plan” of the Loan Parties as defined in Section 3(1) of ERISA that is maintained or contributed to by a Loan Party or a Subsidiary of a Loan Party.

 

“Wholly-owned Subsidiary” means, at any time, any Subsidiary of which all of the issued and outstanding Ownership Interests (other than directors’ qualifying Ownership Interests as required by law) are owned by any one or more of the Borrower and the Borrower’s other Wholly-owned Subsidiaries at such time.

 

Wintrust” is defined in the introductory paragraph of this Agreement.

 

“Withholding Agent” means any Loan Party and the Administrative Agent.

 

Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

 

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Section 1.2.   Interpretation. 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 (a) any definition of or reference to any agreement, instrument or other document herein 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), (b) any reference herein to any Person shall be construed to include such Person’s successors and permitted assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Sections, Exhibits and Schedules shall be construed to refer to Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and any successor of such law or regulation, (f) 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 and (g) the phrase “to the knowledge of any Loan Party” or words of similar import relating to the knowledge or to the awareness of any Loan Party shall mean and refer to (i) the actual knowledge of a Duly Authorized Officer of any Loan Party or (ii) the knowledge that a Duly Authorized Officer would have obtained if such representative had made a due inquiry with regard to the matter to which such phrase relates. All references to time of day herein are references to Chicago, Illinois, time unless otherwise specifically provided. Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, it shall be done in accordance with GAAP except where such principles are inconsistent with the specific provisions of this Agreement. All terms that are used in this Agreement which are defined in the Uniform Commercial Code of the State of Illinois as in effect from time to time (“UCC”) shall have the same meanings herein as such terms are defined in the UCC, unless this Agreement shall otherwise specifically provide. References “from” or “through” any date mean, unless otherwise specified, “from and including” or “through and including”, respectively. Unless otherwise specified herein, the settlement of all payments and fundings hereunder between or among the parties hereto shall be made in lawful money of the United States of America and in immediately available funds. All amounts used for purposes of financial calculations required to be made herein shall be without duplication. References to any statute or act, without additional reference, shall be deemed to refer to federal statutes and acts of the United States of America. Any reference herein to a merger, transfer, consolidation, amalgamation, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a division of or by a limited liability company, or an allocation of assets to a series of a limited liability company (or the unwinding of such a division or allocation), as if it were a merger, transfer, consolidation, amalgamation, assignment, sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person. Any division of a limited liability company shall constitute a separate Person hereunder (and each division of any limited liability company that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity). Notwithstanding anything to the contrary contained in Section 1.3, any change in accounting for leases pursuant to GAAP resulting from the adoption of Financial Accounting Standards Board Accounting Standards Update No. 2016-02, Leases (Topic 842) (“FAS 842”), to the extent such adoption would require treating any lease (or similar arrangement conveying the right to use) as a capital lease where such lease (or similar arrangement) would not have been required to be so treated under GAAP as in effect on December 31, 2017, such lease shall not be considered a capital lease, and all calculations and deliverables under this Agreement or any other Loan Document shall be made or delivered, as applicable, in accordance therewith.

 

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Section 1.3.    Change in Accounting Principles. If, after the date of this Agreement, there shall occur any change in GAAP from those used in the preparation of the financial statements referred to in Section 5.3 and such change shall result in a change in the method of calculation of any financial covenant, standard or term found in this Agreement, either the Borrower or the Required Lenders may by notice to the Lenders and the Borrower, respectively, require that the Lenders and the Borrower negotiate in good faith to amend such covenant, standard, and term so as equitably to reflect such change in accounting principles, with the desired result being that the criteria for evaluating the financial condition of the Borrower and its Subsidiaries or such covenant, standard or term shall be the same as if such change had not been made. No delay by the Borrower or the Required Lenders in requiring such negotiation shall limit their right to so require such a negotiation at any time after such a change in accounting principles. Until any such covenant, standard, or term is amended in accordance with this Section 1.3, financial covenants (and all related defined terms) and applicable covenants, terms and standards shall be computed and determined in accordance with GAAP in effect prior to such change in accounting principles.

 

Section 1.4.    Rounding. Any financial ratios required to be maintained pursuant to this Agreement (or required to be satisfied in order for a specific action to be permitted under 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).

 

Section 1.5    Pro Forma Treatment. Each Disposition of all or substantially all of a line of business, and each Acquisition (including any Permitted Acquisition), by the Borrower and its Subsidiaries that is consummated during any measurement period shall, for purposes of determining compliance with the financial covenants set forth in Section 6.20 and for purposes of determining the Applicable Margin, be given Pro Forma Effect as of the first day of such measurement period.

 

Section 1.6    Rates. Administrative Agent does not warrant or accept responsibility for, and shall not have any liability with respect to (a) the administration of, submission of, calculation of or any other matter related to the Benchmark, any component definition thereof or rates referenced in the definition thereof or any alternative, comparable or successor rate thereto (including any then-current Benchmark or any Benchmark Replacement), including whether the composition or characteristics of any such alternative, comparable or successor rate (including any Benchmark Replacement) will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, Term SOFR or any other Benchmark, or (b) the effect, implementation or composition of any Benchmark Replacement Conforming Changes.

 

Section 2.        The Credit Facilities.

 

Section 2.1.    Term Loan Commitments. Each Lender severally and not jointly agrees, subject to the terms and conditions herein, to make a loan (each individually a “Term Loan” and, collectively, the “Term Loans”) in Dollars to the Borrower in the amount of such Lender’s Term Loan Commitment. Any Term Loans not advanced on the Original Closing Date shall be advanced in a single Borrowing on the Restatement Effective Date, at which time the Term Loan Commitments shall expire. As provided in Section 2.5(a), and subject to the terms hereof, the Borrower may elect that all or any part of the Term Loans be outstanding as Prime Rate Loans or SOFR Loans. No amount of any Term Loan may be reborrowed once it is repaid.

 

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Section 2.2.    Revolving Credit Commitments. Prior to the Revolving Credit Termination Date, each Lender severally and not jointly agrees, subject to the terms and conditions herein, to make revolving loans (each individually a “Revolving Loan” and, collectively, the “Revolving Loans”) in Dollars to the Borrower from time to time up to the amount of such Lender’s Revolving Credit Commitment in effect at such time; provided, however, the sum of the aggregate principal amount of Revolving Loans and L/C Obligations at any time outstanding shall not exceed the lesser of (a) the sum of all Revolving Credit Commitments in effect at such time and (b) the Borrowing Base as then determined and computed. Each Borrowing of Revolving Loans shall be made ratably by the Lenders in proportion to their respective Revolver Percentages. As provided in Section 2.5(a), and subject to the terms hereof, the Borrower may elect that each Borrowing of Revolving Loans be either Prime Rate Loans or SOFR Loans. Revolving Loans may be repaid and reborrowed before the Revolving Credit Termination Date, subject to the terms and conditions hereof. Notwithstanding any other provision of this Agreement to the contrary, the Administrative Agent shall have the right from time to time to establish additional reserves against the amount of Revolving Credit that the Borrower may otherwise request hereunder, which reserves shall be in such amounts as the Administrative Agent shall deem necessary or appropriate in its Permitted Discretion (x) based on adverse information, if any, concerning any or all of the Collateral received by the Administrative Agent after the date hereof, (y) with respect to the Bank Product Liability and Hedging Liability and (z) after the occurrence and continuation of a Default or Event of Default, with respect to rent and other amounts payable during the three (3) consecutive succeeding months under real property leases, bailee agreements, warehouse agreements and other similar contracts for the storing of inventory or equipment of the Loan Parties and with respect to which the Loan Parties have not provided Collateral Access Agreements (where Collateral Access Agreements are required to be provided under the Loan Documents). The amount of such reserves shall be subtracted from the Borrowing Base when calculating the amount of availability under the Revolving Credit and shall be deemed usage of the Revolving Credit Commitment, in each case when calculating the amount of availability under the Revolving Credit for purposes of Sections 2 and 3 hereof, other than with respect to the Revolving Credit Commitment fee under Section 2.13(a). Additionally, the Administrative Agent may from time to time reduce the advance rate percentage applicable to Eligible Accounts under the Borrowing Base, as the Administrative Agent shall deem necessary or appropriate in its Permitted Discretion based on adverse information, if any, concerning any or all of the Collateral received by the Administrative Agent after the date hereof. So long as no Default or Event of Default exists, the Administrative Agent agrees to give the Borrower thirty (30) days’ prior notice of the establishment of any such reserve (other than reserves relating to Bank Product Liability and Hedging Liability) or the change of any such percentage. Each Lender’s Revolving Credit Commitment shall expire on the Revolving Credit Termination Date and all Revolving Loans and all other amounts owed hereunder with respect to the Revolving Loans and the Revolving Credit Commitments shall be paid in full no later than such date.

 

Section 2.3.    Letters of Credit2. (a) General Terms. Subject to the terms and conditions hereof, as part of the Revolving Credit, the L/C Issuer shall issue standby and commercial letters of credit (each such letter of credit, a “Letter of Credit”) for the Borrower’s account in an aggregate undrawn face amount up to the L/C Sublimit; provided, the sum of the aggregate principal amount of Revolving Loans and L/C Obligations at any time outstanding shall not exceed the lesser of (i) the sum of all Revolving Credit Commitments in effect at such time and (ii) the Borrowing Base as then determined and computed. Each Lender shall be obligated to reimburse the L/C Issuer for such Lender’s Revolver Percentage of the amount of each drawing under a Letter of Credit and, accordingly, each Letter of Credit shall constitute usage of the Revolving Credit Commitment of each Lender pro rata in an amount equal to its Revolver Percentage of the L/C Obligations then outstanding.

 

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(b)     Applications. At any time before the Revolving Credit Termination Date, the L/C Issuer shall, at the request of the Borrower, issue one or more Letters of Credit in Dollars, in form and substance acceptable to the L/C Issuer, with expiration dates no later than the earlier of 12 months from the date of issuance (or which are cancelable not later than 12 months from the date of issuance and each renewal) or thirty (30) days prior to the Revolving Credit Termination Date (unless the Borrower has provided Cash Collateral in compliance with the requirements of Section 4.5 as security for such Letter of Credit in an amount equal to 105% of the full amount then available for drawing under such Letter of Credit) in an aggregate face amount as set forth above, upon the receipt of a duly executed application for the relevant Letter of Credit in the form then customarily prescribed by the L/C Issuer for the Letter of Credit requested (each an “Application”). Notwithstanding anything contained in any Application to the contrary: (i) the Borrower shall pay fees in connection with each Letter of Credit as set forth in Section 2.13(b), and (ii) if the L/C Issuer is not timely reimbursed for the amount of any drawing under a Letter of Credit on the date such drawing is paid, the Borrower’s obligation to reimburse the L/C Issuer for the amount of such drawing shall bear interest (which the Borrower hereby promises to pay) from and after the date such drawing is paid at a rate per annum equal to the sum of the Applicable Margin plus the Prime Rate from time to time in effect (computed on the basis of a year of three hundred sixty-five (365) or three hundred sixty-six (366) days, as the case may be, and the actual number of days elapsed). Without limiting the foregoing, the L/C Issuer’s obligation to issue, amend or extend the expiration date of a Letter of Credit is subject to the terms or conditions of this Agreement (including the conditions set forth in Section 3.1 and the other terms of this Section 2.3). Notwithstanding anything herein to the contrary, the L/C issuer shall be under no obligation to issue, extend or amend any Letter of Credit if any Lender is at such time a Defaulting Lender hereunder unless the Borrower or such Defaulting Lender has provided Cash Collateral in compliance with Section 4.5 sufficient to eliminate the L/C Issuer’s risk with respect to such Defaulting Lender.

 

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(c)     The Reimbursement Obligations. Subject to Section 2.3(b), the obligation of the Borrower to reimburse the L/C Issuer for all drawings under a Letter of Credit (a “Reimbursement Obligation”) shall be governed by the Application related to such Letter of Credit and this Agreement, except that reimbursement shall be paid by no later than 11:00 a.m. (Chicago time) on the date which each drawing is to be paid if the Borrower has been informed of such drawing by the L/C Issuer on or before 11:00 a.m. (Chicago time) on the date when such drawing is to be paid or, if notice of such drawing is given to the Borrower after 11:00 a.m. (Chicago time) on the date when such drawing is to be paid, by the end of such day, in all instances in immediately available funds at the Administrative Agent’s principal office in Chicago, Illinois or such other office as the Administrative Agent may designate in writing to the Borrower, and the Administrative Agent shall thereafter cause to be distributed to the L/C Issuer such amount(s) in like funds. If the Borrower does not make any such reimbursement payment on the date due and the Participating Lenders fund their participations in the manner set forth in Section 2.3(d) below, then all payments thereafter received by the Administrative Agent in discharge of any of the relevant Reimbursement Obligations shall be distributed in accordance with Section 2.3(d) below. In addition, for the benefit of the Administrative Agent, the L/C Issuer and each Lender, the Borrower agrees that, notwithstanding any provision of any Application, its obligations under this Section 2.3(c) and each Application shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement and the relevant Application, under all circumstances whatsoever, and irrespective of any claim or defense that the Borrower may otherwise have against the Administrative Agent, the L/C Issuer or any Lender, including (i) any lack of validity or enforceability of any Loan Document; (ii) any amendment or waiver of or any consent to departure from all or any of the provisions of any Loan Document; (iii) the existence of any claim, set-off, defense, or other right of the Borrower may have at any time against a beneficiary of a Letter of Credit (or any Person for whom a beneficiary may be acting), the Administrative Agent, the L/C Issuer, any Lender or any other Person, whether in connection with this Agreement, another Loan Document, the transaction related to the Loan Document or any unrelated transaction; (iv) any statement or any other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (v) payment by the Administrative Agent or a L/C Issuer under a Letter of Credit against presentation to the Administrative Agent or a L/C Issuer of a draft or certificate that does not comply with the terms of the Letter of Credit, or (vi) any other act or omission to act or delay of any kind by the Administrative Agent or a L/C Issuer, any Lender or any other Person or any other event or circumstance whatsoever that might, but for the provisions of this Section 2.3(c), constitute a legal or equitable discharge of the Borrower’s obligations hereunder or under an Application. None of the Administrative Agent, the Lenders, or the L/C Issuer shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the L/C Issuer; provided that the foregoing shall not be construed to excuse the L/C Issuer from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower and each other Loan Party to the extent permitted by applicable law) suffered by the Borrower or any other Loan Party that are caused by the L/C Issuer’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the L/C Issuer (as determined by a court of competent jurisdiction by final and nonappealable judgment), the L/C Issuer shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the L/C Issuer may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

 

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(d)     The Participating Interests. Each Lender (other than the Lender acting as L/C Issuer) severally and not jointly agrees to purchase from the L/C Issuer, and the L/C Issuer hereby agrees to sell to each such Lender (a “Participating Lender”), an undivided participating interest (a “Participating Interest”) to the extent of its Revolver Percentage in each Letter of Credit issued by, and each Reimbursement Obligation owed to, the L/C Issuer. Upon Borrower’s failure to pay any Reimbursement Obligation on the date and at the time required, or if the L/C Issuer is required at any time to return to the Borrower or to a trustee, receiver, liquidator, custodian or other Person any portion of any payment of any Reimbursement Obligation, each Participating Lender shall, not later than the Business Day it receives a certificate in the form of Exhibit A hereto from the L/C Issuer (with a copy to the Administrative Agent) to such effect, if such certificate is received before 1:00 p.m. (Chicago time), or not later than 1:00 p.m. (Chicago time) the following Business Day, if such certificate is received after such time, pay to the Administrative Agent for the account of the L/C Issuer an amount equal to such Participating Lender’s Revolver Percentage of such unpaid or recaptured Reimbursement Obligation together with interest on such amount accrued from the date the L/C Issuer made the related payment to the date of such payment by such Participating Lender at a rate per annum equal to: (i) from the date the L/C Issuer made the related payment to the date two (2) Business Days after payment by such Participating Lender is due hereunder, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation for each such day and (ii) from the date two (2) Business Days after the date such payment is due from such Participating Lender to the date such payment is made by such Participating Lender, the Prime Rate in effect for each such day. Each such Participating Lender shall, after making its appropriate payment, be entitled to receive its Revolver Percentage of each payment received in respect of the relevant Reimbursement Obligation and of interest paid thereon, with the L/C Issuer retaining its Revolver Percentage thereof as a Lender hereunder.

 

The several obligations of the Participating Lenders to the L/C Issuer under this Section 2.3 shall be absolute, irrevocable and unconditional under any and all circumstances and shall not be subject to any set-off, counterclaim or defense to payment which any Participating Lender may have or has had against the Borrower, the L/C Issuer, the Administrative Agent, any Lender or any other Person. Without limiting the generality of the foregoing, such obligations shall not be affected by any Default or Event of Default (or by any reduction or termination of the Revolving Credit Commitment of any Lender with respect to Letters of Credit issued prior to such reduction or termination), and each payment by a Participating Lender under this Section 2.3 shall be made without any offset, abatement, withholding or reduction whatsoever.

 

(e)     Indemnification. The Participating Lenders shall, severally, to the extent of their respective Revolver Percentages, indemnify the L/C Issuer (to the extent not reimbursed by the Borrower) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from the L/C Issuer’s gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment) that the L/C Issuer may suffer or incur in connection with any Letter of Credit issued by it. The obligations of the Participating Lenders under this Section 2.3(e) and all other parts of this Section 2.3 shall survive termination of this Agreement and of all Applications, Letters of Credit, and all drafts and other documents presented in connection with drawings thereunder.

 

(f)     Manner of Requesting a Letter of Credit. The Borrower shall provide at least three (3) Business Days’ advance written notice to the Administrative Agent (or such lesser notice as the Administrative Agent and the L/C Issuer may agree in their sole discretion) of each request for the issuance of a Letter of Credit, each such notice to be accompanied by a properly completed and executed Application for the requested Letter of Credit and, in the case of an extension or amendment or an increase in the amount of a Letter of Credit, a written request therefor, in a form acceptable to the Administrative Agent and the L/C Issuer, in each case, together with the fees called for by this Agreement. The Administrative Agent shall promptly notify the L/C Issuer of the Administrative Agent’s receipt of each such notice (and the L/C Issuer shall be entitled to assume that the conditions precedent to any such issuance, extension, amendment or increase have been satisfied unless notified to the contrary by the Administrative Agent or the Required Lenders) and the L/C Issuer shall promptly notify the Administrative Agent and the Lenders of the issuance of a Letter of Credit.

 

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(g)     Conflict with Application. In the event of any conflict or inconsistency between this Agreement and the terms of any Application, the terms of this Agreement shall control. Notwithstanding anything else to the contrary in this Agreement, any Application or any other document related to issuing a Letter of Credit, any grant of a security interest pursuant to any Application shall be null and void.

 

Section 2.4.     Applicable Interest Rates2. (a) Prime Rate Loans. Each Prime Rate Loan made or maintained by a Lender shall bear interest (computed on the basis of a year of three hundred sixty-five (365) or three hundred sixty-six (366) days, as the case may be, and the actual days elapsed) on the unpaid principal amount thereof from the date such Loan is advanced or created by conversion from a SOFR Loan until, but excluding, the date of repayment thereof at a rate per annum equal to the sum of the Applicable Margin plus the Prime Rate from time to time in effect, payable in arrears by the Borrower on each Interest Payment Date and at maturity (whether by acceleration or otherwise).

 

(b)     SOFR Loans. Each SOFR Loan made or maintained by a Lender shall bear interest during each Interest Period it is outstanding (computed on the basis of a year of three hundred sixty (360) days and actual days elapsed) on the unpaid principal amount thereof from the date such Loan is advanced, continued or created by conversion from a Prime Rate Loan until, but excluding, the date of repayment thereof at a rate per annum equal to the sum of the Applicable Margin plus Term SOFR, payable in arrears by the Borrower on each Interest Payment Date and at maturity (whether by acceleration or otherwise); provided that (i) in the event of any repayment or prepayment of any SOFR Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (ii) in the event of any conversion of any SOFR Loan prior to the end of the Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

 

(c)     Default Rate. While any Event of Default exists or after acceleration, the Borrower shall pay interest (after as well as before entry of judgment thereon to the extent permitted by law) on the principal amount of all Loans and Reimbursement Obligations, L/C Participation Fees and other amounts owing by it at a rate per annum equal to:

 

(i)     for any Prime Rate Loan, the sum of 2.00% per annum plus the Applicable Margin plus the Prime Rate from time to time in effect; and

 

(ii)     for any SOFR Loan, the sum of 2.00% per annum plus the rate of interest in effect thereon at the time of such Event of Default until the end of the Interest Period applicable thereto, and thereafter, at a rate per annum equal to the sum of 2.00% plus the Applicable Margin for Prime Rate Loans plus the Prime Rate from time to time in effect;

 

(iii)     for any Reimbursement Obligation, the sum of 2.00% plus the amounts due under Section 2.3 with respect to such Reimbursement Obligation;

 

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(iv)    for any Letter of Credit, the sum of 2.00% plus the L/C Participation Fee due under Section 2.13(b) with respect to such Letter of Credit; and

 

(v)     for any other amount owing hereunder not covered by clauses (i) through (iv) above, the sum of 2.00% plus the Applicable Margin plus the Prime Rate from time to time in effect;

 

provided, however, that in the absence of acceleration, any increase in interest rates pursuant to this Section and any conversion of Loans into Prime Rate Loans shall be made at the election of the Administrative Agent, acting at the request or with the consent of the Required Lenders, with written notice to the Borrower (which election may be retroactively effective to the date of such Event of Default). While any Event of Default exists or after acceleration, accrued interest shall be paid on demand of the Administrative Agent at the request or with the consent of the Required Lenders.

 

(d)     Rate Determinations. The Administrative Agent shall determine each interest rate applicable to the Loans and the Reimbursement Obligations hereunder, and its determination thereof shall be conclusive and binding except in the case of manifest error.

 

Section 2.5.     Manner of Borrowing Loans and Designating Applicable Interest Rates2. (a) Notice to the Administrative Agent. The Borrower shall give notice to the Administrative Agent by no later than 11:00 a.m. (Chicago time): (i) at least three (3) U.S. Government Securities Business Days before the date on which the Borrower requests the Lenders to advance a Borrowing of SOFR Loans and (ii) on the date the Borrower requests the Lenders to advance a Borrowing of Prime Rate Loans; provided, that the request for a Borrowing on the Restatement Effective Date may, at the discretion of the Administrative Agent, be given later than the times specified herein. The Loans included in each Borrowing shall bear interest initially at the type of rate specified in such notice. Thereafter, the Borrower may from time to time elect to change or continue the type of interest rate borne by each Borrowing or, subject to Section 2.6, a portion thereof, as follows: (i) if such Borrowing is of SOFR Loans, on the last day of the Interest Period applicable thereto, the Borrower may continue part or all of such Borrowing as SOFR Loans or convert part or all of such Borrowing into Prime Rate Loans or (ii) if such Borrowing is of Prime Rate Loans, on any Business Day, the Borrower may convert all or part of such Borrowing into SOFR Loans. The Borrower shall give all such notices requesting the advance, continuation or conversion of a Borrowing to the Administrative Agent by email (with a pdf copy of the applicable fully-executed notice), telephone, or telecopy (which notice shall be irrevocable once given and, if by telephone, shall be promptly confirmed in writing in a manner acceptable to the Administrative Agent), substantially in the form attached hereto as Exhibit B (Notice of Borrowing) or Exhibit C (Notice of Continuation/Conversion), as applicable, or in such other form acceptable to the Administrative Agent. Notice of the continuation of a Borrowing of SOFR Loans for an additional Interest Period or of the conversion of part or all of Prime Rate Loans into SOFR Loans must be given by no later than 11:00 a.m. (Chicago time) at least three (3) U.S. Government Securities Business Days before the date of the requested continuation or conversion. For the avoidance of doubt, any Loans made after the Restatement Effective Date (and to the extent any Loan bearing interest at the Eurodollar Rate is outstanding on the Restatement Effective Date), shall, from and after such date, bear interest at either the Prime Rate or SOFR Rate, as detailed in the Notice of Borrowing delivered by the Borrower for the Borrowing to be made (or continued) on or after the Restatement Effective Date. All notices concerning the advance, continuation or conversion of a Borrowing shall specify the date of the requested advance, continuation or conversion of a Borrowing (which shall be a U.S. Government Securities Business Day), the amount of the requested Borrowing to be advanced, continued or converted, the type of Loans to comprise such new, continued or converted Borrowing and if such Borrowing is to be comprised of SOFR Loans, the Interest Period applicable thereto. The Borrower agrees that the Administrative Agent may rely on any such email, telephonic or telecopy notice given by any person the Administrative Agent in good faith believes is an Authorized Representative without the necessity of independent investigation (the Borrower hereby indemnifies the Administrative Agent from any liability or loss ensuing from such reliance) and, in the event any such notice by telephone conflicts with any written confirmation, such telephonic notice shall govern if the Administrative Agent has acted in reliance thereon.

 

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(b)     Notice to the Lenders. The Administrative Agent shall give prompt telephonic, telecopy, or email notice to each Lender of any notice from the Borrower received pursuant to Section 2.5(a) above and, if such notice requests the Lenders to make SOFR Loans, the Administrative Agent shall give notice to the Borrower and each Lender of the interest rate applicable thereto promptly after the Administrative Agent has made such determination.

 

(c)     Borrower’s Failure to Notify; Automatic Continuations and Conversions; Automatic Extensions of Revolving Loans if Reimbursement Obligations Not Repaid. If the Borrower fails to give proper notice of the continuation or conversion of any outstanding Borrowing of SOFR Loans before the last day of its then current Interest Period within the time period required by Section 2.5(a) or, whether or not such notice has been given, one or more of the conditions set forth in Section 3.1 for the continuation or conversion of a Borrowing of SOFR Loans would not be satisfied, and such Borrowing is not prepaid in accordance with Section 2.8(a), such Borrowing shall automatically be converted into a Borrowing of Prime Rate Loans. Any such automatic conversion to a Prime Rate Loan shall be effective on the applicable Interest Payment Date therefor. In the event the Borrower fails to give notice pursuant to Section 2.5(a) of a Borrowing equal to the amount of a Reimbursement Obligation and has not notified the Administrative Agent by 1:00 p.m. (Chicago time) on the day such Reimbursement Obligation becomes due that it intends to repay such Reimbursement Obligation through funds not borrowed under this Agreement, the Borrower shall be deemed to have requested a Borrowing of Prime Rate Loans under the Revolving Credit on such day in the amount of the Reimbursement Obligation then due, which Borrowing, if otherwise available hereunder, shall be applied to pay the Reimbursement Obligation then due.

 

(d)     Disbursement of Loans. Not later than 1:00 p.m. (Chicago time) on the date of any requested advance of a new Borrowing, subject to Section 3, each Lender shall make available its Loan comprising part of such Borrowing in funds immediately available at the principal office of the Administrative Agent in Chicago, Illinois. The Administrative Agent shall make the proceeds of each new Borrowing available to the Borrower at the Administrative Agent’s principal office in Chicago, Illinois.

 

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(e)     Administrative Agent Reliance on Lender Funding. Unless the Administrative Agent shall have received notice from a Lender prior to the date on which such Lender is scheduled to make available to the Administrative Agent of its share of a Borrowing (which notice shall be effective upon receipt) that such Lender does not intend to make such share available, the Administrative Agent may assume that such Lender has made such share available in accordance with Section 2.5(d) when due and the Administrative Agent, in reliance upon such assumption, may (but shall not be required to) make available to the Borrower a corresponding amount (each such advance, a “Disproportionate Advance”) and, if any Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, such Lender shall, on demand, make available to the Administrative Agent the Disproportionate Advance attributable to such Lender together with interest thereon in respect of each day during the period commencing on the date such Disproportionate Advance was made available to the Borrower and ending on (but excluding) the date such Lender makes available such Disproportionate Advance to the Administrative Agent at a rate per annum equal to: (i) from the date the Disproportionate Advance was made by the Administrative Agent to the date two (2) Business Days after payment by such Lender is due hereunder, the greater of, for each such day, (x) the Federal Funds Rate and (y) an overnight rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any standard administrative or processing fees charged by the Administrative Agent in connection with such Lender’s non-payment and (ii) from the date two (2) Business Days after the date such share of the applicable Borrowing is due from such Lender to the date such payment is made by such Lender, the Prime Rate in effect for each such day. If such amount is not received from such Lender by the Administrative Agent immediately upon demand, the Borrower will, promptly following written demand from the Administrative Agent, repay to the Administrative Agent the proceeds of the Loan attributable to such Disproportionate Advance with interest thereon at a rate per annum equal to the interest rate applicable to the relevant Loan, but without such payment being considered a payment or prepayment of a Loan under Section 8.1 so that the Borrower will have no liability under such Section with respect to such payment. If the Borrower and such Lender shall pay interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrower under this Section shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

 

Section 2.6.     Minimum Borrowing Amounts; Maximum SOFR Loans2. Each Borrowing of Prime Rate Loans advanced under a Credit shall be in an amount not less than $500,000 or such greater amount that is an integral multiple of $50,000.

 

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Section 2.7.     Maturity of Loans2. (a) Scheduled Payments of Term Loans. The Borrower shall make principal payments on the Term Loans in $619,048 installments on the last Business Day of each month, commencing with December 31, 2021 (unless any such day is not a Business Day, in which event such payment is due on the immediately preceding Business Day); it being further agreed that a final payment comprised of all principal and interest not sooner paid on the Term Loans, shall be due and payable on the Term Loan Termination Date. Each principal payment on the Term Loans shall be applied to the Lenders holding the Term Loans pro rata based upon their Term Loan Percentages.

 

(b)       Revolving Loans. Each Revolving Loan, both for principal and interest not sooner paid, shall mature and become due and payable by the Borrower on the Revolving Credit Termination Date.

 

Section 2.8.     Prepayments.2 (a) Voluntary. The Borrower may prepay without premium or penalty (except as set forth in Section 8.1 below) and in whole or in part any Borrowing of SOFR Loans at any time upon three (3) U.S. Government Securities Business Days prior notice by the Borrower to the Administrative Agent or, in the case of a Borrowing of Prime Rate Loans, notice delivered by the Borrower to the Administrative Agent no later than 10:00 a.m. (Chicago time) on the date of prepayment (or, in any case, such shorter time period then agreed to by the Administrative Agent), such prepayment to be made by the payment of the principal amount to be prepaid and, in the case of any Term Loans or SOFR Loans, accrued interest thereon to the date fixed for prepayment plus any amounts due the Lenders under Section 8.1; provided, however, the Borrower may not partially repay a Borrowing (i) if such Borrowing is of Prime Rate Loans, in a principal amount less than $500,000, (ii) if such Borrowing is of SOFR Loans, in a principal amount less than $1,000,000, and (iii) in each case, unless it is in an amount such that the minimum amount required for a Borrowing pursuant to Section 2.6 remains outstanding.

 

(b)     Mandatory. (i) If the Borrower or any Subsidiary shall at any time or from time to time make or agree to make a Disposition or shall suffer an Event of Loss with respect to any Property which results in Net Cash Proceeds in excess of $250,000 individually or $500,000 on a cumulative basis in any fiscal year of the Borrower, then (x) the Borrower shall promptly notify the Administrative Agent of such proposed Disposition or Event of Loss (including the amount of the estimated Net Cash Proceeds to be received by the Borrower or such Subsidiary in respect thereof) and (y) promptly upon receipt by the Borrower or the Subsidiary of the Net Cash Proceeds of such Disposition or such Event of Loss, the Borrower shall prepay the Obligations in an aggregate amount equal to 100% of the amount of all such Net Cash Proceeds in excess of $250,000 individually or $500,000 on a cumulative basis in any fiscal year of the Borrower; provided that in the case of each Disposition and Event of Loss, if the Borrower states in its notice of such event that the Borrower or the applicable Subsidiary intends to invest or reinvest, as applicable, within one hundred eighty (180) days of the applicable Disposition or receipt of Net Cash Proceeds from an Event of Loss, the Net Cash Proceeds thereof in assets used or useful in the business, then so long as no Default or Event of Default then exists, the Borrower shall not be required to make a mandatory prepayment under this Section in respect of such Net Cash Proceeds to the extent such Net Cash Proceeds are actually invested or reinvested as described in the Borrower’s notice within such one hundred eighty (180) day period. Promptly after the end of such one hundred eighty (180) day period, the Borrower shall notify the Administrative Agent whether the Borrower or such Subsidiary has invested or reinvested such Net Cash Proceeds as described in the Borrower’s notice, and to the extent such Net Cash Proceeds have not been so invested or reinvested, the Borrower shall promptly prepay the Obligations in the amount of such Net Cash Proceeds in excess of $250,000 individually or $500,000 on a cumulative basis in any fiscal year of the Borrower not so invested or reinvested. The amount of each such prepayment shall be applied first to the outstanding Term Loans until paid in full, and then to the Revolving Loans until paid in full (without a permanent reduction of the Revolving Credit Commitments). If the Administrative Agent or the Required Lenders so request, all proceeds of such Disposition or Event of Loss shall be deposited with the Administrative Agent and held by it in the Collateral Account. So long as no Default or Event of Default exists, the Administrative Agent is authorized to disburse amounts representing such proceeds from the Collateral Account to or at the Borrower’s direction for application to or reimbursement for the costs of replacing, rebuilding or restoring such Property.

 

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(ii)     If after the Restatement Effective Date the Borrower or any Subsidiary shall issue any new Ownership Interests (other than Excluded Equity Issuances) or incur or assume any Indebtedness other than that permitted by Section 6.11, the Borrower shall promptly notify the Administrative Agent of the estimated Net Cash Proceeds of such issuance, incurrence or assumption to be received by or for the account of the Borrower or such Subsidiary in respect thereof. Promptly upon receipt by the Borrower or such Subsidiary of Net Cash Proceeds of such issuance, incurrence or assumption the Borrower shall prepay the Obligations in the amount of such Net Cash Proceeds. The amount of each such prepayment shall be applied first to the outstanding Term Loans until paid in full, and then to the Revolving Loans until paid in full (without a permanent reduction of the Revolving Credit Commitments). The Borrower acknowledges that its performance hereunder shall not limit the rights and remedies of the Lenders for any breach of Section 6.11 or any other terms of this Agreement.

 

(iii)     If at any time the sum of the unpaid principal balance of the Revolving Loans and the L/C Obligations then outstanding shall be in excess of the Borrowing Base as then determined and computed, the Borrowers shall immediately upon notice (and, in any event, within one (1) Business Day of such notice) pay over the amount of the excess to the Administrative Agent for the account of the Lenders as and for a mandatory prepayment on such Obligations, with each such prepayment first to be applied to the Revolving Loans until payment in full thereof (without a permanent reduction of the Revolving Credit Commitments), with any remaining balance to be held by the Administrative Agent in the Collateral Account as security for the Obligations owing with respect to the Letters of Credit.

 

(iv)     If after the Restatement Effective Date the Borrower or any Subsidiary shall issue any Subordinated Debt, the Borrower shall promptly notify the Administrative Agent of the estimated Net Cash Proceeds of such issuance to be received by or for the account of the Borrower or such Subsidiary in respect thereof. Promptly upon receipt by the Borrower or such Subsidiary of Net Cash Proceeds of such issuance, the Borrower shall prepay the Obligations in the amount of such Net Cash Proceeds. The amount of each such prepayment shall be applied first to the outstanding Term Loans until paid in full, and then to the Revolving Loans until paid in full (without a permanent reduction of the Revolving Credit Commitments). The Borrower acknowledges that its performance hereunder shall not limit the rights and remedies of the Lenders for any breach of Section 6.11 or any other terms of this Agreement.

 

(v)     Within 120 days after the end of each fiscal year, the Borrower shall prepay the then-outstanding Loans by an amount equal to the Applicable ECF Percentage of Excess Cash Flow of Borrower and its Subsidiaries for the most recently completed fiscal year of the Borrower, minus the sum of (1) all voluntary prepayments of Term Loans made during such fiscal year or after year-end and prior to when such Excess Cash Flow prepayment is due, (2) all voluntary prepayments of Revolving Loans during such fiscal year or after year-end and prior to when such Excess Cash Flow prepayment is due to the extent the Revolving Credit Commitments are permanently reduced by the amount of such payments, in the case of each of the immediately preceding clauses (1) and (2), (x) to the extent such prepayments are funded with internally generated cash and (y) excluding any such voluntary prepayments made during such fiscal year that reduced the amount required to be prepaid pursuant to this Section 2.8(b)(v) in the prior fiscal year, and (3) all mandatory prepayments made pursuant to Section 2.8(b)(ix).

 

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(vi)     The Borrower shall, on each date the Revolving Credit Commitments are reduced pursuant to Section 2.10, prepay the Revolving Loans and, if necessary, in accordance with Section 4.5, Cash Collateralize the L/C Obligations by the amount, if any, necessary to reduce the sum of the aggregate principal amount of Revolving Loans and L/C Obligations then outstanding to the amount to which the Revolving Credit Commitments have been so reduced.

 

(vii)      Upon the occurrence of a Change of Control, concurrently with the closing of any such transaction, at the election of the Administrative Agent and the Required Lenders, the Borrower shall (A) repay the Loans in full by payment of the outstanding principal of and the accrued interest on all outstanding Loans, together with all other amounts payable under the Loan Documents and (B) Cash Collateralize 105% of the then outstanding amount of all L/C Obligations.

 

(viii)     Unless the Borrower otherwise directs, prepayments of Loans under this Section 2.8(b) shall be applied first to Borrowings of Prime Rate Loans until payment in full thereof with any balance applied to Borrowings of SOFR Loans. Each prepayment of Loans under this Section 2.8(b) shall be made by the payment of the principal amount to be prepaid and, in the case of any Term Loans or SOFR Loans, accrued interest thereon to the date of prepayment together with any amounts due the Lenders under Section 8.1. Each prefunding of L/C Obligations shall be made in accordance with Section 4.5.

 

(ix)     Upon the Borrower or any Subsidiary’s receipt of Net Claim Proceeds from the Legacy Claims, the Borrower shall promptly prepay any then-outstanding Term Loan Obligations by an amount equal to the Net Claim Proceeds received from such Legacy Claim; provided, however, in no event will the prepayments under this Section 2.8(b)(ix) when combined with prepayments under Section 2.8(b)(v) exceed $6,000,000 in the aggregate during the term of this Agreement.

 

(c)     Lender Notification; Payment Application. The Administrative Agent will promptly advise each Lender of any notice of prepayment it receives from the Borrower, and in the case of any partial prepayment, such prepayment shall be applied to the remaining amortization payments on the relevant Loans (i) in the case of voluntary prepayments pursuant to Section 2.8(a), pro rata and (ii) in the case of mandatory prepayments pursuant to Section 2.8(b), in the inverse order of maturity.

 

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Section 2.9.     Place and Application of Payments. (a) General Payments. All payments of principal of and interest on the Loans and the Reimbursement Obligations, and of all other Obligations payable by the Borrower under this Agreement and the other Loan Documents, shall be made by the Borrower to the Administrative Agent by no later than 11:00 a.m. (Chicago time) on the due date thereof at the office of the Administrative Agent in Chicago, Illinois (or such other location as the Administrative Agent may designate to the Borrower in writing) for the benefit of the Lender or Lenders entitled thereto. Any payments received after such time shall be deemed to have been received by the Administrative Agent on the next Business Day. All such payments shall be made in Dollars, in immediately available funds at the place of payment, in each case without set-off or counterclaim. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest on Loans and on Reimbursement Obligations in which the Lenders have purchased Participating Interests ratably to the Lenders and like funds relating to the payment of any other amount payable to any Lender to such Lender, in each case to be applied in accordance with the terms of this Agreement.

 

(b)     Payments by Borrower; Presumptions by Administrative Agent. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the L/C Issuer hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the L/C Issuer, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the L/C Issuer, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or L/C Issuer, with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at a rate per annum equal to: (i) from the date the distribution was made to the date two (2) Business Days after payment by such Lender is due hereunder, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (ii) from the date two (2) Business Days after the date such payment is due from such Lender to the date such payment is made by such Lender, the Prime Rate then in effect for each such date.

 

(c)     Application of Collateral Proceeds Before Default. Prior to the occurrence of an Event of Default, subject to Section 2.8(b), all payments and collections received in respect of the Obligations and all proceeds of Collateral shall (subject to the other terms of this Agreement) be applied by the Administrative Agent against the outstanding Obligations as follows:

 

(i)     first, to any outstanding fees, charges, and expenses then due to the Administrative Agent and the Lenders;

 

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(ii)     second, to outstanding interest charges then due in respect of the Obligations;

 

(iii)     third, to the outstanding principal balance of the Revolving Loans and Reimbursement Obligations in respect of amounts drawn under Letters of Credit;

 

(iv)     fourth, to the outstanding principal balance then scheduled as due in respect of the Term Loans; and

 

(v)     finally, to be made available to the Borrower or whoever else may be lawfully entitled thereto.

 

(d)     Application of Collateral Proceeds after Default. Anything contained herein to the contrary notwithstanding, (x) pursuant to the exercise of remedies under Sections 7.2 and 7.3 or (y) after written instruction by the Required Lenders after the occurrence and during the continuation of an Event of Default, all payments and collections received in respect of the Obligations and all proceeds of the Collateral received, in each instance, by the Administrative Agent or any of the Lenders shall be remitted to the Administrative Agent and distributed as follows:

 

(i)     first, to the payment of any outstanding costs and expenses incurred by the Administrative Agent, and any security trustee therefor, in monitoring, verifying, protecting, preserving or enforcing the Liens on the Collateral, in protecting, preserving or enforcing rights under the Loan Documents, which the Borrower has agreed to pay the Administrative Agent under Section 10.12 (such funds to be retained by the Administrative Agent for its own account unless it has previously been reimbursed for such costs and expenses by the Lenders, in which event such amounts shall be remitted to the Lenders to reimburse them for payments theretofore made to the Administrative Agent);

 

(ii)     second, to the payment of any outstanding interest and fees due under the Loan Documents to be allocated pro rata in accordance with the aggregate unpaid amounts owing to each holder thereof;

 

(iii)     third, to the payment of principal on the Loans and unpaid Reimbursement Obligations, together with Cash Collateral for any outstanding L/C Obligations pursuant to Section 7.4 (until the Administrative Agent is holding Cash Collateral equal to 105% of the then outstanding amount of all such L/C Obligations), the aggregate amount paid to, or held as collateral security for, the Lenders to be allocated pro rata in accordance with the aggregate unpaid amounts owing to each holder thereof;

 

(iv)     fourth, to the payment of all other Secured Obligations (including Bank Product Liability and Hedging Liability) to be allocated pro rata in accordance with the aggregate unpaid amounts owing to each holder thereof; and

 

(v)     fifth, to the Borrower or whoever else may be lawfully entitled thereto.

 

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Notwithstanding anything contained herein to the contrary, no proceeds of any Collateral or payment made under or in respect of any Guaranty Agreement received from any person who is not an “eligible contract participant” as defined in the Commodities Exchange Act and regulations thereunder shall be applied to the payment of any Hedging Liability, but appropriate adjustments shall be made with respect to payments from the Loan Parties to preserve the allocation to Hedging Liability otherwise set forth in this Section.

 

Section 2.10.     Voluntary Commitment Terminations 2. The Borrower shall have the right at any time and from time to time, upon three (3) Business Days prior written notice to the Administrative Agent (or such shorter period of time agreed to by the Administrative Agent), to terminate the Revolving Credit Commitments in whole or in part, any partial termination to be (a) in an amount not less than $1,000,000 or any greater amount that is an integral multiple of $100,000 and (b) allocated ratably among the Lenders in proportion to their respective Revolver Percentages, provided that the Revolving Credit Commitments may not be reduced to an amount less than the sum of the aggregate principal amount of Revolving Loans and of L/C Obligations then outstanding. Any termination of the Revolving Credit Commitments below the L/C Sublimit then in effect shall reduce the L/C Sublimit by a like amount. The Administrative Agent shall give prompt notice to each Lender of any such termination of the Revolving Credit Commitments. Any termination of the Revolving Credit Commitments pursuant to this Section 2.10 may not be reinstated.

 

Section 2.11.     [Reserved].

 

Section 2.12.     Evidence of Indebtedness. (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

 

(b)     The Administrative Agent shall also maintain accounts in which it will record (i) the amount of each Loan made hereunder and the type thereof, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

 

(c)     The entries maintained in the accounts maintained pursuant to Sections 2.12(a) and (b) above shall be prima facie evidence of the existence and amounts of the Obligations therein recorded (absent manifest error); provided, however, that the failure of the Administrative Agent or any Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Obligations in accordance with their terms.

 

(d)     Any Lender may request that its Loans be evidenced by a promissory note or notes in the forms of Exhibit D-1 (in the case of its Term Loan and referred to herein as a “Term Note”), or D-2 (in the case of its Revolving Loans and referred to herein as a “Revolving Note”), as applicable. In such event, the Borrower shall prepare, execute and deliver to such Lender a Note payable to the order of such Lender in the amount of the Term Loan, or Revolving Credit Commitment, as applicable. Thereafter, the Loans evidenced by such Note or Notes and interest thereon shall at all times (including after any assignment pursuant to Section 10.9) be represented by one or more Notes payable to the order of the payee named therein or any assignee pursuant to Section 10.9, except to the extent that any such Lender or assignee subsequently returns any such Note for cancellation and requests that such Loans once again be evidenced as described in subsections (a) and (b) above.

 

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Section 2.13.     Fees2. (a) Revolving Credit Commitment Fee. The Borrower shall pay to the Administrative Agent for the ratable account of the Lenders according to their Revolver Percentages a commitment fee at the rate per annum equal to the Applicable Margin (computed on the basis of a year of three hundred sixty (360) days and the actual number of days elapsed) on the average daily Unused Revolving Credit Commitments. Such commitment fee shall be payable quarterly in arrears on the last Business Day of each March, June, September, and December in each year (commencing on the first such date occurring after the Restatement Effective Date) and on the Revolving Credit Termination Date, unless the Revolving Credit Commitments are terminated in whole on an earlier date, in which event the commitment fee for the period to the date of such termination in whole shall be paid on the date of such termination.

 

(b)     Letter of Credit Fees. On the date of issuance or extension, or increase in the amount, of any Letter of Credit pursuant to Section 2.3, the Borrower shall pay to the L/C Issuer for its own account a fronting fee equal to .125% of the face amount of (or of the increase in the face amount of) such Letter of Credit. Quarterly in arrears, on the last Business Day of each March, June, September, and December, commencing on the first such date occurring after the Restatement Effective Date, the Borrower shall pay to the Administrative Agent, for the ratable benefit of the Lenders according to their Revolver Percentages, a letter of credit fee (the “L/C Participation Fee”) at a rate per annum equal to 2.00% (computed on the basis of a year of three hundred sixty (360) days and the actual number of days elapsed) applied to the daily average face amount of Letters of Credit outstanding during such quarter. In addition, the Borrower shall pay to the L/C Issuer for its own account the L/C Issuer’s standard issuance, drawing, negotiation, amendment, transfer and other administrative fees for each Letter of Credit. Such standard fees referred to in the preceding sentence may be established by the L/C Issuer from time to time.

 

(c)     Upfront Fee. The Borrower shall pay to the Administrative Agent on the Restatement Effective Date, for the account of each Lender, an upfront fee in an amount equal to $25,000.

 

(d)     Other Fees. The Borrower shall pay to Wintrust, for its own use and benefit, the fees agreed to between Wintrust and the Borrower in that certain fee letter dated January 27, 2021 and as otherwise agreed from to time to in writing between the Borrower and Wintrust.

 

Section 2.14.     Account Debit. The Borrower hereby irrevocably authorizes the Administrative Agent to charge any of the Borrower’s deposit accounts maintained with the Administrative Agent for the amounts from time to time necessary to pay any then due Obligations; provided that the Borrower acknowledges and agrees that the Administrative Agent shall not be under an obligation to do so and the Administrative Agent shall not incur any liability to the Borrower or any other Person for the Administrative Agent’s failure to do so.

 

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Section 2.15.     Assignment and Reallocation of Original Commitments and Original Loans.

 

(a)       Each of the parties hereto severally and for itself agrees that on the Restatement Effective Date, each Original Lender hereby irrevocably sells, transfers, conveys and assigns, without recourse, representation or warranty (except as expressly set forth herein), to each Lender, and each such Lender hereby irrevocably purchases from such Original Lender, a portion of the rights and obligations of such Original Lender under the Original Credit Agreement and each other Loan Document in respect of its Original Loans and Commitments under (and as defined in) the Original Credit Agreement such that, after giving effect to the foregoing assignment and delegation and any increase in the Commitments effected pursuant hereto, each Lender’s percentage of the Commitments and portion of the Loans for the purposes of this Agreement and each other Loan Document will be as set forth opposite such Person’s name on Schedule 1.

 

(b)       Each Original Lender hereby represents and warrants to each Lender that, immediately before giving effect to the provisions of this Section, (i) such Original Lender is the legal and beneficial owner of the portion of its rights and obligations in respect of its Original Loans being assigned to each Lender as set forth above; and (ii) such rights and obligations being assigned and sold by such Original Lender are free and clear of any adverse claim or encumbrance created by such Original Lender.

 

(c)       Each of the Lenders hereby acknowledges and agrees that (i) other than the representations and warranties contained above, no Lender nor the Administrative Agent has made any representations or warranties or assumed any responsibility with respect to (A) any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness or sufficiency of this Agreement, the Original Credit Agreement or any other Loan Document or (B) the financial condition of any Loan Party or the performance by any Loan Party of the Obligations; (ii) it has received such information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; and (iii) it has made and continues to make its own credit decisions in taking or not taking action under this Agreement, independently and without reliance upon the Administrative Agent or any other Lender.

 

(d)       The Borrowers, each of the Lenders and the Administrative Agent also agree that each of the Lenders shall, as of the Restatement Effective Date, have all of the rights and interests as a Lender in respect of the Loans purchased and assumed by it, to the extent of the rights and obligations so purchased and assumed by it.

 

(e)       Each Lender which is purchasing any portion of the Original Loans shall deliver to the Administrative Agent immediately available funds in the full amount of the purchase made by it and the Administrative Agent shall, to the extent of the funds so received, disburse such funds to the Original Lenders that are making sales and assignments in the amount of the portions so sold and assigned.

 

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Section 3.     Conditions Precedent.

 

The obligation of each Lender to advance, continue or convert any Loan (other than the continuation of, or conversion into, a Prime Rate Loan) or of the L/C Issuer to issue, extend the expiration date (including by not giving notice of non-renewal) of or increase the amount of any Letter of Credit under this Agreement, shall be subject to satisfaction (or waiver) of the following conditions precedent:

 

Section 3.1.     All Credit Events. At the time of each Credit Event hereunder:

 

(a)     each of the representations and warranties set forth herein and in the other Loan Documents shall be and remain true and correct (or, in the case of any representation or warranty not qualified as to materiality, true and correct in all material respects) as of said time, except to the extent the same expressly relate to an earlier date (and in such case shall be true and correct (or, in the case of any representation or warranty not qualified as to materiality, true and correct in all material respects) as of such earlier date);

 

(b)     no Default or Event of Default shall have occurred and be continuing or would occur as a result of such Credit Event;

 

(c)     after giving effect to such requested extension of credit, the aggregate principal amount of all Revolving Loans and L/C Obligations under this Agreement shall not exceed the lesser of (i) the aggregate Revolving Credit Commitments as of such date and (ii) the Borrowing Base as then determined and computed;

 

(d)     in the case of a Borrowing, the Administrative Agent shall have received the notice required by Section 2.5, in the case of the issuance of any Letter of Credit, the L/C Issuer shall have received a duly completed Application for such Letter of Credit together with any fees required to be paid at such time under Section 2.13, and, in the case of an extension or increase in the amount of a Letter of Credit, the L/C Issuer shall have received a written request therefor in a form reasonably acceptable to the L/C Issuer together with fees required to be paid at such time under Section 2.13;

 

(e)     such Credit Event shall not violate any Legal Requirement applicable to the Administrative Agent, the L/C Issuer, or any Lender (including Regulation U of the Board of Governors of the Federal Reserve System) as then in effect; provided that, any such Legal Requirement shall not entitle any Lender that is not affected thereby to not honor its obligation hereunder to advance, continue or convert any Loan or, in the case of the L/C Issuer, to extend the expiration date of or increase the amount of any Letter of Credit hereunder.

 

Each request for a Borrowing hereunder and each request for the issuance of, increase in the amount of, or extension of the expiration date of, a Letter of Credit shall be deemed to be a representation and warranty by the Borrower on the date of such Credit Event as to the facts specified in subsections (a) through (d), both inclusive, of this Section; provided, however, that the Lenders may continue to make advances under the Revolving Credit, in the sole discretion of the Lenders with Revolving Credit Commitments, notwithstanding the failure of the Borrower to satisfy one or more of the conditions set forth above and any such advances so made shall not be deemed a waiver of any Default or Event of Default or other condition set forth above that may then exist. For the avoidance of doubt, no Lender shall be required to make any Loans in the event that any of the conditions set forth in this Section 3.1 are not satisfied.

 

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Section 3.2. Initial Credit Event. Before or concurrently with the initial Credit Event:

 

(a)     the Administrative Agent shall have received this Agreement duly executed by the Loan Parties and the Lenders;

 

(b)     the Administrative Agent shall have received for each Lender requesting Notes, such Lender’s duly executed Notes of the Borrower, dated the date hereof and otherwise in compliance with the provisions of Section 2.12(d);

 

(c)     the Administrative Agent shall have received (i) with respect to each applicable Loan Party, as and to the extent applicable, the Security Agreement (or any joinder thereto) duly executed by the Loan Parties, together with (A) original stock certificates or other similar instruments representing all of the issued and outstanding Ownership Interests in the Borrower and each Subsidiary as of the Restatement Effective Date, to the extent such interests are certificated, (B) stock powers or similar transfer powers executed in blank and undated for the Collateral consisting of the Ownership Interests in the Borrower and each Subsidiary to the extent applicable, (C) with respect to any applicable Loan Party, to the extent not previously completed and filed, UCC financing statements to be filed against the Loan Parties, as debtors, in favor of the Administrative Agent, as secured party, (D) patent, trademark, and copyright collateral agreements, to the extent requested by the Administrative Agent, and (E) the Reaffirmation Agreement duly executed by the Loan Parties; and (ii) a duly completed and executed Perfection Certificate;

 

(d)     the Administrative Agent shall have received the Surety Intercreditor Agreement duly executed by the Bonding Company and the other parties thereto, together with copies of the Bonding Agreements in effect on the Restatement Effective Date certified by a Duly Authorized Officer of the Borrower, which documents, including the aggregate bonding availability thereunder, shall be in form and substance reasonably satisfactory to the Administrative Agent or; as to any Surety Intercreditor Agreement and Bonding Agreement which would otherwise be delivered with such certificate, a certification that the same has not been amended, modified, revoked or otherwise altered since its delivery to the Administrative Agent on the Original Closing Date, except to add Jake Marshall LLC as an indemnitor under the Bonding Agreement in connection with the Jake Marshall Acquisition, and otherwise remains in force;

 

(e)     [reserved];

 

(f)     the Administrative Agent shall have received copies of each Loan Party’s Organization Documents, certified in each instance by a Duly Authorized Officer and, with respect to Organization Documents filed with a Governmental Authority, by the applicable Governmental Authority, or, as to any Organization Documents which would otherwise be delivered with such certificate, a certification that the same has not been amended, modified, revoked or otherwise altered since its delivery to the Administrative Agent on the Original Closing Date and otherwise remains in force;

 

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(g)     the Administrative Agent shall have received copies of resolutions of each Loan Party’s board of directors (or similar governing body) authorizing the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby, together with specimen signatures of the persons authorized to execute such documents on such Loan Party’s behalf, all certified in each instance by a Duly Authorized Officer;

 

(h)     the Administrative Agent shall have received copies of the certificates of good standing, or nearest equivalent in the relevant jurisdiction, for each Loan Party (dated no earlier than thirty (30) days prior to the date hereof) from the office of the secretary of state or other appropriate governmental department or agency of the state of its formation, incorporation or organization, as applicable;

 

(i)     the Administrative Agent shall have received a list of the Borrower’s Authorized Representatives;

 

(j)     the Administrative Agent shall have received for itself and for the Lenders the fees required by Section 2.13;

 

(k)     the Administrative Agent shall have received certification from the Borrower’s Chief Financial Officer or other Duly Authorized Officer of the Borrower acceptable to the Administrative Agent of the Solvency of the Loan Parties on a consolidated basis after giving effect to the Credit Event on the Restatement Effective Date;

 

(l)     the Administrative Agent shall have received: (i) an executed compliance certificate from the Borrower’s Chief Financial Officer or other Duly Authorized Officer of the Borrower acceptable to the Administrative Agent in the form of Exhibit E, calculated based on Borrower’s financial conditions as of September 30, 2021, which compliance certificate shall also certify that since September 30, 2021, calculated on a Pro Forma Basis for the Jake Mashall Acquisition and the incurrence of the Term Loans on the Restatement Effective Date no Material Adverse Effect has occurred; (ii) unaudited historical quarterly financial statements for Parent and its Subsidiaries for the quarter ended September 30, 2021; (iii) a quality of earnings report for Jake Marshall and its Subsidiaries, prepared by BDO USA, LLP for the twelve months ended August 31, 2021; and (iv) unaudited interim financial statements for Jake Marshall and its Subsidiaries for the nine month period ended September 30, 2021;

 

(m)     the Administrative Agent shall have received financing statement and, as appropriate, tax and judgment lien search results against the Loan Parties, and their Property evidencing the absence of Liens thereon, except for Permitted Liens;

 

(n)     All existing Indebtedness of the Borrower and its Subsidiaries other than permitted Indebtedness under Section 6.11 of this Agreement shall be repaid in full, all commitments (if any) in respect thereof shall have been terminated and all guarantees therefor and security therefor shall be released, and the Administrative Agent shall have received pay-off letters in form and substance satisfactory to it evidencing such repayment, termination and release;

 

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(o)     the Administrative Agent shall have received the favorable written opinions of counsel to the Loan Parties, in form and substance reasonably satisfactory to the Administrative Agent;

 

(p)     the Administrative Agent’s due diligence with respect to the Loan Parties and their Subsidiaries, if any, shall be completed in a manner reasonably acceptable to the Administrative Agent;

 

(q)     each of the Lenders shall have received, sufficiently in advance of the Restatement Effective Date, all documentation and other information requested by any such Lender required by bank regulatory authorities under applicable “know your customer” and Anti-Money Laundering Laws, including, without limitation, the Patriot Act, and any Loan Party that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation shall have delivered to each Lender that so requests, a Beneficial Ownership Certification in relation to such Loan Party; and the Administrative Agent shall have received a fully executed IRS Form W-9 (or its equivalent) for each of the Loan Parties;

 

(r)     none of the Loan Parties nor any of their Subsidiaries, if any, shall have obtained or attempted to obtain, place, arrange or renew any debt financing, except as otherwise permitted by Section 6.11, prior to the Restatement Effective Date and during the Lead Arranger’s and the Administrative Agent’s syndication of the credit facilities made available to the Borrower hereunder;

 

(s)     the Administrative Agent shall have received copies of the Jake Marshall Acquisition Agreement and all documents, agreements and instruments executed and delivered in connection therewith (collectively, the “Jake Marshall Acquisition Documents”), all in form and substance satisfactory to Administrative Agent;

 

(t)     the Administrative Agent shall have received evidence satisfactory to the Administrative Agent that the transactions contemplated by the Jake Marshall Acquisition Documents have closed on terms and conditions consistent with the Jake Marshall Acquisition Documents;

 

(u)     substantially at the same time as the initial Credit Event, the Administrative Agent shall have received an Additional Guarantor Supplement duly executed by Jake Marshall, LLC, Coating Solutions, LLC and Limbach Facility & Project Solutions LLC, in form and substance acceptable to Administrative Agent in its reasonable discretion;

 

(v)     substantially at the same time as the initial Credit Event, the Administrative Agent shall have received a Supplemental Security Agreement duly executed by Jake Marshall, LLC, Coating Solutions, LLC and Limbach Facility & Project Solutions LLC, in form and substance acceptable to Administrative Agent in its reasonable discretion;

 

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(w)     the Administrative Agent shall have received the Legacy Claims Letter duly executed by the Loan Parties and the other parties thereto, in form and substance reasonably satisfactory to the Administrative Agent; and

 

(x)     the Administrative Agent shall have received such other agreements, instruments, documents, certificates, and opinions as the Administrative Agent may reasonably request.

 

Section 4.     The Collateral and Guaranties.

 

Section 4.1.     Collateral. The Secured Obligations shall be secured by (a) valid, perfected, and enforceable Liens of the Administrative Agent on all right, title, and interest of each Loan Party in all Ownership Interests held by such Person in each of its Subsidiaries, whether now owned or hereafter formed or acquired, and all proceeds thereof, and (b) valid, perfected, and enforceable Liens of the Administrative Agent on all right, title, and interest of each Loan Party in all personal property, fixtures, and real estate, whether now owned or hereafter acquired or arising, and all proceeds thereof; provided, however, that: (i) the Collateral shall not include Excluded Property, and (ii) until an Event of Default has occurred and is continuing and thereafter until otherwise required by the Administrative Agent or the Required Lenders, Liens on vehicles or other goods which are subject to a certificate of title law need not be perfected provided that the total value of such property at any one time not so perfected shall not exceed $100,000 in the aggregate.

 

Section 4.2.     Liens on Real Property. Subject to Section 6.28 hereof, in the event that any Loan Party owns or hereafter acquires any real property (other than Excluded Property), such Loan Party shall execute and deliver to the Administrative Agent (or a security trustee therefor) a mortgage or deed of trust acceptable in form and substance to the Administrative Agent for the purpose of granting to the Administrative Agent a Lien on such real property to secure the Secured Obligations, shall pay all Taxes, costs, and expenses incurred by the Administrative Agent in recording such mortgage or deed of trust, and shall supply to the Administrative Agent, at the Administrative Agent’s request and at Borrower’s cost and expense a survey, a certification with regard to flood zone location (and, if necessary, evidence of flood insurance), environmental report, hazard insurance policy, appraisal report, and a mortgagee’s policy of title insurance from a title insurer acceptable to the Administrative Agent insuring the validity of such mortgage or deed of trust and its status as a first Lien (subject to Permitted Liens) on the real property encumbered thereby and such other instrument, documents, certificates, and opinions reasonably required by the Administrative Agent in connection therewith. Notwithstanding anything to the contrary set forth herein, no Loan Party or the Administrative Agent shall enter into any Mortgage in respect of any real property acquired by any Loan Party after the Restatement Effective Date that is located in a “special flood hazard area” until (a) the Administrative Agent has received written confirmation that each Lender has completed all flood insurance due diligence and flood insurance compliance with respect to the applicable real property subject to such Mortgage, and (b) the date that is forty-five (45) days after the Administrative Agent has delivered to the Lenders the following documents in respect of such real property: (i) a completed flood hazard determination from a third party vendor; (ii) if such real property is located in a “special flood hazard area”, (A) a notification to the applicable Loan Parties of that fact and (if applicable) notification to the applicable Loan Parties that flood insurance coverage is not available and (B) evidence of the receipt by the applicable Loan Parties of such notice; and (iii) if required by applicable flood laws, evidence of required flood insurance with respect to which flood insurance has been made available under applicable flood laws.

 

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Section 4.3.     Guaranties. The payment and performance of the Secured Obligations shall at all times be jointly and severally guaranteed by each Guarantor pursuant to one or more Guaranty Agreements.

 

Section 4.4.     Further Assurances. Each Loan Party agrees that it shall from time to time at the request of the Administrative Agent or the Required Lenders, execute and deliver such documents and do such acts and things as the Administrative Agent or the Required Lenders may reasonably request in order to provide for or perfect or protect such Liens on the Collateral as required by this Section 4. In the event any Loan Party forms or acquires any other Subsidiary after the Restatement Effective Date, the Loan Parties shall promptly upon such formation or acquisition cause such newly formed or acquired Subsidiary to execute a Guaranty Agreement and such Collateral Documents as the Administrative Agent may then require to comply with this Section 4, and the Loan Parties shall also deliver to the Administrative Agent, or cause such Subsidiary to deliver to the Administrative Agent, at the Borrower’s cost and expense, such other instruments, documents, certificates, and opinions reasonably required by the Administrative Agent in connection therewith.

 

Section 4.5.     Cash Collateral. Immediately upon the request of the Administrative Agent, or the L/C Issuer at any time that there shall exist a Defaulting Lender, or otherwise as required hereby, including as required by Sections 2.3(b), 7.4 and 8.6(a)(v), the Borrower shall deliver Cash Collateral to the Administrative Agent in an amount sufficient to cover all Fronting Exposure (after giving effect to Section 8.6(a)(iv) and any Cash Collateral provided by the Defaulting Lender, if applicable) with respect to such Defaulting Lender or to cover such other amount required hereby.

 

(a)     Grant of Security Interest. All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be held by the Administrative Agent in one or more separate collateral accounts (each such account, and the credit balances, properties, and any investments from time to time held therein, and any substitutions for such account, any certificate of deposit or other instrument evidencing any of the foregoing and all proceeds of and earnings on any of the foregoing being collectively called the “Collateral Account”). The Collateral Account shall be held in the name of and subject to the exclusive dominion and control of the Administrative Agent for the benefit of the Administrative Agent, the Lenders, and the L/C Issuer. If and when requested by the Borrower, the Administrative Agent shall invest funds held in the Collateral Account from time to time in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America with a remaining maturity of one year or less, provided that the Administrative Agent is irrevocably authorized to sell investments held in the Collateral Account when and as required to make payments out of the Collateral Account for application to amounts due and owing from the Borrower to the L/C Issuer, the Administrative Agent or the Lenders.

 

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The Borrower, and to the extent provided by any Lender, such Lender, hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the Administrative Agent, the L/C Issuer and the Lenders, and agrees to maintain, a first priority security interest (subject to Permitted Liens) in the Collateral Account, all as security for the obligations to which such Cash Collateral may be applied pursuant to clause (b) below. If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent as herein provided (other than Permitted Liens), or that the total amount of such Cash Collateral is less than the Fronting Exposure and other obligations secured thereby, the Borrower or the relevant Defaulting Lender, will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency.

 

(b)     Application. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section 4.5 or Sections 2.3(b), 7.4, or 8.6(a)(v), or any other Section hereof in respect of Letters of Credit, shall be applied to the satisfaction of the specific Reimbursement Obligations, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation), and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.

 

(c)     Release. (i) Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or other obligations giving rise thereto shall be released promptly following the elimination of the applicable Fronting Exposure and other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee)), or (ii), if such Cash Collateral (or the appropriate portion thereof) is not provided in connection with a Defaulting Lender, Cash Collateral (or the appropriate portion thereof) shall be released promptly after (A) the Borrower shall have made payment of all such obligations referred to in this Section 4.5 above, (B) all relevant preference or other disgorgement periods relating to the receipt of such payments have passed, and (C) no Letters of Credit, Commitments, Loans or other Obligations remain outstanding hereunder, and (iii) Cash Collateral (or the appropriate portion thereof) shall be released promptly following the Administrative Agent’s good faith determination that there exists excess Cash Collateral; provided, however, that (x) Cash Collateral furnished by or on behalf of the Borrower shall not be released during the continuance of a Default or Event of Default (and following application as provided in this Section 4.5 may be otherwise applied in accordance with Section 2.9), and (y) the Person providing Cash Collateral and the L/C Issuer, may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.

 

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Section 5. Representations and Warranties.

 

Each Loan Party represents and warrants to each Lender, the Administrative Agent, and the L/C Issuer as follows:

 

Section 5.1.     Organization and Qualification. Each Loan Party (a) is duly organized and validly existing under the laws of the jurisdiction of its organization, (b) is in good standing under the laws of the jurisdiction of its organization, (c) has the power and authority to own its property and to transact the business in which it is engaged and proposes to engage and (d) is duly qualified and in good standing in each jurisdiction where the ownership, leasing or operation of property or the conduct of its business requires such qualification, except, in each case of clauses (a), (b) (other than with respect to the Borrower where failure to maintain such good standing is not curable or results in the dissolution of the Borrower), (c) and (d), where the same could not be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect.

 

Section 5.2.     Authority and Enforceability. The Borrower has the power and authority to enter into this Agreement and the other Loan Documents executed by it, to make the borrowings herein provided for, to issue its Notes (if any), to grant to the Administrative Agent the Liens described in the Collateral Documents executed by the Borrower, and to perform all of its obligations hereunder and under the other Loan Documents executed by it. Each Guarantor has the power and authority to enter into the Loan Documents executed by it, to guarantee the Secured Obligations, to grant to the Administrative Agent the Liens described in the Collateral Documents executed by such Person, and to perform all of its obligations under the Loan Documents executed by it. The Loan Documents delivered by the Loan Parties have been duly authorized by proper corporate and/or other organizational proceedings, executed, and delivered by such Persons and constitute valid and binding obligations of such Loan Parties enforceable against each of them in accordance with their terms, except as enforceability may be limited by Debtor Relief Laws and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law); and this Agreement and the other Loan Documents do not, nor does the performance or observance by any Loan Party of any of the matters and things herein or therein provided for, (a) contravene or violate any applicable Legal Requirement binding upon any Loan Party or any provision of the Organization Documents of any Loan Party, (b) violate or constitute a default under any covenant, indenture or agreement of or affecting the any Loan Party or any of its Property, in each case where such violation, contravention or default, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or (c) result in the creation or imposition of any Lien on any Property of any Loan Party other than the Liens granted in favor of the Administrative Agent pursuant to the Collateral Documents.

 

Section 5.3.     Financial Reports. The audited consolidated financial statements of Parent and its Subsidiaries for the fiscal year ended December 31, 2019, and the unaudited consolidated financial statements of Parent and its Subsidiaries for the fiscal year ended December 31, 2020, heretofore furnished to the Administrative Agent, fairly and adequately present the consolidated financial condition of Parent and its Subsidiaries as at said dates and the consolidated results of their operations and cash flows for the periods then ended in conformity with GAAP applied on a consistent basis. As of any date after the Restatement Effective Date, the audited consolidated financial statements of the Borrower and its Subsidiaries most recently furnished to the Administrative Agent pursuant to Section 6.1, fairly and adequately present in all material respects the consolidated financial condition of the Borrower and its Subsidiaries as at said dates and the consolidated results of their operations and cash flows for the periods then ended in conformity with GAAP applied on a consistent basis. As of the date of the most recently delivered annual financial statements, no Loan Party or any Subsidiary of a Loan Party has contingent liabilities required to be disclosed under GAAP or judgments, orders or injunctions against it that are material to it and which otherwise constitute an Event of Default under Section 7.1(g), other than as indicated on such financial statements or, with respect to future periods, on the financial statements furnished pursuant to Section 6.1.

 

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Section 5.4.     No Material Adverse Change. Since the date of the most recent audited financial statements of Parent provided to the Administrative Agent pursuant to Section 6.1(b), there has been no change in the business condition (financial or otherwise), operations, performance or Properties of any Loan Party or any Subsidiary of any Loan Party except those occurring in the ordinary course of business, none of which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.

 

Section 5.5.     Litigation and Other Controversies. Except as set forth on Schedule 5.5, there is no litigation, arbitration, labor controversy or governmental proceeding pending or, to the knowledge of any Loan Party, threatened in writing against any Loan Party or any of its Subsidiaries, or any of their respective Property, that could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

 

Section 5.6.     True and Complete Disclosure. All information furnished by or on behalf of the Loan Parties or any of their Subsidiaries to the Administrative Agent or any Lender for purposes of or in connection with this Agreement, or any transaction contemplated herein, does not contain any untrue statements or material fact or omit a material fact necessary to make the material statements herein or therein not misleading in light of the circumstances under which such information was provided; provided that, with respect to projected financial information furnished by or on behalf of the Loan Parties or any of their Subsidiaries, the Loan Parties only represent and warrant that such information is prepared in good faith based upon assumptions and estimates believed to be reasonable by the Loan Parties at the time of preparation and at the time of delivery.

 

Section 5.7.     Use of Proceeds; Margin Stock. The Borrower shall (a) on the Restatement Effective Date, use all proceeds of the Term Loans advanced on the Restatement Effective Date to finance the Jake Marshall Acquisition and to fund certain fees and expenses associated with this Agreement and the transactions contemplated hereby and thereby; and (b) from and after the Restatement Effective Date, use the proceeds of any extension of credit hereunder for working capital purposes and other general corporate purposes of the Loan Parties and their Subsidiaries.  No part of the proceeds of any Loan or other extension of credit hereunder will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock.  Neither the making of any Loan or other extension of credit hereunder nor the use of the proceeds of Loans will violate or be inconsistent with the provisions of Regulations T, U or X of the Board of Governors of the Federal Reserve System and any successor to all or any portion of such regulations.  Margin Stock constitutes less than 25% of the value of those assets of the Loan Parties and their Subsidiaries that are subject to any limitation on sale, pledge or other restriction hereunder.

 

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Section 5.8.     Taxes. Each Loan Party and each of its Subsidiaries has timely filed or caused to be timely filed all tax returns required to be filed by such Loan Party and/or any of its Subsidiaries, except where (i) extensions have been duly obtained or (ii) failure to so file could not be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect. Each Loan Party and each of its Subsidiaries has paid (or made adequate provisions and established appropriate reserves for) all Taxes which have become due and payable by them other than Taxes which are not delinquent, except those that are being contested in good faith and by appropriate legal proceedings and as to which appropriate reserves have been provided for in accordance with GAAP and no Lien resulting therefrom attaches to any of its Property (other than any Permitted Liens).

 

Section 5.9.     ERISA. Except as would not reasonably be expected to result in liability in excess of $750,000, or except as set forth on Schedule 5.9, (a) no ERISA Event has occurred and no Loan Party or any member of its Controlled Group has knowledge of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event; (b) each Plan is in compliance with all applicable Legal Requirements; and (c) there is no existing or pending (or to the knowledge of the Loan Party, threatened) claims (other than routine claims for benefits in the normal course), sanctions, actions, lawsuits or other proceedings or investigation involving any Plan or Welfare Plan; (d) no Loan Party or any member of the Controlled Group has received in the past five years any requests for a “Statement of Business Affairs” from any Multiemployer Plan it has contributed to; and (e) substantially all of the employees for whom any Loan Party or member of its Controlled Group has an obligation to contribute to a Multiemployer Plan perform work in the building and construction industry. No Lien has been imposed under Section 430(k) of the Code or Sections 303 or 4068 of ERISA on any asset of a Loan Party or a Subsidiary of a Loan Party. An update to this Schedule 5.9 will be included as an attachment to each certificate delivered pursuant to Section 6.1(c).

 

Section 5.10.     Subsidiaries. Schedule 5.10 (as supplemented from time to time pursuant to Section 6.18) identifies (a) each Subsidiary (including Subsidiaries that are Loan Parties) and (b) the following information for each Subsidiary: (i) jurisdiction of its organization; and (ii) the percentage of issued and outstanding interests of each class of its Ownership Interests owned by any Loan Party and/or its Subsidiaries; and, if such percentage is not 100% (excluding directors’ qualifying shares as required by law), a description of each class of its authorized Ownership Interests and the number of interests of each class issued and outstanding. All of the outstanding Ownership Interests of each Subsidiary are validly issued and outstanding and fully paid and nonassessable and all such Ownership Interests indicated on Schedule 5.10 (as supplemented from time to time pursuant to Section 6.18) as owned by a Loan Party or another Subsidiary are owned, beneficially and of record, by such Loan Party or Subsidiary free and clear of all Liens, other than the Liens granted in favor of the Administrative Agent pursuant to the Collateral Documents and Permitted Liens. There are no outstanding commitments or other obligations of any Subsidiary to issue, and no options, warrants or other rights of any Person to acquire, any shares of any class of Ownership Interests of any Subsidiary.

 

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Section 5.11.     Compliance with Laws. The Loan Parties and their Subsidiaries are in compliance with all applicable Laws in respect of the conduct of their businesses and the ownership of their Property to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

 

Section 5.12.     Environmental Matters. Except 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: (i) is and has been in compliance with all applicable Environmental Laws; and (ii) has obtained all permits, licenses and approvals required by applicable Environmental Laws, all such permits, licenses and approvals are in full force and effect and each Loan Party and each of its Subsidiaries is in compliance with the terms and conditions of all such permits, licenses and approvals. There are no pending or, to the knowledge of the Loan Parties and their Subsidiaries, threatened Environmental Claims against any Loan Party or any of its Subsidiaries or any real property, including leaseholds, owned or operated by any Loan Party or any of its Subsidiaries. There are no facts, circumstances, conditions or occurrences that, to the knowledge of the Loan Parties and their Subsidiaries, could reasonably be expected to (i) form the basis of an Environmental Claim against any Loan Party or any of its Subsidiaries or any real property, including leaseholds, owned or operated by any Loan Party or any of its Subsidiaries, or (ii) cause any such real property to be subject to any restrictions on its ownership, occupancy, use or transferability under applicable Environmental Laws, in each case except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Hazardous Materials have not been Released on or from any real property, including leaseholds, owned or operated by any Loan Party or any of its Subsidiaries or at any off-site location for which any Loan Party or any of its Subsidiaries is liable, that individually or in the aggregate could reasonably be expected to have a Material Adverse Effect. To the extent requested by the Administrative Agent, the Loan Parties have made available to Administrative Agent accurate and complete copies of all material environmental reports, studies, assessments, investigations, audits, correspondence and other documents relating to environmental or occupational safety and health matters with respect to any real property, including leaseholds, owned or operated by the Loan Parties or any of their Subsidiaries that are in the Loan Parties’ possession or control.

 

Section 5.13.     Investment Company. No Loan Party nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940.

 

Section 5.14.     Intellectual Property. Each Loan Party and each of its Subsidiaries owns or has obtained licenses or other rights of whatever nature to all the patents, trademarks, service marks, trade names, copyrights, trade secrets, know-how or other intellectual property rights necessary for the present conduct of its businesses, in each case without any known conflict with the rights of others except for such conflicts, rights to use and any failure to own or obtain such licenses and other rights, as the case may be, as could not reasonably be expected to result in a Material Adverse Effect.

 

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Section 5.15.     Good Title. The Loan Parties and their Subsidiaries have good and marketable title to, or valid leasehold interests in, or rights to use, their assets as reflected on the Loan Parties’ most recent consolidated balance sheet provided to the Administrative Agent (except for sales of assets in the ordinary course of business, and such defects in title or interests that could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect) and is subject to no Liens, other than Permitted Liens.

 

Section 5.16.     Labor Relations. No Loan Party nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 5.16, there is (a) no strike, labor dispute, slowdown, or stoppage pending against any Loan Party or any of its Subsidiaries or, to the knowledge of the Loan Parties and their Subsidiaries, threatened against any Loan Party or any of its Subsidiaries, (b) to the knowledge of the Loan Parties and their Subsidiaries, no union representation proceeding is pending with respect to the employees of any Loan Party or any of its Subsidiaries and no union organizing activities are taking place and (c) as of the Restatement Effective Date no Loan Party nor any of its Subsidiaries is a party to a collective bargaining agreement, except (with respect to any matter specified in clause (a) or (b) above, either individually or in the aggregate) such as could not reasonably be expected to have a Material Adverse Effect.

 

Section 5.17.     Governmental Authority and Licensing. The Loan Parties and their Subsidiaries have received all licenses, permits, and approvals of each Governmental Authority necessary to conduct their businesses, in each case where the failure to obtain or maintain the same could reasonably be expected to have a Material Adverse Effect. No investigation or proceeding that, if adversely determined, could reasonably be expected to result in revocation or denial of any license, permit or approval is pending or, to the knowledge of the Loan Parties, threatened, except where such revocation or denial could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

 

Section 5.18.     Approvals. No authorization, consent, license or exemption from, or filing or registration with, any Governmental Authority, nor any approval or consent of any other Person, is or will be necessary to the valid execution, delivery or performance by any Loan Party of any Loan Document, except for (a) such approvals, authorizations, consents, licenses or exemptions from, or filings or registrations which have been obtained prior to the date of this Agreement and remain in full force and effect, (b) filings which are necessary to release Liens granted pursuant to the document related to the Jake Marshall Acquisition, and (c) filings, authorizations, consents, licenses, exemptions or registrations which are necessary to perfect the security interests created under the Collateral Documents.

 

Section 5.19.     Affiliate Transactions. No Loan Party nor any of its Subsidiaries is a party to any contracts or agreements with any of its Affiliates (other than with Wholly-owned Subsidiaries) on terms and conditions which are less favorable to such Loan Party or such Subsidiary than would be usual and customary in similar contracts or agreements between Persons not affiliated with each other.

 

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Section 5.20.     Solvency. The Loan Parties and their Subsidiaries are, on a consolidated basis, Solvent.

 

Section 5.21.     No Broker Fees. No broker’s or finder’s fee or commission will be payable with respect hereto or any of the transactions contemplated thereby (except in connection with the Jake Marshall Acquisition in an amount not to exceed $440,000 in the aggregate); and the Loan Parties hereby agree to indemnify the Administrative Agent, the L/C Issuer, and the Lenders against, and agree that they will hold the Administrative Agent, the L/C Issuer, and the Lenders harmless from, any claim, demand, or liability for any such broker’s or finder’s fees alleged to have been incurred in connection herewith or therewith and any expenses (including reasonable attorneys’ fees) arising in connection with any such claim, demand, or liability.

 

Section 5.22.     No Default. No Default or Event of Default has occurred and is continuing.

 

Section 5.23.     Compliance with Anti-Corruption Laws and Sanctions Programs.  Each Loan Party is in compliance with the requirements of all Anti-Corruption Laws and Sanctions Programs applicable to it. Each Subsidiary of each Loan Party is in compliance with the requirements of all Anti-Corruption Laws and Sanctions Programs applicable to such Subsidiary. Each Loan Party has provided to the Administrative Agent, the L/C Issuer, and the Lenders all information regarding such Loan Party and its directors, officers, Affiliates and Subsidiaries necessary for the Administrative Agent, the L/C Issuer, and the Lenders to comply with all applicable Anti-Corruption Laws and Sanctions Programs. To the best of each Loan Party’s knowledge, neither any Loan Party nor any of its employees, officers, directors, agents, Affiliates or Subsidiaries is, as of the date hereof, a Sanctioned Person. The Loan Parties and their Subsidiaries have conducted their business in compliance in all material respects with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010 and other applicable anti-corruption legislation in other jurisdictions, and have instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.

 

Section 5.24.     Bonding Facility. The Loan Parties have provided to the Administrative Agent a true and correct copy of the Bonding Agreement. The Borrower and its Subsidiaries have available bonding capacity under one or more Bonding Agreements in an amount sufficient to operate their respective businesses in the ordinary course of business. Each of the Bonding Agreements is in full force and effect and no Duly Authorized Officer has knowledge of any condition that would constitute a default under Section 7.1(l) of this Agreement.

 

Section 5.25.     Other Agreements and Documents. All Material Agreements existing on the Restatement Effective Date are listed on Schedule 5.25, and, except as set forth on such Schedule, all such Material Agreements are in full force and effect and no Loan Party is in default under such agreements which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect. No Loan Party is in any violation of its Organization Documents which could reasonably be expected to have a Material Adverse Effect.

 

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Section 5.26.     Accuracy of Borrowing Base. At the time any Borrowing Base Certificate is delivered pursuant to this Agreement, to the knowledge of the Loan Parties, each Account included in the calculation of Borrowing Base satisfies all of the criteria stated herein to be an Eligible Account or, in the event knowledge is acquired by any Loan Party after the delivery of such Borrowing Base Certificate, which would cause such representation to be inaccurate, the Loan Parties have promptly delivered to the Administrative Agent a corrected Borrowing Base Certificate.

 

Section 5.27     Beneficial Ownership Certification. The information included in the Beneficial Ownership Certification, if applicable, is true and correct in all respects.

 

Section 5.28     EEA Financial Institution. No Loan Party is an EEA Financial Institution.

 

Section 6.     Covenants.

 

Each Loan Party covenants and agrees that, so long as any Credit is available to or in use by the Borrower hereunder and until the Facility Termination Date:

 

Section 6.1.     Information Covenants. The Loan Parties will furnish to the Administrative Agent:

 

(a)     Quarterly Reports. Within fifty (50) days after the end of the first three fiscal quarters of the Borrower, commencing with the fiscal quarter of the Borrower ending March 31, 2022, (i) the Parent and its Subsidiaries consolidated balance sheet as at the end of such fiscal quarter and the related consolidated statements of income and retained earnings and of cash flows for such fiscal quarter and for the elapsed portion of the fiscal year-to-date period then ended, each in reasonable detail, prepared by the Parent in accordance with GAAP, setting forth comparative figures for the corresponding fiscal quarter in the prior fiscal year and comparable budgeted figures for such fiscal quarter, all of which shall be certified by the Chief Financial Officer or other Duly Authorized Officer of the Borrower acceptable to the Administrative Agent that the consolidated schedules fairly present in all material respects in accordance with GAAP the financial condition of the Parent and its Subsidiaries as of the dates indicated and the results of their operations and changes in their cash flows for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes, (ii) a work in process report of the Parent and its Subsidiaries as at the end of such fiscal quarter in form and substance reasonably acceptable to the Administrative Agent, and (iii) a management discussion and analysis (with reasonable detail and specificity) of the results of operations for the fiscal periods reported.

 

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(b)     Annual Statements. Within one hundred twenty (120) days after the close of each fiscal year of the Borrower, commencing with the fiscal year ending December 31, 2021, (i) a copy of Parent’s consolidated balance sheet as of the last day of the fiscal year then ended and Parent’s consolidated statements of income, retained earnings, and cash flows for the fiscal year then ended, and accompanying notes thereto, each in reasonable detail showing in comparative form the figures for the previous fiscal year, accompanied by an unqualified opinion of a firm of independent public accountants of recognized national standing, selected by the Loan Parties and reasonably acceptable to the Administrative Agent (it being acknowledged that Crowe LLP is acceptable to the Administrative Agent), to the effect that the consolidated financial statements have been prepared in accordance with GAAP and present fairly in accordance with GAAP the consolidated financial condition of Parent and its Subsidiaries as of the close of such fiscal year and the results of their operations and cash flows for the fiscal year then ended and that an examination of such accounts in connection with such financial statements has been made in accordance with generally accepted auditing standards.

 

(c)     Officer’s Certificates. At the time of the delivery of the financial statements provided for in Sections 6.1(a) and (b), commencing with the fiscal year ending December 31, 2021 of the Borrower, (i) a certificate of the Chief Financial Officer or other Duly Authorized Officer of the Borrower acceptable to Administrative Agent in the form of Exhibit E (A) stating no Default or Event of Default has occurred and is continuing during the period covered by such statements or, if a Default or Event of Default exists, a detailed description of the Default or Event of Default and all actions the Borrower is taking with respect to such Default or Event of Default, (B) confirming that the representations and warranties stated in Section 5 remain true and correct (or, in the case of any representation or warranty not qualified as to materiality, true and correct in all material respects) as of said time, except to the extent such representations and warranties relate to an earlier date (and in such case, confirming they are true and correct (or, in the case of any representation or warranty not qualified as to materiality, true and correct in all material respects) as of such earlier date), and (C) showing detailed covenant calculations evidencing the Borrower’s compliance with the covenants set forth in Section 6.20, and (ii) a comparison of the current year to date financial results (other than in respect of the balance sheets included therein) against the budgets required to be submitted pursuant to Section 6.1(d).

 

(d)     Budgets. As soon as available, but in any event at least thirty (30) days after the first day of each fiscal year of the Borrower, a budget in form satisfactory to the Administrative Agent (including a breakdown of the projected results of each of the GCR (construction) and ODR (service) lines of business of the Parent and its Subsidiaries consistent with historical past practices, budgeted consolidated statements of income, and sources and uses of cash and balance sheets for the Parent and its Subsidiaries) of the Borrower and its Subsidiaries in reasonable detail for each fiscal month and the four fiscal quarters of the immediately succeeding fiscal year and, with appropriate discussion, the principal assumptions upon which such budget is based.

 

(e)     Notice of Default or Litigation, Labor Materials and Contracts. Promptly, and in any event within five (5) Business Days after any officer of any Loan Party obtains knowledge thereof, notice of (i) the occurrence of any event which constitutes a Default or an Event of Default or any other event which could reasonably be expected to have a Material Adverse Effect, which notice shall specify the nature thereof, the period of existence thereof and what action the Loan Parties propose to take with respect thereto; provided that this reporting obligation shall not apply to ordinary course short term performance defaults incurred under construction contracts entered into in the ordinary course of business, (ii) the commencement of, or threat of, or any significant development in, any litigation, labor controversy, arbitration or governmental proceeding pending against any Loan Party or any of its Subsidiaries which, if adversely determined, could reasonably be expected to have a Material Adverse Effect, (iii) any labor dispute to which any Loan Party or any of its Subsidiaries may become a party and which may have a Material Adverse Effect, (iv) any strikes, walkouts, or lockouts relating to any of the Loan Parties’ or any of their Subsidiaries’ plants or other facilities, and (v) the occurrence of any event which constitutes a default or an event of default under any Material Agreement; provided that this reporting obligation shall not apply to ordinary course short term performance defaults incurred under construction contracts entered into in the ordinary course of business. In addition, the Loan Parties agree to provide the Administrative Agent, promptly upon receipt by any Loan Party, with copies of all pleadings filed relating to any litigation matter disclosed pursuant to this Section 6.1(e).

 

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(f)     Management Letters. Promptly after any Loan Party’s receipt thereof, a copy of each report or any “management letter” submitted to any Loan Party or any of its Subsidiaries by its certified public accountants and the management’s responses thereto.

 

(g)     Other Reports and Filings. Promptly, copies of all financial information, proxy materials and other material information, certificates, reports, statements and completed forms, if any, which Parent or any of its Subsidiaries has furnished to the shareholders of Parent or the SEC, Indebtedness of the Intermediate Holdco or any of its Subsidiaries in their capacity as such a holder, agent or trustee to the extent that the aggregate principal amount of such Indebtedness exceeds (or upon the utilization of any unused commitments may exceed) $500,000.

 

(h)     Environmental Matters. Promptly upon, and in any event within five (5) Business Days after any officer of any Loan Party obtains knowledge thereof, notice of one or more of the following environmental matters which individually, or in the aggregate, could reasonably be expected to have a Material Adverse Effect: (i) any violation of applicable Environmental Law by, or notice of an Environmental Claim against, any Loan Party or any of its Subsidiaries or any real property owned or operated by any Loan Party or any of its Subsidiaries; (ii) any Release or threatened Release of Hazardous Substances that occurs on or arises from any real property owned or operated by any Loan Party or any of its Subsidiaries or for which any Loan Party or any Subsidiary of any Loan Party is liable, in each case that (x) is not in compliance with applicable Environmental Laws or (y) could reasonably be expected to form the basis of an Environmental Claim against any Loan Party or any of its Subsidiaries or any such real property; (iii) any condition or occurrence on any real property owned or operated by any Loan Party or any of its Subsidiaries that could reasonably be expected to cause such real property to be subject to any restrictions on the ownership, occupancy, use or transferability by any Loan Party or any of its Subsidiaries of such real property under any applicable Environmental Law; and (iv) any investigative, removal or remedial actions to be taken in response to the actual or alleged presence of any Hazardous Material on any real property owned or operated by any Loan Party or any of its Subsidiaries, or by any Loan Party or any of its Subsidiaries at any off-site location, to the extent required by any applicable Environmental Law or Governmental Authority. All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and such Loan Party’s or such Subsidiary’s response thereto. In addition, the Loan Parties agree to provide the Lenders with copies of all material written communications by the Loan Parties or any of their Subsidiaries with any Person or Governmental Authority relating to any of the matters set forth in clauses (i)-(iv) above, and such detailed reports relating to any of the matters set forth in clauses (i)-(iv) above as may reasonably be requested by the Administrative Agent or the Required Lenders.

 

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(i)     Borrowing Base Certificate. Within thirty (30) days after the last day of each calendar month during which, at any time, there were any outstanding Revolving Loans or Letters of Credit, (i) a Borrowing Base Certificate showing the computation of the Borrowing Base in reasonable detail as of the close of business on the last day of the immediately preceding month, together with such other information as therein required, prepared by the Borrower and certified to by its Chief Financial Officer or other Duly Authorized Officer of the Borrower reasonably acceptable to the Administrative Agent, and (ii) Collateral Report executed on behalf of the Borrower by a Duly Authorized Officer of the Borrower, as of the close of business on the last day of the immediately preceding month, which report shall be in form and substance reasonably acceptable to the Administrative Agent and shall include an accounts receivable aging report.

 

(j)     Multiemployer Plans. Promptly after receipt by any Loan Party or any member of the Controlled Group, (x) a copy of any “Statement of Business Affairs” issued by any Multiemployer Plan to any Loan Party or any member of the Controlled Group and (y) a copy of any “estimate of withdrawal liability” received by any Loan Party or any member of its Controlled Group from any Multiemployer Plan it has contributed to, which estimate shall be requested by the Loan Parties at any time withdrawal from any Multiemployer Plan is contemplated by any Loan Party or any member of the Controlled Group.

 

(k)     Monthly Board Reports. Within thirty (30) days after the last day of each calendar month, a copy of a “Monthly Board Report” prepared for the board of directors of Parent and relating to key performance indicators.

 

(l)     Other Information. From time to time, such other information or documents (financial or otherwise) as the Administrative Agent or any Lender may reasonably request.

 

(m)     Anti-Money Laundering; Beneficial Ownership Regulation. Promptly following any request therefor, information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the Patriot Act.

 

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(n)     Beneficial Ownership. To the extent any Loan Party qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, an updated Beneficial Ownership Certification promptly following any change in the information provided in the Beneficial Ownership Certification delivered to the Administrative Agent in relation to such Loan Party that would result in a change to the list of beneficial owners identified in such certification.

 

(o)     Activities of Parent; Consolidating Information.  (i) Promptly, and in any event within five (5) Business Days of the consummation of any of the following transactions, notice of such transaction and, thereafter and promptly following any reasonable request of the Administrative Agent or any Lender, such additional information and documentation in respect of such transaction as the Administrative Agent or any such

Lender may reasonably request: (A) any incurrence of any Indebtedness by Parent (which shall not include guarantees of operating contracts in the ordinary course of business); (B)  consummation of any Investment (including any Acquisition) by Parent in any Person that is not and will not be a Subsidiary of the Intermediate Holdco and is not and will not be a Loan Party (any such Person, a “Parent Entity”); (C)  creation of any Parent Entity; or (D) the purchase or other acquisition of any “operating” assets; and (ii) together with each set of consolidated financial statements referred to in clause (a) and (b) of this Section, at any time any Parent Entity exists, the related consolidating financial statements reflecting the adjustments necessary to eliminate the accounts of any such Parent Entity (if any) (which may be in footnote form only) from such consolidated financial statements.

 

(p)     Bonded Contracts. Within thirty (30) days after the last day of each calendar month, a report detailing the issuance of each Bonded Contract in the prior month, including a description of the specific job for which such Bonded Contract is issued, the amount of such Bonded Contract and the Loan Party or Person to whom such Bonded Contract is issued.

 

Financial statements and other similar information required to be delivered pursuant to clauses (a), (b) and (g) of Section 6.1 may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which such information is posted on the Parent’s website on the Internet on the investor relations page ir.limbachinc.com (or any successor page) or at http://www.sec.gov; or (ii) on which such information is posted on the Borrower’s behalf on the Platform. Notwithstanding anything to the contrary set forth herein, to the extent that the SEC issues an extension order or other similar form of relief regarding the timing of filing a Form 10-Q or Form 10-K, which is applicable, generally, to all public companies (as opposed to specifically applicable to the Parent or any of its Subsidiaries), the Loan Parties’ obligation to provide the financial statements and other similar information required to be delivered pursuant to clauses (a) and (b) of Section 6.1, as applicable, shall be granted a corresponding extension of relief.

 

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Section 6.2.     Inspections; Field Examinations. Each Loan Party will, and will cause each of its Subsidiaries to, permit officers, representatives and agents of the Administrative Agent or any Lender, to visit and inspect any Property of such Loan Party or such Subsidiary, and to examine the financial records and corporate books of such Loan Party or such Subsidiary, and discuss the affairs, finances, and accounts of such Loan Party or such Subsidiary with its and their Duly Authorized Officer and independent accountants, all at such reasonable times as the Administrative Agent or any Lender may request, and with respect to the independent accountants, after prior notice to the Borrower; provided that the Borrower shall be permitted to attend any visit with the independent accountants of the Loan Parties; provided, further, so long as no Default or Event of Default exists, prior written notice of any such visit, inspection, or examination shall be provided to the Borrower and such visit, inspection, or examination shall be performed at reasonable times to be agreed to by the Borrower, which agreement will not be unreasonably withheld. The Borrower shall pay to the Administrative Agent for its own use and benefit reasonable charges for examinations of the Collateral performed by the Administrative Agent or its agents or representatives in such customary per diem amounts and related out-of-pocket costs and expenses as the Administrative Agent may from time to time request (the Administrative Agent acknowledging and agreeing that such charges shall be computed in the same manner as it at the time customarily uses for the assessment of charges for similar collateral examinations); provided, however, that in the absence of any Default and Event of Default, the Borrower shall not be required to pay the Administrative Agent for more than one such examination per calendar year; provided, further, that if an Event of Default has occurred and is continuing, the Administrative Agent shall be permitted to conduct inspections, audits and examinations as it reasonably deems advisable at the reasonable cost and expense of the Borrower. The Intermediate Holdco and the Borrower agree to pay (and shall cause each of their Subsidiaries to pay) on demand all reasonable costs, expenses and fees incurred by the Administrative Agent in connection with any inspections, examinations, or audits of any of the Loan Parties performed by the Administrative Agent under this Section 6.2.

 

Section 6.3.     Maintenance of Property and Insurance; Environmental Matters. (a) Each Loan Party will, and will cause each of its Subsidiaries to, (i) keep its Property, plant, and equipment in good repair, working order and condition, normal wear and tear, casualty, and condemnation excepted, and shall from time to time make all necessary and proper repairs, renewals, replacements, extensions, additions, betterments and improvements thereto so that at all times such Property, plant, and equipment are reasonably preserved and maintained and (ii) maintain in full force and effect with financially sound and reputable insurance companies insurance which provides substantially the same (or greater) coverage and against at least such risks as is in accordance with industry practice, and shall furnish to the Administrative Agent upon request full information as to the insurance so carried. In any event, each Loan Party shall, and shall cause each of its Subsidiaries to, maintain insurance on the Collateral to the extent required by the Collateral Documents.

 

(b)     Without limiting the generality of Section 6.3(a), each Loan Party and its Subsidiaries shall: (i) materially comply with, and maintain all real property owned or operated by any Loan Party or any of its Subsidiaries in material compliance with, applicable Environmental Laws; (ii) obtain and maintain in full force and effect all permits, licenses and approvals required for its operations and the occupancy of its properties by applicable Environmental Laws; (iii) cure as soon as reasonably practicable any violation of applicable Environmental Laws which individually or in the aggregate may reasonably be expected to have a Material Adverse Effect; (iv) not, and shall not knowingly permit any other Person to, own or operate on any of its properties any underground storage tank (except such underground storage tank that is in material compliance with applicable Environmental Laws), landfill, dump or hazardous waste treatment, storage or disposal facility as defined pursuant to applicable Environmental Laws; and (v) shall not use, generate, treat, store, Release or dispose of Hazardous Materials at or on any real property owned or operated by any Loan Party or any of its Subsidiaries except in the ordinary course of its business and in material compliance with all applicable Environmental Laws. Each Loan Party and its Subsidiaries shall conduct any investigation, study, sampling and testing, abatement, cleanup, removal, remediation or other response or preventative action necessary to remove, remediate, prevent, cleanup or abate any Release or threatened Release of Hazardous Materials or any migration or continuation thereof required by applicable Environmental Laws which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.

 

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Section 6.4.     Compliance with Laws and Material Agreements. Each Loan Party shall, and shall cause each of its Subsidiaries to, comply in all respects with the requirements of all Laws applicable to such Loan Party or any of its Subsidiaries’ Property or business operations, where any such non-compliance, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or result in a Lien upon any of its Property (other than Permitted Liens). Each Loan Party shall, and shall cause each of its Subsidiaries to, timely satisfy all assessments, fines, costs and penalties imposed by any Governmental Authority against such Person or any Property of such Person, where any such failure to pay, individually or in the aggregate, would result in a Material Adverse Effect. Each Loan Party shall, and shall cause each of its Subsidiaries to, comply with any and all agreements or instruments evidencing Indebtedness and any other Material Agreement to which it is a party or by which it is bound, where such default would result in a Material Adverse Effect. Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain in effect and enforce policies and procedures designed to effect compliance by each Loan Party, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions Programs.

 

Section 6.5.     ERISA. Each Loan Party shall, and shall cause each member of its Controlled Group to, promptly pay and discharge all obligations and liabilities arising under ERISA of a character which if unpaid or unperformed could reasonably be expected to have a Material Adverse Effect or result in a Lien upon any of the Loan Party’s or any of its Subsidiary’s Property. Each Loan Party shall, and shall cause each of its Subsidiaries to, promptly notify the Administrative Agent and each Lender of the occurrence of any other ERISA Event that could reasonably be expected to result in liability in excess of $750,000; provided, however, that each Loan Party shall, and shall cause each of its Subsidiaries to, promptly notify the Administrative Agent and each Lender of the occurrence of an event that may reasonably be expected to result in a complete or partial withdrawal by the Loan Party or any member of its Controlled Group from a Multiemployer Plan, regardless of whether the resulting liability is reasonably expected to be in excess of $750,000.

 

Section 6.6.     Payment of Taxes. Each Loan Party shall, and shall cause each of its Subsidiaries to, pay and discharge, all Taxes imposed upon it or any of its Property, before becoming delinquent and before any penalties accrue thereon, unless and to the extent that the same are being contested in good faith and by appropriate proceedings and as to which appropriate reserves have been provided for in accordance with GAAP.

 

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Section 6.7.     Preservation of Existence. Each Loan Party shall, and shall cause each of its Subsidiaries to, do or cause to be done, all things necessary to preserve and keep in full force and effect its existence and, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect, its franchises, bonds, authority to do business, licenses, patents, trademarks, copyrights, contracts and other rights that are necessary for the Loan Parties and their Subsidiaries to conduct their respective businesses as presently conducted, except for such patents, trademarks, copyrights, and other proprietary rights which, in the Loan Parties’ reasonable good faith determination, are no longer used, useful, or valuable to their respective businesses; provided, however, that nothing in this Section 6.7 shall prevent, to the extent permitted by Section 6.13, sales of assets by the Loan Parties or any of their Subsidiaries, the dissolution or liquidation of any Subsidiary of any Loan Party, or the merger or consolidation between or among the Subsidiaries of any Loan Party.

 

Section 6.8.     Contracts with Affiliates. No Loan Party shall, nor shall it permit any of its Subsidiaries to, enter into any contract, agreement or business arrangement with any of its Affiliates (other than Wholly-owned Subsidiaries that are Loan Parties) on terms and conditions which are less favorable to such Loan Party or such Subsidiary than would be usual and customary in similar contracts, agreements or business arrangements between Persons not affiliated with each other.

 

Section 6.9.     Restrictions or Changes and Amendments. No Loan Party shall, nor shall it permit any of its Subsidiaries to, change its fiscal year or fiscal quarters from its present basis or amend or change, or allow to be amended or changed: (a) its Organization Documents in any way that could reasonably be expected to have a Material Adverse Effect; provided that prior to any amendment or modification of such Loan Party’s Organization Documents, the Borrower shall cause such Loan Party to furnish a true, correct and complete copy of such proposed amendment or modification to the Administrative Agent, or (b) any Material Agreement in a manner that could reasonably be expected to have a Material Adverse Effect.

 

Section 6.10.     Change in the Nature of Business. No Loan Party shall, nor shall it permit any of its Subsidiaries to, engage in any business or activity if as a result the general nature of the business of such Loan Party or any of its Subsidiaries would be changed in any material respect from the general nature of the business engaged in by it as of the Restatement Effective Date or a Related Line of Business.

 

Section 6.11.     Indebtedness. No Loan Party shall, nor shall it permit any of its Subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness, including liabilities under any Hedge Agreement, except:

 

(a)     the Secured Obligations of the Loan Parties and their Subsidiaries owing to the Administrative Agent and the Lenders (and their Affiliates);

 

(b)     Indebtedness owed pursuant to Hedge Agreements entered into in the ordinary course of business and not for speculative purposes with Persons other than Lenders (or their Affiliates);

 

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(c)     intercompany Indebtedness among the Loan Parties to the extent permitted by Section 6.14;

 

(d)     so long as the Loan Parties are in pro forma compliance with the financial covenants set forth in Section 6.20 (i) Indebtedness consisting of Capitalized Lease Obligations of the Loan Parties, (ii) Indebtedness secured by a Lien that is (A) placed upon fixed or capital assets, acquired, constructed or improved by the Loan Parties so long as each such Lien shall only attach to the property to be acquired, and the Indebtedness incurred shall not exceed one hundred percent (100%) of the purchase price of the item or

items purchased, and (iii) Permitted Refinancing Indebtedness in respect of the items set forth in clauses (i) and (ii);

 

(e)     Guarantees made by the Intermediate Holdco of Indebtedness allowed under this Section 6.11, provided that such guarantees are made in the ordinary course of business;

 

(f)     Acquired Indebtedness in an amount not to exceed $1,000,000 outstanding at any one time;

 

(g)     endorsement of items for deposit or collection of commercial paper received in the ordinary course of business;

 

(h)     Indebtedness incurred under the Bonding Agreements;

 

(i)     Indebtedness under tax-favored or government-sponsored financing transactions; provided that (x) the terms of such transactions and the Loan Parties thereto have been approved by the Administrative Agent in its reasonable discretion and (y) the aggregate principal amount of such Indebtedness shall not exceed $500,000 at any one time;

 

(j)     Indebtedness in respect of netting services, overdraft protections and other like services, in each case incurred in the ordinary course of business.

 

(k)     any Indebtedness existing on the Restatement Effective Date and listed on Schedule 6.11, and any Permitted Refinancing Indebtedness in respect of such Indebtedness;

 

(l)     Indebtedness owing to insurance carriers to finance insurance premiums of any Loan Party in the ordinary course of business in a principal amount not to exceed at any time the amount of insurance premiums to be paid by such Loan Party;

 

(m)     Indebtedness incurred in respect of credit cards, credit card processing services, debit cards, stored value cards, purchase cards (including so-called “procurement cards” or “P-cards”) or other similar cash management services, in each case, incurred in the ordinary course of business;

 

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(n)     Investments permitted under Section 6.14 to the extent constituting Indebtedness;

 

(o)     the Existing Letters of Credit;

 

(p)     Permitted Seller Debt; and

 

(q)     unsecured Indebtedness of the Loan Parties and their Subsidiaries not otherwise permitted by this Section 6.11 in an amount not to exceed $500,000 in the aggregate at any one time outstanding.

 

Section 6.12.     Liens. No Loan Party shall, nor shall it permit any of its Subsidiaries to, create, incur or suffer to exist any Lien on any of its Property; provided that the foregoing shall not prevent the following (the Liens described below, the “Permitted Liens”):

 

(a)     inchoate Liens for the payment of Taxes which are not yet delinquent or the payment of which is not required by Section 6.6;

 

(b)     Liens arising by statute in connection with worker’s compensation, unemployment insurance, old age benefits, social security obligations, Taxes, assessments, statutory obligations or other similar charges (other than Liens arising under ERISA), good faith cash deposits in connection with bids, tenders, contracts, or leases to which any Loan Party or any Subsidiary of any Loan Party is a party or other cash deposits required to be made in the ordinary course of business, provided in each case that the obligation is not for borrowed money and that the obligation secured is not overdue or, if overdue, is being contested in good faith by appropriate proceedings which prevent enforcement of the matter under contest and for which adequate reserves have been established in accordance with GAAP;

 

(c)     Liens in respect of property or assets imposed by law that were incurred in the ordinary course of business, such as carriers’, suppliers’, warehousemen’s, materialmen’s and mechanics’ Liens and other similar Liens arising in the ordinary course of business, that do not in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Borrower or any of its Subsidiaries and do not secure any Indebtedness;

 

(d)     Liens created by or pursuant to this Agreement and the Collateral Documents;

 

(e)     Liens on Property of any Loan Party or any Subsidiary of any Loan Party created solely for the purpose of securing Indebtedness permitted by Section 6.11(d), representing or incurred to finance the purchase price of Property; provided that, no such Lien shall extend to or cover other Property of such Loan Party or such Subsidiary other than the respective Property so acquired, and the principal amount of indebtedness secured by any such Lien shall at no time exceed the purchase price of such Property, as reduced by repayments of principal thereon;

 

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(f)     easements, permits, rights-of-way, encroachments, restrictions, zoning or building codes or ordinances, other land use laws regulating the use or occupancy of real property or the activities conducted thereon which are imposed by any Governmental Authority and other similar encumbrances against real property incurred in the ordinary course of business which, in the aggregate, are not substantial in amount and which do not and are not likely, either individually or in the aggregate, to involve a substantial and prolonged disruption of the business activities of any Loan Party or a Material Adverse Effect;

 

(g)     Liens granted to the Bonding Company to secure the performance of surety bonds in accordance with the terms of the Bonding Agreements, subject to, and in compliance with, the terms and conditions of the Surety Intercreditor Agreement; provided that (i) such Liens are not perfected by the filing of a UCC Financing Statement (except to the extent such filing is expressly permitted pursuant to the terms of the Surety Intercreditor Agreement), (ii) the Administrative Agent continues to have, subject to common law subrogation rights created by or pursuant to the Bonding Agreements, subject to the Surety Intercreditor Agreement a perfected, first priority Lien on any and all collateral referenced in such Bonding Agreements, and (iii) such Liens do not include cash deposits or the issuance of letters of credit for the benefit of the Bonding Company, in each case, in excess of $1,000,000 in the aggregate; provided that the Existing Letters of Credit shall be permitted hereunder notwithstanding the foregoing $1,000,000 aggregate in clause (iii);

 

(h)     Liens arising from the rights of lessors under leases that are not Capital Leases (including financing statements regarding Property subject to a lease) not in violation of the requirements of this Agreement; provided that such Liens are only in respect of the Property subject to, and secure only, the respective lease (and any other lease with the same or an affiliated lessor);

 

(i)     Liens arising in connection with financing transactions permitted by Section 6.11(i); provided that such Liens do not at any time encumber any Property except that financed in such transactions;

 

(j)     Liens consisting of judgment or judicial attachment liens (other than for the payment of Taxes) in respect of judgments, the existence of which do not constitute an Event of Default;

 

(k)     Liens in favor of collecting banks arising under Section 4-210 of the UCC;

 

(l)     Liens assumed by any Loan Party in connection with a Permitted Acquisition that secure Acquired Indebtedness that is permitted under Section 6.12; provided that (i) such Liens are not incurred in connection with, or in anticipation of, such Permitted Acquisition, (ii) such Liens do not encumber any Property other than Property encumbered at the time of such acquisition or such Person becoming a Subsidiary and the proceeds and products thereof and are not all asset Liens, (iii) such Liens do not attach to any other Property of Parent or any of its Subsidiaries and (iv) such Liens will secure only those obligations which it secures at the time such acquisition or purchase occurs;

 

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(m)     Liens described on Schedule 6.12;

 

(n)     Liens securing judgments for the payment of money not constituting an Event of Default under Section 7.1(g) or securing appeal or other surety bonds related to such judgments, provided by a surety or otherwise are junior to the Lien of the Administrative Agent;

 

(o)     Liens granted in the ordinary course of business on the unearned portion of insurance premiums securing the financing of insurance premiums to the extent the financing is permitted under Section 6.11; and

 

(p)     Liens on cash collateral supporting the Existing Letters of Credit in an aggregate amount not exceeding 105% of the face amount thereof.

 

Section 6.13.     Consolidation, Merger, and Sale of Assets. No Loan Party shall, nor shall it permit any of its Subsidiaries to, wind up, liquidate or dissolve its affairs or merge or consolidate, or convey, sell, lease, or otherwise dispose of all or any part of its Property, including any disposition as part of any sale-leaseback transactions except that this Section 6.13 shall not prevent:

 

(a)     the sale and lease of inventory in the ordinary course of business;

 

(b)     the sale, transfer or other disposition of any tangible personal property that, in the reasonable judgment of the Loan Parties or their Subsidiaries, has become obsolete, or worn out, or is no longer used or useful in the business of the Loan Parties and their Subsidiaries;

 

(c)     the sale, transfer, lease, or other disposition of Property of any Loan Party to another Loan Party;

 

(d)     the merger (or dissolution) of any Loan Party with and into the Borrower or any other Loan Party, provided that, in the case of any merger (or dissolution) involving the Borrower, the Borrower is the legal entity surviving the merger (or dissolution);

 

(e)     the disposition or sale of Cash Equivalents on consideration for cash;

 

(f)     the sale of vehicles in the ordinary course of business that are owned by the Loan Parties;

 

(g)     dispositions resulting from an Event of Loss, provided that the proceeds are used and applied as required by Section 2.8(b);

 

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(h)     the sale, transfer, lease, or other disposition of Property of any Loan Party or any Subsidiary of any Loan party (including any disposition of Property as part of a sale and leaseback transaction) having an aggregate fair market value of not more than $250,000 during any fiscal year of the Borrower; and

 

(i)     the termination, surrender or sublease of a real estate lease in the ordinary course of business which does not interfere in any material respect with the business of the Borrower or its Subsidiaries.

 

Section 6.14. Advances, Investments, and Loans. No Loan Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, make an Investment except that this Section 6.14 shall not prevent:

 

(a)     receivables created in the ordinary course of business and payable or dischargeable in accordance with customary trade terms;

 

(b)     Investments in cash and Cash Equivalents; provided that the aggregate amount of all Investments in cash and Cash Equivalents not held in (i) Excluded Deposit Accounts, or (ii) an account with the Administrative Agent or an account with another Lender subject to a control agreement in favor of the Administrative Agent, in form and substance reasonably acceptable to the Administrative Agent, shall not exceed $50,000;

 

(c)     Investments (including debt obligations) (x) received in connection with the bankruptcy or reorganization of suppliers and customers and (y) in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business;

 

(d)     the Loan Parties’ existing Investments in their respective Subsidiaries on the Restatement Effective Date, and Investments made from time to time in other Loan Parties (other than the Intermediate Holdco);

 

(e)     intercompany advances made from time to time among the Loan Parties in the ordinary course of business;

 

(f)     Permitted Acquisitions;

 

(g)     loans and advances to employees for business-related travel expenses, moving expenses, costs of replacement homes, business machines or supplies, automobiles and other similar expenses, in each case incurred in the ordinary course of business; provided that the aggregate outstanding amount of all such loans and advances under this clause (g) shall not exceed $250,000 in the aggregate at any one time;

 

(h)     workers compensation deposits, payment of any premiums on insurance policies, if any, and other deposits made in the ordinary course of any Loan Party’s business;

 

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(i)     Investments in joint ventures not to exceed the sum of (i) $2,000,000 minus (ii) the amount of Investments made in reliance on subclause (ii) of Section 6.14(l), in the aggregate at any one time, so long as (A) unless the grant thereof is precluded by the applicable contractual provisions governing such joint venture, the Administrative Agent possesses a valid, perfected Lien on the applicable Loan Party’s interests in such joint venture, (B) any Indebtedness for borrowed money at any time Guaranteed by any Loan Party on or after the date of such Investment is permitted Indebtedness under Section 6.11 of this Agreement and no such Indebtedness is secured by Liens on any of the Property of any Loan Party, (C) the Borrower provides the Administrative Agent with reasonable notice of all Investments to be made in joint ventures and provides any documents relating thereto reasonably requested by the Administrative Agent, (D) both before and after such Investments, no Default or Event of Default exists hereunder, and (E) the joint venture is in the same line of business engaged in as of the date of this Agreement by the Borrower and any of its Subsidiaries or a Related Line of Business and has its primary operations in the United States of America;

 

(j)     Investments in Special Purpose Joint Ventures, limited to capital contributions not to exceed $50,000 per Special Purpose Joint Venture and $250,000 in the aggregate at any one time outstanding;

 

(k)     Investments existing on the date hereof, as set forth on Schedule 6.14 hereto; and

 

(l)     Other Investments in addition to those otherwise permitted by this Section not to exceed the sum of (i) $250,000 plus (ii) up to $750,000 of unused Investments available pursuant to Section 6.14(i) on such date that the Borrower elects to apply to this subclause (ii), in the aggregate at any one time outstanding.

 

Section 6.15. Restricted Payments. No Loan Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, declare or make any Restricted Payments; provided, however, that the foregoing shall not operate to prevent:

 

(a)     the making of dividends or distributions by any Subsidiary to the Borrower or by any Subsidiary to any other Loan Party (other than the Intermediate Holdco) that is the parent entity of such Subsidiary;

 

(b)     the making of Tax Distributions to the Intermediate Holdco and the Intermediate Holdco may, in turn, make Tax Distributions to Parent;

 

(c)     cash distributions to the Intermediate Holdco and the Intermediate Holdco may, in turn, make distributions to Parent, to pay (i) general administrative costs and expenses in an aggregate amount not to exceed $1,000,000 in any fiscal year of the Intermediate Holdco, (ii) customary indemnifications of officers and directors, and (iii) customary directors’ fees; provided, that amounts paid in cash by a Loan Party on behalf of Parent that reduces Net Income shall not be considered a distribution or Restricted Payment; and

 

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(d)     other Restricted Payments to the Intermediate Holdco and the Intermediate Holdco may, in turn, make to Parent in an amount not to exceed 25% of Excess Cash Flow, so long as (i) Excess Cash Flow payments prepaid pursuant to Section 2.8(b)(v) have exceeded $6,000,000 in the aggregate during the term of this Agreement, (ii) pro forma after such Restricted Payment is made, the Loan Parties are in compliance with the covenants set forth in Sections 6.20(a), (b) and (c), and (iii) no Default or Event of Default shall have occurred and be continuing both before and after giving effect to such Restricted Payments.

 

Section 6.16.     Limitation on Restrictions. No Loan Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any restriction on the ability of any such Loan Party or Subsidiary to (a) pay dividends or make any other distributions on any Ownership Interests owned by a Loan Party or any Subsidiary, (b) pay, prepay or subordinate any Indebtedness owed to any Loan Party or any Subsidiary, (c) make loans or advances to any Loan Party or any Subsidiary, (d) transfer any of its Property to any Loan Party or any Subsidiary, (e) encumber or pledge any of its assets to or for the benefit of the Administrative Agent, or (f) guaranty the Secured Obligations; provided that, the foregoing shall not prevent restrictions contained in any Loan Document.

 

Section 6.17.     Limitation on Issuances of New Ownership Interests by Subsidiaries. No Loan Party will permit any of its Subsidiaries to issue any new Ownership Interests (including by way of sales of treasury stock); provided that, notwithstanding the foregoing, (a) Subsidiaries shall be permitted to issue new Ownership Interests in connection with their creation, so long as such creation is in compliance with Section 6.18, (b) so long as no Change of Control is caused thereby, the Loan Parties and their Subsidiaries shall be permitted to issue Ownership Interests to effect a Permitted Acquisition and (c) the Loan Parties and their Subsidiaries shall be permitted to issue new Ownership Interests in connection with the exercise of stock options.