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Section 1: 8-K (8-K)

8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 7, 2019 (December 31, 2018)

 

 

ARMSTRONG FLOORING, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-37589   47-4303305

(State or other jurisdiction

of incorporation )

 

(Commission

File No.)

 

(IRS Employer

Identification No.)

2500 Columbia Avenue P.O. Box 3025

Lancaster, Pennsylvania

  17603
(Address of principal executive offices)   (Zip code)

Registrant’s telephone number, including area code: (717) 672-9611

Not Applicable

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

 

 

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

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Emerging growth company  ☐

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

 

 

 


Item 1.01

Entry into a Material Definitive Agreement

On December 31, 2018 (the “Closing Date”), Armstrong Flooring, Inc. (the “Company”) completed the previously announced sale of its wood flooring business (the “Transaction”) to AHF Holding, Inc. (formerly known as Tarzan Holdco, Inc.), a Delaware corporation and an affiliate of American Industrial Partners (the “Purchaser”). The Transaction was completed pursuant to the terms of the November 14, 2018 Stock Purchase Agreement (the “Stock Purchase Agreement”) between the Company and the Purchaser.

In connection with the consummation of the Transaction, on the Closing Date, the Company entered into the definitive material agreements described below.

Transition Services Agreement

The Company entered into a Transition Services Agreement (the “Transition Services Agreement”) between the Company and the Purchaser, pursuant to which the Company will provide transitional services in areas including human resources, customer service, operations, finance and IT. In addition, the Company and the Purchaser may mutually agree on additional services to be provided. In consideration for the services, the Purchaser will pay the Company monthly fees that vary based on the scope of services provided and a $3,000,000 administrative fee to the Company. The Purchaser will reimburse the Company for the Company’s out-of-pocket costs and expenses in connection with providing the services. The IT services provided to the Purchaser will be for a maximum of fourteen (14) months, with the option for the Purchaser to extend for an additional four (4) month period. Other services provided by the Company will last for periods between two (2) and nine (9) months. The Transition Services Agreement is subject to termination under certain circumstances, including (i) the Company may terminate the Transition Services Agreement or suspend performance of its obligations for the Purchaser’s failure of payment, subject to a 30-day cure period; (ii) the Purchaser may terminate the TSA in its entirety or for any specific service for convenience upon 30-days’ written notice to the Company, or as otherwise set forth on the schedule of services (attached to the Transition Services Agreement) provided that certain services, such as IT, may only be terminated in bundles; and (iii) either party may terminate the Transition Services Agreement for material breaches or defaults, subject to a 30-day cure period.

Intellectual Property Agreement

The Company entered into an Intellectual Property Agreement (the “IP Agreement”) among the Company, AFI Licensing LLC (together with the Company, “AFI Licensing”), the Purchaser and Armstrong Hardwood Flooring Company (“AHFC”), pursuant to which (i) AFI Licensing assigned to AHFC its right, title and interest in and to certain intellectual property used or held for use exclusively in the design, development, manufacture, advertising, sourcing, distribution and sale of solid hardwood and engineered wood flooring products by or for AHFC (the “Company Field”); (ii) AFI Licensing granted AHFC a perpetual, non-exclusive, royalty-free license in and to certain copyrights, know-how and patents used or held for use in the Company Field during the five (5) years prior to the effective date of the Transition Services Agreement; (iii) AFI Licensing granted AHFC a non-exclusive, royalty-free, non-sublicensable, non-assignable license in and to certain trademarks; and (iv) AHFC granted the Company a perpetual, non-exclusive, royalty-free license in and to certain copyrights, know-how and patents for activities conducted by AFI Licensing or its affiliates (other than the Company Field).

Sublease

The Company also entered into a Sublease (the “Sublease”) between the Company and AHFC, pursuant to which AHFC will lease certain premises located at the Company’s office campus located at 2500 Columbia Avenue, Lancaster, Pennsylvania 17603. As consideration for use of the premises, AHFC will make monthly gross rent installments, inclusive of taxes and overhead costs. AHFC may sublease the premises through March 30, 2021 with the option to terminate the Sublease any time after six (6) months from the effective date of the Sublease with 30-days’ prior notice. Upon such termination, AHFC will pay a termination fee of $2,500,000.


New Company Credit Facility

On December 31, 2018, the Company entered into a credit agreement (the “Credit Agreement”), by and among the Company, as borrower, the guarantors named therein, the lenders party thereto and Bank of America, N.A., as administrative agent for the lenders thereunder.

The Credit Agreement provides the Company with a $150 million secured credit facility (the “Credit Facility”), consisting of a $75 million revolving facility and a $75 million term loan facility. The revolving facility includes a $25 million sublimit for the issuance of letters of credit and a $15 million sublimit for swing line loans. The Credit Facility is scheduled to mature on December 31, 2023. The Credit Agreement provides for an uncommitted accordion feature that allows the Company to request an increase in the revolving facility or the term loan facility in an aggregate amount not to exceed $25 million.

Borrowings under the Credit Facility will bear interest at a rate per annum equal to, at the Company’s option, a base rate or a Eurodollar rate equal to the London interbank offered rate (“LIBOR”) for the relevant interest period, plus, in each case, an applicable margin determined in accordance with the provisions of the Credit Agreement. The base rate will be the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate of Bank of America, N.A., and (c) one month LIBOR plus 1.00%. The applicable margin for borrowings under the Credit Facility will be determined based on the Company’s Consolidated Net Leverage Ratio (as defined in the Credit Agreement) and will range from 0.50% to 1.25% with respect to base rate borrowings and 1.50% to 2.25% with respect to Eurodollar rate borrowings. In addition to paying interest on outstanding principal under the Credit Agreement, the Company will pay a commitment fee to the lenders under the Credit Facility with respect to the unutilized revolving commitments thereunder at a rate ranging from 0.15% to 0.30% depending on the Company’s Consolidated Net Leverage Ratio.

If at any time the aggregate amount of outstanding revolving loans under the Credit Facility exceeds the commitment amount, the Company will be required to repay such excess on demand. The Company must also use cash proceeds from certain dispositions, equity and debt issuances and extraordinary events to prepay outstanding loans under the Credit Facility, subject to specified exceptions. The Company may voluntarily prepay outstanding loans under the Credit Facility without premium or penalty other than customary “breakage” costs with respect to Eurodollar loans.

All obligations under the Credit Agreement are guaranteed by each of the Company’s wholly owned domestic subsidiaries that individually, or together with its subsidiaries, has assets of more than $1 million. All obligations under the Credit Agreement, and guarantees of those obligations, are secured by all of the present and future assets of the Company and the guarantors, subject to certain exceptions and exclusions as set forth in the Credit Agreement and other security and collateral documents.

The Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict the Company’s ability and the ability of its subsidiaries to create liens, to undertake fundamental changes, to incur debt, to sell or dispose of assets, to make investments, to make restricted payments such as dividends, distributions or equity repurchases, to change the nature of their businesses, to enter into transactions with affiliates and to enter into certain burdensome agreements.

In addition, the Credit Agreement requires the Company to comply with certain financial covenants calculated for the Company and its subsidiaries on a consolidated basis. Specifically, the Credit Agreement requires that the Company and its subsidiaries not:

 

   

Permit the Consolidated Net Leverage Ratio (as defined in the Credit Agreement) at any time to be greater than 3.00 to 1.00; and

 

   

Permit the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) at any time to be less than 1.25 to 1.00.

The Credit Agreement also contains customary affirmative covenants and events of default, including a cross-default provision in respect of any other indebtedness that has an aggregate principal amount exceeding $15 million.

The foregoing summaries of the Transition Services Agreement, the IP Agreement, the Sublease and the Credit Agreement do not purport to be complete and are subject to and qualified in their entirety by reference to the Transition Services Agreement, the IP Agreement, the Sublease and the Credit Agreement, copies of which are filed as Exhibits 10.1, 10.2, 10.3 and 10.4 hereto and are incorporated herein by reference.


Item 1.02

Termination of a Material Definitive Agreement

The Credit Agreement, dated as of April 1, 2016, among the Company and Armstrong Hardwood Flooring Company, as Borrowers, certain subsidiaries of the Company identified therein, as the Guarantors, Bank of America, N.A., as Administrative Agent and Collateral Agent, the other lenders party thereto, JPMorgan Chase Bank, N.A. and SunTrust Robinson Humphrey, Inc., as Co-Syndication Agents, and Bank of America, N.A., JPMorgan Chase Bank, N.A. and SunTrust Robinson Humphrey, Inc. as Joint Lead Arrangers and Joint Book Managers was terminated on December 31, 2018 in connection with the Company’s entry into the Credit Agreement and Credit Facility described in Item 1.01 of this Form 8-K under the heading “New Company Credit Facility.”

 

Item 2.01

Completion of Acquisition or Disposition of Assets

On the Closing Date, the Transaction was consummated by means of the sale of all of the issued and outstanding shares of Armstrong Wood Products, Inc., a Delaware corporation, including its direct and indirect wholly owned subsidiaries, AHFC and HomerWood Hardwood Flooring Company, a Delaware corporation, to the Purchaser. Pursuant to the Stock Purchase Agreement, consideration for the sale was $100 million, subject to customary adjustments. The Company received proceeds from the Transaction of approximately $90 million, net of closing costs, transaction fees and taxes. The Transaction is subject to a customary post-closing working capital adjustment process. Additional information regarding the Transaction is provided in the Current Report on Form 8-K filed by the Company on November 15, 2018.

 

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information set forth under Item 1.01 of this Form 8-K under the heading “New Company Credit Facility” is incorporated herein by reference.

 

Item 7.01

Regulation FD Disclosure

The Company has disclosed additional financial information regarding the Company and the effects of the Transaction and the Company’s cost optimization program in the investor relations section of the Company’s website at www.armstrongflooring.com.

The information in this Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. The furnishing of this report is not intended to constitute a determination by the Company that the information is material or that the dissemination of the information is required by Regulation FD.

 

Item 9.01

Financial Statements and Exhibits

(b) Pro forma financial information

Unaudited pro forma condensed consolidated financial information of the Company to give effect to the Transaction is included in Exhibit 99.1 filed herewith and is incorporated herein by reference. The unaudited pro forma condensed consolidated financial information has been prepared for comparative purposes only and does not purport to be indicative of the future results of operations or financial condition of the Company.

(d) Exhibits

 

Exhibit
No.
  

Description

10.1    Transition Services Agreement, dated as of December 31, 2018, by and between Armstrong Flooring, Inc. and AHF Holding, Inc.
10.2    Intellectual Property Agreement, dated as of December 31, 2018, by and among Armstrong Flooring, Inc., AFI Licensing LLC, AHF Holding, Inc. and Armstrong Hardwood Flooring Company.
10.3    Sublease, dated as of December 31, 2018, by and between Armstrong Flooring, Inc. and Armstrong Hardwood Flooring Company.
10.4    Credit Agreement, dated December  31, 2018, by and among Armstrong Flooring, Inc., as borrower, the guarantors named therein, the lenders party thereto and Bank of America, N.A., as administrative agent for the lenders thereunder.
99.1    Pro forma financial information of Armstrong Flooring, Inc.


SIGNATURE

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

 

ARMSTRONG FLOORING, INC.
By:  

/s/ Christopher S. Parisi

  Christopher S. Parisi
  Senior Vice President, General Counsel & Secretary

Date: January 7, 2019

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Section 2: EX-10.1 (EX-10.1)

EX-10.1

Exhibit 10.1

Execution Version

TRANSITION SERVICES AGREEMENT

THIS TRANSITION SERVICES AGREEMENT (this “Agreement”) is entered into as of this 31st day of December, 2018, by and between Armstrong Flooring, Inc., a Delaware corporation (“Seller”), and Tarzan Holdco, Inc., a Delaware corporation (“Buyer”).

WHEREAS, Arizona and Buyer have entered into that certain Stock Purchase Agreement, dated as of November 14, 2018 (the “Purchase Agreement”), pursuant to which Buyer has agreed to purchase and acquire from Seller, and Seller has agreed to sell and transfer to Buyer, all of Seller’s right, title and interest in and to Armstrong Wood Products, Inc., a Delaware corporation (the “Company”), Armstrong Hardwood Flooring Company, a Tennessee corporation, and HomerWood Hardwood Flooring Company, a Delaware corporation (collectively, the “Company Subsidiaries”), by way of a purchase by Buyer of all of the issued and outstanding shares of common stock of the Company, all upon the terms and subject to the conditions set forth in the Purchase Agreement; and

WHEREAS, in connection with the consummation of the transactions contemplated by the Purchase Agreement, Buyer and Seller have agreed to enter into this Agreement at the Closing, all upon the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

SECTION 1

DEFINITIONS

1.1    Definitions. For the purposes of this Agreement, the following terms shall have the meanings set forth below:

Additional Service” shall have the meaning set forth in Section 2.1(b).

Affiliate” means any partnership, joint venture, corporation or other entity that, as to a Party or other Person, as applicable, Controls, is Controlled by or is under the common Control with such Party or other Person, as applicable.

Agreement” shall mean this Agreement, including the schedules attached hereto, as the same may be amended by the Parties from time to time.

Bundled Service” means those Services identified on Schedule A as being part of a bundled package of Services.

Control” means, with respect to any entity, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities (or other ownership interest), by contract or otherwise.


Dispute” has the meaning set forth in Section 2.6.

Force Majeure” shall have the meaning set forth in Section 7.2.

Losses and Expenses” shall have the meaning set forth in Section 6.3(a).

Overdue Statement” shall have the meaning set forth in Section 3.2.

Parties” shall mean Buyer and Seller.

Payment Default” shall have the meaning set forth in Section 3.2.

Person” means an individual, corporation, limited or general partnership, limited liability partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization, other entity or group (as defined in Section 13(d) of the Exchange Act), or the foreign equivalent of any of the foregoing.

Required Licenses” shall have the meaning set forth in Section 3.4.

Service” or “Services” shall mean only those services provided by Seller or its Subsidiaries pursuant to and in accordance with Section 2.1.

Service Fee” shall have the meaning set forth in Section 3.1.

Service Manager” shall have the meaning set forth in Section 2.5.

Service Period” shall have the meaning set forth in Section 4.1.

Subsidiary” means any Person in which Seller, directly or indirectly through Subsidiaries or otherwise, beneficially owns more than fifty percent (50%) of either the equity interests in, or otherwise Controls, such Person.

Tax Authorities” shall have the meaning set forth in Section 3.3.

All other capitalized terms used and not otherwise defined herein will have the respective meanings ascribed to such terms in the Purchase Agreement.

SECTION 2

PROVISION OF SERVICES

2.1    Provision of Services.

(a)    Subject to and in accordance with this Section 2.1, Seller shall, or shall cause its Subsidiaries to, provide to the Company and the Company Subsidiaries those services set forth on Schedule A and such other Services as may from time to time be agreed between the Parties in writing and added to Schedule A as set forth in Section 2.1(b) below. All of the Services shall be provided in accordance with the terms, limitations and conditions set forth herein and on Schedule A.

 

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(b)    During the Term, Buyer may request any internal or external resources, services or systems (any such resource, service or system, an “Additional Service”) previously provided to the Business by the Seller or its Affiliates that is reasonably necessary for the ongoing operation of the Business in substantially the same manner that it was conducted by Seller and/or its Affiliates prior to the Closing. Seller will use commercially reasonable efforts to provide or cause to be provided all Additional Services to the Company or Company Subsidiaries, and Buyer and Seller will negotiate in good faith to determine mutually agreeable terms on which such Additional Services would be provided to Buyer, taking into account the scope of services, duration, methodology used to establish pricing and other terms for the Services hereunder. Schedule A may be amended at any time by mutually agreed upon amendment of this Agreement to add Additional Services. For purposes of this Agreement, “Additional Services” shall be considered “Services”.

(c)    Unless otherwise agreed by the Parties, the Services shall be performed by Seller or its Subsidiaries for the Company and the Company Subsidiaries in a manner that is substantially the same as the manner and level of support in which such Services are generally performed by Seller and its Subsidiaries for the Company and the Company Subsidiaries as of immediately prior to the Closing, and the Company and the Company Subsidiaries shall use such Services for substantially the same purposes and in substantially the same manner as the Company and the Company Subsidiaries are using such Services since as of immediately prior to the Closing unless otherwise mutually agreed by the Parties. The Parties do not intend this Agreement to change, in any material respect, the type, quantity, quality, timeliness or manner of performance of any Services from those provided prior to the Closing.

(d)    The Parties agree that, other than the incurrence of costs to provide Services that will be reimbursed by Buyer, the Company and the Company Subsidiaries as part of the fees payable hereunder, neither Seller nor its Subsidiaries shall be required to use their respective funds or to otherwise pay for any goods or services purchased or required by any of the Company and the Company Subsidiaries from third parties or for any other payment obligation of any of the Company and the Company Subsidiaries. For the avoidance of doubt, the Parties acknowledge and agree that if and to the extent Seller elects to retain a third party to provide a Service to the Company or any of the Company Subsidiaries that was previously provided by Seller or its Subsidiaries, Seller shall bear and be solely responsible for any incremental costs and expenses of such third party in providing such Service to the Company or the Company Subsidiaries (it being understood that the agreed upon fees for the relevant Services shall still be payable by Buyer).

(e)    Buyer understands that certain Services are provided as of the date hereof and may be provided to it by Seller or its Subsidiaries in accordance with this Section 2.1(e) pursuant to agreements between Seller or its Subsidiaries and various third parties. To the extent not prohibited by such third party, Seller will coordinate the provision of Services by the third party to Buyer (including, where necessary, obtaining the consent of such third party, at Buyer’s sole cost and expense and in consultation with Buyer) and Buyer will reasonably cooperate with any third party providing Services on behalf of Seller in order to facilitate the provision and receipt of such Services.

 

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2.2    Use of Services. Seller shall be required to provide the Services only to the Company and the Company Subsidiaries in connection with the conduct by the Company and the Company Subsidiaries of their respective businesses in the ordinary course. Neither the Company nor any of the Company Subsidiaries may resell any of the Services to any Person whatsoever or permit the use of the Services by any Person other than in connection with the conduct of the business of the Company and the Company Subsidiaries in the ordinary course.

2.3    Disclaimer of Warranty. BUYER ACKNOWLEDGES THAT SELLER IS PROVIDING THE SERVICES AS AN ACCOMMODATION TO BUYER’S TRANSITION FOLLOWING THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THE PURCHASE AGREEMENT. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER DISCLAIMS ALL REPRESENTATIONS, WARRANTIES AND GUARANTEES WITH RESPECT TO THE SERVICES, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS AN UNDERTAKING BY SELLER TO ENSURE OR INCREASE THE COMPANY’S OR COMPANY SUBSIDIARIES’ SALES OR PROFITS OR OTHERWISE TO GUARANTEE THE BUSINESS SUCCESS OF THE COMPANY OR ANY COMPANY SUBSIDIARY OR AN ASSUMPTION BY SELLER OF ANY FINANCIAL OBLIGATIONS OF THE COMPANY AND THE COMPANY SUBSIDIARIES.

2.4    Personnel.

(a)    Subject to the limitations set forth herein, Seller shall furnish all Seller personnel reasonably necessary to provide the Services; provided, however, that Seller may, subject to the prior written consent of Buyer (which shall not be unreasonably withheld, conditioned or delayed), engage one or more third-party service providers or consultants to provide the Services. Seller may, upon prior written consent of Buyer (which shall not be unreasonably withheld, conditioned or delayed), remove and replace any such personnel at any time, and such personnel of Seller will be under the direction, control and supervision of Seller. Nothing in this Agreement is intended to transfer the employment of employees engaged in the provision of any Service from one Party to another.

(b)    The personnel dedicated to the provision of Services are set forth on Schedule B (the “TSA Employees”). At the end of each Service Period, Buyer may, but shall not be required to, cause the Company or any applicable Company Subsidiary to offer employment to the TSA Employees who have rendered the Services during the applicable Service Period; provided, however, that in the event that Buyer or the Company or Company Subsidiary fails to extend an offer of employment to a TSA Employee consistent with the provisions of Section 6.6 of the Purchase Agreement, or (solely with respect to a Canadian employee) if the offer triggers severance for the TSA Employee, Buyer, the Company and the applicable Company Subsidiary shall promptly, but in no event later than thirty (30) days, reimburse Seller for any such severance and other termination obligations paid or provided to such TSA Employee with respect to severance that is triggered or occurs during the period within thirty (30) days after the termination, in accordance with Schedule A, of the Services under this Agreement that such employee renders.

 

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2.5    Service Managers. Seller and Buyer will each designate a service manager (with respect to a Party, such Party’s “Service Manager”), who will be directly responsible for coordinating and managing the delivery or receipt of the Services and who will have the authority to act on such Party’s behalf with respect to matters relating to this Agreement. The Service Managers will also discuss progress in the transition of the Services hereunder and may establish a mutually acceptable set of procedures, including frequency of meetings and reporting, and other mutually acceptable, reasonable structures for their cooperation and the cooperation of the Parties in the execution of their obligations pursuant to this Agreement. Unless otherwise agreed to by the Parties, all communications relating to this Agreement and the Services shall be directed to the Service Managers. With respect to matters relating to the Services or under this Agreement requiring dispute resolution, the Parties and their respective Service Managers will follow the dispute resolution process outlined in Section 2.6. The Parties’ initial Service Managers will be Jennifer Zimmerman for the Buyer, and John Bassett, for the Seller. Seller and Buyer may, in their sole discretion, replace their respective Service Manager from time to time with a substitute manager upon written notice to the other Party.

2.6    Dispute Resolution. The Parties agree that any dispute arising out of or relating to this Agreement (a “Dispute”) shall be first submitted for resolution to the Service Managers. If the Service Managers fail to resolve a Dispute within a reasonable time following its submission to the Service Managers, but in no event more than ten (10) Business Days, then, at the request of either Party, such Dispute shall be submitted to a senior officer of each of the Parties, and such senior officers shall attempt in good faith to resolve the Dispute. If such senior officers cannot resolve the Dispute in such manner within a reasonable time, but in no event more than twenty (20) Business Days, then either Party may pursue litigation or other available means of resolving the Dispute. The Parties agree to follow the procedures set forth in this Section 2.6. prior to initiation of any legal proceedings with respect to any Dispute. The Parties agree that all discussions, negotiations and other information exchanged between the Parties during the foregoing escalation proceedings shall be without prejudice to the legal position of a Party in any subsequent litigation or arbitration proceeding. During the pendency of any Dispute, each Party shall, unless directed otherwise by the other Party, continue to perform its respective obligations under this Agreement while such Dispute is being resolved; provided that this Section 2.6 shall not operate or be construed as extending the Term or prohibiting or delaying a Party’s exercise of any right it may have hereunder to terminate this Agreement or suspend performance as to all or any part of the Services in accordance with the terms of this Agreement.

SECTION 3

PAYMENT; WARRANTY; TAXES

3.1    Fee and Payment. The fees and other charges payable by Buyer in consideration for the Services hereunder are set forth on Schedule A (each, a “Service Fee”). In addition to, but without duplication of, the Service Fees set forth on Schedule A hereto, Buyer shall (a) pay Seller an administration fee in the amount of three million dollars ($3,000,000), payable in twelve (12) equal monthly installments of two hundred fifty thousand dollars ($250,000), payable on the first Business Day of each month commencing in January 2019 through and including December 2019, and (b) reimburse Seller for all out-of-pocket costs and expenses incurred by Seller in connection with providing the Services hereunder (which, for the avoidance of doubt, shall exclude overhead and payroll expenses). Seller shall invoice Buyer on a monthly

 

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basis in arrears in accordance with Schedule A for all Services it provided during such month and Buyer shall make payment to Seller within thirty (30) days of receipt of such invoice. Such invoices shall generally identify the Services provided, by area, during the applicable month and specify the Service fee applicable to each such Service area so identified. During the ten (10) Business Day period following Buyer’s receipt of the applicable invoice for the Services, Buyer shall be entitled to review such invoice and discuss with Seller any questions or issues it has with respect to such invoice, and if the Buyer has a bona fide disagreement with any charge thereunder, then Buyer shall send written notice to the Seller specifying in reasonable detail the reason for such disagreement and Buyer and Seller will negotiate in good faith to promptly resolve any such disagreement in accordance with Section 2.6. The Service Fees payable for the Services set forth on Schedule A are based on certain assumptions acknowledged and agreed to by the Parties regarding the underlying costs of providing the Services, including the current and anticipated costs attributable to the provision of any such Services. If events occur that cause a material change in the underlying costs of providing the Services (either increasing or decreasing such costs), then Seller and Buyer hereby agree to re-negotiate in good faith the pricing provisions of Schedule A in order to adjust the Service Fees that Buyer will be required to pay going forward for the continued provision of the Services.

3.2    Payment Default. A payment default (each a “Payment Default”) shall be deemed to occur if the applicable statement (for purposes of this Section 3.2, the “Overdue Statement”) is not paid in full, in cash (including any disputed amounts as further described below) by 11:59 p.m. Eastern Time on the 30th day after delivery of the invoice described in Section 3.1. Upon a Payment Default, Buyer shall be responsible for late charges for each month (or pro rated for any portion thereof in which the Overdue Statement is paid) the Overdue Statement is overdue, calculated as (A) the lesser of (i) 10% or (ii) the maximum rate allowed by applicable law (the “Late Payment Interest Rate”), multiplied by (B) the amount due in the Overdue Statement. Notwithstanding anything to the contrary set forth in this Agreement, Buyer shall not be entitled to withhold or setoff any amount of any fee or other amount payable hereunder as a disputed amount or for any other reason. Notwithstanding the foregoing, if any bona fide disagreement with respect to any invoiced charge is ultimately resolved as a refund to the Buyer, such refund shall bear interest from the date the disputed charge was paid to Seller at a rate per annum equal to the Late Payment Interest Rate

3.3    Taxes. In addition to the fee required to be paid by Buyer to Seller for the Services provided hereunder, Buyer shall pay all sales or use taxes properly assessed with respect to the receipt or use of the Services. The applicable sales and use taxes shall be indicated by the Seller separately on all of the Seller’s invoices. Buyer shall remit to the appropriate tax authorities (the “Tax Authorities”) any taxes required to be withheld by law from any fees payable to Seller hereunder. Buyer shall submit to Seller evidence of payment of any such withholding tax to the Tax Authorities. In the event that Seller receives any credit, deduction or refund of such withholding tax from the Tax Authorities, it shall (a) promptly provide a copy of the certificate from the Tax Authorities showing the receipt of such credit, deduction or refund and (b) provide Buyer a credit for such amount against future monthly fees payable by Buyer to Seller. The Parties shall cooperate with each other to minimize any applicable sales and use taxes and each shall provide the other with any reasonable certificates or documents which are useful for such purpose.

 

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3.4    Certain Software License Fees. Upon Buyer’s request, Seller will use commercially reasonable efforts to obtain all software licenses required hereunder for Seller’s and its Subsidiaries’ performance of the Services, including, without limitation, with respect to the networks and systems in the Business’ data center and disaster recovery center and continued support of the Business during the term of this Agreement or of any Service hereunder (“Required Licenses”). Notwithstanding anything to the contrary in this Agreement and the Purchase Agreement and without regard to any limitation of liability, Buyer shall pay all transfer, re-licensing, consent or termination fees or expenses associated with obtaining all Required Licenses; provided, however, that Seller shall consult with Buyer before seeking any Required License including with respect to the cost of such Required License and shall obtain such Required License only with Buyer’s consent.

SECTION 4

TERM; TERMINATION

4.1    Term. This Agreement shall commence on the date hereof and shall terminate upon completion of the Services hereunder or the earlier termination of this Agreement in accordance with its terms (such period, the “Term”). Schedule A hereto sets forth the term or estimated completion date, as applicable, for each of the Services to be provided hereunder (each, a “Service Period”) and any extension of the term or estimated completion date, as applicable, that Buyer may elect with respect to certain Services. Seller shall not have any obligation to provide any Service after the “maximum duration” period set forth on Schedule A, but, subject to the terms and limitation set forth on Schedule A, including any “escalator” costs contemplated, will consider in good faith any reasonable request by Buyer to extend the term of any Service that Buyer has, after using commercially reasonable efforts, been unable to replace on or before the end of the term or expected completion date (included any extension thereof set forth on Schedule A) of such Service.

4.2    Termination.

(a)    Seller may terminate this Agreement or suspend performance of its obligations hereunder upon written notice to Buyer if Buyer fails to pay any invoice sent to Buyer pursuant to Section 3.1 within thirty (30) days of its receipt of such invoice, and Buyer thereafter fails to make such payment within thirty (30) days after Buyer receives a written request from Seller that such payment be made.

(b)    Buyer may terminate this Agreement in its entirety, or any specific Service, for convenience upon written notice to Seller, provided that (i) such notice is provided to Seller at least thirty (30) days, or such other period as may be set forth on Schedule A, prior to the effective date of termination and in no event shall any Service be terminated before the expiration of the applicable minimum Service period set forth on Schedule A, and (ii) if Buyer elects to terminate any Service that is identified in Schedule A as a Bundled Service, Buyer terminates at the same time all of such dependent Services or Services that are part of such Bundled Service. In the event that, after good faith negotiations, the Parties mutually agree that Buyer may terminate some, but not all, of the Services within a bundle as set forth on Schedule A, then upon such termination, any adjustment in Service Fees for such bundle shall be as

 

7


mutually agreed in writing by the Parties to account for the costs of performance of Services avoided by Seller as a result of such partial termination.

(c)    Either Party may terminate this Agreement upon written notice having immediate effect if the other Party materially breaches or materially defaults on any provision of this Agreement and, if curable, fails to cure such breach or default within thirty (30) days after receipt of a written notice from the non-breaching Party specifying in reasonable detail the alleged material breach or default and requesting such breach or default be cured.

(d)    Either Party may terminate this Agreement upon written notice having immediate effect in the event that the other Party (i) files for bankruptcy, (ii) becomes or is declared insolvent or is the subject of any proceedings (that is not dismissed within sixty (60) days) related to its liquidation, insolvency or the appointment of a receiver or similar officer, (iii) makes an assignment for the benefit of all or substantially all of its creditors, (iv) takes any corporate action for its winding-up, dissolution or administration or (v) enters into an agreement for the extension or readjustment of substantially all of its obligations or if it suffers any foreign equivalent to any of the foregoing.

(e)    This Agreement may be terminated by the mutual written agreement of the Parties.

(f)    This Agreement itself shall automatically terminate upon the expiration of the Term or the termination of the last Service to be provided hereunder.

(g)    If there is any default by Seller hereunder, Buyer may terminate this Agreement and recover any fees paid in advance for any Services not performed.

4.3    Effect of Termination. Sections 3.3, 4.3, 5.2, Section 6 and Section 7 shall survive any termination of this Agreement. In addition, to the extent not paid in full prior to the termination of this Agreement, the Administrative Fee and any unreimbursed fees and expenses shall become due and payable in full upon any termination of this Agreement other than a termination by Buyer pursuant to Section 4.2(c), in which case the Administration Fee or any portion thereof shall no longer be due or payable, and provided that only the installment of the Administrative Fee that is due and unpaid as of the date of such termination, together with any unreimbursed fees and expenses, shall be payable upon a termination by Buyer pursuant to Section 7.2, and any remaining installments of the Administration Fee shall no longer be due or payable.

SECTION 5

CERTAIN OTHER COVENANTS

5.1    Access. Buyer shall, and shall cause the Company and the Company Subsidiaries to, make available on a timely basis to Seller, its Subsidiaries and any third parties pursuant to Section 2.1(e) all information reasonably requested by Seller to enable it to provide the Services. Buyer shall, and shall cause the Company and each Company Subsidiary to, give Seller, its Subsidiaries and any third parties pursuant to Section 2.1(e), at no cost to Seller, reasonable access, during regular business hours and at such other times as are reasonably required, to the premises of the Company and the Company Subsidiaries for the purposes of providing the

 

8


Services. As reasonably requested by Buyer, Seller shall use commercially reasonable efforts to assist the Company or any Company Subsidiary in transitioning off of any applicable Services by answering basic questions.

5.2    Title to Data. Buyer acknowledges that neither Buyer, the Company nor any Company Subsidiary will acquire any right, title or interest (including any license rights or rights of use) in any firmware or software, and any licenses therefor which are owned by Seller or its Subsidiaries, by reason of Seller’s provision of the Services under this Agreement. Seller may retain a copy of any or all data of the Company and the Company Subsidiaries relating to this Agreement following the termination of this Agreement for archival purposes and to be used to fulfill any of Seller’s legal obligations. If Buyer or any of its Affiliates (including the Company and the Company Subsidiaries after the Closing Date) is given or gains access, including unintentional or accidental access, to Seller’s or any of its Affiliates’ computer or electronic systems or data storage, in connection with Seller’s rendering of the Services, Buyer shall limit such access and use solely to the use of the Services and will not attempt to access such computer system, electronic files, software or other electronic services other than as allowed and necessary for the use of the Services. Buyer shall (i) limit such access to the employees of Buyer with an express requirement to have such access in connection with this Agreement, and (ii) follow all reasonable security rules and procedures of Seller for use of Seller’s electronic resources (provided that Seller has informed Buyer of such rules and procedures and all changes thereto). All use of identification numbers and passwords disclosed, unintentional or otherwise, to Buyer or its Affiliates (including the Company and the Company Subsidiaries after the Closing Date) and any information obtained by Buyer or its Affiliates (including the Company and the Company Subsidiaries after the Closing Date), regardless of the means, as a result of Buyer access to, and use of, Seller’s computer and electronic storage systems shall not be disclosed or used by Buyer, the Company or the Company Subsidiaries except in connection with the Services provided hereunder.

5.3    Compliance with Laws. Each of Buyer and Seller shall comply in all material respects with any and all applicable laws in respect of the conduct of its obligations under this Agreement.

5.4    Software and Software Licenses. If and to the extent requested by Buyer, Seller shall use commercially reasonable efforts to assist Buyer in its efforts to obtain licenses (or other appropriate rights) to use, duplicate and distribute, as necessary, certain computer software necessary for Seller or its Subsidiaries to provide, or the Company or the Company Subsidiaries to receive, Services; provided, however, that, Seller shall not be required to pay any fees or other payments, incur any obligations (including obligations to make any payments or expend any funds), assume any liability, or offer or grant any accommodation or concession (financial or otherwise) to enable Buyer to obtain any such license or rights; provided further that Seller shall not be required to seek broader rights or more favorable terms for Buyer than those applicable to Seller, the Company or the Company Subsidiaries, as the case may be, prior to the date hereof or as may be applicable to Buyer from time to time hereafter. The Parties acknowledge and agree that there can be no assurance that Seller’s efforts will be successful or that Seller will be able to obtain such licenses in a timely manner, or rights on acceptable terms or at all and, where Seller enjoys rights under any enterprise, site or similar license grant, the Parties acknowledge that such

 

9


license typically precludes partial transfers or assignments or operation of a service bureau on behalf of unaffiliated entities.

5.5    Records and Audits. In a manner consistent with Seller’s record retention policy and applicable Law, Seller shall, and shall cause its subsidiaries to, maintain detailed books and records of the Services provided hereunder and reasonable supporting documentation of the costs on which the fees charged to Buyer hereunder have been based. Buyer shall have the right, at its sole cost and expense (subject to the last sentence of this Section 5.5), to have the applicable books and records of Seller (i) reviewed by Buyer from time to time during the Term, and/or (ii) audited by a nationally recognized independent certified public accountant, mutually selected by the Parties, under appropriate confidentiality provisions, for the purpose of verifying the accuracy of all fees and out-of-pocket cost calculations under this Agreement; provided, that any such audit shall be conducted no more than twice and shall be conducted, in each case, upon at least thirty (30) days’ advance notice; provided, further, that no review or audit shall be conducted outside of normal business hours or in a manner that interferes unreasonably with Seller’s business. The results of any such audit shall be binding on the Parties absent manifest error, and shall be delivered in writing to each Party. Any underpayment or overbilling determined by such audit shall promptly be paid by Buyer or refunded by Seller, as applicable, plus interest at a rate of simple interest per annum equal to the Late Payment Interest Rate, from the date of any such underpayment or overbilling. Notwithstanding the foregoing, in the event that Buyer elects to exercise its right to conduct an audit pursuant to this Section 5.5 prior to the end of the Term, Buyer shall be required to reimburse Seller for all reasonable and direct costs and expenses incurred by Seller in connection with any such audit unless it is determined that there was an overbilling in an amount equal to or greater than one hundred fifty thousand dollars ($150,000) in the aggregate by Seller, in which case Seller shall be required to reimburse Buyer for all reasonable and direct costs and expenses associated with such audit.

SECTION 6

LIABILITIES

6.1    Consequential and Other Damages. Seller shall be not liable to Buyer, whether in contract, tort (including negligence and strict liability), or otherwise, for any special, indirect, incidental or consequential damages (other than to the extent reasonably foreseeable) whatsoever (including, to the extent such damages may be limited by contract under applicable law, punitive damages), which in any way arise out of, relate to, or are a consequence of, its performance or nonperformance hereunder, or the provision of or failure to provide any Service hereunder, including but not limited to loss of profits (provided, however, that any such damages paid with respect to a claim made by a third party shall be considered direct damages).

6.2    Limitation of Liability. NOTWITHSTANDING THE FORUM IN WHICH ANY CLAIM OR ACTION MAY BE BROUGHT OR ASSERTED OR THE NATURE OF ANY SUCH CLAIM OR ACTION, IN NO EVENT SHALL SELLER BE LIABLE IN RESPECT OF ANY SERVICES RENDERED HEREUNDER BY ANY DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF SELLER OR ITS AFFILIATES, EXCEPT TO THE EXTENT SUCH LIABILITY ARISES FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY SUCH PERSON OR IF SUCH CLAIM OR ACTION ARISES UNDER SECTION 6.3(b), AND IN NO EVENT SHALL ANY DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF

 

10


SELLER OR ITS AFFILIATES HAVE ANY PERSONAL LIABILITY TO BUYER IN RESPECT OF ANY SERVICES RENDERED HEREUNDER. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE AGGREGATE LIABILITY OF SELLER TO BUYER IN RESPECT OF THE SERVICES PROVIDED HEREUNDER, OR OTHERWISE IN CONNECTION WITH THIS AGREEMENT, SHALL BE LIMITED TO (A) REIMBURSEMENT OF THE FEES PAID BY BUYER IN RESPECT OF THE SERVICES THAT CAUSE BUYER TO SUFFER LOSSES AND EXPENSES SUBJECT TO INDEMNIFICATION HEREUNDER, PLUS (B) AN AGGREGATE AMOUNT NOT TO EXCEED $2,000,000. The Parties agree that this provision limiting remedies and liquidating damages is reasonable under the circumstances and Buyer acknowledges that Seller and its Affiliates (including each such entity’s respective directors, officers, employees and agents) shall have no other financial liability to Buyer, the Company or the Company Subsidiaries whatsoever.

6.3    Indemnification. Subject to the limitations set forth in this Agreement (including, for the avoidance of any doubt, Section 6.1 and Section 6.2):

(a)    Buyer shall indemnify, defend and hold harmless Seller, its Subsidiaries and their respective officers, directors, employees or agents from and against any and all liabilities, claims, damages, losses and expenses (including, but not limited to, court costs and reasonable attorneys’ fees) of any kind or nature (“Losses and Expenses”), related to, arising out of or in connection with any third-party claim relating to (i) Buyer’s failure to comply with its obligations hereunder or (ii) an allegation that any activity of Buyer, the Company or the Company Subsidiaries has resulted in the infringement of (or that any resource or process owned or used by Buyer, the Company or the Company Subsidiaries infringes) or violation of any contractual or other right, including the patent, copyright, trademark, trade secret, moral rights, or any other intellectual property rights of any third party; provided, however, Seller shall not be indemnified for any Losses and Expenses to the extent those Losses and Expenses resulted from the fraud, bad faith or willful misconduct of Seller or its Subsidiaries.

(b)    Seller shall indemnify, defend and hold harmless Buyer, the Company, the Company Subsidiaries and their respective officers, directors, employees or agents from and against any and all Losses and Expenses related to, arising out of or in connection with any third-party claim relating to Seller’s failure to fulfill its obligations hereunder; and provided, further, Buyer shall not be indemnified for any Losses and Expenses to the extent those Losses and Expenses resulted from the fraud, bad faith or willful misconduct of Buyer, the Company or any Company Subsidiary.

SECTION 7

MISCELLANEOUS

7.1    Notices. All notices hereunder shall be in writing and shall be deemed to have been given if given in accordance with Section 10.1 of the Purchase Agreement.

7.2    Force Majeure. No Party hereto (or any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement so long as and to the extent that performance of its obligations or attempts

 

11


to cure any breach are made impossible or impracticable due to any act of God, fire, natural disaster, act of terror, act of government, shortage of materials or supplies after the date hereof or any other cause beyond the reasonable control of such Party (a “Force Majeure”); provided, however, that (i) such Party (or such Person) shall have informed the other Party and shall have exercised commercially reasonable efforts to minimize the effect of Force Majeure on its obligations; and (ii) the nature, quality and standard of care that such Party (or such Person) shall provide in delivering a Service after a Force Majeure shall be substantially the same as the nature, quality and standard of care that such Party (or such Person) provides to its Affiliates and its other business components with respect to such Service. In the event of an occurrence of a Force Majeure, the Party whose performance is affected thereby shall give notice of suspension as soon as reasonably practicable to the other stating the date and extent of such suspension and the cause thereof, and such Party shall resume the performance of such obligations as soon as reasonably practicable after the removal of the cause. During the period of a Force Majeure, Buyer shall be entitled to seek an alternative service provider with respect to any or all of the affected Services and shall be entitled to permanently terminate any or all such Services (and shall be relieved of the obligation to pay Service Charges for such Services(s) throughout the duration of such Force Majeure) if a Force Majeure shall continue to exist for more than 15 consecutive days, it being understood that Buyer shall not be required to provide any advance notice of such termination to Seller.

7.3    Independent Contractors. Seller and its Subsidiaries shall operate as, and have the status of, independent contractors and no Party shall act as or be a partner, co-venturer or employee of the other Party. Unless specifically authorized to do so in writing, neither Party shall have any right or authority to assume or create any obligations or to make any representations or warranties on behalf of the other Party, whether express or implied, or to bind the other Party in any respect whatsoever.

7.4    Amendment; Waivers. No amendment, modification or discharge of this Agreement, and no waiver hereunder, shall be valid or binding unless set forth in writing and duly executed by the Party against whom enforcement of the amendment, modification, discharge or waiver is sought. Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the Party granting such waiver in any other respect or at any other time. 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.

7.5    Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, directly or indirectly, by any Party hereto without the prior written consent of the other Party hereto; provided, however, that either Party shall be permitted (a) to assign its rights under this Agreement in connection with a sale of all or substantially all of such Party’s assets, (b) to undergo a change of control so long as the resulting, surviving or transferee Person assumes all of the obligations of the relevant party thereto by operation of law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party or (c) in the case of Buyer, to pledge or assign its rights hereunder to its debt financing sources or an agent thereof as collateral security in connection with any debt financing.

 

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7.6    Sections and Headings. The sections and headings contained in this Agreement are for convenience only, are not intended to define, limit, expand or describe the scope or intent of any clause or provision of this Agreement and shall not affect the meaning or interpretation of this Agreement.

7.7    Entire Agreement. This Agreement, together with all exhibits and schedules attached hereto, constitutes the entire agreement and understanding of the Parties and supersedes all prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof.

7.8    Counterparts. This Agreement may be executed in any number of counterparts, including by means of email, each of which when executed shall be deemed to be an original of this Agreement and all of which taken together shall constitute one and the same agreement.

7.9    Governing Law.

(a)    This Agreement shall be governed by the laws of the State of Delaware, its rules of conflict of laws notwithstanding. Each Party hereby agrees and consents to be subject to the jurisdiction of the Court of Chancery of the State of Delaware in and for New Castle County, or if the Court of Chancery lacks jurisdiction over such dispute, in any state or federal court having jurisdiction over the matter situated in New Castle County, Delaware, in any Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby. Each Party hereby irrevocably consents to the service of any and all process in any such suit, action or proceeding by the delivery of such process to such Party at the address and in the manner provided in Section 10.1 of the Purchase Agreement. Each of the Parties hereto irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the Court of Chancery of the State of Delaware in and for New Castle County, or if the Court of Chancery lacks jurisdiction over such dispute, in any state or federal court having jurisdiction over the matter situated in New Castle County, Delaware, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

(b)    EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY

 

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MAKES THIS WAIVER VOLUNTARILY AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.9.

7.10    No Third-Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of each Party hereto and its respective successors and permitted assigns. Except as provided in Section 6.3 with respect to indemnification, nothing in this Agreement, express or implied, shall confer on any person other than the parties hereto, and their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, including any third-party beneficiary rights.

7.11    Errors and Omissions. Inadvertent delays, errors or omissions that occur in connection with the performance of this Agreement or the transactions contemplated hereby shall not constitute a breach of this Agreement provided that any such delay, error or omission is corrected as promptly as commercially practicable after discovery; provided, however, that this Section 7.11 shall not apply with respect to, as applicable, (a) any failure to pay any amount due and payable by Buyer in accordance with Section 3, (b) Buyer’s indemnification obligations as set forth in Section 6.3(a), and (c) Seller’s indemnification obligations as set forth in Section 6.3(b).

7.12    Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and if the rights or obligations of the Parties under this Agreement will not be materially and adversely affected thereby, (a) such provision will be fully severable; (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof; (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom; and (d) in lieu of such illegal, invalid, or unenforceable provisions, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible.

7.13    Specific Performance. Each Party acknowledges that money damages would be both incalculable and an insufficient remedy for any breach of this Agreement by such Party and that any such breach would cause Buyer, on the one hand, and Seller, on the other hand, irreparable harm. Accordingly, each Party hereto also agrees that, in the event of any breach or threatened breach of the provisions of this Agreement by such Party, Buyer, on the one hand, and Seller, on the other hand, shall be entitled to equitable relief without the requirement of posting a bond or other security, including in the form of injunctions and orders for specific performance. Any and all remedies herein expressly conferred upon a Party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy. Each of Seller, on the one hand, and Buyer, on the other hand, hereby agrees not to raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches or threatened breaches of this Agreement by Seller or Buyer, as applicable, and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of Seller or Buyer, as applicable, under this Agreement.

 

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[Signature page follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Transition Services Agreement as of the date first written above.

 

ARMSTRONG FLOORING, INC.
By:  

/s/ Donald R. Maier

  Name:   Donald R. Maier
  Title:   President and Chief Executive Officer
AHF HOLDING, INC. (formerly known as Tarzan Holdco, Inc.)
By:  

/s/ Stanley Edme

  Name:  

Stanley Edme

  Title:   Vice President

 

[Signature Page to Transition Services Agreement]

(Back To Top)

Section 3: EX-10.2 (EX-10.2)

EX-10.2

Exhibit 10.2

Execution Version

INTELLECTUAL PROPERTY AGREEMENT

This INTELLECTUAL PROPERTY AGREEMENT (this “Agreement), dated as of December 31, 2018 (the “Effective Date”) is entered into by and between Armstrong Flooring, Inc., a Delaware corporation (“Seller”) and AFI Licensing LLC, a Delaware limited liability company (“Licensing and together with Seller, “Arizona”) and AHF Holding, Inc. (formerly known as Tarzan HoldCo, Inc.), a Delaware corporation (“Buyer”) and Armstrong Hardwood Flooring Company, a Tennessee corporation (the “Company” and together with Buyer the “Buyer Entities”) (each of Arizona on the one hand and the Buyer Entities on the other hand, a “Party” and collectively, the “Parties”).

WHEREAS, Seller and Buyer have entered into that certain Stock Purchase Agreement, dated November 14, 2018 (the “Stock Purchase Agreement”); WHEREAS, pursuant to the Stock Purchase Agreement, Seller has agreed to sell and transfer, and Buyer has agreed to purchase and acquire, all of Seller’s right, title and interest in and to Armstrong Wood Products, Inc., a Delaware corporation (“AWP”) and its Subsidiaries, the Company and HomerWood Hardwood Flooring Company, a Delaware corporation (“HHFC,” and together with the Company, the “Company Subsidiaries” and together with AWP, the “Company Entities” and each a “Company Entity”) by way of a purchase by Buyer and sale by Seller of the Shares, all upon the terms and condition set forth therein;

WHEREAS, Arizona owns certain Copyrights, Know-How, Patents and Trademarks which may be used in the Company Field, and in connection with the transactions contemplated by the Stock Purchase Agreement the Company desires to acquire all of Arizona’s right, title and interest in and to such Intellectual Property used exclusively in the Company Field, and obtain a license from Arizona to use other such Intellectual Property on the terms and subject to the conditions set forth herein;

WHEREAS, Seller is signatory to the Trademark License Agreement pursuant to which Seller obtains a license to the Arizona Licensed Trademarks;

WHEREAS, the Company desires to obtain a sublicense to use the Arizona Licensed Trademarks in the Company Field;

WHEREAS, Arizona has obtained consent from all counterparties to the Trademark License Agreement to grant to the Company the sublicenses to the Arizona Licensed Trademarks included in this Agreement; and

WHEREAS, the Company Entities own certain Copyrights and Know-How which may be used in the Arizona Field, and in connection with the transactions contemplated by the Stock Purchase Agreement, Arizona desires to obtain a license from the Company Entities to use such Intellectual Property on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:


1.

DEFINITIONS AND INTERPRETATION

 

1.1

Certain Definitions. As used herein, capitalized terms have the meaning ascribed to them herein, including the following terms have the meanings set forth below. Capitalized terms that are not defined in this Agreement shall have the meaning set forth in the Stock Purchase Agreement.

 

  (a)

Arizona Assigned Copyrights” means all Copyrights, whether registered or unregistered, owned by Licensing or Seller as of the Effective Date and used or held for use exclusively in the Company Field as of November 14, 2018 (the “SPA Signing Date”) and/or as of the Effective Date.

 

  (b)

Arizona Assigned Internet Domain Names” means the Internet domain names set forth on Schedule 1.1(b) and all other Internet domain names owned by Licensing or Seller as of the Effective Date and used or held for use exclusively in the Company Field as of the SPA Signing Date and/or as of the Effective Date (other than any Internet domain names that include any Arizona Licensed Trademarks).

 

  (c)

Arizona Assigned IP” means the Arizona Assigned Copyrights, Arizona Assigned Internet Domain Names, Arizona Assigned Know-How, Arizona Assigned Patents and Arizona Assigned Trademarks.

 

  (d)

Arizona Assigned Know-How” means all Know-How owned by Licensing or Seller as of the Effective Date and used or held for use exclusively in the Company Field as of the SPA Signing Date and/or as of the Effective Date.

 

  (e)

Arizona Assigned Patents” means the Patents set forth on Schedule 1.1(e) and all other Patents owned by Licensing or Seller and used or held for use exclusively in the Company Field as of the SPA Signing Date and/or as of the Effective Date.

 

  (f)

Arizona Assigned Trademarks” means the Trademarks set forth on Schedule 1.1(f) and all other Trademarks owned by Licensing or Seller as of the Effective Date and used or held for use exclusively in the in the Company Field as of the SPA Signing Date and/or as of the Effective Date (other than, for clarity any Arizona Licensed Trademarks).

 

  (g)

Arizona Domain Names” means the Internet domain names set forth on Schedule 1.1(g).

 

  (h)

Arizona Field” means all activities conducted by Arizona or its Affiliates, other than the Company Field.

 

  (i)

Arizona Licensed Copyrights” means all Copyrights owned by Licensing or Seller or their respective Affiliates, as of the Effective Date and used or held for use in the Company Field during the five (5) years prior to the Effective Date (other than the Arizona Assigned Copyrights).

 

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  (j)

Arizona Licensed IP” means the Arizona Licensed Copyrights, the Arizona Licensed Know-How, the Arizona Licensed Patents, the Arizona Licensed Trademarks, the Diamond Licensed Trademarks and the Phase-Out Marks.

 

  (k)

Arizona Licensed Know-How” means all Know-How owned by Licensing or Seller or their respective Affiliates, as of the Effective Date and used or held for use in the Company Field during the five (5) years prior to the Effective Date (other than the Arizona Assigned Know-How).

 

  (l)

Arizona Licensed Patents” means the Patents set forth on Schedule 1.1(l) and all other Patents owned by Licensing or Seller or their respective Affiliates as of the Effective Date and used or held for use in the Company Field during the five (5) years prior to the Effective Date (other than the Arizona Assigned Patents).

 

  (m)

Arizona Licensed Trademarks” means the Trademarks set forth on Schedule 1.1(m).

 

  (n)

Arizona Trademark License Term” means the period commencing on the Effective Date and ending twenty-four (24) months thereafter.

 

  (o)

Company Field” means the design, development, manufacture, marketing, promotion, advertising, sourcing, distribution and sale of solid hardwood and engineered wood flooring products by or for any Company Entity.

 

  (p)

Company Licensed Copyrights” means all Copyrights and registrations and applications for any of the foregoing owned by any Company Entity as of the Effective Date and used or held for use in the Arizona Field as of the Effective Date.

 

  (q)

Company Licensed IP” means the Company Licensed Copyrights, the Company Licensed Know-How and the Company Licensed Patents.

 

  (r)

Company Licensed Know-How” means all Know-How owned by any Company Entity as of the Effective Date and used or held for use in the Arizona Field as of the Effective Date.

 

  (s)

Company Licensed Patents” means the Patents set forth on Schedule 1.1(s).

 

  (t)

Copyrights” means copyrights (whether registered or unregistered) including applications for copyright (excluding, for clarity, Trademarks).

 

  (u)

Diamond Licensed Trademarks” means the Trademarks set forth on Schedule 1.1(u).

 

  (v)

Diamond Product” means the design, development, manufacture, marketing, promotion, advertising, sourcing, distribution and sale of the solid hardwood flooring product by any Company Entity as conducted under the Diamond Licensed Trademarks by any Company Entity prior to the Effective Date

 

3


  (including the composition of coating used with respect to such solid hardwood flooring product).

 

  (w)

Diamond Trademark License Term” means the period commencing on the Effective Date and ending eighteen (18) months thereafter.

 

  (x)

Know-How” means trade secrets, and other confidential and proprietary information, inventions, processes, formulas and methodologies.

 

  (y)

Licensed IP” means the Arizona Licensed IP and the Company Licensed IP.

 

  (z)

Licensed Copyrights” means the Arizona Licensed Copyrights and the Company Licensed Copyrights.

 

  (aa)

Licensed Know-How” means the Arizona Licensed Know-How and the Company Licensed Know-How.

 

  (bb)

Licensed Trademarks” means the Arizona Licensed Trademarks, the Diamond Licensed Trademarks and the Phase-Out Marks.

 

  (cc)

Patents” means patent rights, including patents, patent applications, and all related continuations, continuations-in-part, divisionals, renewals, reissues, re-examinations, substitutions, and extensions thereof, and applications for any of the foregoing.

 

  (dd)

Proceeding” means any proceeding, claim, suit or action arising out of, or in connection with, this Agreement or its subject matter (including its validity, formation at issue, effect, interpretation, performance or termination), howsoever arising.

 

  (ee)

Seller Licensed Trademarks” means the Arizona Licensed Trademarks and the Diamond Licensed Trademarks.

 

  (ff)

Third Party” means any Person other than Arizona, the Company, and their respective Affiliates.

 

  (gg)

Trademarks” means any trademarks, service marks, trade names, trade dress, and other similar designations of source or origin, and registrations and applications for any of the foregoing.

 

  (hh)

Trademark License Agreement” means the Trademark License Agreement by and between Armstrong World Industries, Inc., AWI Licensing LLC and Armstrong Flooring, Inc, dated as of April 1, 2016 and attached hereto as Exhibit A.

 

4


1.2

Interpretation. Section 10.5 and 10.14 of the Stock Purchase Agreement shall apply hereto, mutatis mutandis.

 

1.3

Company Actions. In respect of any action herein required to be undertaken by any of the Company Entities, or to be omitted by any of the Company Entities, the Buyer Entities shall cause the applicable Company Entity to so undertake or omit to undertake, as applicable, such action.

 

2.

ASSIGNMENT OF ARIZONA ASSIGNED IP

 

2.1

Assignment. Arizona agrees to assign and hereby assigns its entire right, title and interest in and to the Arizona Assigned IP to the Company.

 

2.2

Recordation of Assignment. Arizona will reasonably cooperate with the Company to obtain, record, and perfect title to, and provide all necessary evidence of the Company’s ownership of, the Arizona Assigned IP, including the execution of (i) a Patent Assignment in the form of the attached Exhibit B, and (ii) a Trademark Assignment in the form of the attached Exhibit C.

 

3.

GRANT OF COPYRIGHT LICENSE

 

3.1

Arizona Copyright Grant. Subject to the terms and conditions of this Agreement, Arizona hereby grants to the Company a perpetual, non-exclusive, royalty-free license in, to and under the Arizona Licensed Copyrights for use in the Company Field throughout the world.

 

3.2

Company Copyright Grant. Subject to the terms and conditions of this Agreement, the Company hereby grants to Seller a perpetual, non-exclusive, royalty-free license in, to and under the Company Licensed Copyrights for use in the Arizona Field throughout the world.

 

4.

GRANT OF KNOW-HOW LICENSE

 

4.1

Arizona Know-How Grant. Subject to the terms and conditions of this Agreement, Arizona hereby grants to the Company a perpetual, non-exclusive, royalty-free license in, to and under the Arizona Licensed Know-How for use in the Company Field throughout the world.

 

4.2

Company Know-How Grant. Subject to the terms and conditions of this Agreement, the Company hereby grants to Seller a perpetual, non-exclusive, royalty-free license in, to and under the Company Licensed Know-How for use in the Arizona Field throughout the world.

 

5.

GRANT OF PATENT LICENSE

 

5.1

Arizona Patent Grant. Subject to the terms and conditions of this Agreement, Arizona hereby grants to the Company a perpetual, non-exclusive, royalty-free license in, to and under the Arizona Licensed Patents for use in the Company Field throughout the world.

 

5


5.2

Company Patent Grant. Subject to the terms and conditions of this Agreement, the Company hereby grants to Seller a perpetual, non-exclusive, royalty-free license in, to and under the Company Licensed Patents for use in the Arizona Field throughout the world.

 

6.

GRANT OF TRADEMARK LICENSE

 

6.1

Arizona Licensed Trademark Grant. Subject to the terms and conditions of this Agreement, Arizona hereby grants to the Company a limited, non-exclusive, royalty-free, non-sublicensable (except as set forth in Section 7.1), non-assignable license in, to and under the Arizona Licensed Trademarks for the Arizona Trademark License Term for use in the Company Field throughout the world only in the form and manner that such Arizona Licensed Trademarks are used in the Business as of the Closing, provided that the Company shall use commercially reasonable efforts to present the Arizona Licensed Trademarks in the form set forth on Schedule 6.1.

 

6.2

Diamond Licensed Trademark Grant. Subject to the terms and conditions of this Agreement, Arizona hereby grants to the Company a limited, non-exclusive, royalty-free, non-sublicensable (except as set forth in Section 7.1), non-assignable (except as set forth in Section 13.2) license in, to and under the Diamond Licensed Trademarks for the Diamond Trademark License Term for use with respect to the Diamond Product throughout the world only in the form and manner set forth on Schedule 6.2.

 

6.3

Quality Control. The Buyer Entities acknowledge the importance of Arizona’s exercise of quality control over the use of the Seller Licensed Trademarks to preserve the continued integrity and validity of the Seller Licensed Trademarks and to protect the value and goodwill associated with the Seller Licensed Trademarks, and accordingly:

 

  (a)

The Company shall ensure that all goods and services provided by the Company, under or in association with any of the Seller Licensed Trademarks, shall (i) be substantially the same as or greater than the quality of goods and services provided under such Seller Licensed Trademarks immediately prior to the Effective Date and (ii) not be associated with any goods or services, including any activities, that are reasonably likely to have an adverse effect on (A) the image or reputation of any of the Seller Licensed Trademarks or (B) Seller’s right, title or interest in and to, any of the Arizona Licensed Trademarks.

 

  (b)

The Company shall not tarnish or bring into disrepute the reputation of or goodwill associated with the Seller Licensed Trademarks or Arizona.

 

  (c)

The Company shall use the Seller Licensed Trademarks at all times in compliance with all applicable Laws.

 

  (d)

The Company shall include trademark and other notices in connection with the use of the Seller Licensed Trademarks as reasonably requested by Arizona from time to time.

 

6


  (e)

The Company shall upon Arizona’s reasonable request from time to time, supply to Arizona representative samples and/or written descriptions, as appropriate, of uses made by the Company of the Seller Licensed Trademarks.

 

  (f)

The Buyer Entities acknowledge that this license grant does not include, and the Company shall receive no rights under this Agreement or the Stock Purchase Agreement, to use any Trademark that is confusingly similar to or derivative of a Seller Licensed Trademark (other than the Seller Licensed Trademarks themselves as expressly authorized hereunder).

 

6.4

Trademark License Agreement. In addition to the obligations set forth in Section 6.3, and notwithstanding any other provision of this Agreement, the Company shall comply with all obligations applicable to Arizona and its Affiliates under the Trademark License Agreement including, for the avoidance of doubt, any obligations with respect to reporting Complaints (as defined in the Trademark License Agreement), which reports the Company shall provide to Arizona, and quality control and standards, and Licensor Competitors (as defined in the Trademark License Agreement), and neither Party shall undertake any act that would constitute a breach or a basis for termination under the Trademark License Agreement.

 

6.5

Trade Names. The Company shall not create or use any corporate or trade names that include the Arizona Licensed Trademarks, other than those in existence immediately prior to the Effective Date. No later than thirty (30) days following the Closing, each of AWP and the Company shall change its respective corporate name and trade name and cause its organizational documents to be amended to remove any reference to “Armstrong.”

 

6.6

With respect to any Trademarks notified to the Company in writing after the Effective Date that are used as of the Effective Date in the Company Field and are not (i) owned by any Company Entity, (ii) Arizona Assigned Trademarks, or (iii) Seller Licensed Trademarks (the “Phase-Out Marks”) in each case (i)-(iii) the Company shall have a period of twenty-four (24) months from the date of notification to phase out all use. Any use by the Company of any of the Phase-Out Marks as permitted in this Section 6.6, is subject to its use of the Phase-Out Marks in a form and manner and with standards of quality consistent with that in effect for the Phase-Out Marks as of the Effective Date.

 

6.7

Domain Names. Subject to the terms and conditions of this Agreement, the license set forth in Section 6.1 shall include the right of the Company to use the Arizona Domain Names solely in connection with the applicable Arizona Licensed Trademarks in the Company Field during the Arizona Trademark License Term, in the ordinary course of business in a manner generally consistent with the past practice of Arizona in the Company Field. The Company shall not have the right to register any domain name or social media addresses (or any similar or successor identifiers) containing Arizona Licensed Trademarks.

 

7


7.

INTELLECTUAL PROPERTY RIGHTS

 

7.1

Sublicenses. Arizona may sublicense the licenses granted herein to its Affiliates and Third Parties in the ordinary course of business in support of its and its Affiliates’ business, but not for the independent use of Third Parties, and the Company may sublicense the licenses granted herein to Third Parties, its Subsidiaries, AWP, controlled Affiliates, or any holding company that is a direct or indirect parent of the Company in the ordinary course of business in support of its and its Subsidiaries’ or controlled Affiliates’ business, but not for the independent use of Third Parties (each such Affiliate, Third Party, AWP or Subsidiary, a “Sublicensee”). Each Party shall ensure that any sublicense that it grants to a Sublicensee does not conflict with this Agreement. For clarity, granting a sublicense shall not relieve the Parties of any obligations hereunder and each Party shall cause each of its Sublicensees to comply, and shall remain responsible for such Sublicensees’ compliance, with all terms and conditions hereof applicable to the Parties. At the request of a licensing Party, the other Party shall provide to the licensing Party a list of all Sublicensees and otherwise reasonably cooperate with the licensing Party in connection with Sublicensees’ compliance with this Agreement.

 

7.2

Reservation of Rights. Except as expressly provided in the Stock Purchase Agreement or herein, each Party reserves its and its Affiliates’ rights in and to all Intellectual Property (including with respect to the use, registration and licensing thereof).

 

8.

OWNERSHIP

 

8.1

Ownership of Arizona Licensed IP. The Buyer Entities acknowledge and agree that (a) Arizona and its Affiliates own the Arizona Licensed IP (other than the Arizona Licensed Trademarks), (b) AWI Licensing LLC owns the Arizona Licensed Trademarks, (b) neither the Company, nor its Affiliates or its Sublicensees, will acquire any ownership rights in the Arizona Licensed IP, and (c) the Company shall not represent or make any claim that it has an ownership interest in any Arizona Licensed IP. Without limitation to the foregoing, the Company shall not file applications to register any Arizona Licensed IP or assist any person in doing the same, or contest, challenge, or otherwise take any action adverse to Arizona’s and its Affiliates’ ownership of or rights in and to the Arizona Licensed IP, or assist any person in doing the same.

 

8.2

Ownership of Company Licensed IP. Arizona acknowledges and agrees that (a) the Company and its Affiliates own the Company Licensed IP, (b) neither Arizona, nor its Affiliates or its Sublicensees, will acquire any ownership rights in the Company Licensed IP, and (c) Arizona shall not represent or make any claim that it has an ownership interest in any Company Licensed IP. Without limitation to the foregoing, Arizona shall not file applications to register any Company Licensed IP or assist any person in doing the same, or contest, challenge, or otherwise take any action adverse to the Company’s and its Affiliates’ ownership of or rights in and to the Company Licensed IP, or assist any person in doing the same.

 

8


9.

PROSECUTION, MAINTENANCE AND ENFORCEMENT

 

9.1

Responsibility and Cooperation. As between the Parties, Arizona, with respect to the Arizona Licensed IP, and the Buyer Entities, with respect to the Company Licensed IP, shall have the right (but not the obligation) for filing, prosecuting, and maintaining all Arizona Licensed IP and Company Licensed IP, respectively, in the licensing Party’s name. For the avoidance of doubt, in case either such Party files any new Intellectual Property registration to the extent covering the Licensed IP, such new Intellectual Property registration shall automatically become Licensed IP. However, and for the further avoidance of doubt, the aforementioned shall not apply to new Intellectual Property created by a licensee Party or its Sublicensees separately and independently from the Licensed IP, for example in case of separate and independent technical enhancements or advancements. The Parties shall reasonably consult and coordinate with each other at the other Party’s request with respect to the matters set forth in this Section 9.1.

 

9.2

No Additional Obligations. This Agreement shall not obligate either Party to disclose to the other Party, or maintain, register, prosecute, pay for, enforce, or otherwise manage any Intellectual Property except as expressly set forth herein.

 

9.3

Enforcement. As between the Parties, Arizona, with respect to the Arizona Licensed IP, and the Company or Buyer, with respect to the Company Licensed IP, shall have the right (but not the obligation) to elect to bring a Proceeding or enter into settlement discussions regarding, or otherwise seek to resolve, any infringement, misappropriation, or other violation, or allegations of invalidity or unenforceability, of the Licensed IP. In the event that Arizona declines to institute any Proceedings against third-party infringers or violators of any Arizona Licensed Patents, regarding activities that would fall within the Company Field if conducted by the Company, within forty-five (45) days after being notified or becoming aware of such infringing conduct, the Company or Buyer shall have the right to institute any Proceedings against such third-party infringers or violators. In the event that the Company or Buyer elects to institute such Proceedings, Arizona will reasonably cooperate with the Company or Buyer in such Proceedings, and the Company or Buyer shall reimburse Arizona for all reasonable costs and fees incurred by Arizona as a result of such cooperation. Such cooperation by Arizona will include joining such Proceeding as a party, if deemed necessary by the Company or Buyer. In the event that Arizona elects to bring a Proceeding against any alleged infringer of the Arizona Licensed Trademarks and seeks the cooperation of the Licensor of the Trademark License Agreement in such Proceeding, Arizona will take reasonable steps to assist the Company or Buyer in requesting the cooperation of the Licensor of the Trademark License Agreement, and pursuing an infringement claim against such alleged infringer. The Company or Buyer, as applicable, shall retain all benefits, recoveries, injunctions or other value derived from such Proceedings instituted by such Party.

 

10.

INDEMNIFICATION

 

10.1

Indemnification. Each Party (the “Indemnifying Party”) agrees to indemnify, defend and hold harmless the other Party and its Affiliates and their respective employees,

 

9


  directors, officers, agents and successors (collectively, the “Indemnified Parties”) from and against any and all losses (including all costs, liabilities (including present and future damages), claims and expenses) incurred or suffered by any of the Indemnified Parties, to the extent arising out of, relating to or resulting from (a) a breach by the Indemnifying Party of this Agreement; or (b) any gross negligence or willful misconduct of the Indemnifying Party in connection with this Agreement.

 

11.

DISCLAIMERS

 

11.1

Disclaimer. Each Party hereby acknowledges that, except to the extent expressly set forth in this Agreement, the Stock Purchase Agreement, the Transition Services Agreement or the Confidentiality Agreement, neither Party nor any of its Affiliates has made any representation or warranty, expressed or implied, including any representation or warranty regarding the validity, enforceability, or scope of the Licensed IP, noninfringement, merchantability or fitness for a particular purpose.

 

12.

TERM

 

12.1

Term and Termination.

 

  (a)

Unless earlier terminated pursuant to the provisions hereof, the term of this Agreement and the licenses and other grants of rights (and related obligations) under this Agreement shall (i) with respect to the Arizona Licensed Trademarks, be for the Arizona Trademark License Term, (ii) with respect to the Diamond Licensed Trademarks, be for the Diamond Trademark License Term, (iii) with respect to the Phase-Out Marks, be for the term set forth in Section 6.6, and (iv) with respect to Copyrights, Know-How and Patents, be in perpetuity.

 

  (b)

Either Party may terminate this Agreement if the other Party materially breaches this Agreement and fails to remedy such breach within thirty (30) days’ written notice thereof; provided, however, that if the material breach of this Agreement by the breaching Party is limited to the Licensed Copyrights, Licensed Know-How, the Arizona Licensed Patents, or the Licensed Trademarks, the non-breaching Party shall be entitled to termination solely with respect to the affected part of the license (i.e., in such case, the non-breaching Party may terminate this Agreement with respect to the Licensed Copyrights or the Licensed Know-How or the Arizona Licensed Patents or the Licensed Trademarks, as applicable).

 

12.2

Effect of Termination.

 

  (a)

Effect of Termination. Upon termination of this Agreement, each licensee Party shall and shall cause all of its Sublicensees to cease all use of the Licensed IP that is subject to such termination (excluding for clarity (a) any Arizona Licensed Patents, Licensed Copyrights or Licensed Trademarks that are expired, invalid or abandoned or (b) any Licensed Know-How that no longer constitutes confidential information).

 

10


  (b)

Survival. The following provisions of this Agreement, together with all other provisions of this Agreement that expressly specify that they survive, shall survive expiration or termination of this Agreement, in part or in its entirety: Sections 8, 10, 11, 12.2(a) and 13.

 

13.

MISCELLANEOUS

 

13.1

Entire Agreement. This Agreement (together with the Schedules attached hereto), the Stock Purchase Agreement, the Transition Services Agreement and the Confidentiality Agreement constitute the entire agreement of the Parties hereto and supersede all prior negotiations, correspondence, agreements and undertakings, both written and oral, between or among the Parties, or any of them, with respect to the subject matter hereof. It shall be expressly understood that the Stock Purchase Agreement shall govern the transactions contemplated thereby as a whole and that this Agreement shall not be construed as an amendment or variation of the Stock Purchase Agreement but rather shall be complemented by and interpreted in light of the Stock Purchase Agreement. In the event that any provision of this Agreement is inconsistent with, conflicts with or contradicts any term of the Stock Purchase Agreement, the terms of the Stock Purchase Agreement will prevail.

 

13.2

Assignment. Except as otherwise provided in this Agreement, including under Section 7.1, neither this Agreement nor any of the rights, interests or obligations of any Party under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise, by either Party without the prior written consent of the other Party; provided, however, that (a) either Party may assign any of the foregoing in connection with the sale or other transfer of the applicable business or assets of such Party or its Affiliates to which this Agreement relates (except that neither of the Buyer Entities may assign any such rights, interests or obligations with respect to the Arizona Licensed Trademarks); (b) Arizona may assign any of the foregoing to one or more of its Affiliates and (c) the Company and Buyer may assign any of the foregoing to one or more of its Subsidiaries, controlled Affiliates, AWP, or any holding company that is a direct or indirect parent of the Company; provided that in each case (b) and (c), no assignment shall relieve the assigning Party of any of its obligations under this Agreement unless agreed to by the non-assigning Party. Any assignment or other disposition in violation of the preceding sentence shall be void.

 

13.3

Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given (i) on the date delivered, if delivered personally, (ii) on the third (3rd) Business Day after being mailed by registered or certified mail (postage prepaid, return receipt requested), or (iii) on the next Business Day after being sent by reputable overnight courier (delivery prepaid), in each case, to the parties at the following addresses, or on the date sent and confirmed by electronic transmission or confirmatory return email to the telecopier number or email address specified below (or at such other address, telecopier number or email address for a Party as shall be specified by notice given in accordance with this Section 13.3):

(a)     If to Buyer:

 

11


c/o American Industrial Partners

450 Lexington Avenue, 40th Floor

Attention:         General Counsel and Richard Hoffman

Email:               notices@americanindustrial.com

                   richard@americanindustrial.com

with a copy to:

Baker Botts L.L.P.

1299 Pennsylvania Avenue, NW

Washington, D.C. 20004

Attention:         Terrance L. Bessey

                 Brendan O. Dignan

Email:              terrance.bessey@bakerbotts.com

                  brendan.dignan@bakerbotts.com

(b)     If to Arizona:

Armstrong Flooring, Inc.

2500 Columbia Avenue, PO Box 3025

Lancaster, PA 17604

Attention:         Christopher S. Parisi

Email:               csparisi@armstrongflooring.com

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

4 Times Square

New York, NY 10036

Attention:         Eric L. Cochran

                 Steven J. Daniels

Email:               eric.cochran@skadden.com

                   steven.daniels@skadden.com

 

13.4

Specific Performance. Each Party hereto acknowledges that money damages would be both incalculable and an insufficient remedy for any breach of this Agreement by such Party and that any such breach would cause Arizona, on the one hand, and the Buyer Entities, on the other hand, irreparable harm. Accordingly, each Party hereto also agrees that, in the event of any breach or threatened breach of the provisions of this Agreement by such Party, Arizona, on the one hand, and the Buyer Entities, on the other hand, shall be entitled to equitable relief without the requirement of posting a bond or other security, including in the form of injunctions and orders for specific performance. Any and all remedies herein expressly conferred upon a Party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy. Arizona, on the one hand, and Buyer Entities, on the other hand, hereby agree not to raise any objections to the availability of the equitable remedy of specific

 

12


  performance to prevent or restrain breaches or threatened breaches of this Agreement by the Buyer Entities or Arizona, as applicable, and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of the Buyer Entities or Arizona, as applicable, under this Agreement.

 

13.5

Governing Law; Jurisdiction; Waiver of Jury Trial.

 

  (a)

This Agreement shall be governed by the laws of the State of Delaware, its rules of conflict of laws notwithstanding. Each Party hereby agrees and consents to be subject to the jurisdiction of the Court of Chancery of the State of Delaware in and for New Castle County, or if the Court of Chancery lacks jurisdiction over such dispute, in any state or federal court having jurisdiction over the matter situated in New Castle County, Delaware, in any Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby. Each Party hereby irrevocably consents to the service of any and all process in any such Action by the delivery of such process to such Party at the address and in the manner provided in Section 13.3 hereof. Each of the Parties hereto irrevocably and unconditionally waives any objection to the laying of venue of any Proceeding arising out of this Agreement or the transactions contemplated hereby in the Court of Chancery of the State of Delaware in and for New Castle County, or if the Court of Chancery lacks jurisdiction over such dispute, in any state or federal court having jurisdiction over the matter situated in New Castle County, Delaware, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Proceeding brought in any such court has been brought in an inconvenient forum.

 

  (b)

EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.5(b).

 

13


13.6

Severability. If any term or other provision of this Agreement, or any portion thereof, is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms and provisions of this Agreement, or the remaining portion thereof, shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any such term or other provision, or any portion thereof, is invalid, illegal or incapable of being enforced, 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 an acceptable manner to the end that the transactions contemplated hereby are consummated to the fullest extent possible.

 

13.7

Counterparts. This Agreement may be executed in any number of counterparts, including by means of email in portable document format (.pdf), each of which when executed shall be deemed to be an original copy of this Agreement and all of which taken together shall constitute one and the same agreement.

[Remainder of page intentionally left blank]

 

14


IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first written above.

 

ARMSTRONG FLOORING, INC.
By:  

/s/ Donald R. Maier

  Name: Donald R. Maier
  Title: President and Chief Executive Officer
AFI LICENSING LLC
By:  

/s/ Christina Geerlof

  Name: Christina Geerlof
  Title: President
AHF HOLDING, INC. (formerly known as Tarzan Holdco, Inc.)
By:  

/s/ Stanley Edme

  Name: Stanley Edme
  Title: Vice President
ARMSTRONG HARDWOOD FLOORING COMPANY
By:  

/s/ Jason Braeglemann

  Name: Jason Braegelmann
  Title: Vice President

 

[Signature Page to IP Agreement]


Schedule 1.1(b) – Arizona Assigned Internet Domain Names

 

Domain Name

  

Expiration date

  

Owner

amish-handscraped.com    13-Apr-2019    Armstrong Flooring, Inc. (“AFI”)
amishhandscraped.com    13-Apr-2019    AFI
bruce.adult    28-Apr-2019    AFI
bruce.biz    26-Mar-2019    AFI
bruce.com    21-Jan-2019    AFI
bruce.dpml.pub    29-Oct-2019    AFI
bruce.dpmlblock    29-Oct-2019    AFI
bruce.info    10-Aug-2019    AFI
bruce.porn    28-Apr-2019    AFI
bruce.xxx    01-Dec-2021    AFI
brucebuilder.com    02-Mar-2019    AFI
brucecontractor.com    02-Mar-2019    AFI
brucedealer.com    02-Mar-2019    AFI
brucedistributor.com    02-Mar-2019    AFI
brucefloors.com    04-Aug-2019    AFI
brucehardwoodfloors.com    11-Apr-2019    AFI
brucehome.com    02-Mar-2019    AFI
brucelaminate.com    30-Dec-2018    AFI
bruceremodeler.com    02-Mar-2019    AFI
bruceretailer.com    02-Mar-2019    AFI
brucesucks.com    25-Oct-2018    AFI
brucesucks.info    22-Sep-2019    AFI
capellaflooringcompany.com    12-Nov-2018    AFI
capellafloors.com    27-Oct-2018    AFI
forestglenhardwood.com    13-Sep-2019    AFI
handscraped-hardwood.com    13-Apr-2019    AFI
handscrapedhardwoodflooring.com    13-Sep-2019    AFI
handscrapedwoodfloor.com    05-Sep-2019    AFI
handscrapehardwoodfloor.com    05-Sep-2019    AFI
handscrapehardwoodflooring.com    05-Sep-2019    AFI
handscrapehardwoodfloors.com    05-Sep-2019    AFI
handscrapewoodfloor.com    05-Sep-2019    AFI
handscrapewoodflooring.com    05-Sep-2019    AFI
handscrapewoodfloors.com    05-Sep-2019    AFI
hardwood-flooring.asia    26-Mar-2019    AFI
hartco.biz    18-Nov-2018    AFI
hartco.info    10-Aug-2019    AFI
hartcodistributor.com    02-Mar-2019    AFI
hartcoflooring.com    24-May-2019    AFI


Domain Name

  

Expiration date

  

Owner

hartcoflooringcompany.com    18-Jun-2019    AFI
hartcohome.com    02-Mar-2019    AFI
homerwood.com    14-Sep-2019    AFI
lifetimeluxuryhardwood.com    14-Jun-2019    AFI
lockandfold.com    20-Nov-2018    AFI
luxuryhardwood.com    20-Dec-2018    AFI
mybruce.com    25-Jul-2019    AFI
mybruce.net    25-Jul-2019    AFI
myhartco.com    25-Jul-2019    AFI
myhartco.net    25-Jul-2019    AFI
myrobbins.com    25-Jul-2019    AFI
myrobbins.net    25-Jul-2019    AFI
powerofparagon.com    15-Jun-2019    AFI
premium-hardwood.com    13-Apr-2019    AFI
robbins-home.com    02-Mar-2019    AFI
robbins.biz    26-Mar-2019    AFI
robbins.com    13-Sep-2019    AFI
robbins.info    10-Aug-2019    AFI
robbinsflooring.com    21-Nov-2018    AFI
robbinsflooring.info    22-Sep-2019    AFI
robbinsfloors.com    14-Sep-2019    AFI
robbinsfloors.net    17-Apr-2019    AFI
robbinshardwoodflooring.com    26-Sep-2019    AFI
robbinshighperformance.com    18-Oct-2018    AFI
smokedhardwood.com    30-Apr-2019    AFI
smokedhardwoodfloor.com    30-Apr-2019    AFI
smokedhardwoodflooring.com    30-Apr-2019    AFI
smokedhardwoodfloors.com    30-Apr-2019    AFI
softscrapedhardwoodfloor.com    05-Sep-2019    AFI
softscrapedhardwoodflooring.com    05-Sep-2019    AFI
softscrapedhardwoodfloors.com    05-Sep-2019    AFI
softscrapedwoodfloor.com    05-Sep-2019    AFI
softscrapedwoodflooring.com    05-Sep-2019    AFI
softscrapedwoodfloors.com    05-Sep-2019    AFI
softscrapehardwoodfloor.com    05-Sep-2019    AFI
softscrapehardwoodflooring.com    05-Sep-2019    AFI
softscrapehardwoodfloors.com    05-Sep-2019    AFI
softscrapewoodfloor.com    05-Sep-2019    AFI
softscrapewoodflooring.com    05-Sep-2019    AFI
softscrapewoodfloors.com    05-Sep-2019    AFI


Domain Name

  

Expiration date

  

Owner

tmortan.com    07-Sep-2019    AFI
tmorten.com    07-Sep-2019    AFI
tmortin.com    07-Sep-2019    AFI
tmorton-flooring.com    17-Mar-2019    AFI
tmorton-floors.com    17-Mar-2019    AFI
tmorton-hardwood-flooring.com    17-Mar-2019    AFI
tmorton-hardwood-floors.com    17-Mar-2019    AFI
tmorton-hardwood.com    17-Mar-2019    AFI
tmorton-wood-flooring.com    17-Mar-2019    AFI
tmorton-wood-floors.com    17-Mar-2019    AFI
tmorton.asia    20-Mar-2019    AFI
tmorton.com    17-Mar-2019    AFI
tmorton.org    17-Mar-2019    AFI
tmortonandco.com    17-Mar-2019    AFI
tmortonco.com    17-Mar-2019    AFI
wwwbruce.com    01-Mar-2019    AFI
wwwhartco.com    17-Jan-2019    AFI
wwwrobbins.com    17-Jan-2019    AFI


Schedule 1.1(e) – Arizona Assigned Patents

 

Country

  

App.

Status

  

App. Number

  

Filing Date

  

Patent Number

  

Issue Date

US    Granted    10/459,977    12-Jun-03    7381474    3-Jun-08
AU    Granted    2004304906    22-Nov-04    2004304906    28-Oct-10
CN    Granted    200480039516    22-Nov-04    ZL200480039516.1    2-Jan-13
DE    Granted    6020040309575    22-Nov-04    1944158    11-Feb-17
EP    Granted    8007063.4    22-Nov-04    1944158    5-Jan-11
FR    Granted    8007063.4    22-Nov-04    1944158    5-Jan-11
GB    Granted    8007063.4    22-Nov-04    1944158    5-Jan-11
US    Granted    10/727,749    4-Dec-03    7,261,947    28-Aug-07
US    Granted    11/901,361    17-Sep-07    8,287,971    16-Oct-12
US    Granted    13/611,028    12-Sep-12    8,399,075    19-Mar-13
US    Granted    12/825,448    29-Jun-10    8801505    12-Aug-14
US    Granted    14/458,103    12-Aug-14    10,072,427    11-Sep-18
AU    Granted    2014240948    28-Mar-14    2014240948    20-Oct-16
EP    Published    14722915.7    28-Mar-14      
AU    Granted    2013246000    10-Apr-13    2013246000    26-Nov-15
CA    Granted    2,869,667    10-Apr-13    2869667    19-Dec-17
CN    Granted    201380018751    10-Apr-13    2512525    9-Jun-17
EP    Published    13718698.7    10-Apr-13      
US    Granted    13/442,960    10-Apr-13    9434087    6-Sep-16
AU    Granted    2013246002    10-Apr-13    2013246002    17-Dec-15
CA    Granted    2,869,752    10-Apr-13    2869752    3-Jan-17
CN    Granted    201380018754    10-Apr-13    104245258    3-May-17
US    Granted    13/442,966    10-Apr-12    9,108,335    18-Aug-15
CN    Granted    201410046641    10-Feb-14    103978829    12-Apr-17
EP    Granted    14154551.7    10-Feb-14    EP2764965    21-Sep-16
US    Granted    14/176,299    10-Feb-14    9701040    11-Jul-17
AU    Granted    2014240951    28-Mar-14    2014240951    30-Jun-16
AU    Granted    2013270463    10-Dec-13    2013270463    26-Nov-15
CN    Granted    201310674310    11-Dec-13    103866947    4-Jan-17
AU    Granted    2014274549    10-Dec-14    2014274549    15-Oct-15
CA    Granted    2,873,571    8-Dec-14    2873571    27-Mar-18
CN    Published    201407560485    10-Dec-14      
AU    Pending    2016287834    5-Jul-16      
CN    Published    2016800338922    5-Jul-16      


Country

  

App.

Status

  

App. Number

  

Filing Date

  

Patent Number

  

Issue Date

EP    Published    16818951.2    5-Jul-16      
TW    Published    20160120286    28-Jun-16      
WO    Published    PCT/US16/40942    5-Jul-16      
CN    Published    201510954585    17-Dec-15      
EP    Published    15201544.2    21-Dec-15      
US    Published    14/970,662    16-Dec-15      
AU    Pending    2016380976    20-Dec-16      
CN    Published    20168078711    20-Dec-16      
EP    Pending    16882368    20-Dec-16      
US    Published    14/980,263    28-Dec-15      
WO    Published    PCT/US2016/067690        20-Dec-16      
AU    Pending    2016380975    20-Dec-16      
CN    Published    201680078712    20-Dec-16      
EP    Pending    16882368    20-Dec-16      
US    Published    14/980,313    28-Dec-15      
WO    Published    PCT/US2016/067688    20-Dec-16      
WO    Published    PCT/US2017/055068        5-Oct-17      
US    Published    15902327    22-Feb-18      
WO    Published    PCT/US18/19186    22-Feb-18      
US    Granted    09/478,016    5-Jan-00    6164351    26-Dec-00
US    Granted    11/390,679    28-Mar-06    7537841    26-May-09
US    Granted    09/175,661    20-Oct-98    6148884    21-Nov-00
US    Granted    09/303,176    30-Apr-99    6156402    5-Dec-00
US    Granted    09/241,878    2-Feb-99    6194078    27-Feb-01
US    Pending    62/611953    29-Dec-17      
US    Expired    62/404,413    5-Oct-16      
US    Expired    62/462,609    23/Feb-17      
US    Abandoned    09/903,549    13-Jul-01      
US    Abandoned    14/828,598    18-Aug-15      
US    Expired    62/187,925    2-Jul-15      
US    Granted    12/425,560    17-Apr-09    8,357,752    22-Jan-13
US    Granted    13/741,770    15-Jan-13    8,617,654    31-Dec-13
AU    Granted    2014274559    10-Dec-14    2014274559    24-Mar-16
EP    Published    14199378.2    19-Dec-14      
CN    Published    2015109813242    23-Dec-15      
EP    Published    15202406.3    23-Dec-15      
US    Granted    14/580,347    23-Dec-14    9,567,755    14-Feb-17


Country

  

App.

Status

  

App. Number

  

Filing Date

  

Patent Number

  

Issue Date

US    Pending    15/724,391    5-Oct-17      


Schedule 1.1(f) – Arizona Assigned Trademarks

 

Country

  

Trademark

  

Status

  

App.

Number

  

App. Date

  

Reg.

Number

  

Reg. Date

US    AMERICAN SCRAPE    Registered    85616030    3-May-12    4481771    11-Feb-14
CA    ARTISAN COLLECTIVE    Pending    1817435    10-Jan-17      
US    ARTISAN COLLECTIVE    CLTM            
CA    ARTISTIC TIMBERS    Registered    1670991    2-Apr-14    TMA967273    31-Mar-17
US    ARTISTIC TIMBERS    CLTM            
US    BIRCH RUN    Registered    85/931,142    14-May-13    4,524,637    6-May-14
CA    BIRCH RUN    Registered    1,636,822    25-Jul-13    TMA905398    4-Jun-15
US    BRISTOL TRAIL    Registered    86919986    25-Feb-16    5423957    13-Mar-18
CA    BRISTOL TRAIL    Published    1769733    26-Feb-16      


Country

  

Trademark

  

Status

   App.
Number
  

App. Date

   Reg.
Number
  

Reg. Date

US    BRUSHED IMPRESSIONS    Registered    86906683    12-Feb-16    5183009    11-Apr-17
CA    BRUSHED IMPRESSIONS    Published    1768050    16-Feb-16      
CA    CAPELLA    Published    1789784    4-Jul-16      
US    DUNDEE    Registered    86274578    7-May-14    4649247    2-Dec-14
US    EVERGUARD    Registered    86084365    7-Oct-13    4654066    9-Dec-14
US    FARMINGTON    Registered    86920079    25-Feb-16    5423958    13-Mar-18
CA    FARMINGTON    Published    1769729    26-Feb-16      
US    FOREST GLEN    Registered    86084354    7-Oct-13    4633917    4-Nov-14
CA    FOREST GLEN    Registered    1769732    26-Feb-16    961263    27-Jan-17


Country

  

Trademark

  

Status

   App.
Number
  

App. Date

   Reg.
Number
  

Reg. Date

CA    FORGED HERITAGE    Published    1,752,076    26-Oct-15      
CA    Hydropel    Pending    1917541    30-Aug-18      
US    Hydropel    Pending    88148020    9-Oct-18      
US    LOCK&FOLD    Registered    76656450    13-Mar-06    3200208    23-Jan-07
US    MIDTOWN    Registered    85736605    24-Sep-12    4401628    10-Sep-13
US    MILLWORK SQUARE    Registered    86906649    12-Feb-16    5183008    11-Apr-17
CA    MILLWORK SQUARE    Published    1768051    16-Feb-16      
CA    ORIGINAL RUSTICS    Published    1791791    18-Jul-16      
US    ORIGINAL RUSTICS    CLTM            


Country

  

Trademark

  

Status

   App.
Number
  

App. Date

  

Reg.

Number

  

Reg. Date

US    PARAGON    CLTM            
CA    PARAGON    CLTM            
US    PRIME HARVEST    Registered    86/285,289    19-May-14    4,742,207    26-May-15
CA    PRIME HARVEST    Registered    1,677,599    20-May-14    TMA906580    17-Jun-15
US    RIGHT EVERY TIME    Published    87261852    8-Dec-16      
US    RUSTIC RESTORATIONS    Published    87215879    26-Oct-16    5520272    17-Jul-18
CA    RUSTIC RESTORATIONS    Pending    1806462    26-Oct-16      
US    SDF    Pending    ‘87947440    4-Jun-18      
CA    SDF    Pending    1902212    1-Jun-18      


Country

  

Trademark

  

Status

   App.
Number
  

App. Date

   Reg.
Number
  

Reg. Date

US    SIGNATURE SCRAPE    Registered    86920111    25-Feb-16    5187924    18-Apr-17
CA    SIGNATURE SCRAPE    Published    1769731    26-Feb-16      
CA    SIGNATURE SOFT SCRAPE    Published    1769730    26-Feb-16      
US    TimberBlock    Published    87839322    19-Mar-18      
CA    TimberBlock    Pending    1889001    20-Mar-18      
US    TIMBERBRUSHED    Registered    87105110    15-Jul-16    5267454    15-Aug-17
US    TIMBERCUTS    Registered    87295586    10-Jan-17    5371502    2-Jan-18
CA    TIMBERCUTS    Pending    1817434    10-Jan-17      
US    TIMBERLAND    Registered    76496979    13-Mar-03    2923877    1-Feb-05


Country

  

Trademark

  

Status

  

App.

Number

  

App. Date

  

Reg.

Number

  

Reg. Date

CA    TRANQUIL WOODS    Published    1790828    11-Jul-16      
US    TRANQUIL WOODS    CLTM            
US    TruTop    Published    87870541    10-Apr-18      
CA    TruTop    Pending    1892873    10-Apr-18      
CA    VINTAGE FARMHOUSE    Published    1790827    11-Jul-16      
US    WEAR MASTER    Registered    74/329383    9-Nov-92    1834641    3-May-94
CN    WEAR MASTER    Registered    4819937    5-Aug-05    4819937   
CA    OPAL CREEK    Registered    1738695    23-Jul-15    1002365    08-Aug-18
US    OPAL CREEK    Registered    CLTM         


Schedule 1.1(g) – Arizona Domain Names

 

Domain Name

   Expiration date    Owner

armstrongwoodproducts.com

   19-Dec-2018    AFI


Schedule 1.1(l) - Arizona Licensed Patents

 

COUNTRY

  

APP NO.

  

FILING DATE

  

PATENT NUMBER

  

ISSUE DATE

AU    2009241803    30-Apr-09    2009241803    26-Sep-13
AU    2013231111    19-Sep-13    2013231111    7-Jan-16
CN    200980120494    30-Apr-09      
DE    60 2009 024 610.0    30-Apr-09    2 286 018   
EP    9739191.6    30-Apr-09    2286018    11-Jun-14
EP    13192693.3    30-Apr-09    2703461    31-Aug-16
FR    9739191.6    30-Apr-09    2 286 018    11-Jun-14
GB    9739191.6    30-Apr-09    2 286 018    11-Jun-14
US    12/432,845    30-Apr-09    8,420,710    16-Apr-13
US    14/700,669    30-Apr-15      
BE    10770074.2    29-Nov-11    2 424 911    23-Mar-16
DE    DE 60 2010 031 448.0    29-Nov-11    2 424 911    23-Mar-16
EP    10770074.2    29-Nov-11    2 424 911    23-Mar-16
FR    10770074.2    29-Nov-11    2 424 911    23-Mar-16
GB    10770074.2    29-Nov-11    2 424 911    23-Mar-16
NL    10770074.2    29-Nov-11    2 424 911    23-Mar-16
US    12/799,700    30-Apr-10      
US    14/140,206    24-Dec-13      
AU    2012286867    26-Jul-12    2012286867    4-Feb-16
CN    2012800367594    26-Jul-12    2094039    1-Jun-16
DE    12751639.1    26-Jul-12    EP2736977    20-May-15
EP    12751639.1    26-Jul-12    EP2736977    20-May-15
GB    12751639.1    26-Jul-12    EP2736977    20-May-15
AU    2013222106    25-Feb-13    2013222106    25-Feb-13
EP    13707792.1    25-Feb-13      
US    14/380,432    22-Aug-14    9540825    10-Jan-17
AU    2013308554    30-Aug-13    2013308554    28-Apr-16
CN    201380046030    4-Mar-15    2789549    23-Jan-18
EP    13770989.5    30-Mar-15    EP2890749    16-May-18
US    14/423,186    23-Feb-15      
AU    2014207438    8-Jul-15    2014207438    9-Feb-17
EP    14702412.9    14-Aug-15      
US    14/760,080    9-Jul-15      
AU    2014207441    8-Jul-15    2014207441    10-Nov-16
CN    2014800055962    15-Jul-15    2581656    11-Aug-17
EP    14703007.6    14-Aug-15      


COUNTRY

  

APP NO.

  

FILING DATE

  

PATENT NUMBER

  

ISSUE DATE

US    14/760,060    9-Jul-15      
AU    2015227440    16-Sep-15    2015227440    30-Mar-17
CN    2015105859497    23-Dec-14    3045520    24-Aug-18
EP    15198373.1    8-Dec-15      
US    14/580,312    23-Dec-14    9650792    16-May-17
EP    1151281    12-Jul-00    1072659    13-Oct-04
US    10/062,616    31-Jan-02    6572932    3-Jun-03
US    10/060,487    30-Jan-02    6911263    28-Jun-05
AU    2016243556    6-Nov-17      
CN    2016800223098    16-Oct-17      
EP    16719581.7    14-Nov-17      
TW    105110285    31-Mar-16    624366    21-May-18
US    14/678,163    3-Apr-15      
WO    PCT/US16/24457    28-Mar-16      
AU    2016243132    6-Nov-17      
CN    2016800229978    20-Oct-17      
EP    16718052    14-Nov-17      
US    15564161    3-Oct-17      
WO    PCT/US16/24462    28-Mar-16      
US    62/142,611    3-Apr-15      
AU    2016243552    6-Nov-17      
CN    2016800226325    18-Oct-17      
EP    16719580.9    14-Nov-17      
US    14/678,183    3-Apr-15      
WO    PCT/US16/24451    28-Mar-16      
AU    2016357732    18-Apr-18      
CN    2016800648806    7-May-18      
EP    16866982.8    14-Jun-18      
US    15776637    16-May-18      
WO    PCT/US2016/062133    16-Nov-16      
WO    PCT/US2017/055060    5-Oct-17      
WO    PCT/US2017/055047    4-Oct-17      
WO    PCT/US2017/055077    4-Oct-17      
WO    PCT/US2017/055089    5-Oct-17      
WO    PCT/US2017/055044    5-Oct-17      
WO    PCT/US2017/055033    4-Oct-17      
US    14/721,724    26-May-15    9468314    18-Oct-16


Schedule 1.1(m) – Arizona Licensed Trademarks

ARMSTRONG

 

LOGO


Schedule 1.1(s) - Company Licensed Patents

 

Country

  

App.

Status

  

App. Number

  

Filing Date

  

Patent Number

  

Issue Date

US    Granted    12/425,560    17-Apr-09    8,357,752    22-Jan-13
US    Granted    13/741,770    15-Jan-13    8,617,654    31-Dec-13
CN    Published    2015109813242    23-Dec-15      
EP    Published    15202406.3    23-Dec-15      
US    Granted    14/580,347    23-Dec-14    9,567,755    14-Feb-17
US    Pending    15/724,391    5-Oct-17      


Schedule 1.1(u) – Diamond Licensed Trademarks

DIAMOND 10

 

LOGO


Schedule 6.1 – Presentation of Arizona Licensed Trademarks

Armstrong Logo Usage:

 

  1.

Logo Colors: The Armstrong logo can appear only in black, white or 100% Tungsten. If reversed out white, it should be on a dark background color. The entire mark must be the same color. The Armstrong logo cannot be used alone.

 

LOGO

 

LOGO

 

  2.

Logo Size: The minimum logo size is 1” or 25mm. In digital formats, the minimum width is 100 pixels at 72 dpi.

 

LOGO


  3.

Clear Space: If the business unit identifier is used below the logo, the clear space is 12 the diameter of the Armstrong ring on the top, right side and left side and the width of the stem in in the lower case “r” on the bottom.

 

LOGO

If the business unit identifier is used above the logo, the clear space is 12 the diameter of the Armstrong ring on the right side, left side and bottom and the width of the stem of the lower case “r” on the top.

 

LOGO

 

  a.

There is no clear space defined below the business unit identifier if used below the logo and no clear space defined above the business unit identifier if used above the logo.

 

  b.

If the business unit identifier is two lines, the clear space definition applies to the top most line, if used above, or bottom most line, if used below the Armstrong logo.

 

  4.

Font: The Armstrong logo is considered art and the font type, spacing, bold, cannot be modified.

 

LOGO LOGO

 

  5.

Logo Background: The logo should never be used on a busy background or one that does not provide enough contrast.

 

LOGO


  6.

Logo Direction: The logo can be used on an angle or vertically but must read left to right and top to bottom

 

LOGO

 

  7.

Circle A: The Circle A can never be used as a separate graphic element.

 

LOGO

Notice:

 

  1.

The trademark should always be distinguishable from surrounding text – at a minimum, the trademark notice (TM or ®) should be used at least the first time in the text. After first instance, mark should appear with some other distinguishing feature (e.g., different font, all caps, and/or different color) from the surrounding text.

 

  2.

Must include notice of AWI Licensing LLC’s ownership of the trademark within the credit notice of the product, product documentation, or other product communication. (E.g., Armstrong and the Armstrong Logo are registered trademarks of AWI Licensing LLC.


Schedule 6.2 – Presentation of Diamond Licensed Trademarks

Diamond 10® Technology trademark and logo usage:

 

1.

When using Diamond 10® Technology in sentences to identify goods or services:

 

  a.

Always mark with ® (required for first usage on page)

 

  b.

Always add a space between Diamond and 10.

 

  c.

Always keep the entire mark together.

 

2.

Use of Diamond 10® or the Diamond 10® logo must include notice of AFI Licensing LLC’s ownership of the trademark within the credit notice of the product, product documentation, or other product communication. (E.g., Diamond 10 and the Diamond 10 Technology logo are registered trademarks of AFI Licensing LLC.)

 

3.

Logo Colors: Can appear only in White or 4 Color Process comprised of Morado, Tungsten and Black. If reversed out White, use only on dark background color for contrast.

 

LOGO

 

LOGO

COLORS


LOGO

 

4.

Logo Size: A general guideline for the maximum width of the logo in any application should be the equivalent to 20% of the width of the shortest side. Exceptions may be made for signage and promotional materials. The minimum logo size is 1” or 25mm. In digital formats, the minimum width is 100 pixels at 72 dpi.

 

LOGO


5.

Clear Space: The size of the clear space around the logo is determined by the size of the circle of the capital height of the word diamond.

 

LOGO

 

6.

Font: The Diamond 10 Technology logo is considered art and the font type, spacing, bold, cannot be modified.

 

LOGO

 

7.

Logo Background: The logo should never be used on a busy background or one that does not provide enough contrast.


Exhibit A – Trademark License Agreement

Attached.


Exhibit B – Form of Patent Assignment

FORM OF PATENT ASSIGNMENT

This PATENT ASSIGNMENT (the “Assignment”), dated as of December 31, 2018 (the “Effective Date”), is by and between Armstrong Flooring, Inc., a Delaware corporation (“Seller”) and AFI Licensing LLC, a Delaware limited liability company (“Licensing and together with Seller, “Assignor”) and Armstrong Hardwood Flooring Company, a Tennessee corporation (the “Company” or “Assignee”) (each of Assignor and Assignee, a “Party” and collectively, the “Parties”). All capitalized terms used, but not defined herein, shall have the meanings ascribed to such terms in the Intellectual Property Agreement (defined herein below).

WHEREAS, Seller and AHF Holding, Inc. (formerly known as Tarzan Holdco, Inc.), a Delaware corporation (“Buyer”) have entered into that certain Stock Purchase Agreement, dated November 14, 2018 (the “SPA”) and Seller, Buyer and the Company have entered into that certain Intellectual Property Agreement, dated December 31, 2018 (the “Intellectual Property Agreement”);

WHEREAS, pursuant to the SPA, the Seller has agreed to sell and transfer, and the Buyer has agreed to purchase and acquire, all of Seller’s right, title and interest in and to Armstrong Wood Products, Inc. and the Company Subsidiaries (including the Company) by way of a purchase by Buyer and sale by Seller of the Shares, all upon the terms and condition set forth therein; and

WHEREAS, pursuant to the Intellectual Property Agreement, Assignor has agreed to sell, convey, assign, and transfer to Assignee all of Assignor’s right, title, and interest in and to the patent applications and registrations set forth on Schedule A hereto (collectively, the “Assigned Patents”).

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:

1.    Conveyance. Assignor does hereby irrevocably sell, convey, grant, set over, assign and transfer to Assignee, without reservation of any rights, title or interest, all of Assignor’s right, title and interest in and to the Assigned Patents, all rights corresponding to the Assigned Patents throughout the world, and all continuations, continuations-in-part, divisions or renewals thereof, all patents that may be granted therefrom, all reissues, re-exams, or extensions of such patents, and in and to any applications that have been or shall be filed in any country, and all patents or utility models of countries that may be granted therefrom, for its own use and enjoyment, and for the use and enjoyment of any of Assignee’s successors and assigns, as the


same would have been held and enjoyed by Assignor if this Assignment had not been made, together with any and all claims or causes of infringement thereof that may have accrued prior to the effective date of this Assignment, together with the right to bring suit for and/or initiate any proceeding to collect any and all damages arising from said claims or causes of action. Assignee hereby accepts such assignment, transfer and conveyance.

2.    Recordation. Assignor hereby authorizes and requests the Commissioner of Patents and Trademarks and any other applicable governmental entity or registrar (including any applicable foreign or international office or registrar), to record Assignee as the owner of the Assigned Patents, and to issue any and all Assigned Patents to Assignee, as assignee of Assignor’s entire right, title and interest in, to, and under the same. Assignee shall have the right to record this Assignment with all applicable governmental authorities and registrars so as to perfect its ownership of the Assigned Patents.

3.    Further Assistance. Upon Assignee’s reasonable request and at Assignee’s sole cost and expense, Assignor shall (i) provide any further assistance reasonably necessary to effect the assignment of all rights, title and interest in and to the Assigned Patents to Assignee, including, but not limited to, the execution of any further documents and instruments, and (ii) take such other actions as are reasonably necessary to document the aforesaid assignment and transfer to Assignee.

4.    No Modification. Nothing contained in this Assignment is intended to or shall be deemed to modify, alter, amend or otherwise change any of the rights or obligations of Assignor and Assignee and their respective Affiliates under the SPA or the Intellectual Property Agreement.

5.    Successors and Assigns. This Assignment shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and permitted assigns.

6.    Counterparts. This Assignment may be executed in any number of counterparts, including by means of email in portable document format (.pdf), each of which when executed shall be deemed to be an original copy of this Assignment and all of which taken together shall constitute one and the same agreement.

7.    Descriptive Headings. The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Assignment.

8.    Governing Law. This Assignment shall be governed by the laws of the State of Delaware, its rules of conflict of laws notwithstanding. Each Party hereby agrees and consents to be subject to the jurisdiction of the Court of Chancery of the State of Delaware in and for New Castle County, or if the Court of Chancery lacks jurisdiction over such dispute, in any


state or federal court having jurisdiction over the matter situated in New Castle County, Delaware, in any Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Assignment or the transactions contemplated hereby.

9.    Severability. If any term or other provision of this Assignment, or any portion thereof, is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms and provisions of this Assignment, or the remaining portion thereof, shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any such term or other provision, or any portion thereof, is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Assignment so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are consummated to the fullest extent possible.

10.    Authority. Each Party hereby represents that its undersigned representative is authorized and legally competent to execute this Assignment as a binding and enforceable agreement.

[Signature Page Follows]


IN WITNESS WHEREOF, the Parties have caused this Assignment to be executed as of the date above first written by their duly authorized representatives.

 

SELLER:

 

By:  

                                          

Name:  
Title:  
LICENSING

 

By:  

                                          

Name:  
Title:  
Acknowledged and Accepted:
ASSIGNEE:

 

By:  

                                          

Name:  
Title:  


SCHEDULE A TO PATENT ASSIGNMENT


Exhibit C – Form of Trademark Assignment

FORM OF TRADEMARK ASSIGNMENT

This TRADEMARK ASSIGNMENT (the “Assignment”), dated as of December 31, 2018 (the “Effective Date”), is by and between Armstrong Flooring, Inc., a Delaware corporation (“Seller”) and AFI Licensing LLC, a Delaware limited liability company (“Licensing and together with Seller, “Assignor”) and Armstrong Hardwood Flooring Company, a Tennessee corporation (the “Company” or “Assignee”) (each of Assignor and Assignee, a “Party” and collectively, the “Parties”). All capitalized terms used, but not defined herein, shall have the meanings ascribed to such terms in the Intellectual Property Agreement (defined herein below).

WHEREAS, Seller and AHF Holding, Inc. (formerly known as Tarzan Holdco, Inc.), a Delaware corporation (“Buyer”) have entered into that certain Stock Purchase Agreement, dated November 14, 2018 (the “SPA”) and Seller, Buyer and the Company have entered into that certain Intellectual Property Agreement, dated December 31, 2018 (the “Intellectual Property Agreement”);

WHEREAS, pursuant to the SPA, the Seller has agreed to sell and transfer, and the Buyer has agreed to purchase and acquire, all of Seller’s right, title and interest in and to the Company and the Company Subsidiaries (including the Company) by way of a purchase by Buyer and sale by Seller of the Shares, all upon the terms and condition set forth therein; and

WHEREAS, pursuant to the Intellectual Property Agreement, Assignor has agreed to sell, convey, assign, and transfer to Assignee all of Assignor’s right, title, and interest in and to the trademarks applications and registrations set forth on Schedule A hereto (collectively, the “Assigned Marks”).

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:

11.    Conveyance. Assignor does hereby irrevocably sell, convey, grant, set over, assign and transfer to Assignee, without reservation of any rights, title or interest, all of Assignor’s worldwide and universal rights, title and interest in and to the Assigned Marks, including, but not limited to, the applications and registrations therefor which are identified in Schedule A attached hereto, together with the goodwill of the business symbolized by such Assigned Marks, the same to be held and enjoyed by Assignee, for its own use and enjoyment, and for the use and enjoyment of any of Assignee’s successors and assigns, as the same would have been held and enjoyed by Assignor if this Assignment had not been made, including, but not limited to, all common-law rights of Assignor in and/or to the Assigned Marks, and


Assignor’s right to sue for all claims, demands and/or causes of action, both at law and in equity, that Assignor may have on account of any infringement, claim of unfair competitions, likelihood of confusion or dilution of the Assigned Marks or any other claim or cause of action related to the Assigned Marks prior to and following the effective date of this Assignment. Assignor further assigns to Assignee the right to sue and recover damages and/or profits for claims of past, present and/or future infringement, unfair competition, dilution, or any other violation or unlawful act relating to the Assigned Marks, if any. Assignee hereby accepts such grant, assignment, transfer and conveyance.

12.    Recordation. Assignor hereby authorizes and requests the Commissioner of Patents and Trademarks and any other applicable governmental entity or registrar (including any applicable foreign or international office or registrar), to record Assignee as the owner of the Assigned Marks, and to issue any and all Assigned Marks to Assignee, as assignee of Assignor’s entire right, title and interest in, to, and under the same. Assignee shall have the right to record this Assignment with all applicable governmental authorities and registrars so as to perfect its ownership of the Assigned Marks.

13.    Further Assistance. Upon Assignee’s reasonable request and at Assignee’s sole cost and expense, Assignor shall (i) provide any further assistance reasonably necessary to effect the assignment of all rights, title and interest in and to the Assigned Marks to Assignee, including, but not limited to, the execution of any further documents and instruments, and (ii) take such other actions as are reasonably necessary to document the aforesaid assignment and transfer to Assignee.

14.    No Modification. Nothing contained in this Assignment is intended to or shall be deemed to modify, alter, amend or otherwise change any of the rights or obligations of Assignor and Assignee and their respective Affiliates under the SPA or the Intellectual Property Agreement.

15.    Successors and Assigns. This Assignment shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and permitted assigns.

16.    Counterparts. This Assignment may be executed in any number of counterparts, including by means of email in portable document format (.pdf), each of which when executed shall be deemed to be an original copy of this Assignment and all of which taken together shall constitute one and the same agreement.

17.    Descriptive Headings. The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Assignment.


18.    Governing Law. This Assignment shall be governed by the laws of the State of Delaware, its rules of conflict of laws notwithstanding. Each Party hereby agrees and consents to be subject to the jurisdiction of the Court of Chancery of the State of Delaware in and for New Castle County, or if the Court of Chancery lacks jurisdiction over such dispute, in any state or federal court having jurisdiction over the matter situated in New Castle County, Delaware, in any Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Assignment or the transactions contemplated hereby.

19.    Authority. Each Party hereby represents that its undersigned representative is authorized and legally competent to execute this Assignment as a binding and enforceable agreement.

20.    Severability. If any term or other provision of this Assignment, or any portion thereof, is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms and provisions of this Assignment, or the remaining portion thereof, shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any such term or other provision, or any portion thereof, is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Assignment so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are consummated to the fullest extent possible.

[Signature Page Follows]


IN WITNESS WHEREOF, the Parties have caused this Assignment to be executed as of the date above first written by their duly authorized representatives.

 

SELLER:

                                                              

By:  

                                          

Name:  
Title:  
LICENSING:

 

By:  

 

Name:  
Title:  
Acknowledged and Accepted:
ASSIGNEE:

 

By:  

 

Name:  
Title:  


SCHEDULE A TO TRADEMARK ASSIGNMENT

(Back To Top)

Section 4: EX-10.3 (EX-10.3)

EX-10.3

Exhibit 10.3

Execution Version

SUBLEASE

between

ARMSTRONG FLOORING, INC.

as Sublandlord

and

ARMSTRONG HARDWOOD FLOORING COMPANY

as Subtenant

for premises located at:

2500 Columbia Avenue, Lancaster, Pennsylvania

December 31, 2018


SUBLEASE

This Sublease (this “Sublease”) , dated as of December 31, 2018, between ARMSTRONG FLOORING, INC., a Delaware corporation (“Sublandlord”), having an address at 2500 Columbia Avenue, Building 701, Lancaster, PA 17603, and Armstrong Hardwood Flooring Company (“Subtenant”), having an address at c/o American Industrial Partners, 450 Lexington Avenue, 40th Floor, New York, NY 10017.

W I T N E S S E T H:

WHEREAS, Sublandlord and an affiliate of Subtenant are parties to (i) that certain Stock Purchase Agreement (the “SPA”) dated as of November 14, 2018, and (ii) that certain Transition Services Agreement dated as of December 31, 2018 (collectively, the “Related Transaction Agreements”);

WHEREAS, Sublandlord has entered into a lease, dated as of April 1, 2016, between Armstrong World Industries, Inc. (“Master Landlord”), as landlord, and Sublandlord, as tenant (the “Master Lease”) for certain premises described in the Master Lease (the “Premises”) and located at the Buildings as defined therein;

WHEREAS, in connection with the consummation of the transactions contemplated by the Related Transaction Agreements, Subtenant desires to sublease from Sublandlord a portion of the Premises, the exact size and location of which will be determined in accordance with Section 2(A) below (the “Demised Premises”), and Sublandlord desires to sublease the Demised Premises to Subtenant upon the terms and conditions hereinafter set forth;

WHEREAS, this Sublease required the consent of Master Landlord in accordance with Article 14 of the Master Lease (the “Consent”), and such Consent was obtained on or prior to the date hereof.

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

1.    Defined Terms. Unless specifically defined or otherwise provided herein, all capitalized terms used in this Sublease which are defined in the Master Lease shall be deemed to have the respective meanings set forth in the Master Lease.

2.    Demised Premises; Demise and Term.

A.    As of the Commencement Date, the Demised Premises shall be deemed to be composed of those portions of the Premises currently occupied by the Subtenant and its

 

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employees in connection with the conduct of the Business (as defined in the SPA), in a manner consistent with the conduct thereof prior to the Commencement Date (the “Current Business Premises”). From and after the Commencement Date, Sublandlord and Subtenant shall work together, in good faith, to determine if the Current Business Premises shall continue to be the Demised Premises or if Subtenant shall be required to relocate and consolidate the Demised Premises into Building 2 (1st and 2nd floors) and Building 402 (2nd floor), or to one or more other Buildings at the Premises reasonably acceptable to the parties. In the event the parties, each acting in good faith, fail to agree upon such determination on or prior to March 31, 2019, then the Demised Premises shall be deemed to mean all of the space located on the 1st and 2nd floors of Building 2 and the 2nd floor of Building 402, and Subtenant shall promptly relocate its employees and Business operations into such space. Within ten (10) days after the exact size and location of the Demised Premises have been determined in accordance with the foregoing provisions, the parties shall attach a description of the Demised Premises as so determined as Exhibit A hereto without further amendment to this Sublease.

B.    For and during the Sublease Term, as defined and established below, Sublandlord leases to Subtenant the Demised Premises. The leasing of the Demised Premises by Subtenant shall include the right of Subtenant (a) to access and use the Common Areas in common with the other tenants in the Buildings and (b) to use all furniture, fixtures, equipment, improvements and betterments owned or leased by Master Landlord or Sublandlord and which, at any time during the Sublease Term, are attached to or installed in the Demised Premises, all subject to such restrictions, rules, regulations and security arrangements as are provided for in the Master Lease.

C.    The term of this Sublease shall commence on the date hereof (the “Commencement Date”) and expire on the day which is one day preceding the Expiration Date of the Master Lease (the “Sublease Expiration Date”; the period from the Commencement Date through the Sublease Expiration Date, the “Sublease Term”), unless sooner cancelled or otherwise terminated as hereinafter provided.

D.    Notwithstanding the provisions of Section 2(C) above, Subtenant shall have the unilateral right to terminate this Sublease to be effective at any time following the sixth (6)-month anniversary of the Commencement Date, upon thirty (30) days prior written notice to Sublandlord and upon the payment to Sublandlord of a fee (the “Termination Fee”) in the amount of $2,500,000.00, which Termination Fee shall be in full and final settlement of all amounts, duties and obligations of Subtenant to Sublandlord hereunder (subject, however, to any surviving obligations or liabilities of Subtenant pursuant to Section 13(C), Section 14(A) and Section 20 hereof). For the avoidance of doubt, the parties expressly confirm, acknowledge and agree that the Termination Fee shall only be due and payable in connection with the exercise of Subtenant’s unilateral right to terminate the Sublease in accordance with this Section 2(D) and

 

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shall in no event be due or payable in connection with the expiration or early termination of this Sublease pursuant to any other provision of this Sublease or any provision of the Master Lease.

3.    Use. Subtenant may use the Demised Premises for the Permitted Uses and uses incidental thereto subject to the provisions of the Master Lease, and for no other purpose.

4.    Gross Rent.

A.    Subtenant shall pay to Sublandlord, without notice or demand, in lawful money of the United States, at the address set forth above or at such other address as Sublandlord may by notice designate (provided such designation is made at least ten (10) Business Days prior to the effective date of such address change), monthly gross rent in equal installments of $208,334.00 (the “Gross Rent”) as follows:

Gross Rent shall be payable in advance on the first day of each month during said term, without any set off or deduction whatsoever (except as otherwise expressly provided in Section 7 hereof), except that Subtenant shall pay the first monthly installment of Gross Rent on the Commencement Date. In the event the Commencement Date is other than the first day of a calendar month, or in the event the Sublease Term expires or is terminated on other than the last day of a calendar month, (i) Gross Rent for such partial month(s) shall be prorated on a per diem basis, (ii) the prorated Gross Rent for the partial month in which the Commencement Date occurs, together with the Gross Rent for the first full calendar month during the Sublease Term, shall be paid on the Commencement Date, and (iii) the portion of the Gross Rent paid in excess of the prorated Gross Rent due with respect to the partial month in which any such expiration or termination occurs, shall be promptly refunded by Sublandlord to Subtenant, provided Subtenant is not then in default hereunder beyond the expiration of any applicable notice and/or cure period.

B.    This Sublease is intended to be a “gross” sublease, and Subtenant’s payment of Gross Rent shall constitute the full and complete consideration due and payable to Sublandlord in connection the leasing of the Demised Premises, the other rights and benefits granted to Subtenant hereunder, and for the provision of all services (including, without limitation, heat, ventilating and air conditioning, utilities, repairs, restoration, alterations, cleaning, elevator service, hot and cold water and light bulb replacement) to the Demised Premises, as contemplated by Article 8 of the Master Lease, it being agreed that Sublandlord shall use commercially reasonable efforts to cause the Master Landlord to furnish, all such services to the Demised Premises for no charge in addition to Gross Rent. For the avoidance of doubt, the parties expressly acknowledge and agree that Subtenant shall have no liability or obligation to pay or reimburse Sublandlord for any Additional Rent, Taxes, Operating Expenses, or any other rent or additional rent otherwise payable by Sublandlord under the Master Lease, and the provisions of Article 5 of the Master Lease shall not be applicable hereto.

 

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C.    If Subtenant shall fail to make any payment of Gross Rent for more than five (5) days after the same is due and payable, Subtenant shall pay a late payment charge of $.05 for each $1.00 which remains unpaid to compensate Sublandlord for additional expenses in processing such late payment. In addition, if Subtenant fails to pay any Gross Rent when due, Subtenant shall pay interest thereon from the date due until the date paid at an annual rate equal to the Prime Rate plus one percent (1%) per annum but not in excess of the maximum amount permitted by law to be charged to Subtenant, and such interest shall be deemed to be additional rent hereunder.

D.    If any check of Subtenant shall be returned for insufficient funds, there shall be an additional charge to Subtenant of $150.00 and, thereafter, at the request of Sublandlord, Subtenant shall make all payments required hereunder by certified or official bank check only.

E.    The Gross Rent and any other charges expressly required by the terms of this Sublease (e.g., late charges, default interest, attorney’s fees, costs relating to obtaining Master Landlord’s approval) are collectively referred to herein as the “rent”.

5.    Sublease Subject to Master Lease.

A.    A true and complete copy of the Master Lease is annexed hereto and, except as otherwise provided in Section 6 below, is made a part hereof as Exhibit B.

B.    This Sublease is subject and subordinate to all of the terms, covenants and conditions of the Master Lease and to the matters to which the Master Lease is or shall be subordinate. In the event of any termination, re-entry, or dispossession by Master Landlord under the Master Lease, Master Landlord may, at its option, take over all of the right, title and interest of Sublandlord under this Sublease, and Subtenant shall, at Master Landlord’s option, attorn to Master Landlord subject to the conditions and exceptions set forth in Section 14.4(b) of the Master Lease.

C.    Notwithstanding anything to the contrary contained in this Sublease, Subtenant does not have any rights in respect of the Demised Premises greater than Sublandlord’s rights under the Master Lease.

6.    Incorporation by Reference. All of the terms, covenants and conditions contained in the Master Lease are incorporated by reference into this Sublease, except where inconsistent with or modified by the terms of this Sublease, and are also subject, without limitation, to the following specific exceptions and/or modifications:

A.    Notwithstanding anything to the contrary contained herein, (i) the following provisions of the Master Lease are not incorporated into, and shall not be applicable to, this

 

5


Sublease but shall continue in full force and effect as between Sublandlord and Master Landlord in the Master Lease: Section 1.1., Section 1.2, Article 3, Article 5, Article 6, Section 14.5, Section 14.6, Section 14.7, Section 25.1, Article 35, Article 40, Section 41.10, Exhibit F-1, Exhibit F-2, Exhibit F-3, Exhibit G and Schedule 40.2; (ii) all references in the Master Lease to “Licensed Space”, “Additional Rent”, “Taxes”, “Operating Expenses”, “Tenant’s Proportionate Share” and any of the other terms specifically defined in Article 5 or Article 40 shall not be incorporated into this Sublease for any reason.

B.    With respect to the provisions of the Master Lease which are incorporated herein, wherever used in such provisions of the Master Lease, the words “Landlord” and “Tenant”, or words of similar import, shall be construed to mean, respectively, “Sublandlord” and “Subtenant”; provided, however, that the word “Landlord” in the Master Lease shall be construed to mean both “Sublandlord” and “Master Landlord” in those Sections of the Master Lease providing for indemnification by Tenant and insurance coverage required by Tenant; the word “Landlord” in the Master Lease shall be construed to mean only Master Landlord in those Sections of the Master Lease providing for Landlord’s services, Building construction and repairs, removal of Building violations, operation of the Buildings, Landlord’s insurance and the like (subject, however, to the provisions of this Sublease); the word “Lease”, or words of similar import, shall be construed to mean this “Sublease”; the words “Minimum Rent”, “minimum or base rent,” “monthly rate”, “Rent”, “rent” or words of similar import, shall be construed to mean only the monthly Gross Rent payable in accordance with Section 4(A) hereof, together with any other charges expressly required by the terms of this Sublease (e.g., late charges, default interest, attorney’s fees, costs relating to obtaining Master Landlord’s approval), and shall in no event be deemed a reference to the amounts payable under Article 3 or Article 5 of the Master Lease; the word “Premises” shall be construed to mean only the Demised Premises as defined in this Sublease; the words “Tenant’s Property” shall be construed to mean “Subtenant’s Property;” the words “term”, “Term” or “Initial Term”, “Commencement Date” or “Possession Date”, and “Expiration Date”, or words of similar import, shall be construed to mean, respectively, the “Sublease Term”, the “Commencement Date” and “Sublease Expiration Date”, as applicable and as set forth in Section 2(C) hereof, and shall in no event be deemed to be a reference to any terms set forth in Article 1 of the Master Lease; and the word “Initial Notice” shall mean any notice of Dispute sent by Sublandlord or Subtenant.

C.    To the extent possible, the provisions of the Master Lease which are incorporated by reference into this Sublease as provided above shall be construed as consistent with and complementary to the other provisions of this Sublease, but in the event of any inconsistency, the provisions of this Sublease shall control.

D.    Whenever the approval or consent of Sublandlord is required under any provision of the Master Lease or this Sublease, Subtenant acknowledges and agrees that the prior written

 

6


approval or consent of Master Landlord may also be required. In such event, promptly following Sublandlord’s receipt of Subtenant’s request for such approval or consent, Sublandlord shall use commercially reasonable efforts to obtain from Master Landlord its approval or consent to the relevant matter, and any reasonable costs or expenses incurred by Sublandlord in requesting or obtaining Master Landlord’s consent shall be deemed to be additional rent and shall be paid by Subtenant within thirty (30) days after receipt of Sublandlord’s invoice (accompanied by reasonably sufficient supporting documentation) therefor. Whenever Sublandlord has agreed that a required approval or consent shall not be unreasonably withheld or delayed (whether in this Sublease or pursuant to any provision of the Master Lease incorporated herein) Sublandlord may withhold its approval or consent and/or it shall be deemed reasonable for Sublandlord to withhold or delay its approval or consent if Master Landlord shall have delayed or refused to give any approval or consent which may be requested of it related to the same matter, so long as Sublandlord exercised commercially reasonable efforts to obtain such approval or consent from Master Landlord in accordance with the provisions hereof.

7.    Performance by Master Landlord. Subtenant acknowledges that Master Landlord (and not Sublandlord) is responsible for the services and obligations specified in the Master Lease to be provided or performed by Master Landlord thereunder, including, without limitation, heat, ventilating and air conditioning, utilities, repairs, restoration, alterations, cleaning, elevator service, hot and cold water and light bulb replacement, including any of Master Landlord’s repair obligations pursuant to Article 8 of the Master Lease. If Master Landlord shall default or delay in the performance or observance of any of its agreements or obligations under the Master Lease (including, but not limited to, any obligation to perform or furnish any work, services or utilities at or to the Demised Premises or the Premises), Sublandlord agrees that it will, upon written request from Subtenant, make demand upon Master Landlord to perform its obligations under the Master Lease; provided, however, that Sublandlord will have no obligation to take any legal action to enforce the Master Lease. Notwithstanding the foregoing, Sublandlord shall not be liable to Subtenant for the consequences of any default, failure or delay on the part of Master Landlord, except to the extent that the Master Lease provides abatement, set off, self-help or other rights in connection therewith, in which case Subtenant shall have similar rights against Sublandlord as a result thereof, provided that Subtenant is not in default hereunder beyond the expiration of any applicable notice and/or cure period. In furtherance of the foregoing, Subtenant does, to the extent permitted by law, and so long as Sublandlord complies with its obligations under this Section 7, except for the willful misconduct or gross negligence of Sublandlord, hereby waive any cause of action and any right to bring an action against Sublandlord by reason of any act or omission of Master Landlord under the Master Lease. Notwithstanding the foregoing, if, as a result of Master Landlord’s failure to provide the services or perform the repair obligations contemplated by Article 8 of the Master Lease, it becomes reasonably impracticable for Subtenant to occupy the Demised Premises for the Permitted Uses in accordance with Section 2, and such failure continues for a

 

7


period in excess of five (5) consecutive Business Days, then, provided Subtenant upon the occurrence of such failure gave Sublandlord written notice thereof describing such failure, Subtenant shall receive a full abatement of all Gross Rent due under this Sublease, which abatement shall be retroactive to date it first became reasonably impracticable for Subtenant to occupy the Demised Premises for the Permitted Uses in accordance with Section 2, and shall continue until the date it again becomes reasonably practical for Subtenant to resume the operation its business therein.

8.    Condition of Demised Premises. Subtenant is leasing and accepts the Demised Premises in its current “AS IS” condition on the Commencement Date, reasonable wear and tear excepted. Without limiting the generality of the foregoing, Sublandlord shall have no obligation to make, supply or perform any alterations, services, material, fixtures, equipment, or decorations to the Demised Premises. In entering into this Sublease, Subtenant has relied solely on such investigations, examinations, and inspections as Subtenant has chosen to make and Subtenant acknowledges that Sublandlord has afforded Subtenant the opportunity for full and complete investigations, examinations, and inspections.

9.    Fire or Casualty; Insurance.

A.    If the Demised Premises shall be damaged by fire or other casualty, Subtenant agrees that it shall not be the obligation of Sublandlord to repair, restore or rebuild the Demised Premises (except to the extent expressly provided to the contrary in Article 8 or Article 12 of the Master Lease) and Subtenant shall look solely to Master Landlord to repair, restore or rebuild the same in accordance with the applicable provisions of the Master Lease. Except to the extent such restoration is Sublandlord’s obligation under Article 8 or Article 12 of the Master Lease, Sublandlord shall not be responsible for restoration nor for any inconvenience or annoyance to Subtenant or injury to Subtenant’s business resulting in any way from such damage or any repair or restoration. If, as a result of any such casualty, the Master Lease grants rights to Sublandlord, Subtenant shall be entitled to the exercise of, or, at Subtenant’s request, Sublandlord will exercise on Subtenant’s behalf, all such rights as they relate to the Demised Premises and to all services and repairs which Master Landlord is and may be obligated to furnish the Demised Premises or Sublandlord with respect to the Demised Premises pursuant to the terms of the Master Lease. Subtenant understands and acknowledges that Sublandlord will not carry insurance of any kind on any goods, furniture or furnishings owned by Subtenant or on any trade or other fixtures, equipment, other items of moveable personal property, improvements, installations or appurtenances owned and removable by Subtenant (collectively, the “Subtenant’s Property”), and that neither Sublandlord nor Master Landlord shall be obligated to repair any damage thereto or replace same.

 

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B.    To the extent applicable to the Demised Premises or Subtenant’s use thereof, Subtenant shall comply with all insurance, release and waiver of subrogation requirements imposed upon Sublandlord as “Tenant” under the Master Lease, including, without limitation, such requirements set forth in Article 31 of the Master Lease as incorporated herein. All such insurance shall name Sublandlord as an additional insured, in addition to the other entities which are required to be named as additional insureds pursuant to the Master Lease. On or prior to the Commencement Date, Subtenant shall deliver to Sublandlord a certificate of insurance as evidence of such insurance coverage and evidence of waivers of subrogation required to be carried hereunder (collectively, the “Required Policies”). Evidence of each renewal or replacement of all such Required Policies shall be delivered by Subtenant to Sublandlord prior to the scheduled expiration date of the Required Policies.

10.    Assignment and Subletting.

A.    Subtenant shall not (i) assign, sell, mortgage, encumber, pledge, or in any manner transfer this Sublease or any interest therein, nor permit any of the foregoing to occur involuntarily, by operation of law, or otherwise, or (ii) sub-sublet the Demised Premises or any part or parts thereof, grant any concession or license, nor otherwise permit use or occupancy of all or any part of the Demised Premises by any person or entity other than Subtenant, or any entity which controls, is controlled by, or is under common control with Subtenant, without, in each of the foregoing instances, the prior written consent of Master Landlord and the prior written consent of Sublandlord (which prior written consent of Sublandlord shall not be unreasonably withheld, conditioned or delayed); provided, however, in no event may Subtenant sublet the Demised Premises in part.

B.    Subtenant acknowledges and agrees that any amounts due to Master Landlord for attorneys’ fees in connection with Subtenant’s request for approval of or consent to any assignment of this Sublease or sub-subletting of all or any portion of the Demised Premises shall be paid by Subtenant to Sublandlord, as additional rent, within thirty (30) days after receipt of Sublandlord’s invoice (accompanied by reasonably sufficient supporting documentation) therefor.

C.    The making of any assignment, transfer, mortgage, pledge or other encumbrance or sub-subletting, in whole or in part, and whether or not in violation of the provisions of this Sublease, shall not operate to relieve or release Subtenant from its obligations under this Sublease and, notwithstanding any such assignment, transfer, mortgage, pledge, encumbrance or sub-subletting, Subtenant shall be liable for the payment of all rent and for the due performance of all the covenants, agreements, terms and provisions of this Sublease to the full end of the Sublease Term in accordance with the terms and provisions hereof. Each and every assignee, whether as assignee or as successor in interest of Subtenant or as assignee or successor in interest

 

9


of any assignee, shall immediately be and become and remain liable jointly and severally with Subtenant and with each other for the payment of all rent and for the due performance of all the covenants, agreements, terms and provisions of this Sublease on the part of Subtenant to be paid and performed to the full end of the Sublease Term in accordance with the terms and provisions hereof.

D.    Any consent by Sublandlord that may hereafter be given to any act of assignment, transfer, mortgage, pledge, encumbrance or sub-subletting shall be held to apply only to the specific transaction thereby approved. Such consent shall not be construed as a waiver of the duty of Subtenant or its successors or assignees to obtain from Sublandlord and the necessity of the parties to obtain from Master Landlord a consent to any other subsequent assignment, transfer, mortgage, pledge, encumbrance or sub-subletting or as a modification or limitation of the rights of Sublandlord with respect to the foregoing covenants by Subtenant.

11.    Alterations.

A.    Subtenant shall make no alterations, installations, additions or improvements (collectively, “Alterations”) in or to the Demised Premises of any nature without Sublandlord’s prior consent, which consent shall be in Sublandlord’s sole discretion. The foregoing notwithstanding, Sublandlord’s consent shall not be required for (i) mere decorative Alterations (e.g., painting, carpeting and floor and wall coverings) or (ii) installations which are customary for an office tenant, provided such Alterations are non-structural and do not affect any of the mechanical or utility systems of the Buildings or any other space occupied by Sublandlord. If the Master Lease requires the consent of Master Landlord for an Alteration, Subtenant shall not make such Alteration without the consent of Master Landlord (and Sublandlord agrees to pursue such consent, if requested by Subtenant, in accordance with the provisions of Section 6(D) hereof). All Alterations made by Subtenant to the Demised Premises shall be made in accordance with Legal Requirements and the provisions of the Master Lease, including the Rules and Regulations promulgated thereunder. Subtenant shall cooperate with Master Landlord and Sublandlord with respect to the scheduling of Subtenant’s Alterations. Any failure of Subtenant to complete Subtenant’s initial Alterations for occupancy of the Demised Premises shall not result in postponement of the commencement of payment of rent under this Sublease.

B.    Subtenant shall perform all of its Alterations, including the initial Alterations to prepare the Demised Premises for Subtenant’s occupancy (if any), at Subtenant’s sole cost and expense in accordance with and subject to the provisions of Article 7 of the Master Lease.

C.    Subtenant shall provide to Sublandlord and Master Landlord all plans prepared or required in connection with Subtenant’s Alterations, or if no plans are so required, drawings and/or a description of the work.

 

10


D.    Except as provided in Article 7 and Article 36 of the Master Lease, all of Subtenant’s Property shall be and at all times remain the property of Subtenant and nothing contained herein shall be construed as prohibiting Subtenant from removing same from the Demised Premises.

E.    Subject to Section 8.1 of the Master Lease, Subtenant shall, throughout the term of this Sublease, take good care of the Demised Premises, the fixtures and equipment therein and any Subtenant Alterations, and at Subtenant’s sole cost and expense, make all repairs thereto as and when needed to preserve them in good working order and condition, reasonable wear and tear, obsolescence and damage from the elements, fire or other casualty, excepted.

12.    Representations and Warranties.

A.    Subtenant hereby represents and warrants to Sublandlord that the person signing this Sublease on behalf of Subtenant has the full right and authority to execute this Sublease on behalf of Subtenant, and that this Sublease constitutes a valid and binding obligation of Subtenant enforceable against Subtenant in accordance with its terms. Sublandlord hereby represents and warrants to Subtenant that the person signing this Sublease on behalf of Sublandlord has the full right and authority to execute this Sublease on behalf of Sublandlord, and that this Sublease constitutes a valid and binding obligation of Sublandlord enforceable against Sublandlord in accordance with its terms.

B.    Sublandlord hereby represents and warrants that (i) Sublandlord is the sole holder of the interest of the tenant under the Master Lease; (ii) the Master Lease is in full force and effect and, to the best of Sublandlord’s knowledge, Master Landlord is not in default thereunder; and (iii) Sublandlord, to the best of its knowledge, is not in material default, and has received no notice that it is in default, under the Master Lease.

13.    Subtenant’s and Sublandlord’s Additional Covenants. Subtenant and Sublandlord, as applicable, also covenants as follows:

A.    Subtenant hereby assumes and agrees to perform and comply with all of the terms, covenants and conditions of the Master Lease (except as otherwise provided in Section 6) on the part of the tenant thereunder to be performed and observed, with respect to the Demised Premises and Subtenant’s use of the Common Areas during the Sublease Term, other than as expressly set forth in this Sublease.

B.    Subtenant will not do or cause to be done or suffer or permit any act or thing to be done or suffered which would or might constitute a default under the Master Lease or cause the Master Lease or the rights of Sublandlord, as tenant thereunder, to be terminated or which would or might cause Sublandlord to become liable for any damages, costs, claims or penalties or

 

11


would or might increase the fixed rent, additional rent or other charges or obligations of Sublandlord, as tenant under the Master Lease, or would or might adversely affect or reduce any of Sublandlord’s rights or benefits under the Master Lease.

C.    Subtenant shall defend, indemnify and hold Sublandlord harmless from and against any and all claims, actions, liabilities, losses, damages, costs and expenses (including, without limitation, reasonable attorneys’ fees and disbursements) (“Losses”) arising from the use or occupancy by Subtenant of the Demised Premises or the Buildings or from any work or thing done or any condition created by or any other act or omission of Subtenant or its employees, agents, contractors, visitors or licensees (each a “Subtenant Party”), in or about the Demised Premises or any other part of the Buildings, or from any breach of its obligations under this Sublease, including, without limitation, any Losses resulting from Subtenant’s failure to surrender possession of the Demised Premises on the Sublease Expiration Date in accordance with the terms of this Sublease. The provisions of this Section 13(C) shall survive the expiration or earlier termination of this Sublease.

D.    Sublandlord shall perform and comply with all of the terms, covenants and conditions of the Master Lease on its part to be performed and observed, other than to the extent that any failure to perform shall have resulted from any default by Subtenant hereunder, and Sublandlord will not do or cause to be done or suffer or permit any act or thing to be done or suffered which would cause the Master Lease to be terminated, amended or modified so as to adversely affect the rights or benefits of Subtenant under this Sublease or its derivative rights and benefits under the Master Lease, and Sublandlord will not do or cause to be done or suffer or permit any act or thing to be done or suffered which causes Subtenant to become liable for any damages, costs, claims or penalties.

E.    Sublandlord shall defend, indemnify and hold Subtenant harmless from and against any and all Losses arising from the use or occupancy by Sublandlord of the space demised under the Master Lease (other than the Demised Premises) or from any work or thing done or any condition created by or any other act or omission of Sublandlord or its employees, agents, contractors, visitors or licensees, in or about the Demised Premises or any other part of the Buildings, in each case, resulting from any breach of Sublandlord’s obligations under the Master Lease or this Sublease; provided, however, that the foregoing indemnity shall not apply to any Losses resulting from (i) any action or failure to act by Master Landlord or (ii) the acts of any Subtenant Party. The provisions of this Section 13(E) shall survive the expiration or earlier termination of this Sublease.

F.    Sublandlord and Subtenant each promptly shall furnish to the other copies of any notices of default given by Master Landlord to Sublandlord or Subtenant, and any notices of default sent by Sublandlord to Master Landlord, as the case may be.

 

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14.    Hazardous Substances.

A.    Subtenant acknowledges and expressly agrees to comply with the provisions in Article 38 of the Master Lease, and Subtenant shall indemnify and hold Master Landlord and Sublandlord harmless from and against any claims, demands, losses, liabilities, penalties and damages arising out of, or in any way connected with the installation, placement, storage or release of Hazardous Materials used or installed by Subtenant, Subtenant’s employees, contractors or agents upon the Demised Premises in violation of the terms of this Sublease or the Master Lease. If Subtenant, or its employees, contractors or agents install, use, store or place Hazardous Materials in the Demised Premises, Subtenant shall be obligated to remove and dispose of said Hazardous Materials in compliance with all Legal Requirements. This covenant shall survive the expiration or earlier termination of this Sublease.

B.    Sublandlord acknowledges and expressly agrees to comply with the provisions in Article 38 of the Master Lease, and Sublandlord shall indemnify and hold Subtenant harmless from and against any claims, demands, losses, liabilities, penalties and damages arising out of, or in any way connected with the installation, placement, storage or release of Hazardous Materials used or installed by Sublandlord, Sublandlord’s employees, contractors or agents upon the Demised Premises or any other space demised to Sublandlord under the Master Lease in violation of the terms of this Sublease or the Master Lease. This covenant shall survive the expiration or earlier termination of this Sublease.

15.    Remedies. If Subtenant defaults in the performance of any of the terms, covenants or conditions of this Sublease or the Master Lease (to the extent incorporated herein) beyond any applicable notice and cure period, Sublandlord shall be entitled to exercise any and all of the rights and remedies to which it is entitled at law or in equity, and also any and all of the rights and remedies specifically provided for in the Master Lease with the same force and effect as if herein specifically set forth in full, and wherever in the Master Lease rights and remedies are given to Master Landlord, the same shall be deemed to refer to Sublandlord.

16.    Broker. Sublandlord and Subtenant each represent and warrant to the other that it dealt with no broker, finder or agent in connection with this Sublease. Each of Sublandlord and Subtenant shall indemnify, defend, protect and hold the other party harmless from and against any and all losses, liabilities, damages, claims, judgments, fines, suits, demands, costs, interest and expenses of any kind or nature, including, without limitation, reasonable attorneys’ fees and disbursements, which the indemnified party may incur by reason of any claim of or liability to any broker, finder or like agent arising out of any dealings claimed to have occurred between the indemnifying party and the claimant in connection with this Sublease, or arising from a breach by such party of any representation and warranty set forth in this Section 16.

 

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17.    Notices. All notices, requests, claims, demands or other communications under this Sublease (collectively, “Notices” or “notices”) shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, or by registered or certified mail (postage prepaid, return receipt requested) 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 17):

 

If to Sublandlord, to:

Armstrong Flooring, Inc.

Building 701

2500 Columbia Avenue

Lancaster, PA 17603

Attention: General Counsel

Email:

With a copy to:

Armstrong Flooring, Inc.

P.O. Box 3025

Lancaster, PA 17604

Attention: General Counsel

Email:

If to Subtenant, to:

Richard Hoffman

c/o American Industrial Partners

450 Lexington Avenue, 40th Floor

New York, NY 10017

Attention:         General Counsel and Richard Hoffman

Email:               notices@americanindustrial.com

            richard@americanindustrial.com

Any party may, by notice to the other party, change the address to which such notices are to be given. A notice given by counsel for Sublandlord or Subtenant shall be deemed a valid notice if addressed and sent in accordance with the provisions of this Section 17. Each of the parties hereto waives personal or any other service other than as provided for in this Section 17. Notwithstanding the foregoing, either party hereto may give the other party facsimile, email or

 

14


oral notice of the need of emergency repairs. Sublandlord’s rent bills, invoices and related documentation may be delivered by Sublandlord via ordinary United States mail.

18.    Quiet Enjoyment. Provided that Subtenant is not in default hereunder beyond the expiration of any applicable notice and/or cure period, Subtenant may peaceably and quietly enjoy the Demised Premises, subject to the Master Lease and all matters to which the Master Lease is subject, the rights of any superior mortgagee or superior lessor and the terms and conditions of this Sublease.

19.    Termination of Master Lease. Subject to the provisions of Section 5(B) hereof, in the event of and upon the termination or cancellation of the Master Lease pursuant to any of the provisions thereof, this Sublease shall automatically expire and terminate and shall be of no further force and effect, and Subtenant shall forthwith quit, surrender and vacate the Demised Premises without prejudice however, to Sublandlord’s rights and remedies against Subtenant under the provisions hereof in effect prior to such termination, and any rent owing shall be paid up to the date of such termination and, provided Subtenant is not otherwise in default hereunder beyond the expiration of any applicable notice and/or cure period, any payments of rent made by Subtenant which were on account of any period subsequent to such date shall be returned to Subtenant and Subtenant shall have no claim against Sublandlord of any kind whatsoever.

20.    Surrender. Upon the expiration or other termination of this Sublease, Subtenant shall quit and surrender the Demised Premises, broom clean, in good order and condition, ordinary wear and tear and damage by fire or other casualty or condemnation excepted, vacant and free of all of the Subtenant’s Property and otherwise in accordance with the terms and conditions of this Sublease and the Master Lease. Subtenant’s obligations under this provision shall survive the expiration or earlier termination of this Sublease.

21.    No Waiver. The failure of either party to insist upon the strict performance or observance of any obligation of the other party under this Sublease or to exercise any right or other remedy under or with respect to this Sublease shall not be construed as a waiver or relinquishment for the future of that obligation, right or other remedy of either party. Sublandlord’s receipt and acceptance of any rent, or acceptance of performance by Sublandlord of any obligation, with knowledge of Subtenant’s breach or default under this Sublease, shall not be construed as a waiver of that breach or default. No waiver by either party of any provision of this Sublease shall be deemed to have been made unless specifically expressed in a writing signed by the waiving party.

22.    No Oral Change. This Sublease cannot be changed orally or in any manner other than by a written agreement executed by both parties.

 

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23.    Successors and Assigns. Except as may be otherwise specifically provided in this Sublease, the provisions of this Sublease shall extend to, bind and inure to the benefit of the parties hereto and their respective personal representatives, heirs, successors and permitted assigns. In the event of any assignment or transfer of Sublandlord’s interest in the Master Lease, Sublandlord shall be released and discharged from all covenants, conditions and agreements of Sublandlord under this Sublease arising from and after the effective date of such assignment or transfer, provided, however, that such covenants, conditions and agreements arising from and after the effective date of such assignment or transfer shall be deemed to be assumed by and to be binding upon such assignee or transferor.

24.    Interpretation. This Sublease shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania without giving effort to the principles of conflicts of law.

25.    Severability. If any provision of this Sublease or the application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, the remainder of this Sublease and the application of that provision to other persons or circumstances shall not be affected but rather shall be enforced to the fullest extent permitted by law.

26.    Headings. The captions, headings and titles contained in this Sublease, if any, are solely for convenience of reference and shall not affect its interpretation.

27.    Execution and Delivery. The submission to Subtenant of this Sublease shall not constitute an option or offer for the subleasing of the Demised Premises, and the execution and/or delivery of this Sublease by Subtenant shall have no binding force or effect on Sublandlord unless and until Sublandlord and Subtenant shall have (i) executed this Sublease, and (ii) delivered a fully-executed counterpart to each other.

28.    Counterparts. This Sublease may be executed in one or more counterparts, each of which shall constitute an original hereof and all of which, taken together, shall constitute one and the same instrument.

29.    Miscellaneous.

A.    Except with respect to actions to be taken by Subtenant for which shorter or other time limits are specifically set forth in this Sublease, which time limits shall control for the purposes of this Sublease, the time limits provided in those portions of the Master Lease that are incorporated herein for the giving or making of any Notice by the tenant thereunder to Master Landlord, the holder of any leasehold mortgage or any other party, or for the performance of any act, condition or covenant by the tenant thereunder, or for the exercise of any right, remedy or option by the tenant thereunder, are changed for the purpose of incorporation into this Sublease,

 

16


by shortening the same in each instance by (i) fifteen (15) days with respect to all such periods of sixty (60) or more days, (ii) seven (7) days with respect to all such periods of thirty (30) or more days but less than sixty (60) days, (iii) five (5) days with respect to all such periods of twenty (20) or more days but less than thirty (30) days and (iv) three (3) days with respect to all such periods of less than twenty (20) days, provided, however, that in no event shall any such period be shortened to less than three (3) Business Days, so that any Notice may be given or made, or any act, condition or covenant performed, or any right, remedy or option hereunder exercised, by Sublandlord within the time limit relating thereto contained in the Master Lease.

B.    Except with respect to actions to be taken by Sublandlord for which longer time or other limits are specifically set forth in this Sublease, which time limits shall control for the purposes of this Sublease, the time limits provided in those portions of the Master Lease that are incorporated herein for the giving or making of any Notice by Master Landlord, for the performance of any act, covenant or condition by Master Landlord, or for the exercise of any right, remedy or option by Master Landlord thereunder are changed for the purpose of incorporation into this Sublease, by lengthening the same in each instance by (i) fifteen (15) days with respect to all such periods of sixty (60) or more days, (ii) seven (7) days with respect to all such periods of thirty (30) or more days but less than sixty (60) days, (iii) five (5) days with respect to all such periods of twenty (20) or more days but less than thirty (30) days and (iv) three (3) days with respect to all such periods of less than twenty (20) days so that any Notice may be given, any act, condition or covenant performed or any right, remedy or option exercised, by Sublandlord within the number of days respectively set forth above, after the time limits relating thereto contained in the Master Lease.

 

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IN WITNESS WHEREOF, Sublandlord and Subtenant have executed and delivered this Sublease as of the date first above written.

 

SUBLANDLORD:
ARMSTRONG FLOORING, INC., a Delaware corporation
By:  

/s/ Donald R. Maier

  Name:  Donald R. Maier
  Title:    President and Chief Executive Officer
SUBTENANT:
ARMSTRONG HARDWOOD FLOORING COMPANY (to be renamed AHF, Inc. after the Closing Date), a Tennessee corporation
By:  

/s/ Michael L. Bell

  Name:  Michael L. Bell
  Title:    President


EXHIBIT A

Demised Premises

[To follow.]

 

1


EXHIBIT B

Master Lease

[See attached.]

 

1

(Back To Top)

Section 5: EX-10.4 (EX-10.4)

EX-10.4

Exhibit 10.4

EXECUTION VERSION

 

 

 

Deal CUSIP: 04238TAA0

Revolver CUSIP: 04238TAB8

Term Loan CUSIP: 04238TAC6

CREDIT AGREEMENT

Dated as of December 31, 2018

among

ARMSTRONG FLOORING, INC.,

as the Borrower,

THE SUBSIDIARIES OF THE BORROWER PARTY HERETO,

as the Guarantors,

BANK OF AMERICA, N.A.,

as Administrative Agent, Collateral Agent, Swingline Lender and L/C Issuer,

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

JPMORGAN CHASE BANK, N.A.

and

SUNTRUST ROBINSON HUMPHREY, INC.,

as Joint Lead Arrangers and Joint Bookrunners,

BANK OF AMERICA, N.A.,

JPMORGAN CHASE BANK, N.A.

and

SUNTRUST BANK,

as Co-Syndication Agents,

and

THE LENDERS PARTY HERETO

 

 

 


TABLE OF CONTENTS

 

         Page  

ARTICLE I

 

DEFINITIONS AND ACCOUNTING TERMS

     1  

1.01

 

Defined Terms

     1  

1.02

 

Other Interpretive Provisions

     34  

1.03

 

Accounting Terms

     35  

1.04

 

Rounding

     36  

1.05

 

Times of Day

     36  

1.06

 

Letter of Credit Amounts

     36  

1.07

 

UCC Terms

     36  

1.08

 

Rates

     36  

ARTICLE II

 

COMMITMENTS AND CREDIT EXTENSIONS

     37  

2.01

 

Loans

     37  

2.02

 

Borrowings, Conversions and Continuations of Loans

     37  

2.03

 

Letters of Credit

     39  

2.04

 

Swingline Loans

     47  

2.05

 

Prepayments

     49  

2.06

 

Termination or Reduction of Commitments

     52  

2.07

 

Repayment of Loans

     53  

2.08

 

Interest and Default Rate

     54  

2.09

 

Fees

     55  

2.10

 

Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate

     55  

2.11

 

Evidence of Debt

     56  

2.12

 

Payments Generally; Administrative Agent’s Clawback

     56  

2.13

 

Sharing of Payments by Lenders

     58  

2.14

 

Cash Collateral

     59  

2.15

 

Defaulting Lenders

     60  

2.16

 

Increase in Revolving Facility or Term Facility

     62  

ARTICLE III

 

TAXES, YIELD PROTECTION AND ILLEGALITY

     64  

3.01

 

Taxes

     64  

3.02

 

Illegality

     69  

3.03

 

Inability to Determine Rates

     70  

3.04

 

LIBOR Successor Rate

     71  

3.05

 

Increased Costs; Reserves on Eurodollar Rate Loans

     71  

3.06

 

Compensation for Losses

     73  

3.07

 

Mitigation Obligations; Replacement of Lenders

     74  

3.08

 

Survival

     74  

ARTICLE IV

 

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

     74  

4.01

 

Conditions of Initial Credit Extension

     74  

4.02

 

Conditions to all Credit Extensions

     78  

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES

     79  

5.01

 

Existence, Qualification and Power

     79  

 

i


TABLE OF CONTENTS

 

         Page  

5.02

 

Authorization; No Contravention

     80  

5.03

 

Governmental Authorization; Other Consents

     80  

5.04

 

Binding Effect

     80  

5.05

 

Financial Statements; No Material Adverse Effect

     80  

5.06

 

Litigation

     81  

5.07

 

No Default

     81  

5.08

 

Ownership of Property

     81  

5.09

 

Environmental Compliance

     81  

5.10

 

Insurance

     82  

5.11

 

Taxes

     82  

5.12

 

ERISA Compliance

     83  

5.13

 

Margin Regulations; Investment Company Act

     83  

5.14

 

Disclosure

     84  

5.15

 

Compliance with Laws

     84  

5.16

 

Solvency

     84  

5.17

 

Casualty, Etc

     84  

5.18

 

Sanctions Concerns and Anti-Corruption Laws; EEA Financial Institutions

     84  

5.19

 

Responsible Officers

     85  

5.20

 

Subsidiaries; Equity Interests; Loan Parties

     85  

5.21

 

Collateral Representations

     86  

5.22

 

Labor Matters

     87  

5.23

 

Certificate of Beneficial Ownership

     87  

ARTICLE VI

 

AFFIRMATIVE COVENANTS

     87  

6.01

 

Financial Statements

     87  

6.02

 

Certificates; Other Information

     88  

6.03

 

Notices

     91  

6.04

 

Payment of Obligations

     91  

6.05

 

Preservation of Existence, Etc

     91  

6.06

 

Maintenance of Properties

     92  

6.07

 

Maintenance of Insurance

     92  

6.08

 

Compliance with Laws

     93  

6.09

 

Books and Records

     94  

6.10

 

Inspection Rights

     94  

6.11

 

Use of Proceeds

     94  

6.12

 

Material Contracts

     94  

6.13

 

Covenant to Guarantee Obligations

     95  

6.14

 

Covenant to Give Security

     95  

6.15

 

Further Assurances

     96  

6.16

 

Anti-Corruption and Anti-Terrorism Laws

     96  

6.17

 

Post Closing Deliverables

     96  

 

ii


TABLE OF CONTENTS

 

         Page  

ARTICLE VII

 

NEGATIVE COVENANTS

     97  

7.01

 

Liens

     97  

7.02

 

Investments

     99  

7.03

 

Indebtedness

     101  

7.04

 

Fundamental Changes

     103  

7.05

 

Dispositions

     103  

7.06

 

Restricted Payments

     104  

7.07

 

Change in Nature of Business

     105  

7.08

 

Transactions with Affiliates

     105  

7.09

 

Burdensome Agreements

     105  

7.10

 

Use of Proceeds

     106  

7.11

 

Financial Covenants

     107  

7.12

 

Amendments of Organization Documents; Fiscal Year; Legal Name, State of Formation; Form of Entity and Accounting Changes

     107  

7.13

 

Sale and Leaseback Transactions

     107  

7.14

 

Sanctions

     107  

7.15

 

Anti-Corruption Laws

     107  

ARTICLE VIII

 

EVENTS OF DEFAULT AND REMEDIES

     107  

8.01

 

Events of Default

     107  

8.02

 

Remedies upon Event of Default

     110  

8.03

 

Application of Funds

     110  

ARTICLE IX

 

ADMINISTRATIVE AGENT

     111  

9.01

 

Appointment and Authority

     111  

9.02

 

Rights as a Lender

     112  

9.03

 

Exculpatory Provisions

     112  

9.04

 

Reliance by Administrative Agent

     113  

9.05

 

Delegation of Duties

     114  

9.06

 

Resignation of Administrative Agent

     114  

9.07

 

Non-Reliance on Administrative Agent and Other Lenders

     116  

9.08

 

No Other Duties, Etc

     116  

9.09

 

Administrative Agent May File Proofs of Claim; Credit Bidding

     116  

9.10

 

Collateral and Guaranty Matters

     117  

9.11

 

Secured Cash Management Agreements and Secured Hedge Agreements

     118  

9.12

 

Lender ERISA Representation

     118  

ARTICLE X

 

CONTINUING GUARANTY

     120  

10.01

 

Guaranty

     120  

10.02

 

Rights of Lenders

     121  

10.03

 

Certain Waivers

     121  

10.04

 

Obligations Independent

     121  

10.05

 

Subrogation

     121  

10.06

 

Termination; Reinstatement

     122  

 

iii


TABLE OF CONTENTS

 

         Page  

10.07

 

Stay of Acceleration

     122  

10.08

 

Condition of Borrower

     122  

10.09

 

Appointment of Borrower

     122  

10.10

 

Right of Contribution

     123  

10.11

 

Keepwell

     124  

ARTICLE XI

 

MISCELLANEOUS

     124  

11.01

 

Amendments, Etc

     124  

11.02

 

Notices; Effectiveness; Electronic Communications

     126  

11.03

 

No Waiver; Cumulative Remedies; Enforcement

     128  

11.04

 

Expenses; Indemnity; Damage Waiver

     129  

11.05

 

Payments Set Aside

     131  

11.06

 

Successors and Assigns

     131  

11.07

 

Treatment of Certain Information; Confidentiality

     136  

11.08

 

Right of Setoff

     137  

11.09

 

Interest Rate Limitation

     137  

11.10

 

Counterparts; Integration; Effectiveness

     138  

11.11

 

Survival of Representations and Warranties

     138  

11.12

 

Severability

     138  

11.13

 

Replacement of Lenders

     138  

11.14

 

Governing Law; Jurisdiction; Etc

     139  

11.15

 

Waiver of Jury Trial

     140  

11.16

 

Subordination

     140  

11.17

 

No Advisory or Fiduciary Responsibility

     141  

11.18

 

Electronic Execution

     141  

11.19

 

USA PATRIOT Act Notice

     142  

11.20

 

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

     142  

11.21

 

Time of the Essence

     142  

11.22

 

ENTIRE AGREEMENT

     143  

 

iv


BORROWER PREPARED SCHEDULES

Schedule 1.01(c)

  

Responsible Officers

Schedule 5.10

  

Insurance

Schedule 5.20(a)

  

Subsidiaries, Joint Ventures, Partnerships and Other Equity Investments

Schedule 5.20(b)

  

Loan Parties

Schedule 5.21(b)

  

Intellectual Property

Schedule 5.21(c)

  

Documents, Instrument, and Tangible Chattel Paper

Schedule 5.21(d)(i)

  

Deposit Accounts & Securities Accounts

Schedule 5.21(d)(ii)

  

Electronic Chattel Paper & Letter-of-Credit Rights

Schedule 5.21(e)

  

Commercial Tort Claims

Schedule 5.21(f)

  

Pledged Collateral

Schedule 5.21(g)

  

Properties

Schedule 5.21(h)

  

Material Contracts

Schedule 7.01

  

Existing Liens

Schedule 7.02

  

Existing Investments

Schedule 7.03

  

Existing Indebtedness

Schedule 7.05

  

Dispositions

Schedule 7.09

  

Burdensome Agreements

ADMINISTRATIVE AGENT PREPARED SCHEDULES

Schedule 1.01(a)

  

Certain Addresses for Notices

Schedule 1.01(b)

  

Initial Commitments and Applicable Percentages

Schedule 1.01(d)

  

Existing Letters of Credit

Schedule 6.17

  

Post Closing Deliverables

EXHIBITS

  

Exhibit A

  

Form of Administrative Questionnaire

Exhibit B

  

Form of Assignment and Assumption

Exhibit C

  

Form of Compliance Certificate

Exhibit D

  

Form of Joinder Agreement

Exhibit E

  

Form of Loan Notice

Exhibit F

  

Form of Permitted Acquisition Certificate

Exhibit G

  

Form of Revolving Note

Exhibit H

  

Form of Secured Party Designation Notice

Exhibit I

  

Form of Solvency Certificate

Exhibit J

  

Form of Swingline Loan Notice

Exhibit K

  

Form of Term Note

Exhibit L

  

Form of Officer’s Certificate

Exhibit M

  

Forms of U.S. Tax Compliance Certificates

Exhibit N

  

Form of Funding Indemnity Letter

Exhibit O

  

Form of Landlord Waiver

Exhibit P

  

[Intentionally Omitted]

Exhibit Q

  

Form of Authorization to Share Insurance Information

Exhibit R

  

Form of Notice of Loan Prepayment

 

v


CREDIT AGREEMENT

This CREDIT AGREEMENT is entered into as of December 31, 2018, among Armstrong Flooring, Inc., a Delaware corporation (the “Borrower”), the Guarantors (defined herein), the Lenders (defined herein), and BANK OF AMERICA, N.A., as Administrative Agent, Collateral Agent, Swingline Lender and L/C Issuer.

PRELIMINARY STATEMENTS:

WHEREAS, the Loan Parties (as hereinafter defined) have requested that the Lenders, the Swingline Lender and the L/C Issuer make loans and other financial accommodations to the Loan Parties in an aggregate amount of up to $150,000,000.

WHEREAS, the Lenders, the Swingline Lender and the L/C Issuer have agreed to make such loans and other financial accommodations to the Loan Parties on the terms and subject to the conditions set forth herein.

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

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

 

1.01

Defined Terms.

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

Account” has the meaning set forth in the UCC, in each case including all rights to payment for goods sold or leased, or for services rendered, whether or not they have been earned by performance.

Acquisition” means the acquisition, whether through a single transaction or a series of related transactions, of (a) a majority of the Voting Stock or other controlling ownership interest in another Person (including the purchase of an option, warrant or convertible or similar type security to acquire such a controlling interest at the time it becomes exercisable by the holder thereof), whether by purchase of such equity or other ownership interest or upon the exercise of an option or warrant for, or conversion of securities into, such equity or other ownership interest, or (b) assets of another Person which constitute all or substantially all of the assets of such Person or of a division, line of business or other business unit of such Person.

Additional Secured Obligations” means (a) all obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements and (b) all costs and expenses incurred in connection with enforcement and collection of the foregoing, including the fees, charges and disbursements of counsel, in each case whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest, expenses and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest, expenses and fees are allowed claims in such proceeding; provided that Additional Secured Obligations of a Guarantor shall exclude any Excluded Swap Obligations with respect to such Guarantor.

 

1


Administrative Agent” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 1.01(a), or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders.

Administrative Questionnaire” means an Administrative Questionnaire in substantially the form of Exhibit A or any other form approved by the Administrative Agent.

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

Agents” means the collective reference to the Administrative Agent, the Lead Arrangers and the Syndication Agents, or any of them, as the context may require.

Aggregate Commitments” means the Commitments of all the Lenders.

Agreement” means this Credit Agreement.

All-In Yield” means, as to any Indebtedness, the effective all-in yield applicable thereto taking into account interest rate margins, original issue discount (“OID”), upfront fees and any interest rate floor (with such increased amount being equated to interest margins for purposes of determining any increase to the Applicable Rate), or otherwise, in each case as reasonably determined by the Administrative Agent in consultation with the Borrower in a manner consistent with generally accepted financial practices; provided that OID and upfront fees shall be equated to interest rate assuming a four-year life to maturity (or, if less, the stated weighted average life to maturity at the time of its incurrence of the applicable Indebtedness); and provided further that “All-In Yield” shall not include (i) customary one-time arrangement fees, commitment fees, structuring fees, underwriting fees, advisory fees, unused live fees, ticking fees, success fees, or similar fees paid or payable to the applicable arrangers (or their affiliates) for such Indebtedness or any other fees not payable generally to the lenders providing such Indebtedness (regardless of whether any such fees are paid to or shared in whole or in part with any lender) and (ii) any other fee that is not paid directly by the Borrower generally to all relevant lenders ratably (or, if only one lender (or affiliated group of lenders) is providing such Indebtedness, are fees of the type not customarily shared with lenders generally).

Applicable Percentage” means (a) in respect of the Term Facility, with respect to any Term Lender at any time, the percentage (carried out to the ninth decimal place) of the Term Facility represented by (i) on or prior to the Closing Date, such Term Lender’s Term Commitment at such time and (ii) thereafter, the outstanding principal amount of such Term Lender’s Term Loans at such time, and (b) in respect of the Revolving Facility, with respect to any Revolving Lender at any time, the percentage (carried out to the ninth decimal place) of the Revolving Facility represented by such Revolving Lender’s Revolving Commitment at such time, subject to adjustment as provided in Section 2.15. If the Commitment of all of the Revolving Lenders to make Revolving Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02, or if the Revolving Commitments have expired, then the Applicable Percentage of each Revolving Lender in respect of the Revolving Facility shall be determined based on the Applicable Percentage of such Revolving Lender in respect of Revolving Facility most recently in effect, giving effect to any subsequent assignments. The Applicable Percentage of each Lender in respect of each Facility is set forth opposite the name of such Lender on Schedule 1.01(b) or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

2


Applicable Rate” means, for any day, the rate per annum set forth below opposite the applicable Level then in effect (based on the Consolidated Net Leverage Ratio), it being understood that the Applicable Rate for (a) Revolving Loans that are Base Rate Loans shall be the percentage set forth under the column “Base Rate Loans”, (b) Revolving Loans that are Eurodollar Rate Loans shall be the percentage set forth under the column “Eurodollar Rate & Letter of Credit Fee”, (c) that portion of the Term Loan comprised of Base Rate Loans shall be the percentage set forth under the column “Base Rate Loans”, (d) that portion of the Term Loan comprised of Eurodollar Rate Loans shall be the percentage set forth under the column “Eurodollar Rate & Letter of Credit Fee”, (e) the Letter of Credit Fee shall be the percentage set forth under the column “Eurodollar Rate & Letter of Credit Fee”, and (f) the Commitment Fee shall be the percentage set forth under the column “Commitment Fee”:

 

Applicable Rate  

Level

  

Consolidated Net

Leverage Ratio

   Eurodollar Rate &
Letter of Credit Fee
    Base Rate
Loans
    Commitment
Fee
 

1

   < 1.25:1      1.50     0.50     0.15

2

   ³ 1.25:1 but < 2.00:1      1.75     0.75     0.20

3

   ³ 2.00:1 but < 2.50:1      2.00     1.00     0.25

4

   ³ 2.50:1      2.25     1.25     0.30

Any increase or decrease in the Applicable Rate resulting from a change in the Consolidated Net Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(b); provided, however, that if a Compliance Certificate is not delivered when due in accordance with such Section, then, upon the request of the Required Lenders, Pricing Level 4 shall apply, in each case as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered and in each case shall remain in effect until the first Business Day following the date on which such Compliance Certificate is delivered.

Notwithstanding anything to the contrary contained in this definition, (a) the determination of the Applicable Rate for any period shall be subject to the provisions of Section 2.10(b) and (b) the initial Applicable Rate shall be set forth in Level 2 until the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(b) for the first full fiscal quarter to occur following the Closing Date to the Administrative Agent. Any adjustment in the Applicable Rate shall be applicable to all Credit Extensions then existing or subsequently made or issued.

The Applicable Rate set forth above shall be increased as, and to the extent, required by Section 2.16.

Applicable Revolving Percentage” means with respect to any Revolving Lender at any time, such Revolving Lender’s Applicable Percentage in respect of the Revolving Facility at such time.

Appropriate Lender” means, at any time, (a) with respect to any Facility, a Lender that has a Commitment with respect to such Facility or holds a Loan under such Facility at such time, (b) with respect to the Letter of Credit Sublimit, (i) the L/C Issuer and (ii) if any Letters of Credit have been issued pursuant to Section 2.03, the Revolving Lenders and (c) with respect to the Swingline Sublimit, (i) the Swingline Lender and (ii) if any Swingline Loans are outstanding pursuant to Section 2.04(a), the Revolving Lenders.

 

3


Approved Fund” means any Fund 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.

Arranger” means Merrill Lynch, Pierce, Fenner & Smith Incorporated (or any other registered broker-dealer wholly-owned by Bank of America Corporation to which all or substantially all of Bank of America Corporation’s or any of its subsidiaries’ investment banking, commercial lending services or related businesses may be transferred following the date of this Agreement), in its capacity as a Lead Arranger.

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 11.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit B or any other form (including an electronic documentation form generated by use of an electronic platform) approved by the Administrative Agent.

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

Audited Financial Statements” means the audited Consolidated balance sheet of the Borrower and its Subsidiaries for a fiscal year ended December 31, 2017 (or such other fiscal year as specified) and the related Consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.

Authorization to Share Insurance Information” means the authorization substantially in the form of Exhibit Q (or such other form as required by each of the Loan Party’s insurance companies).

Availability Period” means (a) in respect of the Revolving Facility, the period from and including the Closing Date to the earliest of (i) the Maturity Date for the Revolving Facility, (ii) the date of termination of the Revolving Commitments pursuant to Section 2.06, and (iii) the date of termination of the Commitment of each Revolving Lender to make Revolving Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.

AWP Purchase Agreement” means that certain Stock Purchase Agreement, dated as of November 14, 2018, by and between Armstrong Flooring, Inc. and Tarzan Holdco, Inc., in the form of the certified copy delivered to the Administrative Agent on the Closing Date (without giving effect to any amendment, modification (including, without limitation any updates to exhibits, annexes and schedules thereto) or any consent or waiver thereto by any party thereto, in each case, that is material and adverse to the interests of the Lenders, without the prior written consent of the Administrative Agent, such consent not to be unreasonably withheld, delayed or conditioned).

AWP Sale” the sale of all of the issued and outstanding shares of Armstrong Wood Products, Inc., including its direct and indirect wholly owned subsidiaries, pursuant to the terms of the AWP Purchase Agreement.

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

 

4


Bail-In Legislation” means, 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 for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

Bank of America” means Bank of America, N.A. and its successors.

Base Rate” means for any day a fluctuating rate of interest per annum equal to the highest of (a) the Federal Funds Rate plus 0.50%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (c) the Eurodollar Rate plus 1.00%, subject to the interest rate floors set forth therein; provided that if the Base Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such prime rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

Base Rate Loan” means a Revolving Loan or a Term Loan that bears interest based on the Base Rate.

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.

Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.

Borrower” means Armstrong Flooring, Inc., a Delaware corporation.

Borrower Materials” has the meaning specified in Section 6.02.

Borrowing” means a Revolving Borrowing, a Swingline Borrowing or a Term Borrowing, as the context may require.

Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day that is also a London Banking Day.

Businesses” means, at any time, a collective reference to the businesses operated by Borrower and its Subsidiaries at such time.

Capital Expenditures” means, with respect to any Person for any period, any expenditure in respect of the purchase or other acquisition of any fixed or capital asset (excluding normal replacements and maintenance which are properly charged to current operations).

Capital Stock” means (i) in the case of a corporation, capital stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents

 

5


(however designated) of capital stock, (iii) in the case of a partnership, partnership interests (whether general or limited), (iv) in the case of a limited liability company, membership interests and (v) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

Capital Stock Equivalents” means warrants, options or other rights for the purchase, acquisition or exchange of any items of Capital Stock (including through convertible securities).

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

Cash Collateralize” means, to pledge and deposit with or deliver to the Administrative Agent, for the benefit of one or more of the L/C Issuers or Swingline Lender (as applicable) or the Lenders, as collateral for L/C Obligations, the Obligations in respect of Swingline Loans, or obligations of the Revolving Lenders to fund participations in respect of either thereof (as the context may require), (a) cash or deposit account balances, (b) backstop letters of credit entered into on terms, from issuers and in amounts satisfactory to the Administrative Agent and the applicable L/C Issuer, and/or (c) if the Administrative Agent and the applicable L/C Issuer or Swingline Lender shall agree, in their sole discretion, other credit support, in each case, in Dollars and pursuant to documentation in form and substance satisfactory to the Administrative Agent and such L/C Issuer or Swingline Lender (as applicable). “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

Cash Equivalents” means any of the following types of Investments, to the extent owned by the Borrower or any of its Subsidiaries free and clear of all Liens (other than Permitted Liens):

(a)    readily marketable obligations issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof having maturities of not more than three hundred sixty days (360) days from the date of acquisition thereof; provided that the full faith and credit of the United States is pledged in support thereof;

(b)    time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized under the laws of the United States, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (c) of this definition and (iii) has combined capital and surplus of at least $1,000,000,000, in each case with maturities of not more than ninety (90) days from the date of acquisition thereof;

(c)    commercial paper issued by any Person organized under the laws of any state of the United States and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with maturities of not more than one hundred eighty (180) days from the date of acquisition thereof; and

(d)    Investments, classified in accordance with GAAP as current assets of the Borrower or any of its Subsidiaries, in money market investment programs registered under the Investment Company Act of 1940, which are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P, and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (a), (b) and (c) of this definition.

 

6


Cash Management Agreement” means any agreement that is not prohibited by the terms hereof to provide treasury or cash management services, including deposit accounts, overnight draft, credit cards, debit cards, p-cards (including purchasing cards and commercial cards), funds transfer, automated clearinghouse, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services and other cash management services.

Cash Management Bank” means any Person in its capacity as a party to a Cash Management Agreement that, (a) at the time it enters into a Cash Management Agreement with a Loan Party or any Subsidiary, is a Lender or an Affiliate of a Lender, or (b) at the time it (or its Affiliate) becomes a Lender, is a party to a Cash Management Agreement with a Loan Party or any Subsidiary, in each case in its capacity as a party to such Cash Management Agreement (even if such Person ceases to be a Lender or such Person’s Affiliate ceased to be a Lender); provided, however, that for any of the foregoing to be included as a “Secured Cash Management Agreement” on any date of determination by the Administrative Agent, the applicable Cash Management Bank (other than the Administrative Agent or an Affiliate of the Administrative Agent) must have delivered a Secured Party Designation Notice to the Administrative Agent prior to such date of determination.

CFC” means a Person that is a controlled foreign corporation under Section 957 of the Code.

Change in Law” means the occurrence, after the Closing Date, 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, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

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

(a)    any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of fifty percent (50)% or more of the Equity Interests of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking into account all such securities that such “person” or “group” has the right to acquire pursuant to any option right); or

(b)    during any period of twelve (12) 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

 

7


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.

Closing Date” means the date hereof.

Code” means the Internal Revenue Code of 1986.

Collateral” means all of the “Collateral” referred to in the Collateral Documents and all of the other property that is or is intended under the terms of the Collateral Documents to be subject to Liens in favor of the Collateral Agent for the benefit of the Secured Parties.

Collateral Documents” means, collectively, the Security Agreement, the Pledge Agreement, each Joinder Agreement, each of the collateral assignments, security agreements, pledge agreements or other similar agreements delivered to the Administrative Agent pursuant to Section 6.14, and each of the other agreements, instruments or documents that creates or purports to create a Lien in favor of the Administrative Agent for the benefit of the Secured Parties.

Collateral Agent” means Bank of America in its capacity as collateral agent for the holders of the secured obligations identified in the Collateral Documents, and its successors and assigns in such capacity.

Commitment” means a Term Commitment or a Revolving Commitment, as the context may require.

Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

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

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” means, when used with reference to financial statements or financial statement items of the Borrower and its Subsidiaries or any other Person, such statements or items on a consolidated basis in accordance with the consolidation principles of GAAP.

Consolidated Capital Expenditures” means, for any period, for the Borrower and its Subsidiaries on a Consolidated basis, all Capital Expenditures.

Consolidated EBITDA” means, for any period, the sum of the following determined on a Consolidated basis, without duplication, for the Borrower and its Subsidiaries in accordance with GAAP, (a) Consolidated Net Income for the most recently completed Measurement Period plus (b) the following to the extent deducted in calculating such Consolidated Net Income (without duplication): (i) Consolidated Interest Charges, (ii) the provision for federal, state, local and foreign income taxes payable, (iii) depreciation and amortization expense, (iv) non-cash expenses and losses relating to pensions (excluding any such non-cash charges or losses to the extent (A) there were cash charges with respect to such charges and losses in past accounting periods or (B) there is a reasonable expectation that there will be cash charges with respect to such charges and losses in future accounting periods, (v) pro forma adjustments for cost profile changes related to the AWP Sale (to the extent made on or prior to December 31, 2019), and which may be reflected in Measurement Periods ending on or prior to December 31, 2019, (vi) one-time, non-recurring cash expenses (to the extent incurred on or prior to December 31, 2019) related to the AWP Sale in an amount no greater than $10,000,000, and which may be reflected in Measurement Periods ending on or prior to December 31, 2019, (vii) one-time non-recurring cost

 

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initiative charges embedded in cost of goods sold paid in (but only cash charges) and which taken together with cost initiative charges embedded in selling, general and administrative expenses described in clause (viii) below shall be limited to $5,000,000 in any Measurement Period and (viii) one-time cost initiative charges embedded in selling, general and administrative expenses (but only cash charges) and which taken together with cost initiative charges embedded in cost of goods sold described in clause (vii) above shall be limited to $5,000,000 in any Measurement Period, provided that the sum of (vii) and (viii) above shall not comprise more than 10% of Consolidated EBITDA, less (c) without duplication and to the extent reflected as a gain or otherwise included in the calculation of Consolidated Net Income for such period, non-cash gains relating to pensions (excluding any such non-cash gains to the extent (A) there were cash gains with respect to such gains in past accounting periods or (B) there is a reasonable expectation that there will be cash gains with respect to such gains in future accounting periods), provided that if any non-cash expenses or income related to pensions in the current accounting period are ever paid for or received in cash in a future accounting period, the Consolidated EBITDA for the future accounting period will reflect the associated increase or decrease from receipt or payment.

Consolidated Fixed Charge Coverage Ratio” means, as of any date of determination, the ratio of (a) (i) Consolidated EBITDA, less (ii) the aggregate amount of all maintenance Capital Expenditures, less (iii) the aggregate amount of federal, state, local and foreign income taxes paid in cash, less (iv), Restricted Payments (other than Permitted Share Repurchases) to (b) the sum of (i) Consolidated Interest Charges to the extent paid in cash, (ii) the aggregate principal amount of all redemptions or similar acquisitions for value of outstanding debt for borrowed money or regularly scheduled principal payments (excluding, for the avoidance of doubt, voluntary payments or principal prepayments of the Revolving Facility except if in conjunction with a reduction in the Revolving Commitments), in each case, of or by the Borrower and its Subsidiaries for the most recently completed Measurement Period.

Consolidated Funded Indebtedness means, as of any date of determination, for the Borrower and its Subsidiaries on a Consolidated basis, the sum of (a) the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations under the Senior Credit Facility) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments; (b) all purchase money Indebtedness; (c) the principal portion of all obligations under conditional sale or other title retention agreements relating to Property purchased by such Person (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business); (d) the maximum amount available to be drawn under issued and outstanding letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments; (e) all obligations in respect of the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business); (f) all Attributable Indebtedness; (g) all preferred stock or other Equity Interests providing for mandatory redemptions, sinking fund or like payments prior to the Maturity Date; (h) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on, or payable out of the proceeds of production from, Property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed; (i) the Swap Termination Value, if any, under any Swap Contract; (j) without duplication, all Guarantees with respect to outstanding Indebtedness of the types specified in clauses (a) through (i) above of Persons other than the Borrower or any Subsidiary; and (k) all Indebtedness of the types referred to in clauses (a) through (i) 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.

Consolidated Interest Charges” means, for any Measurement Period, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, (b) all interest paid or payable with respect to

 

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discontinued operations and (c) the portion of rent expense under Capitalized Leases that is treated as interest in accordance with GAAP, in each case, of or by the Borrower and its Subsidiaries on a Consolidated basis for the most recently completed Measurement Period.

Consolidated Net Leverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated Funded Indebtedness as of such date, less the amount of cash denominated in U.S. Dollars on deposit in the United States in accounts subject to a Control Agreement in an amount not to exceed $25,000,000, to (b) Consolidated EBITDA for the most recently completed Measurement Period.

Consolidated Net Income” means, at any date of determination, the net income (or loss) of the Borrower and its Subsidiaries on a Consolidated basis before discontinued operations for the most recently completed Measurement Period; provided that Consolidated Net Income shall exclude (a) extraordinary gains and extraordinary losses for such Measurement Period, (b) the net income of any Subsidiary during such Measurement Period to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary of such income is not permitted by operation of the terms of its Organization Documents or any agreement, instrument or Law applicable to such Subsidiary during such Measurement Period, and (c) any income (or loss) for such Measurement Period of any Person if such Person is not a Subsidiary, except that the Borrower’s equity in the net income of any such Person for such Measurement Period shall be included in Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such Measurement Period to the Borrower or a Subsidiary as a dividend or other distribution (and in the case of a dividend or other distribution to a Subsidiary, such Subsidiary is not precluded from further distributing such amount to the Borrower as described in clause (b) of this proviso).

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

Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

Cost of Acquisition” means, with respect to any Acquisition, as at the date of entering into any agreement therefor, the sum of the following (without duplication): (a) the value of the Equity Interests of the Borrower or any Subsidiary to be transferred in connection with such Acquisition, (b) the amount of any cash and fair market value of other property (excluding property described in clause (a) and the unpaid principal amount of any debt instrument) given as consideration in connection with such Acquisition, (c) the amount (determined by using the face amount or the amount payable at maturity, whichever is greater) of any Indebtedness incurred, assumed or acquired by the Borrower or any Subsidiary in connection with such Acquisition, (d) all additional purchase price amounts in the form of earn-outs and other contingent obligations that should be recorded on the financial statements of the Borrower and its Subsidiaries in accordance with GAAP in connection with such Acquisition, (e) all amounts paid in respect of covenants not to compete and consulting agreements that should be recorded on the financial statements of the Borrower and its Subsidiaries in accordance with GAAP, and other affiliated contracts in connection with such Acquisition, and (f) the aggregate fair market value of all other consideration given by the Borrower or any Subsidiary in connection with such Acquisition. For purposes of determining the Cost of Acquisition for any transaction, the Equity Interests of the Borrower shall be valued in accordance with GAAP.

Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.

 

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Debt Issuance” means the issuance by any Loan Party or any Subsidiary of any Indebtedness other than Indebtedness permitted under Section 7.03.

Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.

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

Default Rate” means (a) with respect to any Obligation for which a rate is specified, a rate per annum equal to two percent (2%) in excess of the rate otherwise applicable thereto and (b) with respect to any Obligation for which a rate is not specified or available, a rate per annum equal to the Base Rate plus the Applicable Rate for Revolving Loans that are Base Rate Loans plus two percent (2%), in each case, to the fullest extent permitted by applicable Law.

Defaulting Lender” means, subject to Section 2.15(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, the Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) within two (2) Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent, the L/C Issuer or the Swingline Lender 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) become 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 any one or more of clauses (a) through (d) above, and the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.15(b)) as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to the Borrower, the L/C Issuer, the Swingline Lender and each other Lender promptly following such determination.

 

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Delaware LLC” means any limited liability company organized or formed under the laws of the State of Delaware.

Delaware Divided LLC” means any Delaware LLC which has been formed upon the consummation of a Delaware LLC Division.

Delaware LLC Division” means the statutory division of any Delaware LLC into two or more Delaware LLCs pursuant to Section 18-217 of the Delaware Limited Liability Company Act.

Designated Jurisdiction” means any country, region or territory to the extent that such country, region or territory is the subject of any comprehensive Sanction.

Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any Sale and Leaseback Transaction) of any Property by Borrower or any of its Subsidiaries (including the Capital Stock of any Subsidiary), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith, including any disposition of property to a Delaware Divided LLC pursuant to a Delaware LLC Division but excluding (a) the Permitted Transfers; (b) [reserved]; (c) the sale, lease, license, transfer or other disposition of machinery, equipment or other Property no longer used or useful in the conduct of business; (d) any sale, lease, license, transfer or other disposition of Property to any Loan Party; (e) any Disposition to the extent constituting a Permitted Investment; (f) any sale, lease, license, transfer or other disposition of Property by any Foreign Subsidiary to Borrower or any of its Subsidiaries; (g) dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement equipment or property or (ii) the proceeds of such disposition are applied to the purchase price of such replacement equipment or property in the period required under Section 2.05(b)(i); (h) [reserved]; (i) [reserved]; (j) dispositions set forth on Schedule 7.05; and (h) Involuntary Dispositions.

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

Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political subdivision of the United States.

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 Assignee” means any Person that meets the requirements to be an assignee under Section 11.06 (subject to such consents, if any, as may be required under Section 11.06(b)(iii)).

Environmental Laws” means any and all federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the

 

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environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

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

Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

Equipment” means all machinery, apparatus, equipment, fittings, furniture, fixtures, motor vehicles and other fixed assets owned by the Borrower and used or held for sale by the Borrower in the ordinary course of its business, whether now owned or hereafter acquired by the Borrower and wherever located, and all parts, accessories and special tools and all increases and accessions thereto and substitutions and replacements therefor.

Equity Interests” means, with respect to any Person, any Capital Stock or Capital Stock Equivalents of such Person.

Equity Issuance” means, any issuance by any Loan Party or any Subsidiary to any Person of its Equity Interests, other than (a) any issuance of its Equity Interests pursuant to the exercise of options or warrants, (b) any issuance of its Equity 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 Equity Interests, and (d) any issuance by the Borrower of its Equity Interests as consideration for a Permitted Acquisition. The term “Equity Issuance” shall not be deemed to include any Disposition.

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

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

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

 

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any ERISA Affiliate or (i) a failure by the Borrower or any ERISA Affiliate to meet all applicable requirements under the Pension Funding Rules in respect of a Pension Plan, whether or not waived, or the failure by the Borrower or any ERISA Affiliate 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.

 

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Eurodollar Rate” means:

(a)    for any Interest Period with respect to a Eurodollar Rate Loan, the rate per annum equal to the London Interbank Offered Rate (“LIBOR”), or a comparable or successor rate which rate is approved by the Administrative Agent, as published on the applicable Bloomberg screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) (in such case, the “LIBOR Rate”) at or about 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period; and

(b)    for any interest calculation with respect to a Base Rate Loan on any date, the rate per annum equal to the LIBOR Rate, at or about 11:00 a.m., London time, two (2) Business Days prior to such date for Dollar deposits with a term of one (1) month commencing that day;

provided that: (i) to the extent a comparable or successor rate is approved by the Administrative Agent in connection herewith, the approved rate shall be applied in a manner consistent with market practice; provided, further that to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent and (ii) if the Eurodollar Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement.

Eurodollar Rate Loan” means a Revolving Loan or a Term Loan that bears interest at a rate based on clause (a) of the definition of “Eurodollar Rate.”

Event of Default” has the meaning specified in Section 8.01.

Excluded Property” means, with respect to any Loan Party, (a) any owned or leased real property, (b) unless requested by the Administrative Agent or the Required Lenders, any Intellectual Property for which a perfected Lien thereon is not effected either by filing of a UCC financing statement or by appropriate evidence of such Lien being filed in either the United States Copyright Office or the United States Patent and Trademark Office, (c) the Equity Interests of any Foreign Subsidiary of any Loan Party to the extent not required to be pledged to secure the Secured Obligations pursuant to the Collateral Documents and (d) any property which, subject to the terms of Section 7.03(e), is subject to a Lien pursuant to documents that prohibit such Loan Party from granting any other Liens in such property.

Excluded Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty of such Guarantor of, or the grant by such Guarantor of a Lien 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 thereof) by virtue of such Guarantor failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act (determined after giving effect to Section 10.11 and any other “keepwell, support or other agreement for the benefit of such Guarantor and any and all guarantees of such Guarantor’s Swap Obligations by other Loan Parties) at the time the Guaranty of such Guarantor, or grant by such Guarantor of a Lien, becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a Master Agreement governing more than one Swap Contract, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to Swap Contracts for which such Guaranty or Lien is or becomes excluded in accordance with the first sentence of this definition.

Excluded Taxes” means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured

 

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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 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 pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 11.13) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 3.01(a)(ii), (a)(iii) or (c), 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 Recipient’s failure to comply with Section 3.01(e) and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.

Existing Letters of Credit” means those certain letters of credit set forth on Schedule 1.01(d).

Existing Term Loan” has the meaning set forth in Section 2.16(a).

Extraordinary Receipt” means any cash received by or paid to or for the account of any Person not in the ordinary course of business, including tax refunds, pension plan reversions, proceeds of insurance (other than proceeds of business interruption insurance to the extent such proceeds constitute compensation for lost earnings and proceeds of Involuntary Dispositions), indemnity payments and any purchase price adjustments; provided, however, that an Extraordinary Receipt shall not include cash receipts from proceeds of insurance or indemnity payments to the extent that such proceeds, awards or payments are received by any Person in respect of any third party claim against such Person and applied to pay (or to reimburse such Person for its prior payment of) such claim and the costs and expenses of such Person with respect thereto.

Facility” means the Term Facility or the Revolving Facility, as the context may require.

Facility Termination Date” means the date as of which all of the following shall have occurred: (a) the Aggregate Commitments have terminated, (b) all Obligations have been paid in full (other than contingent indemnification obligations), and (c) all Letters of Credit have terminated or expired (other than Letters of Credit as to which other arrangements with respect thereto satisfactory to the Administrative Agent and the L/C Issuer shall have been made).

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

FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

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

 

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Fee Letter” means the letter agreement, dated December 3, 2018, between the Borrower, the Administrative Agent and the Arranger.

Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

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

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

Fronting Exposure” means, at any time there is a Defaulting Lender that is a Revolving Lender, (a) with respect to the L/C Issuer, such Defaulting Lender’s Applicable 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 Revolving Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swingline Lender, such Defaulting Lender’s Applicable Percentage of Swingline Loans other than Swingline Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Revolving Lenders or Cash Collateralized in accordance with the terms hereof.

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 activities.

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

(a)    all obligations for borrowed money, whether current or long-term (including the Obligations) and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

(b)    all purchase money Indebtedness;

(c)    the principal portion of all obligations under conditional sale or other title retention agreements relating to Property purchased by such Person (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business);

(d)    all obligations arising under standby letters of credit and similar obligations that back obligations that would constitute Indebtedness (but specifically excluding those that support performance obligations);

(e)    all obligations in respect of the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and other than obligations with respect to compensation in each case that are not past due for more than ninety (90) days);

(f)    all Attributable Indebtedness;

 

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(g)    all preferred stock or other equity interests providing for mandatory redemptions, sinking fund or like payments;

(h)    all Funded Indebtedness of others secured by (or for which the holder of such Funded Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on, or payable out of the proceeds of production from, Property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed;

(i)    all Guarantees with respect to Funded Indebtedness of the types specified in clauses (a) through (h) above of another Person; and

(j)    all Funded Indebtedness of the types referred to in clauses (a) through (h) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or joint venturer and has liability for such obligations, but only to the extent there is recourse to such Person for payment thereof.

For purposes hereof, except as provided in clause (d) above, obligations arising under letters of credit and similar instruments shall not constitute Funded Indebtedness.

Funding Indemnity Letter” means a funding indemnity letter, substantially in the form of Exhibit N.

GAAP” means generally accepted accounting principles in the United States 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 accounting profession) including, without limitation, the FASB Accounting Standards Codification, that are applicable to the circumstances as of the date of determination, consistently applied and subject to the terms of the Credit Agreement.

Governmental Authority” means the government of the United States or any other nation, or of 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, without limitation, any supra-national bodies such as the European Union or the European Central Bank).

Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness of the kind described in clauses (a) through (g) of the definition thereof or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness of the kind described in clauses (a) through (g) of the definition thereof or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed or expressly undertaken by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The

 

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amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.

Guaranteed Obligations” has the meaning set forth in Section 10.01.

Guarantors” means, collectively, (a) the Subsidiaries of the Borrower as are or may from time to time become parties to this Agreement pursuant to Section 6.13, and (b) with respect to Additional Secured Obligations owing by any Loan Party or any of its Subsidiaries and any Swap Obligation of a Specified Loan Party (determined before giving effect to Sections 10.01 and 10.11) under the Guaranty, the Borrower.

Guaranty” means, collectively, the Guarantee made by the Guarantors under Article X in favor of the Secured Parties, together with each other guaranty delivered pursuant to Section 6.13.

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

Hedge Bank” means any Person in its capacity as a party to a Swap Contract that, (a) at the time it enters into a Swap Contract not prohibited under Article VI or VII, is a Lender or an Affiliate of a Lender, or (b) at the time it (or its Affiliate) becomes a Lender, is a party to a Swap Contract not prohibited under Article VI or VII, in each case, in its capacity as a party to such Swap Contract (even if such Person ceases to be a Lender or such Person’s Affiliate ceased to be a Lender); provided, in the case of a Secured Hedge Agreement with a Person who is no longer a Lender (or Affiliate of a Lender), such Person shall be considered a Hedge Bank only through the stated termination date (without extension or renewal) of such Secured Hedge Agreement and provided further that for any of the foregoing to be included as a “Secured Hedge Agreement” on any date of determination by the Administrative Agent, the applicable Hedge Bank (other than the Administrative Agent or an Affiliate of the Administrative Agent) must have delivered a Secured Party Designation Notice to the Administrative Agent prior to such date of determination.

Honor Date” has the meaning set forth in Section 2.03(c).

Increase Effective Date” has the meaning set forth in Section 2.16(d).

Incremental Increase” has the meaning set forth in Section 2.16(a).

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

(a)    all Funded Indebtedness;

(b)    the Swap Termination Value of any Swap Contract;

(c)    all Guarantees with respect to outstanding Indebtedness of the types specified in clauses (a) and (b) above of any other Person; and

(d)    all Indebtedness of the types referred to in clauses (a) through (c) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited

 

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liability company) in which such Person is a general partner or joint venturer, and has liability for such obligations, but only to the extent there is recourse to such Person for payment thereof.

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

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

Information” has the meaning specified in Section 11.07.

Insurance Subsidiary” means a Subsidiary established by Borrower or any of its Subsidiaries for the purpose of, and to be engaged solely in the business of, insuring the businesses or facilities owned or operated by Borrower or any of its Subsidiaries or joint ventures or to insure unrelated businesses, provided that such unrelated business premiums do not exceed 35% of the annual premiums collected by such Subsidiary.

Intellectual Property” has the meaning set forth in the Security Agreement.

Intercompany Debt” means intercompany indebtedness among any of the Borrower and its Subsidiaries.

Interest Payment Date” means, (a) as to any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date of the Facility under which such Loan was made; provided, however, that if any Interest Period for a Eurodollar Rate Loan exceeds three (3) months, the respective dates that fall every three (3) months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan or Swingline Loan, the last Business Day of each March, June, September and December and the Maturity Date of the Facility under which such Loan was made (with Swingline Loans being deemed made under the Revolving Facility for purposes of this definition).

Interest Period” means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one (1), two (2), three (3) or six (6) months thereafter (in each case, subject to availability), as selected by the Borrower in its Loan Notice; provided that:

(a)    any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

(b)    any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(c)    no Interest Period shall extend beyond the Maturity Date of the Facility under which such Loan was made.

Inventory” has the meaning set forth in the UCC or any other Applicable Law, as applicable, including all goods intended for sale, lease, display or demonstration; all goods provided under a contract for services; all work in process; and all raw materials, and other materials and supplies of any kind that are or could be used in connection with the manufacture, transformation, printing, packing, shipping,

 

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advertising, sale, lease or furnishing of such goods, or otherwise used or consumed in a Loan Party’s business (but excluding Equipment).

Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or interest in, another Person (including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor guaranties Indebtedness of such other Person), or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person which constitute all or substantially all of the assets of such Person or of a division, line of business or other business unit of such Person. For purposes of covenant compliance, the amount of any Investment at any time shall be the amount actually invested, as determined at the time of each such Investment, without adjustment for subsequent increases or decreases in the value of such Investment, net of (i) any return representing a return of capital with respect to such Investment and (ii) any dividend, distribution or other return on capital with respect to such Investment.

Involuntary Disposition” means any loss of, damage to or destruction of, or any condemnation or other taking for public use of, any property of any Loan Party or any Subsidiary.

IRS” means the United States Internal Revenue Service.

ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).

Issuer Documents” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the L/C Issuer and the Borrower (or any Subsidiary) or in favor of the L/C Issuer and relating to such Letter of Credit.

Joinder Agreement” means a joinder agreement substantially in the form of Exhibit D executed and delivered in accordance with the provisions of Section 6.13.

Landlord Waiver” means a landlord or warehouse waiver substantially in the form of Exhibit O.

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

L/C Advance” means, with respect to each Revolving Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Applicable Revolving Percentage.

L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Revolving Borrowing.

L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

L/C Issuer” means Bank of America in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.

 

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L/C Obligations” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts (including all L/C Borrowings). For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

Lead Arrangers” means (a) the Arranger, (b) JPMorgan Chase Bank, N.A. and (c) SunTrust Robinson Humphrey, Inc., in their respective capacities as joint lead arrangers and joint bookrunners.

Lender” means each of the Persons identified as a “Lender” on the signature pages hereto, each other Person that becomes a “Lender” in accordance with this Agreement and, their successors and assigns and, unless the context requires otherwise, includes the Swingline Lender.

Lending Office” means, as to the Administrative Agent, the L/C Issuer or any Lender, the office or offices of such Person described as such in such Person’s Administrative Questionnaire, or such other office or offices as such Person may from time to time notify the Borrower and the Administrative Agent; which office may include any Affiliate of such Person or any domestic or foreign branch of such Person or such Affiliate.

Letter of Credit” means any letter of credit issued hereunder and shall include the Existing Letters of Credit. A Letter of Credit may be a commercial letter of credit or a standby letter of credit.

Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.

Letter of Credit Expiration Date” means the day that is seven (7) days prior to the Maturity Date then in effect for the Revolving Facility (or, if such day is not a Business Day, the next preceding Business Day).

Letter of Credit Fee” has the meaning specified in Section 2.03(h).

Letter of Credit Sublimit” means an amount equal to the lesser of (a) $25,000,000 and (b) the Revolving Facility. The Letter of Credit Sublimit is part of, and not in addition to, the Revolving Facility.

LIBOR” has the meaning specified in the definition of Eurodollar Rate.

LIBOR Screen Rate” means the LIBOR quote on the applicable screen page the Administrative Agent designates to determine LIBOR (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time).

LIBOR Successor Rate Conforming Changes” means, with respect to any proposed LIBOR Successor Rate, any conforming changes to the definition of Base Rate, Interest Period, timing and frequency of determining rates and making payments of interest and other administrative matters as may be appropriate, in the discretion of the Administrative Agent, to reflect the adoption of such LIBOR Successor Rate and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of such LIBOR Successor Rate exists, in such other manner of administration as the Administrative Agent determines in consultation with the Borrower).

 

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

Loan” means an extension of credit by a Lender to the Borrower under Article II in the form of a Term Loan, a Revolving Loan or a Swingline Loan.

Loan Documents” means, collectively, (a) this Agreement, (b) the Notes, (c) the Guaranty, (d) the Collateral Documents, (e) the Fee Letter, (f) each Issuer Document, (g) each Joinder Agreement, (h) any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.14 and (i) all other certificates, agreements, documents and instruments executed and delivered, in each case, by or on behalf of any Loan Party pursuant to the foregoing (but specifically excluding any Secured Hedge Agreement or any Secured Cash Management Agreement); provided, however, that for purposes of Section 11.01, “Loan Documents” shall mean this Agreement, the Guaranty and the Collateral Documents.

Loan Notice” means a notice of (a) a Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurodollar Rate Loans, pursuant to Section 2.02(a), which shall be substantially in the form of Exhibit E or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.

Loan Parties” means, collectively, the Borrower and each Guarantor.

London Banking Day” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

Master Agreement” has the meaning set forth in the definition of “Swap Contract.”

Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent) or condition (financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole; (b) a material impairment of the rights and remedies of the Administrative Agent or any Lender under any Loan Document, or of the ability of the Borrower, individually, or of the Loan Parties, taken as a whole, to perform its or their respective obligations under any Loan Document to which it is or they are a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.

Material Domestic Subsidiary” means any Domestic Subsidiary of Borrower that individually, or together with its Subsidiaries on a consolidated basis, has assets of more than $1,000,000; provided, that in no event shall any Insurance Subsidiary constitute a Material Domestic Subsidiary.

Material Contract” means, with respect to any Person, each contract or agreement (a) to which such Person is a party involving aggregate consideration payable to or by such Person of $3,500,000 or more in any year or (b) otherwise material to the business, condition (financial or otherwise), operations, performance or properties of such Person or (c) any other contract, agreement, permit or license, written or oral, of the Borrower and its Subsidiaries as to which the breach, nonperformance, cancellation or failure to renew by any party thereto, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

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Maturity Date” means (a) with respect to the Revolving Facility, December 31, 2023 and (b) with respect to the Term Facility, December 31, 2023; provided, however, that, in each case, if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.

Measurement Period” means, at any date of determination, the most recently completed four (4) fiscal quarters of the Borrower or, if fewer than four (4) consecutive fiscal quarters of the Borrower have been completed since the Closing Date, the fiscal quarters of the Borrower that have been completed since the Closing Date.

Minimum Collateral Amount” means, at any time, (a) with respect to Cash Collateral consisting of cash or deposit account balances provided to reduce or eliminate Fronting Exposure during any period when a Lender constitutes a Defaulting Lender, an amount equal to 105% of the Fronting Exposure of the L/C Issuer with respect to Letters of Credit issued and outstanding at such time, (b) with respect to Cash Collateral consisting of cash or deposit account balances provided in accordance with the provisions of Section 2.14(a)(i), (a)(ii) or (a)(iii), an amount equal to 105% of the Outstanding Amount of all L/C Obligations, and (c) otherwise, an amount determined by the Administrative Agent and the L/C Issuer in their sole discretion.

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

Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five (5) plan years, has made or been obligated to make contributions.

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

Net Cash Proceeds” means the aggregate cash or Cash Equivalents proceeds received by any Loan Party or any Subsidiary in respect of any Disposition, Equity Issuance, or Involuntary Disposition, net of (a) direct costs incurred in connection therewith (including, without limitation, legal, accounting and investment banking fees and sales commissions), (b) taxes paid or payable as a result thereof and (c) in the case of any Disposition or any Involuntary Disposition, the amount necessary to retire any Indebtedness secured by a Permitted Lien (ranking senior to any Lien of the Administrative Agent) on the related property; it being understood that “Net Cash Proceeds” shall include, without limitation, any cash or Cash Equivalents received upon the sale or other disposition of any non-cash consideration received by any Loan Party or any Subsidiary in any Disposition, Equity Issuance, or Involuntary Disposition.

New Lenders” has the meaning set forth in Section 2.16(c).

Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 11.01 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” means a Term Note or a Revolving Note, as the context may require.

Notice of Loan Prepayment” means a notice of prepayment with respect to a Loan, which shall be substantially in the form of Exhibit R or such other form as may be approved by the Administrative

 

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Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer.

Obligations” means (a) all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, or Letter of Credit and (b) all costs and expenses incurred in connection with enforcement and collection of the foregoing, including the fees, charges and disbursements of counsel, in each case whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest, expenses and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof pursuant to any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest, expenses and fees are allowed claims in such proceeding; provided that Obligations of a Guarantor shall exclude any Excluded Swap Obligations with respect to such Guarantor.

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

Officer’s Certificate” means a certificate substantially the form of Exhibit L or any other form approved by the Administrative Agent.

Operating Facilities” means, at any time, a collective reference to the facilities and real properties owned, leased or operated by Borrower or any of its Subsidiaries.

Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement or limited liability company agreement (or equivalent or comparable documents with respect to any non-U.S. jurisdiction); (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization (or equivalent or comparable documents with respect to any non-U.S. jurisdiction) and (d) with respect to all entities, 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 (or equivalent or comparable documents with respect to any non-U.S. jurisdiction).

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

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 3.06).

Outstanding Amount” means (a) with respect to Term Loans, Revolving Loans and Swingline Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Term Loans, Revolving Loans and Swingline Loans, as the case may be, occurring on such date; and (b) with respect to any L/C Obligations on any date, the

 

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amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by the Borrower of Unreimbursed Amounts.

Participant” has the meaning specified in Section 11.06(d).

Participant Register” has the meaning specified in Section 11.06(d).

PBGC” means the Pension Benefit Guaranty Corporation.

Pension Act” means the Pension Protection Act of 2006.

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

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

Permitted Acquisition” means an Acquisition by a Loan Party (the Person or division, line of business or other business unit of the Person to be acquired in such Acquisition shall be referred to herein as the “Target”), in each case that is a type of business (or assets used in a type of business) permitted to be engaged in by the Borrower and its Subsidiaries pursuant to the terms of this Agreement, in each case so long as:

(a)    no Default shall then exist or would exist after giving effect thereto;

(b)    the Loan Parties shall demonstrate to the reasonable satisfaction of the Administrative Agent that, after giving effect to the Acquisition on a Pro Forma Basis (including, without limitation and without duplication, any cash earnest money deposits and any escrow deposits, delayed purchase price payments or payment of the maximum amount of any earnout or similar obligations), (i) the Loan Parties are in Pro Forma Compliance and (ii) the Consolidated Net Leverage Ratio shall be no more than 2.50 to 1.0 (calculated using the same Measurement Period used to determine Pro Forma Compliance in accordance with the preceding clause (i));

(c)    the Administrative Agent, on behalf of the Secured Parties, shall have received (or shall receive in connection with the closing of such Acquisition) a first priority perfected security interest in all property (including, without limitation, Equity Interests) acquired with respect to the Target in accordance with the terms of Section 6.14 and the Target, if a Person, shall have executed a Joinder Agreement in accordance with the terms of Section 6.13;

(d)    the Administrative Agent and the Lenders shall have received not less than thirty (30) days prior to the consummation of any such Acquisition (i) a description of the material terms of such Acquisition, (ii) audited financial statements (or, if unavailable, management-prepared financial statements) of the Target for its two (2) most recent fiscal years and for any fiscal quarters ended within the fiscal year to date, (iii) Consolidated projected income statements of the Borrower and its Subsidiaries (giving effect to such Acquisition), and (iv) not less than five (5) Business Days prior to the consummation of any Permitted Acquisition, a Permitted

 

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Acquisition Certificate, executed by a Responsible Officer of the Borrower certifying that such Permitted Acquisition complies with the requirements of this Agreement;

(e)    [reserved];

(f)    such Acquisition shall not be a “hostile” Acquisition and shall have been approved by the board of directors (or equivalent) and/or shareholders (or equivalent) of the applicable Loan Party and the Target; and

(g)    after giving effect to such Acquisition and any Borrowings made in connection therewith, the sum of (i) Borrower’s unrestricted cash and Cash Equivalents plus (ii) an amount equal to the unused portion of the aggregate Revolving Commitments (taking into account any issued and outstanding Letters of Credit, LC Advances and/or LC Loans), shall be no less than $25,000,000.

Permitted Acquisition Certificate” means a certificate substantially the form of Exhibit F or any other form approved by the Administrative Agent.

Permitted Investments” means, at any time, Investments by the Borrower or any of its Subsidiaries permitted to exist at such time pursuant to the terms of Section 7.02.

Permitted Liens” has the meaning set forth in Section 7.01.

Permitted Share Repurchases” means the repurchase of shares of the Borrower and the payment of dividends from time to time during the first 18 months following the Closing Date in an aggregate amount of up to $100,000,000.

Permitted Transfers” means (a) Dispositions of inventory in the ordinary course of business; (b) Dispositions of property to the Borrower or any Subsidiary; provided, that if the transferor of such property is a Loan Party then the transferee thereof must be a Loan Party; (c) Dispositions of accounts receivable in connection with the collection or compromise thereof; (d) licenses, sublicenses, leases or subleases granted to others not interfering in any material respect with the business of the Borrower and its Subsidiaries; (e) the sale or disposition of Cash Equivalents for fair market value; and (f) the sale or disposition of obsolete or unused equipment and other assets in the ordinary course of business.

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

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

Platform” has the meaning specified in Section 6.02.

Pledge Agreement” means the pledge agreement, dated as of the Closing Date, executed in favor of the Collateral Agent by each of the Loan Parties

Pledged Collateral” has the meaning specified in the Pledge Agreement.

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 7.11, each such transaction or

 

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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 Borrower and its 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 Borrower and its 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 Borrower and its 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 Borrower and its Subsidiaries for such Measurement Period.

Pro Forma Compliance” means, with respect to any transaction, that such transaction does not cause, create or result in a Default after giving Pro Forma Effect, based upon the results of operations for the most recently completed Measurement Period to (a) such transaction and (b) all other transactions which are contemplated or required to be given Pro Forma Effect hereunder that have occurred on or after the first day of the relevant Measurement Period.

Property” means any interest of any kind in any property or asset, whether real, personal or mixed, or tangible or intangible.

Public Lender” has the meaning specified in Section 6.02.

Public Market” shall exist if (a) a Public Offering has been consummated and (b) any Equity Interests of the Borrower have been distributed by means of an effective registration statement under the Securities Act.

Public Offering” means a public offering of the Equity Interests of the Borrower pursuant to an effective registration statement under the Securities Act.

Qualified ECP Guarantor” means, at any time, each Loan Party with total assets exceeding $10,000,000 or that qualifies at such time as an “eligible contract participant” under the Commodity Exchange Act and can cause another Person to qualify as an “eligible contract participant” at such time under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

Qualifying Control Agreement” means an agreement, among a Loan Party, a depository institution or securities intermediary and the Administrative Agent, which agreement is in form and substance acceptable to the Administrative Agent and which provides the Administrative Agent with “control” (as such term is used in Article 9 of the UCC) over the deposit account(s) or securities account(s) described therein.

 

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Recipient” means the Administrative Agent, any Lender, the L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder.

Reduction Amount” has the meaning set forth in Section 2.05(b)(viii).

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

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

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

Request for Credit Extension” means (a) with respect to a Borrowing, conversion or continuation of Term Loans or Revolving Loans, a Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to a Swingline Loan, a Swingline Loan Notice.

Required Lenders” means, at any time, Lenders having Total Credit Exposures representing more than 50% of the Total Credit Exposures of all Lenders; provided that, if there are only two (2) Lenders, Required Lenders shall mean all Lenders that are not Defaulting Lenders. The Total Credit Exposure of any Defaulting Lender shall be disregarded in determining Required Lenders at any time; provided that, the amount of any participation in any Swingline Loan and Unreimbursed Amounts that such Defaulting Lender has failed to fund that have not been reallocated to and funded by another Lender shall be deemed to be held by the Lender that is the Swingline Lender or L/C Issuer, as the case may be, in making such determination.

Required Revolving Lenders” means, at any time, Revolving Lenders having Total Revolving Credit Exposures representing more than 50% of the Total Revolving Credit Exposures of all Revolving Lenders; provided that, if there are only two (2) Revolving Lenders, Required Revolving Lenders shall mean all Revolving Lenders that are not Defaulting Lenders. The Total Revolving Credit Exposure of any Defaulting Lender shall be disregarded in determining Required Revolving Lenders at any time; provided that, the amount of any participation in any Swingline Loan and Unreimbursed Amounts that such Defaulting Lender has failed to fund that have not been reallocated to and funded by another Lender shall be deemed to be held by the Revolving Lender that is the Swingline Lender or L/C Issuer, as the case may be, in making such determination.

Required Term Lenders” means, at any time, Term Lenders having Total Term Credit Exposures representing more than 50% of the Total Term Credit Exposures of all Term Lenders; provided that, if there are only two (2) Term Lenders, Required Term Lenders shall mean all Term Lenders that are not Defaulting Lenders. The Total Term Credit Exposure of any Defaulting Lender shall be disregarded in determining Required Term Lenders at any time.

Resignation Effective Date” has the meaning set forth in Section 9.06.

Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of a Loan Party, solely for purposes of the delivery of incumbency certificates pursuant to Section 4.01, the secretary or any assistant secretary of a Loan Party and, solely for purposes of notices given pursuant to Article II, any other officer or employee]of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Loan Party designated in or pursuant to an

 

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agreement between the applicable Loan Party and the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party. To the extent requested by the Administrative Agent, each Responsible Officer will provide an incumbency certificate and to the extent requested by the Administrative Agent, appropriate authorization documentation, in form and substance satisfactory to the Administrative Agent.

Restricted Payment” means (a) any dividend or other distribution, direct or indirect, on account of any shares (or equivalent) of any class of Equity Interests of the Borrower or any of its Subsidiaries, now or hereafter outstanding, (b) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares (or equivalent) of any class of Equity Interests of the Borrower or any of its Subsidiaries, now or hereafter outstanding, and (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of Equity Interests of any Loan Party or any of its Subsidiaries, now or hereafter outstanding.

Revolving Borrowing” means a borrowing consisting of simultaneous Revolving Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Revolving Lenders pursuant to Section 2.01(b).

Revolving Commitment” means, as to each Revolving Lender, its obligation to (a) make Revolving Loans to the Borrower pursuant to Section 2.01(b), (b) purchase participations in L/C Obligations, and (c) purchase participations in Swingline Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 1.01(b) under the caption “Revolving Commitment” or opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement. The Revolving Commitment of all of the Revolving Lenders on the Closing Date shall be $75,000,000.

Revolving Exposure” means, as to any Lender at any time, the aggregate principal amount at such time of its outstanding Revolving Loans and such Lender’s participation in L/C Obligations and Swingline Loans at such time.

Revolving Facility” means, at any time, the aggregate amount of the Revolving Lenders’ Revolving Commitments at such time.

Revolving Lender” means, at any time, (a) so long as any Revolving Commitment is in effect, any Lender that has a Revolving Commitment at such time or (b) if the Revolving Commitments have terminated or expired, any Lender that has a Revolving Loan or a participation in L/C Obligations or Swingline Loans at such time.

Revolving Loan” has the meaning specified in Section 2.01(b).

Revolving Note” means a promissory note made by the Borrower in favor of a Revolving Lender evidencing Revolving Loans or Swingline Loans, as the case may be, made by such Revolving Lender, substantially in the form of Exhibit G.

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

 

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Sale and Leaseback Transaction” means, with respect to any Loan Party or any Subsidiary, any arrangement, directly or indirectly, with any Person whereby such Loan Party or such Subsidiary shall sell or transfer any property used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property being sold or transferred.

Sanction(s)” means any sanction administered or enforced by the United States Government (including, without limitation, OFAC), the United Nations Security Council, the European Union, any European Union member state, Her Majesty’s Treasury (“HMT”) or other relevant sanctions authority.

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

Secured Cash Management Agreement” means any Cash Management Agreement between the any Loan Party or any Subsidiary of any Loan Party and any Cash Management Bank.

Secured Hedge Agreement” means any interest rate, currency, foreign exchange, or commodity Swap Contract required by or not prohibited under Article VI or VII between any Loan Party or any Subsidiary of any Loan Party and any Hedge Bank.

Secured Obligations” means all Obligations and all Additional Secured Obligations.

Secured Parties” means, collectively, the Administrative Agent, the Lenders, the L/C Issuer, the Hedge Banks, the Cash Management Banks, the Indemnitees and each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to Section 9.05.

Secured Party Designation Notice” means a notice from any Lender or an Affiliate of a Lender substantially in the form of Exhibit H.

Securities Act” means the Securities Act of 1933, including all amendments thereto and regulations promulgated thereunder.

Security Agreement” means the security agreement, dated as of the Closing Date, executed in favor of the Collateral Agent by each of the Loan Parties.

Shareholders’ Equity” means, as of any date of determination, consolidated shareholders’ equity of the Borrower and its Subsidiaries as of such date, determined in accordance with GAAP.

Solvency Certificate” means a solvency certificate in substantially in the form of Exhibit I.

Solvent” and “Solvency” mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital, and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business. 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.

 

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Specified Loan Party” means any Loan Party that is not then an “eligible contract participant” under the Commodity Exchange Act (determined prior to giving effect to Section 10.11).

Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of Voting Stock is at the time beneficially owned, or the management of which is otherwise controlled, directly or indirectly, through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.

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

Swap Obligations” 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.

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

Swingline Borrowing” means a borrowing of a Swingline Loan pursuant to Section 2.04.

Swingline Lender” means Bank of America in its capacity as provider of Swingline Loans, or any successor swingline lender hereunder.

Swingline Loan” has the meaning specified in Section 2.04(a).

Swingline Loan Notice” means a notice of a Swingline Borrowing pursuant to Section 2.04(b), which shall be substantially in the form of Exhibit J or such other form as approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.

Swingline Sublimit” means an amount equal to the lesser of (a) $15,000,000 and (b) the Revolving Facility. The Swingline Sublimit is part of, and not in addition to, the Revolving Facility.

 

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Syndication Agents” means Bank of America, N.A., JPMorgan Chase Bank, N.A. and SunTrust Bank, in their respective capacities as co-syndication agents.

Synthetic Debt” means, with respect to any Person as of any date of determination thereof, all obligations of such Person in respect of transactions entered into by such Person that are intended to function primarily as a borrowing of funds but are not otherwise included in the definition of “Indebtedness” or as a liability on the Consolidated balance sheet of such Person and its Subsidiaries in accordance with GAAP.

Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property (including Sale and Leaseback Transactions), in each case, creating obligations that do not appear on the balance sheet of such Person but which, upon the application of any Debtor Relief Laws to such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

Target” has the meaning set forth in the definition of “Permitted Acquisition.”

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

Term Borrowing” means a borrowing consisting of simultaneous Term Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Term Lenders pursuant to Section 2.01(a).

Term Commitment” means, as to each Term Lender, its obligation to make Term Loans to the Borrower pursuant to Section 2.01(a) in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Term Lender’s name on Schedule 1.01(b) under the caption “Term Commitment” or opposite such caption in the Assignment and Assumption pursuant to which such Term Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement. The Term Commitment of all of the Term Lenders on the Closing Date shall be $75,000,000.

Term Facility” means, at any time, (a) on or prior to the Closing Date, the aggregate amount of the Term Commitments at such time and (b) thereafter, the aggregate principal amount of the Term Loans of all Term Lenders outstanding at such time.

Term Lender” means (a) at any time on or prior to the Closing Date, any Lender that has a Term Commitment at such time and (b) at any time after the Closing Date, any Lender that holds Term Loans at such time.

Term Loan” means an advance made by any Term Lender under the Term Facility.

Term Note” means a promissory note made by the Borrower in favor of a Term Lender evidencing Term Loans made by such Term Lender, substantially in the form of Exhibit K.

Threshold Amount” means $15,000,000.

Total Credit Exposure” means, as to any Lender at any time, the unused Commitments, Revolving Exposure and Outstanding Amount of all Term Loans of such Lender at such time.

 

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Total Revolving Credit Exposure” means, as to any Revolving Lender at any time, the unused Commitments and Revolving Exposure of such Revolving Lender at such time.

Total Revolving Outstandings” means the aggregate Outstanding Amount of all Revolving Loans, Swingline Loans and L/C Obligations.

Total Term Credit Exposure” means, as to any Term Lender at any time, the Outstanding Amount of all Term Loans of such Term Lender at such time.

Type” means, with respect to a Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.

UCC” means the Uniform Commercial Code as in effect in the State of New York; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.

UCP” means, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce (“ICC”) Publication No. 600 (or such later version thereof as may be in effect at the time of issuance).

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

Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).

U.S. Loan Party” means any Loan Party that is organized under the laws of one of the states of the United States and that is not a CFC.

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” has the meaning specified in Section 3.01(e)(ii)(B)(3).

Voting Stock” means, with respect to any Person, Equity Interests issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right to so vote has been suspended by the happening of such contingency.

Write-Down and Conversion Powers” means, 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.

 

1.02

Other Interpretive Provisions.

With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

(a)    The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the

 

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

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

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

 

1.03

Accounting Terms.

(a)    Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Borrower and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 on financial liabilities shall be disregarded.

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

 

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this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Without limiting the foregoing, leases shall continue to be classified and accounted for on a basis consistent with that reflected in the Audited Financial Statements for all purposes of this Agreement, notwithstanding any change in GAAP relating thereto, unless the parties hereto shall enter into a mutually acceptable amendment addressing such changes, as provided for above.

(c)    Pro Forma Treatment. Each Disposition of all or substantially all of a line of business, and each 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 7.11 and for purposes of determining the Applicable Rate, be given Pro Forma Effect as of the first day of such Measurement Period.

 

1.04

Rounding.

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

 

1.05

Times of Day.

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

 

1.06

Letter of Credit Amounts.

Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

 

1.07

UCC Terms.

Terms defined in the UCC in effect on the Closing Date and not otherwise defined herein shall, unless the context otherwise indicates, have the meanings provided by those definitions. Subject to the foregoing, the term “UCC” refers, as of any date of determination, to the UCC then in effect.

 

1.08

Rates

The Administrative Agent does not warrant, nor accept responsibility, nor shall the Administrative Agent have any liability with respect to the administration, submission or any other matter related to the rates in the definition of “Eurodollar Rate” or with respect to any comparable or successor rate thereto.

 

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ARTICLE II

COMMITMENTS AND CREDIT EXTENSIONS

 

2.01

Loans.

(a)    Term Borrowing. Subject to the terms and conditions set forth herein, each Term Lender severally agrees to make a single loan to the Borrower, in Dollars, on the Closing Date in an amount not to exceed such Term Lender’s Applicable Percentage of the Term Facility. The Term Borrowing shall consist of Term Loans made simultaneously by the Term Lenders in accordance with their respective Applicable Percentage of the Term Facility. Term Borrowings repaid or prepaid may not be reborrowed. Term Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein; provided, however, any Term Borrowing made on the Closing Date or any of the three (3) Business Days following the Closing Date shall be made as Base Rate Loans unless the Borrower delivers a Funding Indemnity Letter not less than three (3) Business Days prior to the date of such Term Borrowing.

(b)    Revolving Borrowings. Subject to the terms and conditions set forth herein, each Revolving Lender severally agrees to make loans (each such loan, a “Revolving Loan”) to the Borrower, in Dollars, from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Revolving Commitment; provided, however, that after giving effect to any Revolving Borrowing, (i) the Total Revolving Outstandings shall not exceed the Revolving Facility, and (ii) the Revolving Exposure of any Lender shall not exceed such Revolving Lender’s Revolving Commitment. Within the limits of each Revolving Lender’s Revolving Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow Revolving Loans, prepay under Section 2.05, and reborrow under this Section 2.01(b). Revolving Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein; provided, however, any Revolving Borrowings made on the Closing Date or any of the three (3) Business Days following the Closing Date shall be made as Base Rate Loans unless the Borrower delivers a Funding Indemnity Letter not less than three (3) Business Days prior to the date of such Revolving Borrowing.

 

2.02

Borrowings, Conversions and Continuations of Loans.

(a)    Notice of Borrowing. Each Borrowing, each conversion of Loans from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent, which may be given by: (A) telephone or (B) a Loan Notice; provided that any telephonic notice must be confirmed immediately by delivery to the Administrative Agent of a Loan Notice. Each such Loan Notice must be received by the Administrative Agent not later than 11:00 a.m. (i) three (3) Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate Loans. Not later than 11:00 a.m., three (3) Business Days before the requested date of such Borrowing, conversion or continuation, the Administrative Agent shall notify the Borrower (which notice may be by telephone) whether or not the requested Interest Period has been consented to by all the Lenders. Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof (or, in connection with any conversion or continuation of a Term Loan, if less, the entire principal thereof then outstanding). Except as provided in Sections 2.03(c) and 2.04(c), each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $500,000 in excess thereof (or, in

 

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connection with any conversion or continuation of a Term Loan, if less, the entire principal thereof then outstanding). Each Loan Notice and each telephonic notice shall specify (A) the applicable Facility and whether the Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other, or a continuation of Loans, as the case may be, under such Facility, (B) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (C) the principal amount of Loans to be borrowed, converted or continued, (D) the Type of Loans to be borrowed or to which existing Loans are to be converted, and (E) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If the Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one (1) month. Notwithstanding anything to the contrary herein, a Swingline Loan may not be converted to a Eurodollar Rate Loan.

(b)    Advances. Following receipt of a Loan Notice for a Facility, the Administrative Agent shall promptly notify each Appropriate Lender of the amount of its Applicable Percentage under such Facility of the applicable Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Appropriate Lender of the details of any automatic conversion to Base Rate Loans described in Section 2.02(a). In the case of a Borrowing, each Appropriate Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the Business Day specified in the applicable Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01), the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower; provided, however, that if, on the date a Loan Notice with respect to a Revolving Borrowing is given by the Borrower, there are L/C Borrowings outstanding, then the proceeds of such Revolving Borrowing, first, shall be applied to the payment in full of any such L/C Borrowings, and second, shall be made available to the Borrower as provided above.

(c)    Eurodollar Rate Loans. Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan. During the existence of a Default, no Loans may be requested as, converted to or continued as Eurodollar Rate Loans without the consent of the Required Lenders and the Required Lenders may demand that any or all of the outstanding Eurodollar Rate Loans be converted immediately to Base Rate Loans.

(d)    Interest Rates. Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error.

(e)    Interest Periods. After giving effect to all Term Borrowings, all conversions of Term Loans from one Type to the other, and all continuations of Term Loans as the same Type, there shall not be more than five (5) Interest Periods in effect in respect of the Term Facility. After giving effect to all Revolving Borrowings, all conversions of Revolving Loans from one

 

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Type to the other, and all continuations of Revolving Loans as the same Type, there shall not be more than five (5) Interest Periods in effect in respect of the Revolving Facility.

(f)    Cashless Settlement Mechanism. Notwithstanding anything to the contrary in this Agreement, any Lender may exchange, continue or rollover all or the portion of its Loans in connection with any refinancing, extension, loan modification or similar transaction permitted by the terms of this Agreement, pursuant to a cashless settlement mechanism approved by the Borrower, the Administrative Agent and such Lender.

 

2.03

Letters of Credit.

(a)    The Letter of Credit Commitment.

(i)    Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the Revolving Lenders set forth in this Section 2.03, (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account of the Borrower or any of its domestic Subsidiaries, and to amend or extend Letters of Credit previously issued by it, in accordance with Section 2.03(b), and (2) to honor drawings under the Letters of Credit; and (B) the Revolving Lenders severally agree to participate in Letters of Credit issued for the account of the Borrower or its Subsidiaries and any drawings thereunder; provided that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (x) the Total Revolving Outstandings shall not exceed the Revolving Facility, (y) the Revolving Exposure of any Revolving Lender shall not exceed such Lender’s Revolving Commitment, and (z) the Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit. Each request by the Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Borrower that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. All Existing Letters of Credit shall be deemed to have been issued pursuant hereto and deemed L/C Obligations, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof.

(ii)    The L/C Issuer shall not issue any Letter of Credit if:

(A)    subject to Section 2.03(b)(iii), the expiry date of the requested Letter of Credit would occur more than twelve (12) months after the date of issuance or last extension, unless the Required Lenders have approved such expiry date; or

(B)    the expiry date of the requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Revolving Lenders have approved such expiry date.

(iii)    The L/C Issuer shall not be under any obligation to issue any Letter of Credit if:

 

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(A)    any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing the Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon the L/C Issuer with respect to the Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;

(B)    the issuance of the Letter of Credit would violate one or more policies of the L/C Issuer applicable to letters of credit generally;

(C)    except as otherwise agreed by the Administrative Agent and the L/C Issuer, the Letter of Credit is in an initial stated amount less than $100,000, in the case of a commercial Letter of Credit, or $250,000, in the case of a standby Letter of Credit (other than Existing Letters of Credit that are standby Letters of Credit);

(D)    the Letter of Credit is to be denominated in a currency other than Dollars; and

(E)    any Revolving Lender is at that time a Defaulting Lender, unless the L/C Issuer has entered into arrangements, including the delivery of Cash Collateral, satisfactory to the L/C Issuer (in its sole discretion) with the Borrower or such Revolving Lender to eliminate the L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section 2.15(a)(iv)) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Obligations as to which the L/C Issuer has actual or potential Fronting Exposure, as it may elect in its sole discretion.

(iv)    The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be permitted at such time to issue the Letter of Credit in its amended form under the terms hereof.

(v)    The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to the Letter of Credit.

(vi)    The L/C Issuer shall act on behalf of the Revolving Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article IX included the L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuer.

 

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(b)    Procedures for Issuance and Amendment of Letters of Credit; Auto Extension Letters of Credit.

(i)    Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Borrower. Such Letter of Credit Application may be sent by fax transmission, by United States mail, by overnight courier, by electronic transmission using the system provided by the L/C Issuer, by personal delivery or by any other means acceptable to the L/C Issuer. Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least five (5) Business Days (or such later date and time as the Administrative Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) the purpose and nature of the requested Letter of Credit; and (H) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer (1) the Letter of Credit to be amended; (2) the proposed date of amendment thereof (which shall be a Business Day); (3) the nature of the proposed amendment; and (4) such other matters as the L/C Issuer may require. Additionally, the Borrower shall furnish to the L/C Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer or the Administrative Agent may require.

(ii)    Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof. Unless the L/C Issuer has received written notice from any Revolving Lender, the Administrative Agent or any Loan Party, at least one (1) Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article IV shall not then be satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower (or the applicable Subsidiary) or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Revolving Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Revolving Lender’s Applicable Revolving Percentage times the amount of such Letter of Credit.

(iii)    Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.

 

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(iv)    If the Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole discretion, agree to issue a standby Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such extension at least once in each twelve (12) month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve (12) month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Borrower shall not be required to make a specific request to the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Revolving Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has determined that it would not be permitted, or would have no obligation at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of Section 2.03(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven (7) Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (2) from the Administrative Agent, any Revolving Lender or the Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the L/C Issuer not to permit such extension.

(c)    Drawings and Reimbursements; Funding of Participations.

(i)    Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall notify the Borrower and the Administrative Agent thereof. Not later than 11:00 a.m. on the date of any payment by the L/C Issuer under a Letter of Credit (each such date, an “Honor Date”), the Borrower shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing. If the Borrower fails to so reimburse the L/C Issuer by such time, the Administrative Agent shall promptly notify each Revolving Lender of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such Revolving Lender’s Applicable Revolving Percentage thereof. In such event, the Borrower shall be deemed to have requested a Revolving Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Revolving Commitments and the conditions set forth in Section 4.02 (other than the delivery of a Loan Notice). Any notice given by the L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

(ii)    Each Revolving Lender shall upon any notice pursuant to Section 2.03(c)(i) make funds available (and the Administrative Agent may apply Cash Collateral provided for this purpose) for the account of the L/C Issuer at the Administrative Agent’s Office in an amount equal to its Applicable Revolving Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii), each

 

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Revolving Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the L/C Issuer.

(iii)    With respect to any Unreimbursed Amount that is not fully refinanced by a Revolving Borrowing of Base Rate Loans because the conditions set forth in Section 4.02 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Revolving Lender’s payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section.

(iv)    Until each Revolving Lender funds its Revolving Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Applicable Revolving Percentage of such amount shall be solely for the account of the L/C Issuer.

(v)    Each Revolving Lender’s obligation to make Revolving Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, the Borrower, any Subsidiary or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default; or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Revolving Lender’s obligation to make Revolving Loans pursuant to this Section 2.03(c) is subject to the conditions set forth in Section 4.02 (other than delivery by the Borrower of a Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrower to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.

(vi)    If any Revolving Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii), then, without limiting the other provisions of this Agreement, the L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the L/C Issuer in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Revolving Loan included in the relevant Revolving Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of the L/C Issuer submitted to any Revolving Lender (through the Administrative Agent) with respect to any amounts owing under this Section 2.03(c)(vi) shall be conclusive absent manifest error.

 

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(d)    Repayment of Participations.

(i)    At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Revolving Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c), if the Administrative Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Applicable Revolving Percentage thereof in the same funds as those received by the Administrative Agent.

(ii)    If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the circumstances described in Section 11.05 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Revolving Lender shall pay to the Administrative Agent for the account of the L/C Issuer its Applicable Revolving Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

(e)    Obligations Absolute. The obligation of the Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

(i)    any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;

(ii)    the existence of any claim, counterclaim, setoff, defense or other right that the Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement or by such Letter of Credit, the transactions contemplated hereby or any agreement or instrument relating thereto, or any unrelated transaction;

(iii)    any draft, demand, endorsement, certificate or other document presented under or in connection with such 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; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

(iv)    waiver by the L/C Issuer of any requirement that exists for the L/C Issuer’s protection and not the protection of the Borrower or any waiver by the L/C Issuer which does not in fact materially prejudice the Borrower;

(v)    honor of a demand for payment presented electronically even if such Letter of Credit requires that demand be in the form of a draft;

(vi)    any payment made by the L/C Issuer in respect of an otherwise complying item presented after the date specified as the expiration date of, or the date by

 

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which documents must be received under, such Letter of Credit if presentation after such date is authorized by the UCC, the ISP or the UCP, as applicable;

(vii)    any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or

(viii)    any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or any of its Subsidiaries.

The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s instructions or other irregularity, the Borrower will immediately notify the L/C Issuer. The Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.

(f)    Role of L/C Issuer. Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight or time draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Revolving Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable or responsible for any of the matters described in Section 2.03(e); provided, however, that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves, as determined by a final nonappealable judgment of a court of competent jurisdiction, were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight or time draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring, endorsing or assigning or purporting to transfer, endorse or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. The L/C

 

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Issuer may send a Letter of Credit or conduct any communication to or from the beneficiary via the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) message or overnight courier, or any other commercially reasonable means of communicating with a beneficiary.

(g)    Applicability of ISP and UCP; Limitation of Liability. Unless otherwise expressly agreed by the L/C Issuer and the Borrower when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the UCP shall apply to each commercial Letter of Credit. Notwithstanding the foregoing, the L/C Issuer shall not be responsible to the Borrower for, and the L/C Issuer’s rights and remedies against the Borrower shall not be impaired by, any action or inaction of the L/C Issuer required or permitted under any law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the Law or any order of a jurisdiction where the L/C Issuer or the beneficiary is located, the practice stated in the ISP or UCP, as applicable, or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade - International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.

(h)    Letter of Credit Fees. The Borrower shall pay to the Administrative Agent for the account of each Revolving Lender in accordance, subject to Section 2.15, with its Applicable Revolving Percentage a Letter of Credit fee (the “Letter of Credit Fee”) for each Letter of Credit equal to the Applicable Rate for Revolving Loans that are Eurodollar Rate Loans times the daily amount available to be drawn under such Letter of Credit. Letter of Credit Fees shall be (1) due and payable on the first Business Day following each fiscal quarter end, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand and (2) computed on a quarterly basis in arrears. If there is any change in the Applicable Rate during any quarter, the daily amount available to be drawn under each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.

(i)    Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer. The Borrower shall pay directly to the L/C Issuer for its own account a fronting fee (i) with respect to each commercial Letter of Credit, at the rate specified in the Fee Letter (or such other rate separately agreed between the Borrower and the L/C Issuer, computed on the amount of such Letter of Credit, and payable upon the issuance thereof, (ii) with respect to any amendment of a commercial Letter of Credit increasing the amount of such Letter of Credit, at a rate separately agreed between the Borrower and the L/C Issuer, computed on the amount of such increase, and payable upon the effectiveness of such amendment, and (iii) with respect to each standby Letter of Credit, at the rate per annum specified in the Fee Letter, computed on the daily amount available to be drawn under such Letter of Credit on a quarterly basis in arrears. Such fronting fee shall be due and payable on or prior to the date that is ten (10) Business Days following each fiscal quarter end, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06. In addition, the Borrower shall pay directly to the L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

 

46


(j)    Conflict with Issuer Documents. In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.

(k)    Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, the Borrower shall be obligated to reimburse the L/C Issuer hereunder for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Subsidiaries.

 

2.04

Swingline Loans.

(a)    The Swingline. Subject to the terms and conditions set forth herein, the Swingline Lender, in reliance upon the agreements of the other Lenders set forth in this Section, may in its sole discretion make loans to the Borrower (each such loan, a “Swingline Loan”). Each such Swingline Loan may be made, subject to the terms and conditions set forth herein, to the Borrower, in Dollars, from time to time on any Business Day during the Availability Period in an aggregate amount not to exceed at any time outstanding the amount of the Swingline Sublimit, notwithstanding the fact that such Swingline Loans, when aggregated with the Applicable Revolving Percentage of the Outstanding Amount of Revolving Loans and L/C Obligations of the Lender acting as Swingline Lender, may exceed the amount of such Lender’s Revolving Commitment; provided, however, that (i) after giving effect to any Swingline Loan, (A) the Total Revolving Outstandings shall not exceed the Revolving Facility at such time, and (B) the Revolving Exposure of any Revolving Lender (other than the Swingline Lender in its capacity as such) at such time shall not exceed such Lender’s Revolving Commitment, (ii) the Borrower shall not use the proceeds of any Swingline Loan to refinance any outstanding Swingline Loan, and (iii) the Swingline Lender shall not be under any obligation to make any Swingline Loan if it shall determine (which determination shall be conclusive and binding absent manifest error) that it has, or by such Credit Extension may have, Fronting Exposure. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section, prepay under Section 2.05, and reborrow under this Section. Each Swingline Loan shall bear interest only at a rate based on the Base Rate plus the Applicable Rate. Immediately upon the making of a Swingline Loan, each Revolving Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swingline Lender a risk participation in such Swingline Loan in an amount equal to the product of such Revolving Lender’s Applicable Revolving Percentage times the amount of such Swingline Loan.

(b)    Borrowing Procedures.

(i)    Each Swingline Borrowing shall be made upon the Borrower’s irrevocable notice to the Swingline Lender and the Administrative Agent, which may be given by: (A) telephone or (B) a Swingline Loan Notice; provided that any telephonic notice must be confirmed immediately by delivery to the Swingline Lender and the Administrative Agent of a Swingline Loan Notice. Each such Swingline Loan Notice must be received by the Swingline Lender and the Administrative Agent not later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $100,000, and (ii) the requested date of the Borrowing (which shall be a Business Day). Promptly after receipt by the Swingline Lender of any Swingline Loan Notice, the Swingline Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swingline Loan Notice and, if not, the Swingline Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof. Unless the

 

47


Swingline Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Revolving Lender) prior to 2:00 p.m. on the date of the proposed Swingline Borrowing (A) directing the Swingline Lender not to make such Swingline Loan as a result of the limitations set forth in the first proviso to the first sentence of Section 2.04(a), or (B) that one or more of the applicable conditions specified in Article IV is not then satisfied, then, subject to the terms and conditions hereof, the Swingline Lender will, not later than 3:00 p.m. on the borrowing date specified in such Swingline Loan Notice, make the amount of its Swingline Loan available to the Borrower at its office by crediting the account of the Borrower on the books of the Swingline Lender in immediately available funds.

(c)    Refinancing of Swingline Loans.

(i)    The Swingline Lender at any time in its sole discretion may request, on behalf of the Borrower (which hereby irrevocably authorizes the Swingline Lender to so request on its behalf), that each Revolving Lender make a in an amount equal to such Lender’s Applicable Revolving Percentage of the amount of Swingline Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02, without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the Revolving Facility and the conditions set forth in Section 4.02. The Swingline Lender shall furnish the Borrower with a copy of the applicable Loan Notice promptly after delivering such notice to the Administrative Agent. Each Revolving Lender shall make an amount equal to its Applicable Revolving Percentage of the amount specified in such Loan Notice available to the Administrative Agent in immediately available funds (and the Administrative Agent may apply Cash Collateral available with respect to the applicable Swingline Loan) for the account of the Swingline Lender at the Administrative Agent’s Office not later than 1:00 p.m. on the day specified in such Loan Notice, whereupon, subject to Section 2.04(c)(ii), each Revolving Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the Swingline Lender.

(ii)    If for any reason any Swingline Loan cannot be refinanced by such a Revolving Borrowing in accordance with Section 2.04(c)(i), the request for Base Rate Loans submitted by the Swingline Lender as set forth herein shall be deemed to be a request by the Swingline Lender that each of the Revolving Lenders fund its risk participation in the relevant Swingline Loan and each Revolving Lender’s payment to the Administrative Agent for the account of the Swingline Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of such participation.

(iii)    If any Revolving Lender fails to make available to the Administrative Agent for the account of the Swingline Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i), the Swingline Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swingline Lender at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the Swingline Lender in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Swingline Lender in connection

 

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with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Revolving Loan included in the relevant Revolving Borrowing or funded participation in the relevant Swingline Loan, as the case may be. A certificate of the Swingline Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.

(iv)    Each Revolving Lender’s obligation to make Revolving Loans or to purchase and fund risk participations in Swingline Loans pursuant to this Section 2.04(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the Swingline Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided however, that each Revolving Lender’s obligation to make Revolving Loans pursuant to this Section 2.04(c) is subject to the conditions set forth in Section 4.02 (other than delivery by the Borrower of a Loan Notice). No such funding of risk participations shall relieve or otherwise impair the obligation of the Borrower to repay Swingline Loans, together with interest as provided herein.

(d)    Repayment of Participations.

(i)    At any time after any Revolving Lender has purchased and funded a risk participation in a Swingline Loan, if the Swingline Lender receives any payment on account of such Swingline Loan, the Swingline Lender will distribute to such Revolving Lender its Applicable Revolving Percentage thereof in the same funds as those received by the Swingline Lender.

(ii)    If any payment received by the Swingline Lender in respect of principal or interest on any Swingline Loan is required to be returned by the Swingline Lender under any of the circumstances described in Section 11.05 (including pursuant to any settlement entered into by the Swingline Lender in its discretion), each Revolving Lender shall pay to the Swingline Lender its Applicable Revolving Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate. The Administrative Agent will make such demand upon the request of the Swingline Lender. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

(e)    Interest for Account of Swingline Lender. The Swingline Lender shall be responsible for invoicing the Borrower for interest on the Swingline Loans. Until each Revolving Lender funds its Base Rate Loan or risk participation pursuant to this Section to refinance such Revolving Lender’s Applicable Revolving Percentage of any Swingline Loan, interest in respect of such Applicable Revolving Percentage shall be solely for the account of the Swingline Lender.

(f)    Payments Directly to Swingline Lender. The Borrower shall make all payments of principal and interest in respect of the Swingline Loans directly to the Swingline Lender.

 

2.05

Prepayments.

(a)    Optional.

 

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(i)    The Borrower may, upon notice to the Administrative Agent pursuant to delivery to the Administrative Agent of a Notice of Loan Prepayment, at any time or from time to time voluntarily prepay Term Loans and Revolving Loans in whole or in part without premium or penalty subject to Section 3.06; provided that, unless otherwise agreed by the Administrative Agent, (A) such notice must be received by the Administrative Agent not later than 11:00 a.m. (1) three (3) Business Days prior to any date of prepayment of Eurodollar Rate Loans and (2) on the date of prepayment of Base Rate Loans; (B) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (C) any prepayment of Base Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $500,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid and, if Eurodollar Rate Loans are to be prepaid, the Interest Period(s) of such Loans. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s ratable portion of such prepayment (based on such Lender’s Applicable Percentage in respect of the relevant Facility). If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.06. Each prepayment of the outstanding Term Loans pursuant to this Section 2.05(a) shall be applied to the principal repayment installments thereof on a pro-rata basis. Subject to Section 2.15, such prepayments shall be paid to the Lenders in accordance with their respective Applicable Percentages in respect of each of the relevant Facilities.

(ii)    The Borrower may, upon notice to the Swingline Lender pursuant to delivery to the Swingline Lender of a Notice of Loan Prepayment (with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay Swingline Loans in whole or in part without premium or penalty; provided that, unless otherwise agreed by the Swingline Lender, (A) such notice must be received by the Swingline Lender and the Administrative Agent not later than 1:00 p.m. on the date of the prepayment, and (B) any such prepayment shall be in a minimum principal amount of $100,000 or a whole multiple of $100,000 in excess hereof (or, if less, the entire principal thereof then outstanding). Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.

(b)    Mandatory.

(i)    Dispositions and Involuntary Dispositions. The Borrower shall prepay the Loans and/or Cash Collateralize the L/C Obligations as hereinafter provided in an aggregate amount equal to 100% of the Net Cash Proceeds received by any Loan Party or any Subsidiary from all Dispositions (other than Permitted Transfers) and Involuntary Dispositions within five (5) days of the date of such Disposition or Involuntary Disposition to the extent such proceeds are not reinvested in properties or assets within one-hundred eighty (180) days of the date of such Disposition or Involuntary Disposition.

(ii)    Equity Issuance. Immediately upon the receipt by any Loan Party or any Subsidiary of the Net Cash Proceeds of any Equity Issuance by (A) the Borrower or (B) any Subsidiary of the Borrower to any Person that is not the Borrower or another

 

50


Subsidiary of the Borrower, and excluding any Equity Issuance to any Loan Party’s officers, directors or employees that is permitted under Section 7.06, the Borrower shall prepay the Loans and/or Cash Collateralize the L/C Obligations as hereinafter provided in an aggregate amount equal to 100% of such Net Cash Proceeds.

(iii)    Debt Issuance. Immediately upon the receipt by any Loan Party or any Subsidiary of the Net Cash Proceeds of any Debt Issuance, the Borrower shall prepay the Loans and/or Cash Collateralize the L/C Obligations as hereinafter provided in an aggregate amount equal to 100% of such Net Cash Proceeds.

(iv)    Extraordinary Receipts. Immediately upon receipt by any Loan Party or any Subsidiary of any Extraordinary Receipt received by or paid to or for the account of any Loan Party or any of its Subsidiaries, and not otherwise included in clause (i), (ii) or (iii) of this Section, the Borrower shall prepay the Loans and/or Cash Collateralize the L/C Obligations as hereinafter provided in an aggregate principal amount equal to 100% of all Net Cash Proceeds received therefrom to the extent such proceeds are not reinvested in properties or assets within one-hundred eighty (180) days of the date of receipt of such Extraordinary Receipts.

(v)    Application of Payments. Each prepayment of Loans pursuant to the foregoing provisions of Section 2.05(b)(i)-(iv) shall be applied, first, to the principal repayment installments of the Term Loan on a pro-rata basis for all such principal repayment installments, including, without limitation, the final principal repayment installment on the Maturity Date and, second, to the Revolving Facility in the manner set forth in clause (vii) of Section 2.05(b). Subject to Section 2.15, such prepayments shall be paid to the Lenders in accordance with their respective Applicable Percentages in respect of the relevant Facilities.

(vi)    Revolving Outstandings. If for any reason the Total Revolving Outstandings at any time exceed the Revolving Facility at such time, the Borrower shall immediately prepay Revolving Loans, Swingline Loans and L/C Borrowings (together with all accrued but unpaid interest thereon) and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess; provided, however, that the Borrower shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.05(b)(vi) unless, after the prepayment of the Revolving Loans and Swingline Loans, the Total Revolving Outstandings exceed the Revolving Facility at such time.

(vii)    Application of Other Payments. Except as otherwise provided in Section 2.15, prepayments of the Revolving Facility made pursuant to this Section 2.05(b), first, shall be applied ratably to the L/C Borrowings and the Swingline Loans, second, shall be applied to the outstanding Revolving Loans, and, third, shall be used to Cash Collateralize the remaining L/C Obligations; and, in the case of prepayments of the Revolving Facility required pursuant to clause (i), (ii), (iii), or (iv) of this Section 2.05(b), the amount remaining, if any, after the prepayment in full of all L/C Borrowings, Swingline Loans and Revolving Loans outstanding at such time and the Cash Collateralization of the remaining L/C Obligations in full (the sum of such prepayment amounts, cash collateralization amounts and remaining amount being, collectively, the “Reduction Amount”) may be retained by the Borrower for use in the ordinary course of its business, and the Revolving Facility shall be automatically and permanently reduced by the Reduction Amount as set forth in Section 2.06(b)(ii). Upon the drawing of any Letter of Credit that has been Cash Collateralized, the funds held as Cash Collateral shall be applied (without any further action by or notice to or from the Borrower or any other

 

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Loan Party or any Defaulting Lender that has provided Cash Collateral) to reimburse the L/C Issuer or the Revolving Lenders, as applicable.

Within the parameters of the applications set forth above, prepayments pursuant to this Section 2.05(b) shall be applied first to Base Rate Loans and then to Eurodollar Rate Loans in direct order of Interest Period maturities. All prepayments under this Section 2.05(b) shall be subject to Section 3.06, but otherwise without premium or penalty, and shall be accompanied by interest on the principal amount prepaid through the date of prepayment.

 

2.06

Termination or Reduction of Commitments.

(a)    Optional. The Borrower may, upon notice to the Administrative Agent, terminate the Revolving Facility, the Letter of Credit Sublimit or the Swingline Sublimit, or from time to time permanently reduce the Revolving Facility, the Letter of Credit Sublimit or the Swingline Sublimit; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. five (5) Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof and (iii) the Borrower shall not terminate or reduce (A) the Revolving Facility if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Revolving Outstandings would exceed the Revolving Facility, (B) the Letter of Credit Sublimit if, after giving effect thereto, the Outstanding Amount of L/C Obligations not fully Cash Collateralized hereunder would exceed the Letter of Credit Sublimit, or (C) the Swingline Sublimit if, after giving effect thereto and to any concurrent prepayments hereunder, the Outstanding Amount of Swingline Loans would exceed the Letter of Credit Sublimit.

(b)    Mandatory.

(i)    The aggregate Term Commitments shall be automatically and permanently reduced to zero on the date of the Term Borrowing.

(ii)    The Revolving Facility shall be automatically and permanently reduced on each date on which the prepayment of Revolving Loans outstanding thereunder is required to be made pursuant to Section 2.05(b)(i), (ii), (iii) or (iv) by an amount equal to the applicable Reduction Amount.

(iii)    If after giving effect to any reduction or termination of Revolving Commitments under this Section 2.06, the Letter of Credit Sublimit or the Swingline Sublimit exceeds the Revolving Facility at such time, the Letter of Credit Sublimit or the Swingline Sublimit, as the case may be, shall be automatically reduced by the amount of such excess.

(c)    Application of Commitment Reductions; Payment of Fees.

The Administrative Agent will promptly notify the Lenders of any termination or reduction of the Letter of Credit Sublimit, Swingline Sublimit or the Revolving Commitment under this Section 2.06. Upon any reduction of the Revolving Commitments, the Revolving Commitment of each Revolving Lender shall be reduced by such Lender’s Applicable Revolving Percentage of such reduction amount. All fees in respect of the Revolving Facility accrued until the effective date of any termination of the Revolving Facility shall be paid on the effective date of such termination.

 

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2.07

Repayment of Loans.

(a)    Term Loans. The Borrower shall repay to the Term Lenders the aggregate principal amount of all Term Loans outstanding on the following dates in the respective amounts set forth opposite such dates (which amounts shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Section 2.05), unless accelerated sooner pursuant to Section 8.02;

 

Payment Dates

   Principal Repayment
Installments
 

March 31, 2019

   $ 937,500.00  

June 30, 2019

   $ 937,500.00  

September 30, 2019

   $ 937,500.00  

December 31, 2019

   $ 937,500.00  

March 31, 2020

   $ 937,500.00  

June 30, 2020

   $ 937,500.00  

September 30, 2020

   $ 937,500.00  

December 31, 2020

   $ 937,500.00  

March 31, 2021

   $ 1,875,000.00  

June 30, 2021

   $ 1,875,000.00  

September 30, 2021

   $ 1,875,000.00  

December 31, 2021

   $ 1,875,000.00  

March 31, 2022

   $ 1,875,000.00  

June 30, 2022

   $ 1,875,000.00  

September 30, 2022

   $ 1,875,000.00  

December 31, 2022

   $ 1,875,000.00  

March 31, 2023

   $ 2,812,500.00  

June 30, 2023

   $ 2,812,500.00  

September 30, 2023

   $ 2,812,500.00  

Maturity Date

     Remaining Principal  

provided, however, that (i) the final principal repayment installment of the Term Loans shall be repaid on the Maturity Date for the Term Facility and in any event shall be in an amount equal to the aggregate principal amount of all Term Loans outstanding on such date and (ii) (A) if any principal repayment installment to be made by the Borrower (other than principal repayment installments on Eurodollar Rate Loans) shall come due on a day other than a Business Day, such principal repayment installment shall be due on the preceding Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be and (B) if any principal repayment installment to be made by the Borrower on a Eurodollar Rate Loan shall come due on a day other than a Business Day, such principal repayment installment shall be extended to the next succeeding Business Day unless the result of such extension

 

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would be to extend such principal repayment installment into another calendar month, in which event such principal repayment installment shall be due on the immediately preceding Business Day.

(b)    Revolving Loans. The Borrower shall repay to the Revolving Lenders on the Maturity Date for the Revolving Facility the aggregate principal amount of all Revolving Loans outstanding on such date.

(c)    Swingline Loans. The Borrower shall repay each Swingline Loan on the earlier to occur of (i) the date ten (10) Business Days after such Loan is made and (ii) the Maturity Date for the Revolving Facility.

 

2.08

Interest and Default Rate.

(a)    Interest. Subject to the provisions of Section 2.08(b), (i) each Eurodollar Rate Loan under a Facility shall bear interest on the outstanding principal amount thereof for each Interest Period from the applicable borrowing date at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate for such Facility; (ii) each Base Rate Loan under a Facility shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate for such Facility; and (iv) each Swingline Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate for the Revolving Facility. To the extent that any calculation of interest or any fee required to be paid under this Agreement shall be based on (or result in) a calculation that is less than zero, such calculation shall be deemed zero for purposes of this Agreement.

(b)    Default Rate.

(i)    If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(ii)    If any amount (other than principal of any Loan) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(iii)    Upon the request of the Required Lenders, while any Event of Default exists (including a payment default), all outstanding Obligations (including Letter of Credit Fees) may accrue at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

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

(c)    Interest Payments. Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after

 

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judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

 

2.09

Fees.

In addition to certain fees described in subsections (h) and (i) of Section 2.03:

(a)    Commitment Fee. The Borrower shall pay to the Administrative Agent for the account of each Revolving Lender in accordance with its Applicable Revolving Percentage, a commitment fee equal to the Applicable Rate times the actual daily amount by which the Revolving Facility exceeds the sum of (i) the Outstanding Amount of Revolving Loans and (ii) the Outstanding Amount of L/C Obligations, subject to adjustment as provided in Section 2.15. For the avoidance of doubt, the Outstanding Amount of Swingline Loans shall not be counted towards or considered usage of the Revolving Facility for purposes of determining the commitment fee. The commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the last day of the Availability Period for the Revolving Facility, provided that the commitment fee for the first full fiscal quarter following the Closing Date shall be determined based on the Consolidated Net Leverage Ratio in effect as of the Closing Date, as demonstrated by the Closing Date Consolidated Net Leverage Ratio Certificate. The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.

(b)    Other Fees.

(i)    The Borrower shall pay to the Administrative Agent and the Arranger fees in the amounts and at the times specified in the Fee Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

(ii)    The Borrower shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

 

2.10

Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate.

(a)    Computation of Interest and Fees. All computations of interest for Base Rate Loans (including Base Rate Loans determined by reference to the Eurodollar Rate) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365 day year. Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a), bear interest for one (1) day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

(b)    Financial Statement Adjustments or Restatements. If, as a result of any restatement of or other adjustment to the financial statements of the Borrower and its Subsidiaries

 

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or for any other reason, the Borrower, or the Lenders determine that (i) the Consolidated Net Leverage Ratio as calculated by the Borrower as of any applicable date was inaccurate and (ii) a proper calculation of the Consolidated Net Leverage Ratio would have resulted in higher pricing for such period, the Borrower shall immediately and retroactively be obligated to pay to the Administrative Agent for the account of the applicable Lenders or the L/C Issuer, as the case may be, promptly on demand by the Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, automatically and without further action by the Administrative Agent, any Lender or the L/C Issuer), 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. This paragraph shall not limit the rights of the Administrative Agent, any Lender or the L/C Issuer, as the case may be, under any provision of this Agreement to payment of any Obligations hereunder at the Default Rate or under Article VIII. The Borrower’s obligations under this paragraph shall survive the termination of the Aggregate Commitments and the repayment of all other Obligations hereunder.

 

2.11

Evidence of Debt.

(a)    Maintenance of Accounts. The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

(b)    Maintenance of Records. In addition to the accounts and records referred to in Section 2.11(a), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swingline Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

 

2.12

Payments Generally; Administrative Agents Clawback.

(a)    General. All payments to be made by the Borrower shall be made free and clear of and without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Applicable Percentage in respect of the relevant Facility (or other applicable share as provided herein) of such payment in like funds as received by wire

 

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transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. Subject to Section 2.07(a) and as otherwise specifically provided for in this Agreement, if any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

(b)    (i) Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of Eurodollar Rate Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall pay such 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 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.

(i)    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 Appropriate 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 Appropriate 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 the L/C Issuer, in immediately available funds 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 the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.

 

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(c)    Failure to Satisfy Conditions Precedent. If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

(d)    Obligations of Lenders Several. The obligations of the Lenders hereunder to make Term Loans and Revolving Loans, to fund participations in Letters of Credit and Swingline Loans and to make payments pursuant to Section 11.04(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 11.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 11.04(c).

(e)    Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

(f)    Pro Rata Treatment. Except to the extent otherwise provided herein: (i) each Borrowing (other than Swingline Borrowings) shall be made from the Appropriate Lenders, each payment of fees under Section 2.09 and 2.03(h) and (i) shall be made for account of the Appropriate Lenders, and each termination or reduction of the amount of the Commitments shall be applied to the respective Commitments of the Lenders, pro rata according to the amounts of their respective Commitments; (ii) each Borrowing shall be allocated pro rata among the Lenders according to the amounts of their respective Commitments (in the case of the making of Revolving Loans) or their respective Loans that are to be included in such Borrowing (in the case of conversions and continuations of Loans); (iii) each payment or prepayment of principal of Loans by the Borrower shall be made for account of the Appropriate Lenders pro rata in accordance with the respective unpaid principal amounts of the Loans held by them; and (iv) each payment of interest on Loans by the Borrower shall be made for account of the Appropriate Lenders pro rata in accordance with the amounts of interest on such Loans then due and payable to the respective Appropriate Lenders.

 

2.13

Sharing of Payments by Lenders.

If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of (a) Obligations in respect of any of the Facilities due and payable to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Lender at such time to (ii) the aggregate amount of the Obligations in respect of the Facilities due and payable to all Lenders hereunder and under the other Loan Documents at such time) of payments on account of the Obligations in respect of the Facilities due and payable to all Lenders hereunder and under the other Loan Documents at such time obtained by all the Lenders at such time or (b) Obligations in respect of any of the Facilities owing (but not due and payable) to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing (but not due and payable) to such Lender at such time to (ii) the aggregate amount of the Obligations in respect of the Facilities owing (but not due and payable) to all Lenders hereunder and under the other Loan Documents at such time) of payments on account of the Obligations in respect of the

 

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Facilities owing (but not due and payable) to all Lenders hereunder and under the other Loan Documents at such time obtained by all of the Lenders at such time, then, in each case under clauses (a) and (b) above, the Lender receiving such greater proportion shall (A) notify the Administrative Agent of such fact, and (B) purchase (for cash at face value) participations in the Loans and subparticipations in L/C Obligations and Swingline Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of Obligations in respect of the Facilities then due and payable to the Lenders or owing (but not due and payable) to the Lenders, as the case may be, provided that:

(1)    if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

(2)    the provisions of this Section shall not be construed to apply to (x) any payment made by or on behalf of the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (y) the application of Cash Collateral provided for in Section 2.14, or (z) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or subparticipations in L/C Obligations or Swingline Loans to any assignee or participant, other than an assignment to any Loan Party or any Affiliate thereof (as to which the provisions of this Section shall apply).

Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.

 

2.14

Cash Collateral.

(a)    Certain Credit Support Events. If (i) the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, (ii) as of the Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, (iii) the Borrower shall be required to provide Cash Collateral pursuant to Section 2.05 or 8.02(c), or (iv) there shall exist a Defaulting Lender, the Borrower shall immediately (in the case of clause (iii) above) or within one (1) Business Day (in all other cases) following any request by the Administrative Agent or the L/C Issuer, provide Cash Collateral in an amount not less than the applicable Minimum Collateral Amount (determined in the case of Cash Collateral provided pursuant to clause (iv) above, after giving effect to Section 2.15(a)(iv) and any Cash Collateral provided by the Defaulting Lender).

(b)    Grant of Security Interest. The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting 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 in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.14(c). 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 or the L/C Issuer as herein provided, other than Permitted Liens, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Borrower will, promptly upon

 

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demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency. All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in one or more blocked, non-interest bearing deposit accounts at Bank of America. The Borrower shall pay on demand therefor from time to time all customary account opening, activity and other administrative fees and charges in connection with the maintenance and disbursement of Cash Collateral.

(c)    Application. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.14 or Sections 2.03, 2.05, 2.15 or 8.02 in respect of Letters of Credit shall be held and applied to the satisfaction of the specific L/C Obligations, obligations to fund participations therein (including, as to Cash Collateral provided by a Revolving Lender that is 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 be provided for herein.

(d)    Release. Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or to secure other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Revolving Lender (or, as appropriate, its assignee following compliance with Section 11.06(b)(vi))) or (ii) the determination by the Administrative Agent and the L/C Issuer that there exists excess Cash Collateral; provided, however, (A) any such release shall be without prejudice to, and any disbursement or other transfer of Cash Collateral shall be and remain subject to, any other Lien conferred under the Loan Documents and the other applicable provisions of the Loan Documents, and (B) 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.

 

2.15

Defaulting Lenders.

(a)    Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:

(i)    Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of “Required Lenders” and Section 11.01.

(ii)    Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 11.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the L/C Issuer or Swingline Lender hereunder; third, to Cash Collateralize the L/C Issuer’s Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.14; fourth, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative

 

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Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (A) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (B) Cash Collateralize the L/C Issuer’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.14; sixth, to the payment of any amounts owing to the Lenders, the L/C Issuer or Swingline Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the L/C Issuer or the Swingline Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise as may be required under the Loan Documents in connection with any Lien conferred thereunder or directed by a court of competent jurisdiction; provided that if (1) such payment is a payment of the principal amount of any Loans or L/C Borrowings in respect of which such Defaulting Lender has not fully funded its appropriate share, and (2) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Obligations owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Obligations owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in L/C Obligations and Swingline Loans are held by the Lenders pro rata in accordance with the Commitments hereunder without giving effect to Section 2.15(a)(v). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.15(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii)    Certain Fees.

(A)    Fees. No Defaulting Lender shall be entitled to receive any fee payable under Section 2.09(a) for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

(B)    Letter of Credit Fees. Each Defaulting Lender shall be entitled to receive Letter of Credit Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Applicable Revolving Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.14.

(C)    Defaulting Lender Fees. With respect to any Letter of Credit Fee not required to be paid to any Defaulting Lender pursuant to clause (A) or (B) above, the Borrower shall (1) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in L/C Obligations or Swingline Loans that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (2) pay to the L/C Issuer and Swingline Lender, as applicable, the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to

 

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such L/C Issuer’s or Swingline Lender’s Fronting Exposure to such Defaulting Lender, and (3) not be required to pay the remaining amount of any such fee.

(iv)    Reallocation of Applicable Revolving Percentages to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in L/C Obligations and Swingline Loans shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Applicable Revolving Percentages (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that such reallocation does not cause the aggregate Revolving Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Revolving Commitment. Subject to Section 11.20, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

(v)    Cash Collateral, Repayment of Swingline Loans. If the reallocation described in clause (a)(v) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under applicable Law, (A) first, prepay Swingline Loans in an amount equal to the Swingline Lender’s Fronting Exposure and (B) second, Cash Collateralize the L/C Issuer’s Fronting Exposure in accordance with the procedures set forth in Section 2.14.

(b)    Defaulting Lender Cure. If the Borrower, the Administrative Agent, Swingline Lender and the L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit and Swingline Loans to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages (without giving effect to Section 2.15(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

 

2.16

Increase in Revolving Facility or Term Facility.

(a)    Request for Increase. Provided there exists no Default, upon notice to the Administrative Agent (which shall promptly notify the Lenders), the Borrower may from time to time request an increase in the Revolving Facility or the Term Facility by an aggregate amount (for all such requests) not exceeding $25,000,000 (each, an “Incremental Increase”); provided that:

(i)    any such request for an Incremental Increase shall be in a minimum amount of $5,000,000 and in increments of $5,000,000 in excess thereof, or if less, the entire remaining unused Incremental Increase amount;

(ii)    a maximum of three (3) such requests may be made;

 

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(iii)    except as otherwise specifically set forth herein, all of the other terms and conditions applicable to each such Incremental Increase shall be identical to the terms and conditions applicable to the Facility so increased and shall be part of, and not a separate facility from, the then existing Revolving Facility or Term Facility, as applicable;

(iv)    notwithstanding anything in the foregoing clause (iii) or otherwise in this Agreement to the contrary, solely with respect to any requested Incremental Increase in the Term Facility, if the All-In Yield in respect of such Incremental Increase exceeds the All-In Yield for the Term Loans then in effect (in each case, the “Existing Term Loans”) by more than 0.25%, then the interest rate margins for the Existing Term Loans shall be increased so that the All-In Yield in respect of the Existing Term Loans is equal to the All-In Yield for such Incremental Increase.

(b)    Lender Elections to Increase. Each applicable Lende