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)

October 3, 2016

 

 

Green Plains Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Iowa   001-32924   84-1652107

(State or other jurisdiction

of incorporation)

  (Commission File Number)  

(I.R.S. Employer

Identification No.)

450 Regency Parkway, Suite 400

Omaha, Nebraska

(Address of principal executive offices)

68114

(Zip code)

(402) 884-8700

(Registrant’s telephone number, including area code)

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))

 

 

 


Item 1.01 Entry into a Material Definitive Agreement

Stock Purchase Agreement

On October 3, 2016, Green Plains Inc. (“Green Plains”) and Green Plains II LLC (“GP II”), an indirect wholly-owned subsidiary of Green Plains, entered into a stock purchase agreement (the “Purchase Agreement”) with SCI Ingredients Holdings, Inc. (“SCI”), Stone Canyon Industries LLC and other selling shareholders for GP II to purchase all of the issued and outstanding capital stock of SCI for $250 million in cash, subject to certain post-closing adjustments. A portion of the purchase price was used to fully repay existing debt. SCI is the holding company of Fleischmann’s Vinegar Company, Inc. (“FVC”), the world’s largest manufacturer and marketer of food-grade industrial vinegar.

The closing of the transaction (the “Closing”) occurred immediately following the execution of the Purchase Agreement, on October 3, 2016. The transaction was financed using $135 million of debt described under “ Credit Agreement ” below, with the balance paid from cash on hand. Green Plains has obtained representation and warranty insurance, which will provide coverage for breaches of certain representation and warranties contained in the Purchase Agreement, subject to deductibles and certain other terms and conditions.

The foregoing description of the Purchase Agreement is not complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K, and is incorporated into this Item 1.01 by reference.

Credit Agreement

On October 3, 2016, in order to partially fund the transaction described above, GP II entered into a Credit Agreement with a group of lenders led by Maranon Capital, L.P., consisting of a Term Loan and a Revolving Loan Commitment. Green Plains I LLC (“GP I”), the parent company of GP II, has provided a guaranty of GP II’s obligations under the Credit Agreement. In addition, immediately after the Closing of the transaction, the subsidiaries of GP II, which are FVC, SCI, FVC Intermediate Holdings, Inc. (“FVC-Int”) and FVC Houston, Inc. (“FVC-Houston”) executed a joinder to the Credit Agreement.

GP II and its subsidiaries borrowed $130 million under the Term Loan. The Term Loan principal is scheduled to be repaid in installments of $325,000 per quarter beginning December 31, 2016 through September 30, 2022, with a final balloon payment of $122,200,000 on October 3, 2022. The Revolving Loan Commitment provides for principal borrowings of up to $15 million through October 3, 2022. GP II and its subsidiaries borrowed $5 million under the Revolving Loan Commitment. Both the Term Loan and loans under the Revolving Loan Commitment are subject to mandatory prepayments based on, as defined, excess cash flow, extraordinary receipts, asset dispositions and proceeds from equity and debt issuances. Term Loan prepayments are generally subject to prepayment fees of (i) 2.0% if prepaid on or before the first anniversary of the Credit Agreement or (ii) 1.0% if prepaid after the first anniversary but on or before the second anniversary of the Credit Agreement.

The Term Loan and loans under the Revolving Loan Commitment each bear interest at a floating rate based on GP I’s consolidated total net leverage ratio, adjusted quarterly, equal to (i) for portions of the Term Loan and/or revolving credit advances designated as Base Rate loans, the sum of (x) the Base Rate plus (y) an applicable margin of 5.0% to 6.0%, initially established at 6.0% per annum and (ii) for portions of the Term Loan and/or revolving credit advances designated as LIBOR loans, the sum of (x) the LIBOR Rate plus (y) an applicable margin of 6.0% to 7.0%, initially established at 7.0% per annum. The Base Rate is established as the highest of (i) the per annum rate published by the Wall Street Journal as the “prime” rate, (ii) the Federal Funds rate plus 50 basis points per annum and (iii) one-month LIBOR, subject to a floor of 1.00%, plus 1.00% per annum. The LIBOR Rate is established as the greater of (i) 1.00% per annum or (ii) the offered rate per annum for the applicable LIBOR one-month, two-month, three-month or six-month period selected by the borrower. The unused portion of the Revolving Loan Commitment is also subject to a commitment fee of 0.5% per annum.

The obligations under the Credit Agreement are secured by a first priority lien on (i) all of the assets of GP I, GP II, SCI, FVC, FVC-Int, and FVC-Houston, and (ii) all of the capital stock of GP II, SCI, FVC, FVC-Int, and FVC-Houston.

The Credit Agreement contains certain customary representations and warranties, affirmative covenants, negative covenants, financial covenants and events of default. The negative covenants include restrictions on GP I’s and its subsidiaries’ ability to incur additional indebtedness, acquire and sell assets, create liens, make investments, make distributions and enter into transactions with affiliates. The financial covenants include requirements for GP I and its subsidiaries to maintain a minimum consolidated fixed charge coverage ratio and a maximum consolidated total net leverage ratio.


The foregoing descriptions of the Credit Agreement and ancillary documents are not complete and are qualified in their entirety by reference to the full text of the Credit Agreement and ancillary documents, which are filed as Exhibit 10.1(a) – (i) to this Current Report on Form 8-K and are incorporated into this Item 1.01 by reference.

 

Item 2.01. Completion of Acquisition or Disposition of Assets.

The information under the heading “ Stock Purchase Agreement ” set forth in Item 1.01 above is incorporated into this Item 2.01 by reference.

 

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information under the heading “ Credit Agreement ” set forth in Item 1.01 above is incorporated into this Item 2.03 by reference.

 

Item 8.01. Other Events.

On October 3, 2016, Green Plains issued a press release and investor presentation slides announcing the acquisition of FVC. The press release and slides are attached hereto as Exhibits 99.1 and 99.2 and are incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

(a) Financial statements of businesses acquired. Green Plains expects to file any required financial statements related to the acquired business by amendment not later than 71 calendar days after this Current Report on Form 8-K was required to be filed.

(b) Pro forma financial information. Green Plains expects to file any required pro forma financial statements related to the acquired business by amendment not later than 71 calendar days after this Current Report on Form 8-K was required to be filed.

(d) Exhibits. The following exhibits are filed as part of this report.

 

Exhibit

 

Description

2.1   Stock Purchase Agreement, dated as of October 3, 2016, by and among Green Plains Inc., Green Plains II LLC, SCI Ingredients Holdings, Inc., Stone Canyon Industries LLC and other selling shareholders.
10.1(a)   Credit Agreement, dated as of October 3, 2016, by and among Green Plains II LLC, Green Plains I LLC (as borrower and guarantor) and Maranon Capital, L.P. (as agent for lenders).
10.1(b)   Term Notes, dated as of October 3, 2016, by and among Green Plains II LLC (as borrower), Northwestern Mutual Life Insurance Company, Axa Equitable Life Insurance Company, Metropolitan Life Insurance Company and MetLife Insurance Company USA (as lenders) and Maranon Capital, L.P. (as agent for lenders).
10.1(c)   Revolving Notes, dated as of October 3, 2016, by and among Green Plains II LLC (as borrower), Northwestern Mutual Life Insurance Company, Metropolitan Life Insurance Company (as lenders) and Maranon Capital, L.P. (as agent for lenders).
10.1(d)   Borrower Joinder to Credit Agreement and Notes, dated as of October 3, 2016, by and among SCI Ingredients Holdings, Inc., FVC Intermediate Holdings, Inc., Fleischmann’s Vinegar Company, Inc., FVC Houston, Inc. (as new borrowers) and Maranon Capital, L.P. (as agent for lenders).
10.1(e)   Security Agreement, dated as of October 3, 2016, by and among Green Plains II LLC, Green Plains I LLC (as borrowers and guarantor) and Maranon Capital, L.P. (as agent for lenders).
10.1(f)   Joinder Agreement to Security Agreement, dated as of October 3, 2016, by and among SCI Ingredients Holdings, Inc., FVC Intermediate Holdings, Inc., Fleischmann’s Vinegar Company, Inc., FVC Houston, Inc. and Maranon Capital, L.P. (as agent for lenders).
10.1(g)   Pledge Agreement, dated as of October 3, 2016, by and among Green Plains II LLC, Green Plains I LLC (as pledgors) and Maranon Capital, L.P. (as agent for lenders).
10.1(h)   Pledge Supplement, dated as of October 3, 2016, by and among Green Plains II LLC and each Pledgor and Maranon Capital, L.P. (as agent for lenders).
10.1(i)   Joinder to Pledge Agreement, dated as of October 3, 2016, by and among SCI Ingredients Holdings, Inc., FVC Intermediate Holdings, Inc., Fleischmann’s Vinegar Company, Inc., FVC Houston, Inc. (as new pledgers) and Maranon Capital, L.P. (as agent for lenders).
99.1   Press Release dated October 3, 2016.
99.2   Investor Presentation Slides dated October 3, 2016


SIGNATURES

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

 

    Green Plains Inc.
Date: October 3, 2016     By:   /s/ Jerry L. Peters
      Jerry L. Peters
      Chief Financial Officer
      (Principal Financial Officer)

 

Exhibit 2.1

STOCK PURCHASE AGREEMENT

by and among

GREEN PLAINS, INC., AS PARENT

GREEN PLAINS II, LLC, AS BUYER

THE PERSONS IDENTIFIED AS SELLERS ON THE SIGNATURE PAGE HERETO,

STONE CANYON INDUSTRIES LLC, AS SELLER REPRESENTATIVE,

AND

SCI INGREDIENTS HOLDINGS, INC., AS THE COMPANY

Dated as of October 3, 2016

 

 


TABLE OF CONTENTS

 

               Page  

ARTICLE I PURCHASE AND SALE OF SHARES

     1   
   1.01    Purchase and Sale of Shares; Treatment of Stock Appreciation Rights      1   
   1.02    Closing Payment Certificate      2   
   1.03    The Closing; Payment for Shares, Transaction Expenses and Indebtedness      2   
   1.04    Seller Representative Holdback Amount      4   
   1.05    Calculation of Final Purchase Price      4   
ARTICLE II [INTENTIONALLY OMITTED]      8   
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS      8   
   3.01    Authority      8   
   3.02    Authorization; Valid and Binding Agreement      8   
   3.03    No Breach; Consents      8   
   3.04    Title to Shares      9   
   3.05    NO OTHER REPRESENTATIONS      9   
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY      10   
   4.01    Organization and Power      10   
   4.02    Subsidiaries      10   
   4.03    Authorization; Valid and Binding Agreement      10   
   4.04    No Breach; Consents      11   
   4.05    Capital Stock      11   
   4.06    Financial Statements      12   
   4.07    Absence of Certain Developments      12   
   4.08    Title to Properties      13   
   4.09    Tax Matters      14   
   4.10    Contracts and Commitments      17   
   4.11    Intellectual Property      19   
   4.12    Litigation      21   
   4.13    Employee Benefit Plans      21   
   4.14    Compliance with Legal Requirements      23   
   4.15    Environmental Matters      24   
   4.16    Affiliated Transactions      24   
   4.17    Employees      25   
   4.18    Brokerage      26   

 

i


   4.19    Governmental Licenses and Permits      27   
   4.20    Insurance      27   
   4.21    Customers and Suppliers      27   
   4.22    Product Warranty      27   
   4.23    Food Safety and Certifications      28   
   4.24    Undisclosed Liabilities      29   
   4.25    Inventory      29   
   4.26    Accounts Receivable      29   
   4.27    Condition and Sufficiency of Assets      30   
   4.28    Books and Records      30   
   4.29    NO OTHER REPRESENTATIONS OR WARRANTIES      30   
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER      31   
   5.01    Organization and Authority      31   
   5.02    Authorization; Valid and Binding Agreement      31   
   5.03    No Breach      32   
   5.04    Litigation      32   
   5.05    Solvency      32   
   5.06    Funds Availability      32   
   5.07    Investment Representations      33   
   5.08    Acknowledgments by Buyer Parties      33   
   5.09    NO OTHER REPRESENTATIONS OR WARRANTIES      33   
ARTICLE VI [INTENTIONALLY OMITTED]      34   
ARTICLE VII ADDITIONAL AGREEMENTS      34   
   7.01    Director and Officer Liability and Indemnification      34   
   7.02    Tax Matters      35   
   7.03    Employee Benefits      36   
   7.04    WARN Act      37   
   7.05    Further Assurances      37   
   7.06    Non-Competition; Non-Solicitation      37   
   7.07    Appointment of Seller Representative      39   
   7.08    Representations and Warranties Insurance Policy      41   
ARTICLE VIII [INTENTIONALLY OMITTED]      42   
ARTICLE IX SURVIVAL; POST-CLOSING REMEDIES      42   
   9.01    Survival      42   
   9.02    Post-Closing Remedy      42   
   9.03    Indemnification Regarding the Pre-Closing Merger      42   

 

ii


ARTICLE X DEFINITIONS    43
   10.01    Definitions    43
   10.02    Cross-Reference of Other Definitions    51
ARTICLE XI MISCELLANEOUS    54
   11.01    Press Releases and Communications    54
   11.02    Expenses    54
   11.03    Notices    54
   11.04    Assignment    55
   11.05    Severability    56
   11.06    References    56
   11.07    No Strict Construction    56
   11.08    Amendment and Waiver    56
   11.09    Complete Agreement    56
   11.10    Counterparts    57
   11.11    Waiver of Jury Trial    57
   11.12    Limitation of Remedies    57
   11.13    Specific Performance    57
   11.14    Governing Law; Consent to Jurisdiction    58
   11.15    Legal Representation    58
   11.16    No Third-Party Beneficiaries    60
   11.17    Guarantee    60

Exhibits

 

Exhibit A:   Sample Calculation of Net Working Capital
Exhibit B:   Paying Agent Agreement
Exhibit 4.07(b)   Absence of Certain Developments
Exhibit 7.06   Third Party Entity Covered by Non-Compete Covenant
Exhibit X   Certain Accounting Methodology

 

iii


STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “ Agreement ”), dated as of October 3, 2016, is made by and among SCI Ingredients Holdings, Inc., a Delaware corporation (the “ Company ”), Green Plains Inc., an Iowa corporation (“ Parent ”), Green Plains II LLC, a Delaware limited liability company and indirect wholly owned subsidiary of Parent (“ Buyer ” and together with Parent, the “ Buyer Parties ”), the Persons identified as “Sellers” on the signature page hereto (the “ Sellers ”), and Stone Canyon Industries LLC, a Delaware limited liability company, as representative for the Sellers and SAR Holders (the “ Seller Representative ”). Capitalized terms not otherwise defined have the meanings given in Article X .

RECITALS

WHEREAS, Sellers own all of the issued and outstanding capital stock of the Company, which consists of (i) 52,700 shares of Series A Convertible Preferred Stock, par value $0.001 per share, and (ii) 4,595.65 shares of Common Stock, par value $0.001 per share (collectively, the “ Shares ”);

WHEREAS, prior to the Closing, Stone Canyon Industries II, Inc., a Delaware corporation (“ Stone Canyon ”), and SC Industries Holdco, Inc., a Delaware corporation (“ SC Holdco ”) and wholly owned Subsidiary of SCIFSC LLC, a Delaware limited liability company (“ SCIFSC ”), each merged with and into the Company, in transactions intended to qualify as reorganizations under Section 368(a) of the Code, with the Company as the surviving corporation (the “ Pre-Closing Merger ”);

WHEREAS, in connection with the execution of this Agreement, the Company and Kenneth M. Simril have entered into and delivered to Buyer a duly executed employment agreement (the “ Employment Agreements ”), each to be effective as of the Closing Date; and

WHEREAS, Buyer desires to purchase from Sellers, and Sellers desire to sell to Buyer, the Shares.

NOW, THEREFORE, in consideration of the premises, representations and warranties and mutual covenants contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

PURCHASE AND SALE OF SHARES

1.01 Purchase and Sale of Shares; Treatment of Stock Appreciation Rights .

(a) Pursuant to the terms and subject to the terms and conditions set forth herein, at the Closing, Sellers shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase, acquire and accept from Sellers, the Shares free and clear of all Liens (other than Liens created by Buyer or arising pursuant to applicable securities laws). The purchase price to be paid at the Closing by Buyer shall be an amount equal to the Estimated Purchase Price, which shall be subject to adjustment as provided herein, plus the 2016 Refund Amount, of which $376,700 shall be for the account of and paid to SCIFSC and $493,800 shall be for the account of and paid to the Sellers and SAR Holders in accordance with their respective Pro Rata Portion.


(b) Each Stock Appreciation Right outstanding as of the Closing, upon the Closing, shall be cancelled, extinguished and, to the extent vested, converted into the right to receive an amount in cash, without interest, equal to the amount determined pursuant to Schedule 1.01(b) (the “ Stock Appreciation Rights Payments ”). Effective upon the Closing, the Stock Appreciation Rights Plan shall terminate and each Stock Appreciation Right cancelled upon the Closing shall represent only the right to receive the applicable Stock Appreciation Rights Payment.

1.02 Closing Payment Certificate . The Company has delivered to Buyer a certificate (the “ Closing Payment Certificate ”) setting forth (a) its good faith estimate of Cash On Hand (such estimate is referred to as the “ Estimated Cash On Hand ”), (b) its good faith estimate of the Net Working Capital Amount (such estimate is referred to as the “ Estimated Net Working Capital Amount ”), (c) its good faith estimate of Closing Indebtedness (such estimate is referred to as the “ Estimated Closing Indebtedness ”), (d) its good faith estimate of Transaction Expenses (such estimate is referred to as the “ Estimated Transaction Expenses ”), (e) its calculation of the Estimated Purchase Price and (f) wire instructions for the account(s) designated by Sellers to which funds are to be wired at the Closing pursuant to Sections 1.03(b)(i) , 1.03(b)(ii) , 1.03(b)(iii) , and 1.03(b)(iv) .

1.03 The Closing; Payment for Shares, Transaction Expenses and Indebtedness .

(a) The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Goodwin Procter LLP, at 620 8th Ave, New York, NY 10018. The date on which the Closing shall occur is referred to herein as the “ Closing Date ”.

(b) Upon the terms and subject to the conditions set forth in this Agreement, the parties hereto shall consummate the following transactions as of the Closing:

(i) Buyer shall deliver to Continental Stock Transfer & Trust Company or another bank or trust mutually acceptable to Buyer and Seller Representative, as paying agent (the “ Paying Agent ”), by wire transfer of immediately available funds, an amount equal to (A) (x) the Estimated Purchase Price, minus (y) the Sellers’ aggregate Pro Rata Portions of the Seller Representative Holdback Amount, with each Seller of Series A Preferred Stock being entitled to its Pro Rata Portion thereof up to an aggregate amount for all such Sellers equal to the Series A Preference Amount, with the balance, if any, to all Sellers with each Seller being entitled to its proportionate share thereof based upon its relative Pro Rata Portions expressed as a percentage of the aggregate Pro Rata Portions of all Sellers (it being understood that no Buyer Party bears any responsibility whatsoever for determining Pro Rata Portion), plus (B) the 2016 Refund Amount, to be disbursed pursuant to Section 1.01(a);

 

2


(ii) Buyer shall pay, or cause to be paid, on behalf of the Sellers and the holders of outstanding and vested Stock Appreciation Rights as of immediately prior to the Closing (such holders, together with Kenneth M. Simril and Robert Kostrinsky solely to the extent of the phantom equity awards payable to them at Closing, collectively, the “ SAR Holders ”), the Seller Representative Holdback Amount by wire transfer of immediately available funds to the account specified by the Seller Representative prior to the Closing;

(iii) Buyer shall pay, or cause to be paid, on behalf of Sellers, the SAR Holders and the Company, as applicable, the Estimated Transaction Expenses by wire transfer of immediately available funds to accounts specified by Sellers prior to the Closing in the Closing Payment Certificate, such amounts to include amounts due to the SAR Holders, which shall be paid, or cause to be paid, to the Company and promptly remitted by the Company to the SAR Holders, subject to any applicable withholding;

(iv) Buyer shall pay, or cause to be paid, to the lenders on behalf of Sellers, the SAR Holders and the Company, the Closing Indebtedness outstanding as of the Closing pursuant to the Credit Facility by wire transfer of immediately available funds to accounts specified by Sellers prior to the Closing in the Closing Payment Certificate;

(v) Sellers and the Company shall make the following deliveries to Buyer:

(A) a certified copy of the Company’s certificate of incorporation and bylaws and a certificate of good standing for the Company dated not earlier than 10 Business Days prior to the Closing Date;

(B) stock certificates evidencing the Shares, free and clear of all Liens, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank, with all required stock Transfer Tax stamps affixed thereto;

(C) certified copies of the resolutions duly adopted by the board of directors of the Company authorizing the execution, delivery and performance of this Agreement and the other agreements contemplated hereby to which the Company is a party, and the consummation of the transactions contemplated hereby and thereby;

(D) the Paying Agent Agreement executed by the Seller Representative; and

(E) a certificate of non-foreign status from each Seller in accordance with Treasury Regulation Section 1.1445-2(b), dated as of the Closing Date, and in form and substance reasonably acceptable to Buyer; and

 

3


(F) written evidence reasonably acceptable to Buyer indicating that the Company and its Subsidiaries have been, or upon payment of the Closing Indebtedness as contemplated by Section 1.03(b)(iv) will be, discharged from any and all obligations pursuant to the Credit Facility and that all Liens on the capital stock or other equity interests and any assets of the Company or any of its Subsidiaries securing the Credit Facility shall be released from and after the Closing;

(vi) Buyer shall make the following deliveries to Sellers and the Company:

(A) certified copies of the resolutions duly adopted by Buyer’s board of directors (or its equivalent governing body) authorizing the execution, delivery and performance of this Agreement and the other agreements contemplated hereby to which Buyer is a party, and the consummation of the transactions contemplated hereby and thereby; and

(B) the Paying Agent Agreement executed by Buyer.

(vii) Sellers shall cause the directors of the Company and its Subsidiaries to deliver to Buyer letters of resignation from their positions as directors, subject to and effective upon the Closing.

1.04 Seller Representative Holdback Amount . An amount equal to $4,000,000 (the “ Seller Representative Holdback Amount ”) shall be delivered by the Buyer to the Seller Representative at the Closing by wire transfer of immediately available funds to a segregated account designated in writing by the Seller Representative at least two (2) Business Days prior to the Closing Date (which account shall be used only to hold the Seller Representative Holdback Amount and to pay any fees, costs, expenses, or any other amounts payable out of the Seller Representative Holdback Amount pursuant to the terms of this Agreement). The Seller Representative is entitled to pay on behalf of the Sellers and the SAR Holders, and to the extent paid by the Seller Representative from its own funds, obtain reimbursement from Sellers and the SAR Holders for, any fees, costs, expenses reasonably incurred or other disbursements made by the Seller Representative in the performance of its roles hereunder from the Seller Representative Holdback Amount.

1.05 Calculation of Final Purchase Price .

(a) Determination . As promptly as possible, but in any event within sixty (60) days after the Closing Date, Buyer will deliver to Seller Representative (i) a consolidated balance sheet of the Company and its Subsidiaries as of 11:59 p.m. on the Closing Date (the “ Closing Balance Sheet ”), which shall be prepared in accordance with the Accounting Practices and Procedures, and (ii) a reasonably detailed statement (the “ Closing Statement ”) setting forth Buyer’s calculations of Cash on Hand, the Net Working Capital Amount, Closing Indebtedness, Transaction Expenses, and the Transaction Tax Benefit. Solely in connection with the preparation of the Closing Balance Sheet and the Closing Statement, Buyer agrees that it shall not, and shall cause the Company and its Subsidiaries not to, take any actions with respect to the accounting books and records of the Company and its Subsidiaries on which the Closing Balance Sheet or Closing Statement are to be based that are not consistent with the Accounting Practices

 

4


and Procedures. After delivery of the Closing Statement, Seller Representative and its accountants shall be permitted reasonable access during normal business hours to review the Company and its Subsidiaries’ books and records and any work papers (including any work papers of their respective accountants) related to the preparation of the Closing Statement. Seller Representative and its accountants may make inquiries of Buyer, the Company and its Subsidiaries and their respective accountants and employees regarding questions concerning or disagreements with the Closing Statement arising in the course of their review thereof, and Buyer shall use its, and shall cause the Company and its Subsidiaries to use their, commercially reasonable efforts to cause any such accountants and employees to cooperate with and respond to such inquiries as promptly as practicable. If Seller Representative has any objections to the Closing Statement, Seller Representative shall deliver to Buyer a statement setting forth in reasonable detail the items in dispute, the amount thereof in dispute and the basis for its objections thereto (an “ Objections Statement ”). If an Objections Statement is not delivered to Buyer within forty-five (45) days after delivery of the Closing Statement, the Closing Statement shall be final, binding, indisputable and non-appealable by the parties hereto. Any matters not covered by the Objection Statement shall be final, binding, indisputable and non-appealable by the parties. Seller Representative and Buyer shall negotiate in good faith to resolve any objections set forth in the Objections Statement (and all such discussions related thereto shall, unless otherwise agreed by Buyer and Seller Representative, be governed by Rule 408 of the Federal Rules of Evidence (and any applicable similar state rule)), but if they do not reach a final resolution within thirty (30) days after the delivery of the Objections Statement, Seller Representative and Buyer shall submit such dispute to PricewaterhouseCoopers or, if not available, another independent nationally recognized accounting firm of similar standing mutually acceptable to Buyer and Seller Representative (the “ Accounting Referee ”). Seller Representative and Buyer shall cooperate in good faith to promptly engage the Accounting Referee pursuant to an engagement letter that requires the Accounting Referee to make all determinations in accordance with the Accounting Practices and Procedures; provided , however that if the Accounting Referee determines that the Accounting Practices and Procedures are not in compliance with GAAP, then “Accounting Practices and Procedures” as used in this Section 1.05(a) (and elsewhere in this Agreement for the purposes of this Section 1.05(a) ) shall mean GAAP applied in a manner most consistent with the accounting methods, policies, practices and procedures, including classification and estimation methodologies, used in the preparation of the audited consolidated June 24, 2016 financial statements of the Company and its Subsidiaries (it being acknowledged and agreed by Buyer that, as of the date hereof, Buyer has no reason to believe that the Accounting Practices and Procedures are not in compliance with GAAP, except as set forth on Schedule 1.05 ). If any dispute is submitted to the Accounting Referee, each party will promptly upon request, furnish to the Accounting Referee such work papers and other documents and information relating to the disputed issues as the Accounting Referee may request and are available to that party or its accountants (including information of the Company and its Subsidiaries) and otherwise cooperate fully with the Accounting Referee’s review of the dispute, and each party shall be afforded the opportunity to present the Accounting Referee (with a copy concurrently delivered to the other party) material relating to the determination and to discuss the determination with the Accounting Referee. The Accounting Referee shall resolve only those matters set forth in such Objections Statement that remain in dispute after the 30-day resolution period. With respect to any disputed item, the Accounting Referee’s determination

 

5


shall be no greater than the higher amount calculated by Buyer or Seller Representative, as the case may be, and no less than the lower amount calculated by Buyer or Seller Representative as the case may be, and in all events shall be calculated in accordance with the Accounting Practices and Procedures. It is the intent of Buyer, Seller Representative and the Company that the process set forth in this Section 1.05 and the activities of the Accounting Referee in connection herewith are not intended to be and, in fact, are not arbitration and that no formal arbitration rules shall be followed (including rules with respect to procedures and discovery). Seller Representative and Buyer shall use their commercially reasonable efforts to cause the Accounting Referee to resolve all such disagreements as soon as practicable but in no event later than thirty (30) days after submission of the disputed issues to the Accounting Referee. The resolution of the dispute by the Accounting Referee shall be final, binding, indisputable and non-appealable by the parties hereto. The Closing Statement shall be modified if necessary to reflect such determination. The fees and expenses of the Accounting Referee shall be allocated to be paid by Buyer, on the one hand, and/or Seller Representative, on the other hand, based upon the percentage which the portion of the contested amount not awarded to each party bears to the amount actually contested by such party, as determined by the Accounting Referee. For example, if Buyer claims that the Net Working Capital Amount is $10,000 less than the Estimated Net Working Capital Amount determined by the Company, and Seller Representative contests only $5,000 of the amount claimed by Buyer, and if the Accounting Referee ultimately resolves the dispute by awarding Buyer $3,000 of the $5,000 contested, then the cost of such review and report will be allocated 60% (i.e., 3,000 ÷ 5,000) to Seller Representative and 40% (i.e., 2,000 ÷ 5,000) to Buyer.

(b) Adjustments.

(i) Cash On Hand Adjustment . If the Cash on Hand as finally determined pursuant to Section 1.05(a) above is greater than the Estimated Cash on Hand, such excess shall result in an increase in the Estimated Purchase Price in accordance with Section 1.05(c) . If the Cash on Hand as finally determined pursuant to Section 1.05(a) above is less than the Estimated Cash on Hand, such shortfall shall result in a decrease in the Estimated Purchase Price in accordance with Section 1.05(c) .

(ii) Net Working Capital Adjustment . If the Net Working Capital Amount as finally determined pursuant to Section 1.05(a) above is greater than the Estimated Net Working Capital Amount, such excess shall result in an increase in the Estimated Purchase Price in accordance with Section 1.05(c) . If the Net Working Capital Amount as finally determined pursuant to Section 1.05(a) above is less than the Estimated Net Working Capital Amount, such shortfall shall result in a decrease in the Estimated Purchase Price in accordance with Section 1.05(c).

 

6


(iii) Closing Indebtedness Adjustment . If the Closing Indebtedness as finally determined pursuant to Section 1.05(a) above is less than the Estimated Closing Indebtedness, such shortfall shall result in an increase in the Estimated Purchase Price in accordance with Section 1.05(c) . If the Closing Indebtedness as finally determined pursuant to Section 1.05(a) above is greater than the Estimated Closing Indebtedness, such excess shall result in a decrease in the Estimated Purchase Price in accordance with Section 1.05(c) .

(iv) Transaction Expenses Adjustment . If the Transaction Expenses as finally determined pursuant to Section 1.05(a) above are less than the Estimated Transaction Expenses, such shortfall shall result in an increase in the Estimated Purchase Price in accordance with Section 1.05(a) . If the Transaction Expenses as finally determined pursuant to Section 1.05(a) above are greater than the Estimated Transaction Expenses, such excess shall result in a decrease in the Estimated Purchase Price in accordance with Section 1.05(a) .

(v) Transaction Tax Benefit Adjustment . If the Transaction Tax Benefit as finally determined pursuant to Section 1.05(a) above is less than the Estimated Transaction Tax Benefit, such shortfall shall result in a decrease in the Estimated Purchase Price in accordance with Section 1.05(a) . If the Transaction Tax Benefit as finally determined pursuant to Section 1.05(a) is greater than the Estimated Transaction Tax Benefit, such excess shall result in an increase in the Estimated Purchase Price in accordance with Section 1.05(a) .

(c) Final Adjustment Amount . Without duplication, all amounts calculated pursuant to Section 1.05(b) shall be aggregated, and the net amount (if any) by which the Estimated Purchase Price is increased, on the one hand, or decreased, on the other hand, is referred to as the “ Final Adjustment Amount .” If the net effect pursuant to this Section 1.05(c) is an increase in the Estimated Purchase Price, then Buyer shall make a cash payment in an amount equal to the Final Adjustment Amount to the Paying Agent with each Seller and SAR Holder being entitled to its Pro Rata Portion (it being understood that Buyer bears no responsibility whatsoever for determining Pro Rata Portion). If the net effect pursuant to this Section 1.05(c) is a decrease in the Estimated Purchase Price, then Seller Representative first, but solely up to any then available amount of Seller Representative Holdback Amount, and then, but solely for any residual amount, each Seller and SAR Holder severally (and not jointly and severally) shall deliver to Buyer an amount in cash equal its Pro Rata Portion of any residual Final Adjustment Amount. The Final Adjustment Amount shall be calculated as an adjustment to the Estimated Purchase Price and the Estimated Purchase Price, as so adjusted, is referred to herein as the “ Final Purchase Price .” Payment of the Final Adjustment Amount shall be paid by wire transfer of immediately available funds to an account designated by the recipient party within five (5) Business Days after the date of final determination pursuant to Section 1.05(a) .

 

7


ARTICLE II

[INTENTIONALLY OMITTED]

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLERS

Except as set forth in the Disclosure Schedule, each Seller severally (and not jointly) hereby represents and warrants to Buyer as follows:

3.01 Authority . Such Seller is duly organized, validly existing and in good standing under the laws of its state of organization. Such Seller has all requisite power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.

3.02 Authorization; Valid and Binding Agreement . This Agreement and the Ancillary Agreements to which such Seller is party have been duly authorized, and this Agreement has been and, as of the Closing, the Ancillary Agreements to which such Seller is party will be, duly executed and delivered by such Seller, and no other action on the part of such Seller is necessary to authorize the execution and delivery of this Agreement and the Ancillary Agreements to which such Seller is party, the performance by such Seller of its obligations hereunder and thereunder or the consummation by such Seller of the transactions contemplated by this Agreement and the Ancillary Agreements. Assuming that (a) this Agreement is a valid and binding obligation of Buyer and (b) the Ancillary Agreements will be valid and binding obligations of the parties thereto (other than such Seller and the Company) as of the Closing, this Agreement constitutes, and the Ancillary Agreements to which such Seller is party will constitute as of the Closing, legal, valid and binding obligations of such Seller, enforceable in accordance with their terms, except as enforceability may be limited by (i) the effect of any Legal Requirement of general application relating to bankruptcy, reorganization, insolvency, moratorium or similar Legal Requirements affecting creditors’ rights and relief of debtors generally, and (ii) the effect of Legal Requirements and general principles of equity governing specific performance, injunctive relief and other equitable remedies (regardless of whether such enforceability is considered in a proceeding in equity or at law, the “ Enforceability Exceptions ”).

3.03 No Breach; Consents . The execution, delivery and performance by such Seller of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other organizational documents of such Seller or the Company; (b) conflict with or result in a violation or breach of any provision of any law or Governmental Order applicable to such Seller or the Company in any material respects; (c) except as set forth in Schedule 3.03 , require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Material Contract to which such Seller or the Company is a party or by which such Seller or the Company is bound or to which any of their respective properties and assets are subject; or (d) result in the creation or imposition of any Lien other than Permitted Liens on any material properties or assets of the Company. No material consent, approval, License, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to such Seller or the Company in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, except for filings required under the HSR Act.

 

8


3.04 Title to Shares . Subject to Section 1.6 , as applicable, such Seller is the record and beneficial owner of its applicable Shares, free and clear of all Liens other than Permitted Liens. At the Closing, assuming Buyer has the requisite power and authority to be the lawful owner of the Shares, such Seller will transfer to Buyer the applicable Shares held by such Seller, free and clear of all Liens (other than Liens created by or at the bequest of Buyer and Liens arising pursuant to applicable securities laws).

3.05 NO OTHER REPRESENTATIONS . EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE III , AND IN ARTICLE IV (AS MODIFIED OR SUPPLEMENTED BY THE DISCLOSURE SCHEDULE), NONE OF SUCH SELLER, THE OTHER SELLERS, THE COMPANY, THEIR AFFILIATES OR ANY OTHER PERSON MAKES OR HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, RELATING TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, SUCH SELLER, THE OTHER SELLERS OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY SUCH SELLER, THE OTHER SELLERS, THE COMPANY, OR ANY OF THEIR AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, CONSULTANTS OR REPRESENTATIVES, ARE HEREBY EXPRESSLY DISCLAIMED INCLUDING ANY IMPLIED REPRESENTATION OR WARRANTY AS TO CONDITION, MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND BUYER AND ITS AFFILIATES ARE NOT RELYING ON ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES. WITHOUT LIMITING THE FOREGOING, SUCH SELLER MAKES NO, AND SHALL NOT BE DEEMED TO HAVE MADE ANY, REPRESENTATION OR WARRANTY TO BUYER WITH RESPECT TO (A) ANY PROJECTIONS, ESTIMATES OR BUDGETS HERETOFORE DELIVERED TO OR MADE AVAILABLE TO BUYER OR ANY OF ITS AFFILIATES, COUNSEL, ACCOUNTANTS OR ADVISORS OF FUTURE REVENUES, EXPENSES OR EXPENDITURES OR FUTURE RESULTS OF OPERATIONS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR (B) IN THE MATERIALS RELATING TO SUCH SELLER, THE COMPANY OR ANY OF ITS SUBSIDIARIES MADE AVAILABLE TO BUYER OR IN ANY PRESENTATION OF THE BUSINESS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, AND NO STATEMENT CONTAINED IN ANY OF SUCH MATERIALS OR MADE IN ANY SUCH PRESENTATION SHALL BE DEEMED A REPRESENTATION OR WARRANTY HEREUNDER OR OTHERWISE, IT BEING UNDERSTOOD THAT ANY PROJECTIONS OR OTHER PREDICTIONS, ANY DATA, ANY FINANCIAL INFORMATION OR ANY MEMORANDA OR OFFERING MATERIALS OR PRESENTATIONS, INCLUDING BUT NOT LIMITED TO, THE SELLERS’, THE COMPANY’S OR ANY OF ITS SUBSIDIARIES’ CONFIDENTIAL OVERVIEWS MADE AVAILABLE BY SUCH SELLER AND ITS REPRESENTATIVES ARE NOT AND SHALL NOT BE DEEMED TO BE OR TO INCLUDE REPRESENTATIONS OR WARRANTIES OF SUCH SELLER, THE COMPANY OR ANY OF ITS SUBSIDIARIES, EXCEPT TO THE EXTENT SPECIFICALLY REFERENCED HEREIN OR (C) ANY OTHER

 

9


INFORMATION OR DOCUMENTS (FINANCIAL OR OTHERWISE) MADE AVAILABLE TO THE BUYER OR ANY OF ITS AFFILIATES, COUNSEL, ACCOUNTANTS OR ADVISORS WITH RESPECT TO THE COMPANY AND ITS SUBSIDIARIES. BUYER HEREBY ACKNOWLEDGES AND AGREES TO SUCH DISCLAIMER AND THAT, EXCEPT TO THE EXTENT SPECIFICALLY SET FORTH IN THIS AGREEMENT, BUYER IS PURCHASING THE COMPANY AND ITS SUBSIDIARIES ON AN “AS IS, WHERE IS” BASIS, AND IS ONLY ENTITLED TO RELY UPON THE REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the Disclosure Schedule, the Company hereby represents and warrants to Buyer as follows:

4.01 Organization and Power . The Company is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware, and the Company has all requisite organizational power and authority to own, operate and lease its properties and to carry on its businesses as now conducted. Schedule 4.01 sets forth each jurisdiction in which the Company is licensed or qualified to do business. The Company is duly qualified or licensed to do business and is in good standing in every jurisdiction in which its ownership or lease of assets or property or the conduct of its businesses as now conducted requires it to be so qualified or licensed, except where the failure to be so qualified or licensed or in good standing would not reasonably be expected to have a Material Adverse Effect.

4.02 Subsidiaries . Schedule 4.02 sets forth each Person in which the Company or any of its Subsidiaries owns any stock, partnership interest, joint venture interest or other equity ownership interest and each jurisdiction in which each Subsidiary is licensed or qualified to do business. Except as set forth on Schedule 4.02 , each Subsidiary of the Company is wholly-owned by the Company or another Subsidiary of the Company as indicated on Schedule 4.02 . Each Subsidiary of the Company identified on Schedule 4.02 (a) is duly organized, validly existing and in good standing (when applicable) under the laws of the jurisdiction of its organization, (b) has all requisite organizational power and authority to own, operate and lease its properties and to carry on its businesses as now conducted and (c) is duly qualified or licensed to do business and is in good standing in every jurisdiction in which its ownership or lease of assets or property or the conduct of its business as now conducted requires it to be so qualified or licensed, except, in the case of clause (c), where the failure to be so qualified or licensed or in good standing would not reasonably be expected to have a Material Adverse Effect.

4.03 Authorization; Valid and Binding Agreement . The Company has all requisite power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. This Agreement has been and, as of the Closing, the Ancillary Agreements to which the Company is party will be, duly authorized, executed and delivered by the Company and no other action on the part of the Company is necessary to

 

10


authorize the execution and delivery of this Agreement and the Ancillary Agreements to which the Company is party, the performance by the Company of its obligations hereunder and thereunder or the consummation by the Company of the transactions contemplated by this Agreement and the Ancillary Agreements. Assuming that (a) this Agreement is a valid and binding obligation of Buyer and (b) the Ancillary Agreements will be valid and binding obligations of the parties thereto (other than Sellers and the Company) as of the Closing, this Agreement constitutes and the Ancillary Agreements to which it is party will constitute as of the Closing, valid and binding obligations of the Company, enforceable in accordance with their terms, except as enforceability may be limited by the Enforceability Exceptions.

4.04 No Breach; Consents . The execution, delivery and performance by Company of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other organizational documents of the Company; (b) conflict with or result in a violation or breach of any provision of any law or Governmental Order applicable to the Company in any material respects; (c) except as set forth in Schedule 4.04 , require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Material Contract to which any the Company is a party or by which the Company is bound or to which any of its properties and assets are subject; or (d) result in the creation or imposition of any Lien other than Permitted Liens on any properties or assets of the Company. Except as set forth in Schedule 4.04 , no consent, approval, License, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to the Company in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, except for filings required under the HSR Act.

4.05 Capital Stock .

(a) Schedule 4.05 sets forth the authorized, issued and outstanding shares of each class of capital stock or other equity interests of the Company and its Subsidiaries, the name and mailing address of each record and beneficial holder of the shares of the Company’s or its Subsidiaries’ capital stock or other equity interests, and the number of shares of such class of the Company’s or its Subsidiaries’ capital stock or other equity interests held of record and beneficially by each such holder, in each case, as of the date of this Agreement.

(b) Except as set forth on Schedule 4.05: (i) all outstanding shares of capital stock or other equity interests of the Company and each of its Subsidiaries have been duly authorized and validly issued and are fully paid and non-assessable, free and clear of any preemptive rights, and free and clear of any Liens, and no such equity interests have been issued in violation of any Legal Requirement; (ii) there are no outstanding (i) shares of capital stock, other equity interests or voting securities of the Company or any of its Subsidiaries, (ii) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock, other equity interests or voting securities of the Company or any of its Subsidiaries or (iii) options, warrants or other rights to acquire from the Company or any of its Subsidiaries, or other obligations of the Company or any of its Subsidiaries to issue, deliver or sell, any capital stock, other equity interests or voting securities or securities convertible into or exchangeable for capital stock, other equity interests or voting securities of the Company or any of its Subsidiaries (the items in clauses (i), (ii) and

 

11


(iii) above being referred to collectively as “ Company Securities ”); (iii) there are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire or retire for value any Company Securities; (iv) no Company Securities are reserved for issuance or are held as treasury shares; (v) there are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect to which the Company or any of its Subsidiaries is a party, or by which it is bound, with respect to the governance of the Company or any of its Subsidiaries or the voting or transfer of any Company Securities; and (vi) there are no outstanding or authorized stock appreciation, phantom stock, profit participation or similar rights with respect to any of the Company and its Subsidiaries.

4.06 Financial Statements . Set forth on Schedule 4.06 are (a) the audited consolidated balance sheets as of June 26, 2015 and June 24, 2016 (the “ Balance Sheet Date ”) and the related audited consolidated statements of operations, stockholders equity and cash flows of the Company and its Subsidiaries for the fiscal years then ended (the “ Audited Financial Statements ”) and (b) the unaudited consolidated balance sheet of the Company and its Subsidiaries as of August 26, 2016 and the related unaudited consolidated statements of income and cash flows for the two-month period then ended (the “ Interim Financial Statements ” and together with the Audited Financial Statements, the “ Financial Statements ”). Except as set forth on Schedule 4.06 , such Financial Statements present fairly in all material respects the financial condition and results of operations of the Company and its Subsidiaries as of the times and for the periods referred to therein, in conformity with GAAP consistently applied throughout the periods referred to therein (except that the Interim Financial Statements lack footnote disclosure, do not include changes in stockholders’ equity and do not include material year-end audit adjustments).

4.07 Absence of Certain Developments . Since the Balance Sheet Date, to the Knowledge of the Company, there has not been any material adverse change in the business, operations, properties, prospects, customers, contracts, suppliers, assets or condition of the Company or any of its Subsidiaries, and, to the knowledge of the Company, no event has occurred or circumstance exists that would reasonably be expected to result in such a material adverse change. Except as set forth on Schedule 4.07(a) , since the Balance Sheet Date (i) the Company and its Subsidiaries have conducted their businesses in the ordinary course of business consistent with past practice, and (ii) neither the Company nor any of its Subsidiaries has taken any of the actions set forth on Exhibit 4.07(b) .

 

12


4.08 Title to Properties .

(a) Schedule 4.08(a) sets forth a list of all real property owned by the Company and/or any of its Subsidiaries (all such real property interests, together with all right, title and interest of the Company and any of its Subsidiaries in and to (i) all buildings, structures and other improvements and fixtures located on or under such real property and (ii) all easements, rights and other appurtenances to such real property, the “ Owned Real Property ”), including the street address for each Owned Real Property. The Company and/or its Subsidiaries own good and marketable legal fee simple title to the Owned Real Property free and clear of any Liens, other than Permitted Liens. There are no unexpired option to purchase agreements, rights of first refusal or first offer or any other rights to purchase or otherwise acquire any Owned Real Property or any portion thereof, and there are no other outstanding rights or agreements to enter into any contract for sale, ground lease or letter of intent to sell or ground lease any Owned Real Property or any portion thereof.

(b) Schedule 4.08(b) sets forth a list of all Leased Real Property, including the street address for each Leased Real Property. The Company and/or one or more of its Subsidiaries has a valid and enforceable leasehold interest in each Leased Real Property, free and clear of any Liens other than Permitted Liens. The Company or the applicable Subsidiary is a tenant or possessor in good standing thereunder and all rents currently due and payable under such leases have been paid. No purchase option, right of first refusal, right of first offer or other purchase right has been exercised with respect to any Leased Real Property. None of the Company nor any of its Subsidiaries nor any other party to any lease of any Company Real Property is in breach or violation of, or default under such lease nor has an event occurred which would, with the giving of notice or the expiration of time, result in such breach or violation, and each such Lease is valid, binding and enforceable in accordance with its terms with respect to the other parties thereto.

(c) Except as set forth on Schedule 4.08(c) , neither the Company nor any of its Subsidiaries (i) has leased, subleased or licensed any of their respective interests in any Company Real Property or (ii) has any obligation under any brokerage or similar arrangement with respect to any Company Real Property.

(d) True and complete copies of (i) all deeds, existing title insurance policies, leases and surveys of or pertaining to the Company Real Property and (ii) all instruments, agreements and other documents evidencing, creating or constituting any Liens on Company Real Property have been made available to the Buyer. No claim has been made against any title insurance policy pertaining to the Company Real Property.

(e) The Company and its Subsidiaries presently enjoy peaceful and undisturbed possession of the Company Real Property sufficient for the continued conduct of the business of the Company and its Subsidiaries as presently conducted. Without limiting the foregoing, there are no pending or, to the knowledge of the Company, threatened eminent domain, condemnation, rezoning or other similar proceedings against the Company or any of its Subsidiaries or with respect to any Company Real Property nor has any eminent domain or condemnation occurred with respect to any Company Real Property.

(f) Neither the Company nor any of its Subsidiaries is in violation of any covenant, condition, restriction, easement, or Governmental Order to which any Company Real Property is bound or subject and there are no pending or, to the knowledge of the Company,

 

13


threatened proceedings with respect thereto. Each certificate, permit, license, agreement, easement or other right of an unlimited duration that is necessary to permit the lawful use and operation of the buildings and improvements on the Company Real Property or that is necessary to permit the lawful use and operation of all utilities, parking areas, driveways, roads and other means of egress and ingress to and from the Company Real Property is in full force.

(g) There are no Tax abatements or exemptions specifically affecting Company Real Property. Neither the Company nor any of its Subsidiaries has received written or, to the knowledge of the Company, oral notice of any special, general or other assessments or any proposed increase in the assessed valuation against the Company or any of its Subsidiaries or affecting any Company Real Property.

(h) The Company or one or more of its Subsidiaries is in possession of and has good and valid (and in the case of Owned real Property, good and marketable fee simple) title to, or valid leasehold interests in or valid rights under Contract to use, all Real Property, personal property and other assets reflected in the Financial Statements or acquired after the Balance Sheet Date. All such properties and assets (including leasehold interests) are free and clear of all Liens except as specifically disclosed on Schedule 4.08(h) and except for Permitted Liens. Other than as set forth on Schedule 4.08 , no Person other than the Company nor any of its Subsidiaries owns or has any right to the use or possession of such personal property other than lessors and licensors of such personal property constituting leasehold interests or licenses. Except as set forth on Schedule 4.08 , all items of personal property held by the Company and its Subsidiaries are in good condition and repair and are usable in the ordinary course, ordinary wear and tear excepted.

4.09 Tax Matters . This Section 4.09 , Section 4.12 and Section 4.13 contain the sole and exclusive representations and warranties relating to Tax Matters. Except as set forth on Schedule 4.09 :

(a) All income and other material Tax Returns required to be filed by Stone Canyon, SC Holdco, the Company and its Subsidiaries have been duly and timely filed (taking into account any valid extensions) and all such Tax Returns are true, complete and correct in all material respects. Stone Canyon, SC Holdco, the Company and its Subsidiaries have timely paid all Taxes due, including estimated income Taxes, in an amount that equals or exceeds the amount of the actual income Tax liability of the group for the taxable year ended June 24, 2016 (whether or not shown as due and owing on such Tax Returns) as of the Closing, and the unpaid Taxes of the Company and its Subsidiaries (i) did not, as of the Balance Sheet Date, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Financial Statements (rather than in any notes thereto) and (ii) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company and its Subsidiaries in filing their Tax Returns. Stone Canyon, SC Holdco, the Company and its Subsidiaries will not have any income Tax due for the taxable period ending on the Closing Date after taking into account all income Tax deductions attributable to the taxable period ending on the Closing Date.

 

14


(b) Stone Canyon, SC Holdco, the Company and its Subsidiaries have timely and properly withheld, deducted or collected all Taxes required to have been withheld, deducted or collected by them in connection with amounts paid or owing to any shareholder, employee, creditor, independent contractor, customer or other third party and, to the extent required, have timely remitted or paid such Taxes to the proper Governmental Authority.

(c) There are not currently in force any waivers or agreements binding upon Stone Canyon, SC Holdco, the Company or any of its Subsidiaries for the extension of time for the assessment, collection or payment of any Tax. There are no private letter rulings, closing agreements or similar agreements or rulings relating to Taxes that have been requested or applied for, or entered into or issued by any Governmental Authority with or in respect of Stone Canyon, SC Holdco, the Company or any of its Subsidiaries.

(d) No Tax audits or administrative or judicial Tax proceedings or other investigations, examinations or other challenges regarding Taxes are being conducted or are pending or, to the knowledge of the Company, threatened, with respect to Stone Canyon, SC Holdco, the Company or any of its Subsidiaries, nor has Stone Canyon, SC Holdco, the Company or any of its Subsidiaries been notified in writing of any request for such an audit or other examination. None of Stone Canyon, SC Holdco, the Company or any of its Subsidiaries or any of their Affiliates has received from any Taxing Authority (including jurisdictions where Stone Canyon, SC Holdco, the Company and its Subsidiaries have not filed Tax Returns) any written (i) notice indicating an intent to open an audit or other review that involves or affects Stone Canyon, SC Holdco, the Company or any of its Subsidiaries, (ii) request for information related to Tax matters of Stone Canyon, SC Holdco, the Company or any of its Subsidiaries or (iii) notice of deficiency or proposed adjustment for any amount of Tax that involves or affects any of Stone Canyon, SC Holdco, the Company or any of its Subsidiaries. Since December 31, 2012, none of Stone Canyon, SC Holdco, the Company or any of its Subsidiaries has received a nexus questionnaire or a written claim by any Governmental Authority in a jurisdiction where any of Stone Canyon, SC Holdco, the Company or any of its Subsidiaries do not file Tax Returns that it is or may be subject to taxation by that jurisdiction or obligated to file a Tax Return in such jurisdiction.

(e) None of Stone Canyon, SC Holdco, the Company or any of its Subsidiaries is a party to or bound by any Tax allocation or Tax sharing agreement with any other Person; and there is no other agreement or other arrangement that (i) obligates any of Stone Canyon, SC Holdco, the Company or any of its Subsidiaries to compensate or make payments to minority investors with respect to the manner in which the allocation of the Tax liability of the Affiliated Group which includes the Company or its Subsidiaries is determined or (ii) otherwise grants minority investors any rights in connection with the manner in which the allocation of the Tax liability of the Affiliated Group that includes the Company or its Subsidiaries is determined (“ Special Tax Related Rights Arrangement ”); and none of Stone Canyon, SC Holdco, the Company or any of its Subsidiaries has any contractual obligation to indemnify any other Person with respect to Taxes (other than contracts entered into in the ordinary course of business, the principal purpose of which is not related to Taxes). None of Stone Canyon, SC Holdco, the Company or any of its Subsidiaries have any liability for the Taxes of any other Person under Treas. Reg. § 1.1502-6 (or any similar provision of state, local, or foreign Law), as a transferee or successor, by contract, or otherwise.

 

15


(f) None of Stone Canyon, SC Holdco, the Company or any of its Subsidiaries has been a member of an Affiliated Group (other than an Affiliated Group whose members consist solely of one or more of Stone Canyon, SC Holdco, the Company and its Subsidiaries).

(g) None of Stone Canyon, SC Holdco, the Company or any of its Subsidiaries is a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code.

(h) None of Stone Canyon, SC Holdco, the Company or any of its Subsidiaries has been a “distributing corporation” or a controlled corporation” in connection with a distribution described in Section 355 of the Code.

(i) None of Stone Canyon, SC Holdco, the Company or any of its Subsidiaries has been a party to a “reportable transaction” within the meaning of Section 6707A(c)(1) of the Code or Treasury Regulation Section 1.6.011-4(b).

(j) None of Stone Canyon, SC Holdco, the Company or any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting, or the use of an improper method of accounting, for a taxable period ending on or prior to the Closing Date; (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign law) executed on or prior to the Closing Date; (iii) installment sale or open transaction disposition made on or prior to the Closing Date; or (iv) election under Section 108(i) of the Code (or any corresponding or similar provision of state, local or foreign law).

(k) There are no Liens for Taxes on any assets of Stone Canyon, SC Holdco, the Company or its Subsidiaries, other than Permitted Liens.

(l) Stone Canyon validly elected to file a consolidated federal income Tax Return (the “ Consolidated Return ”) with the affiliated group (as defined in Section 1504 of the Code) that includes SC Holdco, the Company and its Subsidiaries; and each of SC Holdco, Inc., the Company and its Subsidiaries validly consented to be included in the Consolidated Return. As of immediately before the Pre-Closing Merger, Stone Canyon was the common parent of the affiliated group (as defined in Section 1504 of the Code) of corporations that included SC Holdco, the Company and its Subsidiaries.

(m) The Pre-Closing Merger will not result in the recognition of income or gain by the Company, Stone Canyon, or SC Holdco for U.S. federal income tax purposes.

 

16


4.10 Contracts and Commitments .

(a) Schedule 4.10(a) , in sections labeled and corresponding to the subparagraphs below, lists each of the following contracts (whether written or oral) of the Company and its Subsidiaries (such contracts, together with the Company Real Property leases listed on Schedule 4.08(b) , being “ Material Contracts ”):

(i) each collective bargaining agreement or other agreement with any labor union;

(ii) each contract or agreement for the employment or services of any officer or Employee of any of the Company and its Subsidiaries providing for severance, change of control or retention payments;

(iii) except for contracts relating to trade receivables, all contracts relating to indebtedness (including, without limitation, notes, debentures, guarantees, mortgages, loan agreements and indentures), including contracts relating to the Credit Facility;

(iv) each lease or agreement under which any of the Company and its Subsidiaries is lessee of, or holds or operates any tangible personal property owned by any other party, for which the annual rental payment exceeds $250,000 in any calendar year remaining under the term of such lease or agreement;

(v) each lease or agreement under which any of the Company and its Subsidiaries is lessor of or permits any third-party to hold or operate any tangible personal property owned by any of the Company and its Subsidiaries for which the annual rental exceeds $500,000 in any calendar year remaining under the term of such lease or agreement;

(vi) each contract or group of related contracts with the same party for the purchase or supply of products, inventory, supplies, equipment, machinery, services or other tangible personal property by or to the Company and its Subsidiaries, under which such products, inventory, supplies, equipment, machinery, services or other personal property has a selling price on an annual basis in excess of $500,000;

(vii) each contract containing covenants limiting the freedom of the any of the Company and its Subsidiaries to compete in any line of business;

(viii) each agreement pursuant to which (A) any of the Company and its Subsidiaries is granted the right to use Intellectual Property (excluding agreements for the use of commercially available software that is made available for an annual cost of less than $100,000) or (B) any of the Company and its Subsidiaries has granted the right to use Intellectual Property owned by the Company and its Subsidiaries to any other Person;

(ix) each joint venture, partnership, strategic alliance or similar agreement;

 

17


(x) each contract or purchase order (or series of related contracts or purchase orders) for capital expenditures or the acquisition or construction of fixed assets requiring the future payment by any of the Company and its Subsidiaries of an amount in excess of $250,000 annually;

(xi) each contract to acquire, directly or indirectly (by merger or otherwise), all or substantially all of the capital stock or other equity interests, assets, or rights of any other Person during the past five (5) years;

(xii) each contract or agreement for consulting or other similar type of contract or agreement providing for annual payments in excess of $100,000;

(xiii) each contract or agreement relating to the settlement of material litigation, administrative charge or investigation by any Governmental Authority entered into during the past three (3) years;

(xiv) each broker, distributor, dealer, manufacturer’s representative, franchise, agency, sales promotion, market research, marketing consulting and advertising contract;

(xv) each “take or pay” or “requirements” contract;

(xvi) each contract with any Governmental Authority;

(xvii) each contract that limits or purports to limit the ability of the Company or any of its Subsidiaries to compete in any line of business or with any Person or in any geographic area or during any period of time, or that restricts or purports to restrict any other Person from competing with the Company or any of its Subsidiaries in any line of business or in any geographic area or during any period of time;

(xviii) any other contract that is material to the Company or any of its Subsidiaries and not previously disclosed pursuant to this Section 4.10 .

(b) Buyer has been provided with true and complete copies of all Material Contracts. Except as set forth on Schedule 4.10(b) , (i) each Material Contract is legal, valid, binding and enforceable in accordance with its terms with respect to the Company or any of its Subsidiaries, as applicable, and, to the Company’s knowledge, each other party to such contract, subject to the Enforceability Exceptions, (ii) to the Company’s knowledge, neither the Company nor any of its Subsidiaries nor, to the Company’s knowledge, any other party thereto, is in material breach, violation or default under any such contract and (iii) neither the Company nor its Subsidiaries has provided or received written notice of any breach under any such contract or of the cancellation or termination of any such contract.

(c) There are no outstanding powers of attorney executed on behalf of the Company or any of its Subsidiaries except as set forth on Schedule 4.10(c).

 

18


4.11 Intellectual Property .

(a) Schedule 4.11(a) sets forth a list of all of the (i) issued patents and patent applications, (ii) domain names and registered trademarks and applications therefor, and (iii) registered copyrights and applications therefor owned by the Company and its Subsidiaries. Schedule 4.11(f) sets forth all licenses (other than shrink wrap licenses), sublicenses, and other similar agreements, including any ongoing software or website maintenance agreements, hosting agreements or cloud computing agreements, as to which the Company or any of its Subsidiaries is a party, other than licenses and shrink wrap licenses for commercial off-the-shelf software products.

(b) The Company and its Subsidiaries own, have the right to use pursuant to a valid and enforceable contract, and have free and clear of any Liens (other than Permitted Liens), all Intellectual Property necessary to conduct the business of the Company and its Subsidiaries as currently conducted without any known conflict with or infringement or misappropriation of any rights or property of third parties. Each item of Intellectual Property owned or used by Company or its Subsidiaries immediately prior to the Closing will be owned or available for use by Buyer on identical terms and conditions immediately subsequent to the Closing.

(c) To the knowledge of the Company, there is no unauthorized use, disclosure, infringement, or misappropriation of, nor to the knowledge of the Company, any valid basis for any claim of infringement or misappropriation by any third party upon, the Intellectual Property or other proprietary rights of the Company and its Subsidiaries.

(d) Except as disclosed on Schedule 4.11(d) :

(i) To the knowledge of the Company, neither the conduct of the Company and its Subsidiaries’ business as currently conducted, nor any of the products of the Company and its Subsidiaries currently sold, have infringed, misappropriated, diluted or otherwise violated, and do not infringe, dilute, misappropriate or otherwise violate the Intellectual Property or other rights of any Person.

(ii) to the knowledge of the Company, no Person has infringed, misappropriated, diluted or otherwise violated, or is currently infringing, misappropriating, diluting or otherwise violating, any Company Intellectual Property.

(iii) there are no Actions (including any oppositions, interferences or re-examinations) settled, pending or threatened (including in the form of offers to obtain a license): (A) alleging any infringement, misappropriation, dilution or violation of the Intellectual Property of any Person by any of the Company and its Subsidiaries; (B) challenging the validity, enforceability, registrability or ownership of any Intellectual Property of the Company and its Subsidiaries; or (C) by any of the Company and its Subsidiaries or any other Person alleging any infringement, misappropriation, dilution or violation by any Person of the Intellectual Property of the Company and its Subsidiaries; and

(iv) all registered patents, domain names, trademarks and copyrights, and applications to register trademarks and copyrights set forth on Schedule 4.11(a) are in effect and all renewal fees and other maintenance fees have been paid and all other maintenance actions have been taken.

 

19


(e) The Company and its Subsidiaries follow reasonable commercial practices common in the industry to protect their respective proprietary and Confidential Information, including requiring their respective employees, consultants and agents to be bound in writing by obligations of confidentiality and non-disclosure, and requiring their respective employees, consultants and agents to assign to Company and its Subsidiaries any and all inventions and discoveries and other Intellectual Property conceived, reduced to practice, developed or discovered by such employees, consultants and/or agents made within the scope of, and during their employment (to the extent permitted by law) pursuant to written agreements executed by each such employee, consultant or agent, and only disclosing proprietary and Confidential Information to third parties pursuant to written confidentiality and non-disclosure agreements.

(f) Schedule 4.11(f) identifies each item of Intellectual Property that any third party owns and that Company and its Subsidiaries use for the businesses as currently conducted, and as proposed to be conducted, pursuant to license, sublicense, agreement, or permission, other than commercially available, non-negotiated licenses granted to the Company on a non-exclusive basis. Seller has delivered to Buyer correct and complete copies of all such licenses, sublicenses, agreements, and permissions (as amended to date).

(g) The computer systems, including the software, firmware, hardware, networks, interfaces, platforms and related systems used or currently planned to be used in the conduct of the business of the Company and its Subsidiaries (collectively, “ Systems ”) are sufficient for the immediate and reasonably anticipated future needs of the respective businesses of the Company and its Subsidiaries, as currently contemplated, including as to capacity, scalability and ability to process current and anticipated peak volumes in a timely manner. The Systems are in good working condition to effectively perform all information technology operations necessary for the business of the Company and its Subsidiaries. All Systems, other than software, used in the business of the Company and its Subsidiaries are owned and operated by and are under the control of Company and its Subsidiaries and are not wholly or partly dependent on any facilities which are not under the ownership, operation or control of the Company and its Subsidiaries. In the twelve-month (12) period prior to the date hereof, there have been no failures, breakdowns or continued substandard performance of any Systems that has caused substantial disruption or interruption in or to any customer’s use of the Systems or the operation of the business of the Company and its Subsidiaries. Seller has taken commercially reasonable steps to provide for the back-up and recovery of data and information critical to the conduct of the business of the Company and its Subsidiaries (including such data and information that is stored on magnetic or optical media in the ordinary course) without material disruption to, or material interruption in, the conduct of such business. The Company and its Subsidiaries have in place commercially reasonable disaster recovery and business continuity plans, procedures and facilities, acts in compliance therewith and has taken commercially reasonable steps to test such plans and procedures on a periodic basis, and such plans and procedures have been proven effective upon such testing in all material respects. The Company and its Subsidiaries are not individually or collectively a party to any agreement or arrangement,

 

20


or otherwise subject to any duty, which (in either case) (i) restricts the Company and its Subsidiaries’ free use or disclosure of any source code relating to any of the Intellectual Property, or (ii) requires the Company and its Subsidiaries to (x) include any source code relating to any Intellectual Property with any distribution or delivery (whether physical or on a hosted basis) of such software and/or (y) permit any licensee of the Intellectual Property to modify any source code relating to any of the Intellectual Property.

(h) The Company and its Subsidiaries are, and since January 30, 2015 have been, in compliance with (i) all applicable laws concerning data protection, privacy and the collection or use of personal information; and (ii) any privacy policies or related policies, programs or other notices that concern the collection or use of personal information in the business of the Company and its Subsidiaries. There have not been any incidents of data security breaches or complaints, notices to, or audits, proceedings or investigations conducted or claims asserted by any Person (including any Governmental Authority) regarding the collection, use, transmission or disclosure of personal information by any Person in connection with the business of the Company and its Subsidiaries, or any violation of applicable law, and there is no reasonable basis for the same and no such claim has been threatened or is pending.

4.12 Litigation .

(a) Except as set forth on Schedule 4.12(a) , there are no Actions pending or, to the knowledge of the Company, threatened (i) against or by the Company or any of its Subsidiaries affecting any of their business, properties or assets (or to the Company’s knowledge, by or against any Seller or any Affiliate thereof and relating to any of the Company and its Subsidiaries); or (ii) against or by the Company or any of its Subsidiaries, any Seller or any Affiliate of any Seller that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. Except as set forth on Schedule 4.12(a) , no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.

(b) Except as set forth on Schedule 4.12(b) , there are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards against or affecting the Company or any of its Subsidiaries or any of their business, properties or assets.

4.13 Employee Benefit Plans .

(a) Schedule 4.13(a) sets out a list of all material employee benefit plans (as defined in Section 3(3) of the ERISA) and all bonus, commission, stock option, stock purchase, restricted stock, stock ownership, phantom stock, stock appreciation right, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement, severance or other material benefit plans, programs or arrangements, and all employment, termination, severance or change in control contracts or agreements to which the Company or any of its Subsidiaries is a party, with respect to which the Company or any Subsidiary has any Liability or which are maintained, contributed to or sponsored by the Company or any Subsidiary for the benefit of any current or former employee, officer or director of the Company or any Subsidiary (each a “ Plan ” and, collectively, the “ Plans ”). In addition, Schedule 4.13(a) sets out a list of each employee

 

21


benefit plan maintained, or contributed to, by the Company or an ERISA Affiliate, or with respect to which the Company or any Subsidiary would be reasonably expected to have any Liability, that is a “multiemployer plan” (as defined in Section 3(37) of ERISA) (each, a Multiemployer Plan ”).

(b) With respect to each Plan (other than a multi-employer pension plan), Seller has made available to Buyer accurate, current and complete copies of each of the following: (i) where the Plan has been reduced to writing, the plan document together with all amendments; (ii) where the Plan has not been reduced to writing, a written summary of all material plan terms; (iii) where applicable, copies of any trust agreements or other funding arrangements, custodial agreements, insurance policies and contracts, administration agreements and similar agreements and investment management or investment advisory agreements, now in effect; (iv) copies of any summary plan descriptions, summaries of material modifications, employee handbooks and any other written communications (or a description of any oral communications) relating to any Plan; (v) in the case of any Plan that is intended to be qualified under Section 401(a) of the Code, a copy of the most recent determination, opinion or advisory letter from the Internal Revenue Service; (vi) in the case of any Plan for which a Form 5500 is required to be filed, a copy of the two most recently filed Form 5500, with schedules and financial statements attached; (vii) actuarial valuations and reports related to any Plans with respect to the most recently completed plan year; (viii) nondiscrimination tests for the last plan year prior to the plan year in which the Closing Date occurs; and (ix) copies of material notices, letters or other correspondence whether to or from the Internal Revenue Service, Department of Labor, Pension Benefit Guaranty Corporation or other Governmental Authority relating to the Plan. With respect to each Multiemployer Plan, Seller has made available to Buyer accurate, current and complete copies of each of the following received within the three years prior to the Closing Date: (x) all estimates of withdrawal liability; (xi) all funding disclosures; and (xii) all other correspondence relating to withdrawal liability.

(c) Each Plan intended to be qualified under Section 401(a) of the Code has received a favorable determination or opinion letter from the Internal Revenue Service (“ IRS ”) regarding its qualification thereunder or may rely on opinion letter issued by the IRS with respect to a prototype plan adopted in accordance with the requirements for such reliance, or has time remaining for application to the IRS for a determination of the qualified status of such Plan for any period for which such Plan would not otherwise be covered by an IRS determination.

(d) Except as set out in Schedule 4.13(d) , neither any Plan nor any employee benefit plan maintained by any ERISA Affiliate is subject to Title IV of ERISA or Section 412 of the Code.

(e) With respect to each Multiemployer Plan: (i)  Schedule 4.13(e) states the amount of estimated withdrawal Liability or other termination Liability that has been or would be incurred by the Company or an ERISA Affiliate upon a complete withdrawal (as defined in Section 4203 of ERISA) from such multiemployer plan, as most recently estimated or otherwise disclosed to the Company by the applicable plan; (ii) except as set forth on Schedule 4.13(e) , no such multiemployer plan is in reorganization or insolvent (as those terms are defined in Sections 4241 and 4245 of ERISA, respectively); and (iii) except as set forth on Schedule 4.13(e) , no such multiemployer plan is in critical status, endangered status, or seriously endangered status (as those terms are defined in Section 305 of ERISA).

 

22


(f) Each Plan is now, and except as set out in Schedule 4.13(f) , (i) since January 30, 2015 and (ii) to the Company’s knowledge, since January 1, 2013, has been operated in all material respects in accordance with its terms and applicable Legal Requirements, including ERISA and the Code. Neither the Company nor any Subsidiary has taken, or failed to take, any action that would be reasonably likely to result in imposition of tax under Section 4980H of the Code or under Section 4980D of the Code. The Company and its Subsidiaries have performed in all material respects all obligations required to be performed by them and are not in any material respect in default under or in violation of any Plan. No litigation or governmental administrative proceeding, audit or other proceeding (other than those relating to routine claims for benefits) is pending or, to the Company’s knowledge, threatened with respect to any Plan.

(g) None of the Plans provides health care or any other non-pension benefits to any employees after their employment is terminated (other than as required by Part 6 of Subtitle B of Title I of ERISA or similar state law).

(h) Each Plan that constitutes in any part a nonqualified deferred compensation plan within the meaning of Section 409A of the Code has been operated and maintained in operational and documentary compliance in all material respects with Section 409A of the Code and applicable guidance thereunder.

(i) Except as set out in Schedule 4.13(i) , neither the execution and delivery of this Agreement, the shareholder approval of this Agreement, nor the consummation of the transactions contemplated hereby, will (either alone or upon the occurrence of any additional or subsequent events): (i) entitle any current or former director, officer, employee, independent contractor or consultant of the Company to severance pay or any other payment; (ii) accelerate the time of payment, funding or vesting, or increase the amount of compensation due to any such individual; (iii) limit or restrict the right of the Company to merge, amend or terminate any Benefit Plan; (iv) increase the amount payable under or result in any other material obligation pursuant to any Plan; (v) result, following 280G Stockholder Approval, in “excess parachute payments” within the meaning of Section 280G(b) of the Code; or (vi) require a “gross-up” or other payment to any “disqualified individual” within the meaning of Section 280G(c) of the Code.

4.14 Compliance with Legal Requirements . Except as set forth on Schedule 4.14 , since January 30, 2015, (a) the Company and its Subsidiaries have complied and are now complying, in each case in all material respects with all Legal Requirements of any Governmental Authority to which the Company or any of its Subsidiaries or their respective business, properties or assets is subject, and (b) neither the Company nor any of its Subsidiaries has received any notice, Action or assertion from any Governmental Authority nor, to the Company’s knowledge, has any such written notice, Action or assertion been filed, commenced or threatened against the Company or any of its Subsidiaries, alleging that the Company or any of its Subsidiaries is not in material compliance with any Legal Requirement.

 

23


4.15 Environmental Matters . Except as set forth on Schedule 4.15 : (a) the Company and its Subsidiaries are currently, and have for the past three (3) years been, in material compliance with all applicable Environmental Requirements; (b) the Company and its Subsidiaries possess all Environmental Permits necessary to operate the business as currently operated (each of which is disclosed in the Disclosure Schedule) and all such Environmental Permits are in full force and effect and shall be maintained in full force and effect through the Closing Date; (c) the Company and its Subsidiaries have not received any written or, to the knowledge of the Company, oral notification from any Governmental Authority of any material adverse change in the status or terms and conditions of such Environmental Permits; (d) the Company and its Subsidiaries have not received any written claim, request for information, complaint, demand, administrative inquiry, notice of responsibility, notice of intent, notice of violation or other written notice alleging that the Company or any Subsidiary is in material violation of, or has material Liability under, any Environmental Requirements or Environmental Permits which remains pending or unresolved; (e) there are no actions, suits or proceedings pending against the Company or any of its Subsidiaries pursuant to Environmental Requirements and, to the Company’s knowledge, no such actions, suits or proceedings have been threatened; (f) to the knowledge of the Company, no Hazardous Material has been released at, on or under any Company Real Property in an amount, manner, condition or concentration that requires any investigation, remediation or other response action by the Company or its Subsidiaries pursuant to any Environmental Requirements; (g) none of the Company Real Property, and to the knowledge of the Company, no property formerly owned, operated or leased by the Company and its Subsidiaries is listed on, or has been proposed for listing on, the National Priorities List maintained by the Environmental Protection Agency or any analogous state list; (h) the Company has made available to Buyer all material environmental reports, studies, audits, records, sampling data, site assessments and risk assessments that are in the Company’s possession and relate to the Company Real Property and the business or assets of the Company and its Subsidiaries; and (i) the Company and its Subsidiaries have not assumed by contract any material Liabilities or obligations of third parties under Environmental Requirements. The representations and warranties contained in this Section 4.15 are the only representations and warranties being made with respect to environmental matters, Hazardous Materials, or compliance with or Liability under Environmental Requirements.

4.16 Affiliated Transactions . Except (a) as set forth on Schedule 4.16 , and (b) pursuant to the Plans or employment arrangements set forth on Schedule 4.13 , no officer, director, stockholder or Affiliate (other than the Company or any of its Subsidiaries) of the Company or any of its Subsidiaries (i) is a party to any agreement, contract, commitment or transaction with the Company or any of its Subsidiaries or (ii) has any interest in any property used by the Company or its Subsidiaries. Except pursuant to contracts set forth on Schedule 4.16 , neither the Company nor any of its Subsidiaries owes any amounts to any Seller or any Affiliate of any Seller (other than the Company and its Subsidiaries).

 

24


4.17 Employees .

(a) Except as set forth in Schedule 4.17(a) , (i) within the past three years, neither the Company nor any of its Subsidiaries has experienced any strike, slowdown, work stoppage or lockout, or any claim of unfair labor practices that has not been dismissed or settled; (ii) there is not and has not been for the last three years, any union representing or purporting to represent any employee of the Company or its Subsidiaries; (iii) to the Company’s knowledge, no organizational effort is presently being made or threatened by or on behalf of any labor union with respect to employees of the Company or any of its Subsidiaries; and (iv) neither the Company nor any of its Subsidiaries is party to any collective bargaining or similar agreement with any labor union or organization.

(b) In the past year, neither the Company nor any of its Subsidiaries has implemented any “plant closing” or employee “mass layoff” (as defined in the Worker Adjustment Retraining and Notification Act of 1988, as amended, or any similar Legal Requirement (collectively, the “ WARN Act ”)) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of the Company or any of its Subsidiaries.

(c) Except as set forth on Schedule 4.17(c) :

(i) except as would not result in material Liability to the Company or its Subsidiaries, each of the Company and its Subsidiaries is in compliance with all Legal Requirements relating to labor and employment matters including all Legal Requirements relating to labor relations, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence and unemployment insurance;

(ii) except as would not result in material Liability to the Company or its Subsidiaries, (A) all individuals characterized and treated by the Company as independent contractors or consultants are properly treated as independent contractors under all applicable Legal Requirements and (B) all employees of the Company classified as exempt under the Fair Labor Standards Act and state and local wage and hour laws are properly classified;

(iii) there are no civil or criminal actions against the Company pending, or to the Seller’s Knowledge, threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment of any current or former applicant, employee, consultant or independent contractor of the Company, including, without limitation, any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, equal pay, wage and hours or any other employment related matter arising under applicable laws.

 

25


(iv) neither the Company nor any of its Subsidiaries is materially delinquent in any payments for any wages, salaries, commissions, bonuses, fees or other compensation due to its employees with respect to any services performed for it prior to the date hereof;

(v) none of the employment policies or practices of the Company or any of its Subsidiaries are currently being audited or investigated, or to the Company’s knowledge, subject to imminent audit or investigation by any Governmental Authority which would result in a material Liability to the Company or its Subsidiaries;

(vi) neither the Company nor any of its Subsidiaries is subject to, nor have they been subject to in the last three (3) years, any order, decree, injunction or judgment by any Governmental Authority in respect of any labor or employment matters which would result in a material Liability to the Company or its Subsidiaries;

(vii) each of the Company and its Subsidiaries is in material compliance with the requirements of the Immigration Reform Control Act of 1986; and

(viii) all employees of the Company are employed on an at-will basis, subject, as applicable, to certain severance and termination obligations as set forth in the Disclosure Schedule.

(d) Schedule 4.17(d) sets forth a true, correct and complete list, as of the date of this Agreement, of each employee of the Company or its Subsidiaries (collectively, “ Employees ”) including for each such individual the following: (i) title or position (including whether full or part time); (ii) hire date; (iii) current annual base compensation rate; and (iv) commission, bonus or other incentive-based compensation. Schedule 4.17(d) further sets forth a true, correct and complete list as of July 1, 2016 of each independent contractor and consultant of the Company or its Subsidiaries, including for each such individual the following: (i) nature of services provided, and (ii) fee or compensation arrangement.

(e) Except as set forth on Schedule 4.17(e) , to the Company’s knowledge as of the date hereof after due inquiry, none of Robert Kostrinsky, Sylvain Norton, Jim Pricola, Kenneth M. Simril or any officer presently intends to terminate his or her employment, and neither the Company nor any of its Subsidiaries has any present intention to terminate the employment of any such individual, except as may be required under Section 1.03(b)(vii) of this Agreement.

4.18 Brokerage . Except as set forth on Schedule 4.18 , no broker, finder, financial advisor, investment banker or other Person is entitled to any brokerage commissions, finders’ fees or similar compensation in connection with this Agreement or the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of the Sellers, the Company or any of its Subsidiaries pursuant to which Buyer, the Company or any of their Subsidiaries could be responsible or obligated.

 

26


4.19 Governmental Licenses and Permits . The Company and its Subsidiaries own or possess all approvals, authorizations, consents, licenses, sublicenses, permits, franchises, registrations, certificates and similar rights from Governmental Authorities (collectively, the “ Licenses ”) required to be held by the Company or its Subsidiaries in the conduct of their respective businesses. All of such Licenses are in full force and effect, and the Company or its Subsidiaries that is a party thereto is in material compliance with each such License held by or issued to it. No Action is pending, nor to the Company’s knowledge is threatened, to suspend, revoke, limit, restrict or terminate any of such Licenses or declare any such License invalid.

4.20 Insurance . Schedule 4.20 sets forth a list of all insurance policies and fidelity bonds covering the assets, business, operations, employees, officers, directors and managers, as applicable, of the Company and its Subsidiaries (collectively, the “ Policies ”). All Policies are valid and binding and in full force and effect and there is no claim by the Company or any of its Subsidiaries pending under any of such Policies as to which coverage has been questioned, denied, or disputed by the issuers or underwriters of such Policies. Neither of the Company nor any of its Subsidiaries has received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such Policies.

4.21 Customers and Suppliers .

(a) Schedule 4.21 sets forth (i) in descending order of magnitude, a list of the largest customers of the Company and its Subsidiaries accounting for at least $500,000 annually and constituting in the aggregate not less than fifty percent (50%) of consolidated revenue, and (ii) in descending order of magnitude, a list of the largest suppliers of the Company and its Subsidiaries constituting in the aggregate not less than fifty percent (50%) of consolidated purchases, as measured by the dollar amount of revenue recorded or purchases therefrom, during the twelve (12) month period ending on the Balance Sheet Date, showing purchases and revenue recorded to the Company and its Subsidiaries from and to each such supplier and customer during such period.

(b) Since the Balance Sheet Date, no customer or supplier listed on Schedule 4.21 : (i) has terminated its relationship with the Company or any of its Subsidiaries, (ii) materially changed the pricing or other terms of its business with the Company and its Subsidiaries and (iii) and no such customer or supplier has notified the Company or any of its Subsidiaries that it intends to terminate or materially change the pricing or other terms of its business with the Company or its Subsidiaries. To the knowledge of the Company, no such customer or supplier intends to take any of the actions described in the foregoing sentence as a result of the consummation of the transactions contemplated by this Agreement.

4.22 Product Warranty . All of the products manufactured, sold, leased, and delivered by the Company and its Subsidiaries conform in all material respects with all recipes, formulas, applicable contractual commitments and all express and implied warranties, and the Company and its Subsidiaries do not have any material Liability or obligation for replacement or repair thereof or other damages in connection therewith, subject only to the reserve for product warranty claims set forth on the Financial Statements.

 

27


4.23 Food Safety and Certifications . During the past three (3) years:

(a) the Company and its Subsidiaries are and have been in compliance in all material respects with the Food Safety Laws, including with respect to the manufacturing and storage practices, preparation, ingredients, composition, packaging and labeling for each of the products of the Company and its Subsidiaries;

(b) no food product manufactured, produced, distributed or sold by the Company or its Subsidiaries is or has been in any material respect contaminated, adulterated, misbranded, mispackaged, or improperly labeled, or poses an inappropriate threat to health or safety when processed or consumed in the intended manner, and there are no pending or, to the knowledge of the Company and its Subsidiaries, threatened claims by any Governmental Authority or other third party to the contrary;

(c) there has been no product recall by the Company, its Subsidiaries, or any Governmental Authority with respect to any food product manufactured, produced, distributed or sold by the Company or its Subsidiaries;

(d) the Company and its Subsidiaries have not received any written notices relating to any lawsuit, claim, seizure, or recall involving any food product manufactured, produced, distributed or sold by the Company or its Subsidiaries resulting from an alleged adulteration, food poisoning or violation of Food Safety Laws;

(e) none of the food manufacturing or processing facilities currently owned or operated by the Company or its Subsidiaries have been involuntarily shut down by a Governmental Authority or subject to any unresolved U.S. Food and Drug Administration form 483 notices or warning letters;

(f) neither the Company, its Subsidiaries, nor any of their respective food products or facilities is or has been subject to any adverse finding, recall, investigation, penalty assessment or other compliance or enforcement action by any Governmental Authority having responsibility for the regulation of food products, and none of the manufacturing or processing facilities that are operated by the Company or its Subsidiaries, and, to the knowledge of the Company and its Subsidiaries, no third-party food facility, establishment, or processing plant that uses the Company’s or its Subsidiaries’ products in the manufacture or processing of other foods or that receives, manufactures, processes or distributes the food products manufactured, produced, distributed or sold by the Company or its Subsidiaries, is or has been subject to any such material adverse action with regard to such a product;

(g) the Company and its Subsidiaries have no knowledge, nor has the Company or its Subsidiaries received any notices that any product or ingredient it holds or is held for its benefit is subject to reporting pursuant to the Reportable Food Registry maintained by the U.S. Food and Drug Administration;

 

28


(h) to the knowledge of the Company, the Company and its contract manufacturers have at all times complied with all procedures and practices necessary for the maintenance of any and all food related-certifications that it holds, including, but not limited to, its kosher and organic certifications; and

(i) to the knowledge of the Company, the Company does not have any material Liability (whether known or unknown, asserted or unasserted, absolute or contingent) arising out of any injury to individuals or property as a result of the ownership, possession or use of any product manufactured, sold or delivered by the Company; and

(j) none of the food manufacturing or processing facilities currently owned or operated by the Company or its Subsidiaries are subject to any outstanding, unresolved material audit findings or issues regarding compliance with the Orthodox Union’s kosher certification program or the U.S. Department of Agriculture’s National Organic Program.

4.24 Undisclosed Liabilities . The Company and its Subsidiaries have no liabilities, obligations or commitments of any nature that are, in the aggregate, material to the Company and its Subsidiaries as a whole (“ Liabilities ”), except (a) those which are adequately reflected or reserved against in the Balance Sheet as of the Balance Sheet Date, and (b) those which have been incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date and which are not, individually or in the aggregate, material in amount.

4.25 Inventory . All inventory of the Company and its Subsidiaries, whether or not reflected in the Financial Statements, consists of a quality and quantity usable and salable in the ordinary course of business consistent with past practice, except for obsolete, damaged, defective or slow-moving items that have been written off or written down to fair market value or for which adequate reserves have been established. All such inventory is owned by the Company and its Subsidiaries free and clear of all Liens, and no inventory is held on a consignment basis. The quantities of each item of inventory (whether raw materials, work-in-process or finished goods) are not excessive, but are reasonable in the present circumstances of the Company and its Subsidiaries.

4.26 Accounts Receivable . The accounts receivable reflected in the Financial Statements and the accounts receivable arising after the Balance Sheet Date (a) have arisen from bona fide transactions entered into by the Company or its Subsidiaries involving the sale of goods or the rendering of services in the ordinary course of business consistent with past practice; (b) constitute only valid, undisputed claims of the Company and its Subsidiaries not subject to claims of set-off or other defenses or counterclaims other than normal cash discounts accrued in the ordinary course of business consistent with past practice; and (c) subject to a reserve for bad debts shown in the Financial Statements or, with respect to accounts receivable arising after the Balance Sheet Date, on the accounting records of the Company and its Subsidiaries, are collectible in full within ninety (90) days after billing. The reserve for bad debts shown in the Financial Statements has been determined in accordance with GAAP or, with respect to accounts receivable arising after the Balance Sheet Date, on the accounting records of the Company and its Subsidiaries have been determined in accordance with GAAP, consistently applied, subject to normal year-end adjustments and the absence of disclosures normally made in footnotes.

 

29


4.27 Condition and Sufficiency of Assets . Except as set forth on Schedule 4.27 , the buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property of the Company and its Subsidiaries are structurally sound, are in good operating condition and repair, and are adequate for the uses to which they are being put, and none of such buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. The buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property currently owned or leased by the Company or its Subsidiaries, together with all other properties and assets of the Company and its Subsidiaries, are sufficient for the continued conduct of the Company’s and its Subsidiaries’ businesses after the Closing in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets necessary to conduct the business of the Company and its Subsidiaries as currently conducted.

4.28 Books and Records . The minute books and stock record books of the Company and its Subsidiaries, all of which have been made available to Buyer, are complete and correct and have been maintained in accordance with sound business practices. The minute books of the Company and its Subsidiaries contain accurate and complete records of all meetings, and actions taken by written consent of, the stockholders, the board of directors and any committees of the board of directors of the Company or its Subsidiaries, and no meeting, or action taken by written consent, of any such stockholders, board of directors or committee has been held for which minutes have not been prepared and are not contained in such minute books. At the Closing, all of those books and records will be in the possession of the Company.

4.29 NO OTHER REPRESENTATIONS OR WARRANTIES . EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE III AND THIS ARTICLE IV (AS MODIFIED OR SUPPLEMENTED BY THE DISCLOSURE SCHEDULE), NONE OF THE SELLERS, THE COMPANY, THEIR AFFILIATES OR ANY OTHER PERSON MAKES OR HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, RELATING TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, THE SELLERS OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY THE SELLERS, THE COMPANY, OR ANY OF THEIR AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, CONSULTANTS OR REPRESENTATIVES, ARE HEREBY EXPRESSLY DISCLAIMED INCLUDING ANY IMPLIED REPRESENTATION OR WARRANTY AS TO CONDITION, MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND BUYER AND ITS AFFILIATES ARE NOT RELYING ON ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES. WITHOUT LIMITING THE FOREGOING, COMPANY MAKES NO, AND SHALL NOT BE DEEMED TO HAVE MADE ANY, REPRESENTATION OR WARRANTY TO BUYER WITH RESPECT TO (A) ANY PROJECTIONS, ESTIMATES OR BUDGETS HERETOFORE DELIVERED TO OR MADE AVAILABLE TO BUYER OR ANY OF ITS AFFILIATES, COUNSEL, ACCOUNTANTS OR ADVISORS OF FUTURE REVENUES, EXPENSES OR EXPENDITURES OR FUTURE

 

30


RESULTS OF OPERATIONS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR (B) IN THE MATERIALS RELATING TO THE SELLERS OR THE COMPANY AND ITS SUBSIDIARIES MADE AVAILABLE TO BUYER OR IN ANY PRESENTATION OF THE BUSINESS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, AND NO STATEMENT CONTAINED IN ANY OF SUCH MATERIALS OR MADE IN ANY SUCH PRESENTATION SHALL BE DEEMED A REPRESENTATION OR WARRANTY HEREUNDER OR OTHERWISE, IT BEING UNDERSTOOD THAT ANY PROJECTIONS OR OTHER PREDICTIONS, ANY DATA, ANY FINANCIAL INFORMATION OR ANY MEMORANDA OR OFFERING MATERIALS OR PRESENTATIONS, INCLUDING BUT NOT LIMITED TO, THE SELLERS’, THE COMPANY’S OR ANY OF ITS SUBSIDIARIES’ CONFIDENTIAL INFORMATION MEMORANDUM. THE COMPANY OR ANY OF ITS SUBSIDIARIES CONFIDENTIAL OVERVIEWS MADE AVAILABLE BY THE COMPANY AND ITS REPRESENTATIVES ARE NOT AND SHALL NOT BE DEEMED TO BE OR TO INCLUDE REPRESENTATIONS OR WARRANTIES OF THE SELLERS, THE COMPANY OR ANY OF ITS SUBSIDIARIES, EXCEPT TO THE EXTENT SPECIFICALLY REFERENCED HEREIN OR (C) ANY OTHER INFORMATION OR DOCUMENTS (FINANCIAL OR OTHERWISE) MADE AVAILABLE TO THE BUYER OR ANY OF ITS AFFILIATES, COUNSEL, ACCOUNTANTS OR ADVISORS WITH RESPECT TO THE COMPANY OR ANY OF ITS SUBSIDIARIES. BUYER HEREBY ACKNOWLEDGES AND AGREES TO SUCH DISCLAIMER AND THAT, EXCEPT TO THE EXTENT SPECIFICALLY SET FORTH IN THIS AGREEMENT, BUYER IS PURCHASING THE COMPANY AND ITS SUBSIDIARIES ON AN “AS IS, WHERE IS” BASIS, AND IS ONLY ENTITLED TO RELY UPON THE REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

The Buyer Parties, jointly and severally, hereby represent and warrant to Sellers and the Company as follows:

5.01 Organization and Authority . Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the state of Delaware, and Parent is a corporation duly organized, validly existing and in good standing under the laws of the state of Iowa, each with all requisite power and authority to execute and deliver this Agreement and the Ancillary Agreements to which each is party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.

5.02 Authorization; Valid and Binding Agreement . This Agreement and the Ancillary Agreements to which a Buyer Party is a party have been duly authorized, and this Agreement has been and, as of the Closing, the Ancillary Agreements to which such Buyer Party is a party will be duly executed and delivered by such Buyer Party, and no other action on the part of such Buyer Party is necessary to authorize the execution and delivery of this Agreement and the Ancillary Agreements to which such Buyer Party is a party, the performance by such Buyer Party of its obligations hereunder and thereunder or the consummation by such Buyer Party of

 

31


the transactions contemplated by this Agreement and the Ancillary Agreements. Assuming that (a) this Agreement is a valid and binding obligation of each Seller and the Company and (b) the Ancillary Agreements will be valid and binding obligations of the parties thereto (other than the Buyer Parties) as of the Closing, this Agreement constitutes and the Ancillary Agreements to which a Buyer Party is a party will constitute as of the Closing, valid and binding obligations of such Buyer Party, enforceable in accordance with their terms, except as enforceability may be limited by the Enforceability Exceptions.

5.03 No Breach . Except (a) for the applicable requirements of the HSR Act and (b) in the case of clauses (ii) and (iii) below, where the failure of any of the following to be true would not reasonably be expected to prevent or materially impede, interfere with or delay the consummation by a Buyer Party of the transactions contemplated under this Agreement and the Ancillary Agreements, the execution, delivery and performance of this Agreement and the Ancillary Agreements to which a Buyer Party is a party by such Buyer Party, and the consummation of the transactions contemplated hereby and thereby, do not result in any breach of, constitute a default under, result in a violation of, result in the creation of any Lien (other than a Permitted Lien) upon any asset or property of any Buyer Party, or give rise to any third-party rights of termination or amendment (i) under the provisions of any Buyer Party’s articles or certificate of incorporation or formation or bylaws, limited liability company operating agreement or equivalent organizational documents, (ii) under any License, agreement or instrument to which any Buyer Party is bound, or any Legal Requirement or (iii) in any respect under any order, judgment or decree to which any Buyer Party is subject.

5.04 Litigation . As of the date of this Agreement, there are no Actions pending or, to Buyer’s knowledge, threatened against a Buyer Party at law or in equity, or before or by any Governmental Authority, which if determined adversely to such Buyer Party would reasonably be expected to prevent or materially impede, interfere with or delay the consummation by such Buyer Party of the transactions contemplated under this Agreement and the Ancillary Agreements.

5.05 Solvency . Assuming (a) the accuracy of the representations and warranties set forth in Article III and  Article IV and (b) that immediately prior to the Closing and without giving effect to any of the transactions to occur at Closing, the Company and each of its Subsidiaries are Solvent, immediately after giving effect to the transactions contemplated by this Agreement, each Buyer Party and each of their Subsidiaries shall be Solvent. No transfer of property is being made by a Buyer Party and no obligation is being incurred by a Buyer Party in connection with the transactions contemplated by this Agreement with the intent to hinder, delay or defraud either present or future creditors of the Company.

5.06 Funds Availability . Each Buyer Party has and will continue to have at Closing sufficient cash to fund the transactions contemplated by this Agreement to be consummated at the Closing, and to pay all consideration, fees, costs, expenses and other amounts required to be paid by such Buyer Party in connection with this Agreement.

 

32


5.07 Investment Representations . Buyer is not acquiring any of the Shares with a view to or for sale in connection with any distribution thereof within the meaning of the Securities Act of 1933 (as amended from time to time, and including the rules and regulations promulgated thereunder, the “ Securities Act ”). Buyer (a) is an “accredited investor” (as defined in Regulation D under the Securities Act); (b) is able to bear the economic risk of its investment in the Shares; (c) acknowledges that the Shares have not been registered under the Securities Act and therefore are subject to certain restrictions on transfer unless registered for resale or subject to an exempt transaction under the Securities Act and any applicable state securities law and the Company is under no obligation to file a registration statement with the Securities and Exchange Commission with respect to the Shares in connection with the transactions contemplated by this Agreement or after the Closing; and (d) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of its investment in the Shares.

5.08 Acknowledgments by Buyer Parties . Each Buyer Party has conducted to its satisfaction an independent investigation and verification of the financial condition, results of operations, assets, Liabilities, properties and projected operations of the Company and its Subsidiaries and, in making its determination to proceed with the transactions contemplated by this Agreement and the Ancillary Agreements, it has relied solely on the results of its own independent investigation and verification and the representations and warranties of Sellers and the Company expressly set forth in this Agreement and the certificates delivered pursuant hereto, as modified by the Disclosure Schedule. The representations and warranties of Sellers and the Company contained in this Agreement, the certificates delivered pursuant hereto and in the Ancillary Agreements constitute the sole and exclusive representations and warranties of Sellers and the Company in connection with the transactions contemplated hereby, and all other representations, warranties, statements or information made, communicated or furnished (orally or in writing) of any kind or nature (including any estimates, projections, forecasts, plans and information made available in “data rooms,” management presentations, functional “break-out” discussions, responses to questions submitted or any other form in expectation of the transactions contemplated by this Agreement) are disclaimed by such Buyer Party.

5.09 NO OTHER REPRESENTATIONS OR WARRANTIES . EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE V , NO BUYER PARTY MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, RELATING TO A BUYER PARTY OR ANY OF ITS SUBSIDIARIES, OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED INCLUDING ANY IMPLIED REPRESENTATION OR WARRANTY AS TO CONDITION, MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE. WITHOUT LIMITING THE FOREGOING, NO BUYER PARTY MAKES ANY, AND SHALL NOT BE DEEMED TO HAVE MADE ANY, REPRESENTATION OR WARRANTY TO SELLERS WITH RESPECT TO (A) ANY PROJECTIONS, ESTIMATES OR BUDGETS HERETOFORE DELIVERED TO OR MADE AVAILABLE TO SELLERS OR ANY OF THEIR AFFILIATES, COUNSEL, ACCOUNTANTS OR ADVISORS OF FUTURE REVENUES, EXPENSES OR EXPENDITURES OR FUTURE RESULTS OF OPERATIONS

 

33


OF SUCH BUYER PARTY OR ANY OF ITS SUBSIDIARIES OR (B) IN THE MATERIALS RELATING TO SUCH BUYER PARTY OR ANY OF ITS SUBSIDIARIES MADE AVAILABLE TO SELLERS OR IN ANY PRESENTATION OF THE BUSINESS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, AND NO STATEMENT CONTAINED IN ANY OF SUCH MATERIALS OR MADE IN ANY SUCH PRESENTATION SHALL BE DEEMED A REPRESENTATION OR WARRANTY HEREUNDER OR OTHERWISE, IT BEING UNDERSTOOD THAT ANY PROJECTIONS OR OTHER PREDICTIONS, ANY DATA, ANY FINANCIAL INFORMATION OR ANY MEMORANDA OR OFFERING MATERIALS OR PRESENTATIONS, INCLUDING BUT NOT LIMITED TO, ANY CONFIDENTIAL INFORMATION MEMORANDUM AND A BUYER PARTY’S OR ANY OF ITS SUBSIDIARIES’ CONFIDENTIAL OVERVIEWS MADE AVAILABLE BY BUYER AND ITS REPRESENTATIVES ARE NOT AND SHALL NOT BE DEEMED TO BE OR TO INCLUDE REPRESENTATIONS OR WARRANTIES OF SUCH BUYER PARTY OR ANY OF ITS SUBSIDIARIES, EXCEPT TO THE EXTENT SPECIFICALLY REFERENCED HEREIN OR (C) ANY OTHER INFORMATION OR DOCUMENTS (FINANCIAL OR OTHERWISE) MADE AVAILABLE TO THE SELLERS OR ANY OF ITS AFFILIATES, COUNSEL, ACCOUNTANTS OR ADVISORS WITH RESPECT TO SUCH BUYER PARTY OR ANY OF ITS SUBSIDIARIES.

ARTICLE VI

[INTENTIONALLY OMITTED]

ARTICLE VII

ADDITIONAL AGREEMENTS

7.01 Director and Officer Liability and Indemnification .

(a) For a period of six (6) years after the Closing Date, each Buyer Party shall cause the Company to indemnify and hold harmless each present and former director and officer of the Company and its Subsidiaries (the “ D&O Indemnified Persons ”) against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or Liabilities of any nature whatsoever (“ D&O Costs ”), incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of or pertaining to matters existing or occurring at or prior to Closing, whether asserted or claimed prior to, at or after the Closing, to the fullest extent permitted under Legal Requirements; provided , however , that nothing in this Section 7.01(a) shall require the Company to indemnify any D&O Indemnified Person for any D&O Costs that the Company or any of its Subsidiaries would not have been obligated to indemnify such D&O Indemnified Person for prior to Closing.

(b) For a period of six (6) years after the Closing Date, each Buyer Party shall cause to be maintained in effect with respect to the D&O Indemnified Persons any provision in the Company’s or its Subsidiaries’ articles or certificate of incorporation or bylaws (or other organizational documents) relating to the exculpation or indemnification of any officers and directors in effect on the date of this Agreement (unless required by Legal Requirements), it being the intent of the parties that the D&O Indemnified Persons shall continue to be entitled to such exculpation and indemnification.

 

34


(c) If the Closing occurs, the Company shall purchase, and each of Buyer and Sellers shall pay one-half of the cost of, a directors’ and officers’ liability insurance “tail” or “runoff” insurance program (the “ Tail Policy ”) to be in effect until the end of the six-year period commencing as of the Closing Date (and for so long as any indemnification claim is being adjudicated) with respect to actions or omissions occurring prior to the Closing Date (such coverage to be on terms and conditions and for an amount no less favorable to the Company’s and its Subsidiaries’ directors and officers currently covered by such insurance than those of such policy in effect on the date of this Agreement), and each Buyer Party and the Company agrees not to terminate or modify in a manner adverse to the beneficiaries thereof the Tail Policy prior to the sixth anniversary of the Closing Date.

(d) In the event that after the Closing Date, Buyer or the Company, or their respective successors or assigns, (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity in such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in each case, proper provision shall be made so that the successors and assigns of Buyer or the Company, as the case may be, honor the indemnification and other obligations of such Persons, including under this Section 7.01 .

7.02 Tax Matters .

(a) Tax Cooperation . Buyer and the Seller Representative shall reasonably cooperate in connection with any audit, examination, assessment, litigation or other proceeding with respect to the Taxes of the Company or any of its Subsidiaries. Such cooperation shall include reasonably furnishing or making available during normal business hours of personnel, and the retention and (upon a Party’s request) the provision of records and information that are reasonably relevant to the preparation of any such Tax Return or to any such audit, litigation or other proceeding.

(b) Tax Sharing Agreements . Any and all existing Tax allocation and Tax sharing agreements and Special Tax-Related Rights Arrangements (whether written or not) binding upon the Company or any of its Subsidiaries (or benefitting any of their minority investors) shall be terminated as of the Closing Date. After such date, neither the Company nor any of its Subsidiaries shall have any further rights or Liabilities thereunder .

(c) Transfer Taxes . All Transfer Taxes and related expenses shall be borne 50% by the Sellers and 50% by the Buyer when due, and the party required to file the Transfer Tax Return under applicable Law will file all necessary Tax Returns and other documentation with respect to all such Transfer Taxes. The parties shall reasonably cooperate with each other in connection with the filing of any Tax Returns relating to Transfer Taxes, including joining in the execution of any such Tax Return or other documentation where necessary to the extent such Tax Return or other documentation is in form and substance satisfactory to the cooperating party.

 

35


(d) Pre-Closing Merger . It is intended that the Pre-Closing Merger did not (1) result in the recognition of any income or gain by the Company, Stone Canyon, or SC Holdco for federal and state income Tax purposes or (2) cause the affiliated group (as defined in Section 1504 of the Code) of corporations of which Stone Canyon was the common parent to cease to remain in existence within the meaning of Treas. Reg. § 1.1502-75(d), and the parties shall not file any Tax Return or take any position in a proceeding before a Governmental Authority inconsistent with the foregoing unless required by a closing agreement entered into under section 7121 of the Code or any other settlement agreement entered into in connection with an administrative or judicial proceeding. Buyer shall submit a draft of any Income Tax Returns for the taxable period that includes the Pre-Closing Merger or reflects the 2016 Refund Amount to the Seller Representative (together with schedules, statements and, to the extent requested by the Seller Representative, supporting documentation) at least forty (40) days prior to the due date thereof (including extensions). If the Seller Representative objects to any item on any such Income Tax Return, it shall, within ten (10) days after delivery of such Income Tax Returns, notify Buyer in writing that it so objects, specifying with particularity any such item and stating the specific factual or legal basis for any such objection. If a notice of objection is duly delivered, Buyer and Seller Representative shall negotiate in good faith and use their reasonable best efforts to resolve such items. If Buyer and the Seller Representative are unable to reach such agreement within ten (10) days after receipt by Buyer of such notice, the disputed items shall be resolved by the Independent Accountant and any determination by the Independent Accountant shall be final. The Independent Accountant shall resolve any disputed items within twenty (20) days of having the dispute referred to it pursuant to such procedures as it may require. The Income Tax Return shall be prepared in accordance with the Independent Accountant’s determination and timely filed. The costs, fees and expenses of the Independent Accountant shall be borne 50% by the Sellers, on the one hand, and 50% by the Buyer, on the other.

7.03 Employee Benefits .

(a) From and after the Closing Date, with respect to employees of the Company or its Subsidiaries immediately before the Closing who continue employment with Buyer and its Affiliates (including, following the Closing, the Company and its Subsidiaries) following the Closing Date (the “ Continuing Employees ”), Buyer shall cause the service of each such Continuing Employee to be recognized for purposes of eligibility to participate, levels of benefits (but not for benefit accruals under any defined benefit pension plan) and vesting under each compensation, retirement, vacation, fringe or other welfare benefit plan, program or arrangement of Buyer and its Affiliates, but not including any equity compensation plans, programs, agreements or arrangements (collectively, the “ Buyer Benefit Plans ”) in which any Continuing Employee is or becomes eligible to participate, but solely to the extent service was credited to such employee for such purposes under a comparable Plan immediately prior to the Closing Date and to the extent such credit would not result in a duplication of benefits.

(b) From and after the Closing Date, with respect to each Buyer Benefit Plan that is an “employee welfare benefit plan” as defined in Section 3(1) of ERISA in which any Continuing Employee is or becomes eligible to participate, Buyer shall use reasonable efforts to cause each such Buyer Benefit Plan to (i) waive all limitations as to pre-existing conditions, waiting periods, required physical examinations and exclusions with respect to participation and coverage requirements applicable under such Buyer Benefit Plan for such Continuing Employees and their eligible dependents to the same extent that such pre-existing conditions,

 

36


waiting periods, required physical examinations and exclusions would not have applied or would have been waived under the corresponding Plan in which such Continuing Employee was a participant immediately prior to his commencement of participation in such Buyer Benefit Plan but, with respect to long-term disability and life insurance benefits and coverage, solely to the extent permitted under the terms and conditions of Buyer’s applicable insurance contracts in effect as of the Closing Date; provided , however , that for purposes of clarity, to the extent such benefit coverage includes eligibility conditions based on periods of employment, Section 7.03(a) shall control; and (ii) provide each Continuing Employee and their eligible dependents with credit for any co-payments and deductibles paid in the calendar year that, and prior to the date that, such Continuing Employee commences participation in such Buyer Benefit Plan in satisfying any applicable co-payment or deductible requirements under such Buyer Benefit Plan for the applicable calendar year, to the extent that such expenses were recognized for such purposes under the comparable Plan.

(c) Buyer, the Company and the Sellers acknowledge and agree that all provisions contained in this Section 7.03 are included for the sole benefit of the respective parties to this Agreement and shall not create any right in any other Person, including any employees, former employees, any participant in any Plan or any beneficiary thereof or any right to continued employment with Buyer or any of its Affiliates. Nothing in this Section 7.03 shall be deemed to amend any Buyer Benefit Plan or to require Buyer or any of its Affiliates to continue or amend any particular benefit plan before or after the consummation of the transactions contemplated in this Agreement, and any such plan may be amended or terminated in accordance with its terms and applicable Legal Requirements.

7.04 WARN Act . Buyer agrees that it shall not, nor shall it permit any of its Affiliates (including, without limitation, the Company and its Subsidiaries) to, at any time within ninety (90) days following the Closing Date, effectuate a “plant closing” or “mass layoff” (as those terms are defined in the WARN Act) without complying in all material respects with the notice requirements and all other provisions of the WARN Act.

7.05 Further Assurances . Subject to the limitations set forth elsewhere in this Agreement, from time to time, as and when requested by any party hereto and at such party’s expense, any other party shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions as the requesting party may reasonably deem necessary or desirable to evidence and effectuate the transactions contemplated by this Agreement.

7.06 Non-Competition; Non-Solicitation .

(a) For a period of three (3) years commencing on the Closing Date (the “ Restricted Period ”), SCIFSC shall not, and shall not permit any of its Affiliates to, directly or indirectly, (i) engage in or assist others in engaging in the Restricted Business in the Territory or

 

37


acquire or commit to acquire the entity listed on Exhibit 7.06 , whether by merger, purchase of all or substantially all of the capital stock, equity interests or assets, reorganization or otherwise; or (ii) intentionally interfere in any material respect with the business relationships (formed as of the date of this Agreement) between the Company and customers or suppliers of the Company. Notwithstanding the foregoing, SCIFSC may (A) own, directly or indirectly, solely as an investment, securities of any Person traded on any national securities exchange if it is not a controlling Person of, or a member of a group which controls, such Person and does not, directly or indirectly, own five percent (5%) or more of any class of securities of such Person and (B) acquire or hold passive investments in investment funds, partnership or similar entities in which it does not have a controlling interest or otherwise possess, directly or indirectly, control or influence over the investment decisions or management of such entity or (C) commence employment with a subsidiary, division or unit of any entity that engages in a business that is competitive with the Restricted Business so long as SCIFSC and such subsidiary, division or unit does not engage in the Restricted Business and SCIFSC does not have any involvement in or exert any influence over any business that engages in the Restricted Business. SCIFSC acknowledges that the purchase price to be paid at Closing for the Shares as specified in Section 1.03(b)(i) includes, among other things, a value associated with the goodwill of the Company, and that the restrictions contained in this Section 7.06 are reasonable and necessary to protect the legitimate interests of Buyer, including without limitation the protection of the goodwill of the Company.

(b) During the Restricted Period, SCIFSC shall not, and shall not permit any of its Affiliates to, directly or indirectly, hire or solicit any employee of the Company (to the extent such employee was employed with the Company as of the Closing Date), or encourage any such employee to leave such employment or hire any such employee who has left such employment, except pursuant to a general solicitation which is not directed specifically to any such employees; provided , that nothing in this Section 7.06 shall prevent SCIFSC or any of its Affiliates from hiring (i) any employee whose employment has been terminated by the Company or Buyer or (ii) after one hundred and eighty (180) days from the date of termination of employment, any employee whose employment has been terminated by the employee.

(c) During the Restricted Period, SCIFSC shall not, and shall not permit any of its Affiliates to, directly or indirectly, solicit or entice, or attempt to solicit or entice, any clients or customers of the Company (to the extent such client or customer was a client or customer of the Company as of the Closing Date) for purposes of diverting their business or services from the Company.

(d) SCIFSC acknowledges that a breach or threatened breach of this Section 7.06 could give rise to irreparable harm to Buyer, for which monetary damages may not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by SCIFSC of any such obligations, Buyer may, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction.

 

38


(e) SCIFSC acknowledges that the restrictions contained in this Section 7.06 are reasonable and necessary to protect the legitimate interests of Buyer. In the event that any covenant contained in this Section 7.06 should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable law. The covenants contained in this Section 7.06 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.

(f) This Section 7.06 shall survive the Closing.

7.07 Appointment of Seller Representative .

(a) Each Seller and SAR Holder irrevocably constitutes and appoints Stone Canyon Industries LLC, a Delaware limited liability company, as Seller Representative and as such Seller’s or SAR Holder’s true and lawful attorney-in-fact and agent and authorizes he, she or it acting for such Seller and SAR Holder and in such Seller’s and SAR Holder’s name, place and stead, in any and all capacities to do and perform every act and thing required or permitted to be done in connection with this Agreement, as fully to all intents and purposes as such Seller might or could do in person, including taking any and all action on behalf of such Seller and SAR Holder from time to time as contemplated hereunder. Each Seller and SAR Holder grants unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing necessary or desirable to be done in connection with the transactions contemplated hereby, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all act Seller Representative may lawfully do or cause to be done by virtue hereof. Each Seller and SAR Holder acknowledges and agrees that upon execution of this Agreement, upon any delivery by Seller Representative of any waiver, amendment, agreement, or certificate document executed by Seller Representative, such Seller and SAR Holder and shall be bound by such documents or action as fully as if such Seller and SAR Holder had executed and delivered such documents. Sellers and SAR Holders shall pay all fees, costs and expenses incurred by Seller Representative in performing its duties hereunder.

(b) All payments owed to Sellers and SAR Holders pursuant to this Agreement or otherwise shall be paid by Buyer to Seller Representative for subsequent distribution to Sellers and SAR Holders, and Buyer shall have no duty or obligation whatsoever to see to Seller Representative’s application of funds and no Liability whatsoever arising out of the conduct of Seller Representative. Each Seller and SAR Holder further acknowledges that any payment made to Seller Representative on behalf of any Seller and SAR Holder shall be deemed to have been directly paid to such Seller and SAR Holder and agrees that Buyer’s payment obligations hereunder shall be satisfied in full upon receipt by Seller Representative of such payment and Sellers, SAR Holders and Seller Representative hereby waive any and all claims against Buyer relating to any such payment or otherwise relating to the appointment or conduct of Seller Representative.

 

39


(c) Each Seller and SAR Holder further acknowledges that the Seller Representative shall have full power and authority on such Seller’s and SAR Holder’s behalf: (i) to pay such Seller’s and SAR Holder’s expenses incurred in connection with the negotiation and performance of this Agreement (whether incurred on or after the date hereof), including by using funds from the Seller Representative Holdback Amount; (ii) in Seller Representative’s sole discretion, to pay such Seller’s and SAR Holder’s Pro Rata Portion of any Final Adjustment Amount pursuant to Section 1.05(c) , (iii) to endorse and deliver any certificates representing the Shares and execute such further instruments of assignment or indemnity as the Buyer shall reasonably request; (iv) to execute and deliver on behalf of such Seller and SAR Holder any amendment or waiver hereto; (v) (A) to dispute or refrain from disputing, on behalf of such Seller and SAR Holder relative to any amounts to be received by such Seller and SAR Holder under this Agreement or any agreements contemplated hereby, any claim made by the Buyer under this Agreement or other agreements contemplated hereby, (B) to negotiate and compromise, on behalf of such Seller and SAR Holder, any dispute that may arise under, and exercise or refrain from exercising any remedies available under, this Agreement or any other agreement contemplated hereby, and (C) to agree to, negotiate or execute, on behalf of such Seller and SAR Holder, any settlement agreement, release or other document with respect to such dispute or remedy; (vi) to engage attorneys, accountants, agents or consultants on behalf of the Sellers and SAR Holders in connection with this Agreement or any other agreement contemplated hereby and paying any fees related thereto; (vii) to take all other actions to be taken by or on behalf of such Seller and SAR Holder in connection herewith; (viii) to retain the Seller Representative Holdback Amount and/or pay amounts therefrom in accordance with this Agreement; and (ix) to do each and every act and exercise any and all rights which such Seller and SAR Holder or the Sellers and SAR Holders collectively are permitted or required to do or exercise under this Agreement.

(d) If the Sellers and SAR Holders shall agree that the removal of the Seller Representative is necessary at a given time, Sellers and SAR Holders shall appoint a replacement Seller Representative, which replacement (if not an Affiliate of the Seller Representative or a nationally recognized professional shareholder representative service company) shall be subject to Buyer’s prior written approval (such approval not to be unreasonably withheld, delayed or conditioned).

(e) Each Seller and SAR Holder agrees that the Buyer shall be entitled to rely, without inquiry whatsoever, on any action taken, or the failure to take any action, by Seller Representative, on behalf of Sellers and SAR Holders pursuant to this Section 7.06 (each, an “ Authorized Action ”), and that each Authorized Action shall be binding on each Seller and SAR Holder as fully as if such Seller or SAR Holder had taken such Authorized Action.

(f) The Seller Representative shall not have by reason of this Agreement a fiduciary relationship in respect of any Seller or SAR Holder, except in respect of amounts received on behalf of such Seller or SAR Holder. The Seller Representative shall not be liable to

 

40


any Seller or SAR Holder for any action taken or omitted by it or any agent employed by it hereunder or under any other document entered into in connection herewith, except that the Seller Representative shall not be relieved of any liability imposed by law for willful misconduct. The Seller Representative shall not be liable to any Seller or SAR Holder for any apportionment or distribution of payments made by the Seller Representative in good faith, and if any such apportionment or distribution is subsequently determined to have been made in error the sole recourse of any Seller and SAR Holder to whom payment was due, but not made, shall be to recover from other Sellers or SAR Holders any payment in excess of the amount to which they are determined to have been entitled. The Seller Representative shall not be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement. Neither the Seller Representative nor any agent employed by it shall incur any Liability to any Seller or SAR Holder by virtue of the failure or refusal of the Seller Representative for any reason to consummate the transactions contemplated hereby or relating to the performance of its other duties hereunder, except for actions or omissions constituting fraud or bad faith. The Sellers and SAR Holders will indemnify, defend and hold harmless the Seller Representative from and against any and all losses arising out of or in connection with the Seller Representative’s execution and performance of this Agreement, in each case as such loss is suffered or incurred; provided, that in the event that any such loss is finally adjudicated to have been directly caused by the fraud, gross negligence or willful misconduct of the Seller Representative, the Seller Representative will reimburse the Sellers and SAR Holders the amount of such indemnified loss to the extent attributable to such fraud, gross negligence or willful misconduct.

(g) If the Seller Representative Holdback Amount is insufficient to reimburse the Seller Representative in full, the Seller Representative may instruct the Buyer, as the case may be, when making any payments to the Paying Agent, to direct to the Seller Representative sufficient funds from such payments to the Sellers or the SAR Holders to pay the amount of any such shortfall to the Seller Representative, and such payment to the Seller Representative shall be deducted from the funds otherwise being directed to the Paying Agent, and allocated among the Sellers and the SAR Holders on a pro rata basis according to each such Person’s Pro Rata Portion. Except as expressly set forth in the immediately preceding sentence, in no event shall the Buyer or the Company be required to pay any amount to the Seller Representative in capacity as such.

7.08 Representations and Warranties Insurance Policy . Prior to or upon Closing, Buyer shall obtain a representations and warranties insurance policy in connection with this Agreement (the “ R&W Insurance Policy ”) on terms and conditions acceptable to Buyer, and certify to Sellers that such policy has been bound as of the Closing Date. Buyer shall pay one-half, and Sellers shall pay one-half, the cost of the R&W Insurance Policy. In connection with the R&W Insurance Policy, the Sellers, the Seller Representative and the Company shall provide such reasonable cooperation to Buyer and the applicable insurance provider as reasonably requested by Buyer and such insurance provider in connection with obtaining such R&W Insurance Policy. Following the Closing, the Sellers and the Seller Representative shall provide reasonable cooperation to Buyer, the applicable insurance provider and the Company in connection with pursuing claims under such policy if requested by Buyer or the applicable insurance provider.

 

41


ARTICLE VIII

[INTENTIONALLY OMITTED]

ARTICLE IX

SURVIVAL; POST-CLOSING REMEDIES

9.01 Survival . Except as expressly set forth in this Agreement, none of the representations, warranties or covenants (to the extent required to be performed on or prior to the Closing Date) of Sellers, the Company or Buyer in this Agreement or any instrument delivered pursuant to this Agreement shall survive the Closing.

9.02 Post-Closing Remedy . Effective on the Closing Date and at all times thereafter:

(a) except as set forth in this Article IX , Buyer hereby, on its own behalf and on behalf of its Affiliates, waives, to the fullest extent permitted under Legal Requirement, and agrees not to assert in any Action, any and all rights, claims and causes of action it or such Affiliate may now or hereafter have against each Seller, SAR Holder or their Affiliates arising out of or based upon this Agreement or the transactions contemplated hereby (including any such rights, claims or causes of action arising under or based upon common law or other Legal Requirement); provided , however , that this Section 9.02(a) shall not apply to (i) claims arising from fraud on the part of any Seller, SAR Holder or Seller Affiliate, or (ii) covenants and obligations required to be performed hereunder after the Closing Date; and

(b) each Seller and SAR Holder, on its own behalf and on behalf of its Affiliates, waives, to the fullest extent permitted under Legal Requirement, and agrees not to assert in any Action, any and all rights, claims and causes of action it or such Affiliate may now or hereafter have against Buyer or its Affiliates arising out of or based upon this Agreement or the transactions contemplated hereby (including any such rights, claims or causes of action arising under or based upon common law or other Legal Requirement); provided , however , that this Section 9.02(b) shall not apply to (i) claims arising from fraud on the part of Buyer, or (ii) covenants and obligations required to be performed hereunder after the Closing Date.

9.03 Indemnification Regarding the Pre-Closing Merger . SCIFSC, in its capacity as a Seller, shall indemnify the Buyer Indemnitees against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Liabilities incurred or sustained by, or imposed upon, the Buyer Indemnitees based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of the representation and warranty of the Company contained in Section 4.09(m) .

 

42


ARTICLE X

DEFINITIONS

10.01 Definitions . For purposes hereof, the following terms, when used herein with initial capital letters, shall have the respective meanings set forth herein:

2016 Refund Amount ” means $870,500.

Accounting Practices and Procedures ” means the accounting methods, policies, practices and procedures, including classification and estimation methodologies, in accordance with GAAP, used in the preparation of the audited consolidated financial statements of the Company and its Subsidiaries as of June 24, 2016.

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

Affiliate ” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person. For the purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.

Affiliated Group ” means an affiliated group as defined in Section 1504 of the Code (or analogous combined, consolidated or unitary group defined under state, local or foreign income Tax Legal Requirements).

Ancillary Agreements ” means all agreements, documents and instruments contemplated to be delivered or executed in connection with this Agreement.

Business Day ” means any day that is not a Saturday, Sunday or other day on which the Federal Reserve Bank of New York is closed.

Cash on Hand ” means, with respect to the Company and its Subsidiaries, all cash (including deposits and transfers in transit or in process, reduced by outstanding checks written by the Company or any of its Subsidiaries), and cash equivalents as of 11:59 p.m. (New York City time) on the Closing Date.

CERCLA ” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.

Closing Indebtedness ” means all Indebtedness of the Company and its Subsidiaries as of 11:59 p.m. (New York City time) on the Closing Date.

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

 

43


Common Stock ” means the Common Stock authorized in the Amended and Restated Certificate of Incorporation of SCI Ingredients Holdings, Inc., dated as of January 29, 2015.

Company’s knowledge ” or “ the knowledge of the Company ” means the actual knowledge, of any of Kenneth M. Simril and Robert Kostrinsky after due inquiry of their respective direct reports, and the actual knowledge of any of Sylvain Norton and Jim Pricola after reasonable inquiry of their respective direct reports.

Company Real Property ” means any real property and improvements at any time owned, leased, used, operated, or occupied (whether for storage, disposal, or otherwise) by the Company or any of its Subsidiaries.

Confidential Information ” means information regarding the business and operations of the Company and its Subsidiaries that is not publicly available, whether tangible or intangible, including without limitation algorithms, customer lists, ideas, designs, formulas, know-how, methods, processes, programs, prototypes, systems, and techniques.

Confidentiality Agreement ” means that certain Confidentiality Agreement, dated March 31, 2016, 2016, between Green Plains Inc. and Fleischmann’s Vinegar Company, Inc.

Credit Facility ” means, collectively, (i) that certain First Lien Credit Agreement, dated as of January 30, 2015, by and among SCI/VIN Mergerco, Inc., RLJ-FVC Holdings, Inc., Fleischmann’s Vinegar Company, Inc., SCI Ingredients Holdings, Inc., the Lenders party thereto and Security Benefit Corporation; and (ii) that certain Second Lien Credit Agreement, dated as of January 30, 2015, by and among SCI/VIN Mergerco, Inc., RLJ-FVC Holdings, Inc., Fleischmann’s Vinegar Company, Inc., SCI Ingredients Holdings, Inc., the Lenders party thereto and Security Benefit Corporation.

Environmental Permit ” means any permit, license, consent, authorization or approval issued under Environmental Requirements.

Environmental Requirements ” means any Legal Requirements (a) relating to pollution (or the cleanup thereof) or protection of natural resources, endangered or threatened species, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term includes, without limitation, the following (including their implementing regulations and any state analogs): CERCLA; RCRA; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.

 

44


ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

ERISA Affiliate ” means any entity that is, or within the past six (6) years would have been, considered a single employer with the Company under Section 4001(b) of ERISA or part of the same “controlled group” as the Company for purposes of Section 302(d)(3) of ERISA.

Estimated Purchase Price ” means an amount, without duplication, equal to (i) the Purchase Price, plus (ii) the Estimated Cash on Hand, plus (iii) the Estimated Transaction Tax Benefit minus (iv) Estimated Closing Indebtedness, plus (v) the amount, if any, by which the Estimated Net Working Capital Amount exceeds the Target Net Working Capital Amount, minus (vi) the amount, if any, by which the Target Net Working Capital Amount exceeds the Estimated Net Working Capital Amount, minus (vii) the Estimated Transaction Expenses.

Estimated Transaction Tax Benefit ” means $1,638,348 as detailed on Exhibit X .

fraud ” means an act, committed by or on behalf of a party to this Agreement, with intent to deceive another party to this Agreement, or to induce him, her or it to enter into this Agreement, and requires: (i) a false representation expressly made in this Agreement; (ii) with actual knowledge (as opposed to constructive, imputed or implied knowledge) that such representation is false; (iii) with an intention to induce such other party to whom such representation is made to act or refrain from acting in reliance upon it; (iv) causing that such other party, in justifiable reliance upon such false representation, to take or refrain from taking action; and (v) causing such other party to suffer damage by reason of such reliance.

Food Safety Laws ” means the Federal Food, Drug and Cosmetic Act and any other federal, state, local or foreign law and the respective implementing regulations in each case which impose standards with respect to the safety of food products intended for human consumption, including any such laws relating to the manufacture, production, packaging, transportation, import, export, distribution, or sale of such products.

Fully Diluted Common Stock ” means the sum of (i) the aggregate number of issued and outstanding shares of common stock of the Company immediately prior to the Closing, including for this purpose all shares of Common Stock underlying outstanding and vested Stock Appreciation Rights as of immediately prior to the Closing, and the phantom shares held by Kenneth M. Simril, Robert Kostrinsky and Sylvain Norton as of immediately prior to the Closing, plus (ii) the aggregate number of shares of common stock of the Company issuable upon full conversion of all shares of Series A Preferred Stock that are outstanding immediately prior to the Closing.

GAAP ” means United States generally accepted accounting principles, consistently applied.

 

45


Governmental Authority ” means any foreign, federal, state, local or other governmental authority, regulatory body, court, tribunal, administrative agency, commission, stock exchange or listing authority, or other instrumentality thereof, including any applicable department of insurance.

Governmental Order ” means any order, judgment, injunction, stipulation, determination or decree issued by any Governmental Authority with jurisdiction over such matters.

Hazardous Materials ” means all pollutants, contaminants or hazardous or toxic substances or materials including Hazardous Substances as defined under CERCLA, Hazardous Substances as defined under RCRA, petroleum and petroleum products (including crude oil and any fraction thereof), lead-based paint, asbestos and friable asbestos-containing materials, and polychlorinated biphenyls.

HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Indebtedness ” means, without duplication, the sum of all obligations of the Company and its Subsidiaries, whether or not contingent, with respect to the Credit Facility. For the avoidance of doubt, Indebtedness shall not include any intercompany accounts, payables or loans of any kind or nature among the Company and its Subsidiaries, Multiemployer Plan withdrawal penalty Liability, any Liability taken into account in the determination of Net Working Capital or any Transaction Expenses.

Intellectual Property ” means all U.S. and foreign intellectual property, including (a) all trademarks, trademark rights, service marks, service mark rights, trade names, trade name rights, trade dress, logos, slogans, rights in telephone numbers, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (b) all copyrightable works, all copyrights, all works of authorship, all advertising and promotional materials (including any rights to all social media accounts such as Facebook, Instagram and Twitter), and all applications, registrations, and renewals in connection therewith, (c) inventions (whether patentable or not and whether or not reduced to practice), invention disclosures, all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (d) trade secrets, industrial models, industrial designs, manufacturing formulae, technical information, patents, patent applications, moral rights, mask work registrations, franchises, franchise rights, customer and supplier lists, and related identifying information together with the goodwill associated therewith, product formulae, formulations and recipes, product designs, product packaging, rights of publicity, improvements, processes, specifications, technology, and methodologies, (e) computer software (including all source code and object code), firmware, development tools, flow charts, annotations, all Web addresses, sites and domain names, all data bases and data collections and all rights therein, and (f) any other confidential and proprietary right or information or type of intellectual property, whether or not subject to statutory registration, as each of the foregoing rights may arise anywhere in the world, and all related technical information, manufacturing, engineering and technical drawings, know-how, and the

 

46


right to sue for past infringement, if any, in connection with any of the foregoing, and all documents, disks, records, files, and other media on which any of the foregoing is stored, and other proprietary rights, in the case of each of the foregoing which is owned by a Person or used or held for use by such Person in connection with its respective business.

Leased Real Property ” means all real property leased or for which the Company or any of its Subsidiaries holds a possessory interest.

Legal Requirement ” means any applicable federal, state, local or municipal order, judgment, law (including common law), rule, ordinance, code, registration, decrees, directives, judgments, orders, regulation or statute.

Liability ” means any and all debts, liabilities and obligations of any kind or nature, whether accrued or fixed, absolute or contingent, matured or unmatured, or determined or determinable.

Lien ” means any lien, charge, claim, encumbrance, pledge, deed of trust, deed restriction, security interest, conditional sale agreement or other title retention agreement, financing lease, mortgage, right of first refusal, option, restriction, right-of-way, easement, community property interest, equitable interest, other lien, claim or other similar encumbrance of any kind.

Material Adverse Effect ” means any change, effect, event or condition that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, financial condition, results of operations or assets of the Company and its Subsidiaries, taken as a whole; provided , however , that none of the following, individually or in the aggregate, shall be taken into account in determining a Material Adverse Effect: (i) general economic or business conditions in the United States or elsewhere in the world; (ii) the credit, debt, financial or capital markets or interest or exchange rates, in each case, in the United States or elsewhere in the world; (iii) conditions generally affecting the industries in which the Company and its Subsidiaries operate; (iv) political conditions or any outbreak or escalation of any military conflict, declared or undeclared war, armed hostilities, or acts of foreign or domestic terrorism; (v) any hurricane, flood, tornado, earthquake or other natural disaster; (vi) changes or proposed changes in accounting requirements or principles or Legal Requirements or in the interpretation or enforcement thereof; (vii) any failure by the Company and its Subsidiaries to meet any internal or external estimates, expectations, budgets, projections or forecasts (but not the underlying causes of such failure unless such underlying causes would otherwise be excepted from this definition); (viii) the public announcement of this Agreement or the identity of Buyer or any of its Affiliates or the pendency or consummation of the transactions contemplated hereby, including any change, effect, event or condition arising out of actions of competitors, customers, suppliers, distributors, joint venture partners, employees (including losses of employees) or labor unions in connection therewith; or (ix)(A) any action taken by the Company or its Subsidiaries (1) as required pursuant to and in accordance with this Agreement or (2) at the request or with the consent of Buyer or (B) the failure by the Company or its Subsidiaries to take any action prohibited by this Agreement; except that any change, effect, event or condition

 

47


referred to in clauses (i), (ii), (iii), (iv), (v) or (vi) above may be taken into account in determining a Material Adverse Effect to the extent that such change, effect, event or condition has a materially disproportionate impact on the Company and its Subsidiaries, taken together, as compared to other participants in the industries in which the Company and its Subsidiaries operate (in which case only such disproportionate impact shall be taken into account in determining whether there has been or will be a Material Adverse Effect).

Multiemployer Plan ” means an employee pension or welfare benefit plan to which more than one unaffiliated employer contributes and which is maintained pursuant to one or more collective bargaining agreements.

Net Working Capital ” means the result of (i) all current assets (excluding Cash on Hand, current and deferred Tax assets, prepaid financing, prepaid acquisition expenses, environmental claims receivables and related party receivables) of the Company and its Subsidiaries minus (ii) all current Liabilities (excluding Indebtedness, current and deferred Tax Liabilities, and related party payables), of the Company and its Subsidiaries, in each case determined in accordance with the Accounting Practices and Procedures; provided that , notwithstanding anything herein to the contrary, for purposes of calculating Net Working Capital, in no event will the determination of Net Working Capital include any intercompany accounts among the Company and its Subsidiaries, or Transaction Expenses; provided , further , that the determination of Net Working Capital shall give effect to the adjustments expressly labeled as “Management Adjustments”, “QoE Adjustments” or “GPI Adjustments” on Exhibit A hereto calculated as of 11:59 p.m. (New York City time) on the Closing Date. Exhibit A hereto sets forth a sample calculation of Net Working Capital.

Net Working Capital Amount ” means the Net Working Capital of the Company and its Subsidiaries as of 11:59 p.m. (New York City time) on the Closing Date.

Paying Agent Agreement ” means the Paying Agent Agreement by and among the Seller Representative, Buyer, and the Paying Agent, substantially in the form attached hereto as Exhibit B .

Permitted Liens ” means (a) Liens for Taxes, assessments or other similar governmental charges that are not yet due or that are being contested in good faith by appropriate proceedings and that are fully and properly reserved for in the Financial Statements; (b) any mechanics’, workmen’s, repairmen’s and other similar Liens arising or incurred in the ordinary course in respect of obligations that are not overdue and that are fully and properly reserved for in the Financial Statements; or (c) Liens affecting the Company Real Property arising from easements, easement agreements, rights-of-way, restrictions, or minor title defects (whether or not recorded) that arise in the ordinary course and that do not detract materially from the value of the property subject thereto or materially impair the use of the property subject thereto; and (d) Liens set forth on Schedule 10.01 .

 

48


Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

Pro Rata Portion ” means, with respect to each Seller and each SAR Holder, the amount, expressed as a percentage, (a) the numerator of which is the aggregate number of Shares of Fully Diluted Common Stock held by such Seller or deemed held by such SAR Holder (including, for the avoidance of doubt, Kenneth M. Simril and Robert Kostrinsky solely to the extent of the phantom equity awards payable to them at Closing) immediately prior to the Closing, and (ii) the denominator of which is the aggregate number of Shares of Fully Diluted Common Stock held or deemed held by all Sellers and SAR Holders immediately prior to the Closing; provided , however , when used in regard to a Seller with respect to the Series A Preferred Stock only, such term means the amount, expressed as a percentage, (a) the numerator of which is the aggregate number of Shares of Series A Preferred Stock held by such Seller immediately prior to the Closing, and (ii) the denominator of which is the aggregate number of Shares of Series A Preferred Stock held by all such Sellers immediately prior to the Closing.

Purchase Price ” means two hundred fifty million dollars ($250,000,000), subject to the adjustments provided in this Agreement.

Restricted Business ” means the manufacture, production or wholesale of vinegar products that are offered or being developed by the Company or any of its Subsidiaries as of the Closing Date, except products that contain de minimis amounts of vinegar (such as sauces and dressings).

RCRA ” means the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.

Series A Preference Amount ” shall have the meaning assigned thereto in the Amended and Restated Certificate of Incorporation of SCI Ingredients Holdings, Inc., dated as of January 29, 2015.

Series A Preferred Stock ” means the Series A Convertible Preferred Stock authorized in the Amended and Restated Certificate of Incorporation of SCI Ingredients Holdings, Inc., dated as of January 29, 2015.

Solvent ” means that such Person (a) has property with fair value greater than the total amount of their debts and Liabilities, contingent (it being understood that the amount of contingent Liabilities at any time shall be computed as the amount that, in 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), subordinated or otherwise, (b) has assets with present fair salable value not less than the amount that will be required to pay their Liability on their debts as they become absolute and matured, (c) is able to pay their debts and Liabilities, subordinated, contingent or otherwise, as they become absolute and matured and (d) is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which their property would constitute an un-reasonably small capital.

 

49


Stock Appreciation Right ” means an award of Stock Appreciation Rights (as defined in the Stock Appreciation Right Plan) granted under the Stock Appreciation Right Plan.

Stock Appreciation Rights Plan ” means the SCI Ingredients Holdings, Inc. Stock Appreciation Rights Plan.

Subsidiary ” or “ Subsidiaries ” means, with respect to any Person, a corporation, limited liability company, partnership or other entity of which 50% or more of the voting power of the equity securities or equity interests is owned, directly or indirectly, by such Person.

Target Net Working Capital Amount ” means an amount equal to $14,700,000.

Tax ” or “ Taxes ” means any United States federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, real property gains, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, customs, duties, real property, special assessment, personal property, capital stock, social security, unemployment, disability, payroll, license, employee or other withholding, or other tax of any kind whatsoever, including any interest, penalties or additions to tax or additional amounts in respect of the foregoing imposed by a Taxing Authority.

Tax Return ” or “ Tax Returns ” means any return, report, information return or other document (including schedules or any related or supporting information or any amendments thereto) filed or required to be filed with any Taxing Authority in connection with the determination, assessment or collection of any Tax.

Taxing Authority ” means any Governmental Authority having or purporting to exercise jurisdiction with respect to any Tax.

Territory ” means anywhere in the United States, Canada or Mexico.

Transaction Expenses ” means (a) all fees and expenses payable to the Company’s advisors and other fees from and expenses of professional service firms and other service providers incurred by the Company or any of its Subsidiaries or for which the Company or any of its Subsidiaries is liable or responsible in connection with the transactions contemplated by this Agreement, and (b) any severance, change in control, termination, bonus or similar amounts paid or payable by the Company or any of its Subsidiaries to or in respect of the employees of the Company or any of its Subsidiaries (including, for the avoidance of doubt, the phantom equity awards payable to Kenneth M. Simril and Robert Kostrinsky) solely as a result of or in connection with the consummation of the transactions contemplated by this Agreement, (but excluding any “double trigger” payments), (c) the Stock Appreciation Right Payments, in the case of each of clauses (a), (b) and (c) above, to the extent unpaid as of the Closing, as of 11:59 p.m. (New York City time) on the Closing Date (but no other amounts with respect thereto shall be Transaction Expenses or otherwise reduce the Purchase Price).

 

50


Transaction Tax Benefit ” means the product of (a) forty percent (40%) and (b) the excess, if any, of (i) the sum of (1) the aggregate amount of Transaction Expenses (provided that, that for purposes hereof, Transaction Expense shall include any such amounts that were unpaid as of 12:01 a.m. on June 25, 2016 that are determined by the Buyer and Seller Representative to be deductible as set forth on Exhibit X , and provided, further, that (A) the deductibility of Transaction Expenses consisting of success-based fees will be determined using the safe harbor of Rev. Proc. 2011-29, and (B) Transaction Expenses shall not include any fees and expenses payable to the Company’s advisors and other fees from and expenses of professional service firms and other service providers incurred by the Company or any of its Subsidiaries prior to September 9, 2016), (2) Stock Appreciation Rights Payments, (3) the employer portion of FICA taxes payable in connection with the payment of any severance, change in control, termination, bonus or similar amounts paid to employees of the Company or any of its Subsidiaries as a result of the consummation of the transactions contemplated by this Agreement; and (4) any capitalized costs in respect of Closing Indebtedness, over (ii) the amount of taxable income of the Company as determined by the Buyer and the Seller Representative for the taxable period beginning on June 25, 2016 and ending on the Closing Date computed without taking into account the amounts described in (i), all in a manner consistent with the methodology set forth on Exhibit X .

Transfer Taxes ” means any and all transfer, documentary, sales, use, gross receipts, stamp, registration, value added, recording and other similar Taxes and fees (including any penalties and interest) incurred in connection with the transactions contemplated by this Agreement.

10.02 Cross-Reference of Other Definitions . Each capitalized term listed below is defined in the corresponding Section of this Agreement:

 

Term    Section No.
280G Stockholder Approval    6.04
Accounting Referee    1.05(a)
Agreement    Preamble
Authorized Action    7.06(e)
Balance Sheet Date    4.06
Buyer    Preamble
Buyer Parties    Preamble
Buyer Benefit Plans    7.03(a)
Buyer Indemnitees    9.03
Closing    1.03(a)

 

51


Closing Balance Sheet    1.05(a)
Closing Date    1.03(a)
Closing Payment Certificate    1.02
Closing Statement    1.05(a)
Company    Preamble
Company Securities    4.05(b)
Continuing Employee    7.03(a)
Disclosure Schedule    Article IV
D&O Costs    7.01(a)
D&O Indemnified Persons    7.01(a)
Employees    4.17(d)
Employment Agreements    Preamble
Enforceability Exceptions    3.02
Estimated Cash on Hand    1.02
Estimated Closing Indebtedness    1.02
Estimated Net Working Capital Amount    1.02
Estimated Transaction Expenses    1.02
Final Adjustment Amount    1.05(c)
Final Purchase Price    1.05(c)
Financial Statements    4.06
Guaranteed Obligations    11.17
Holder Group    11.15(a)
IRS    4.13(c)
Licenses    4.19

 

52


Liabilities    4.24
Material Contract    4.10(a)
Multiemployer Plan    4.13(e)
Objections Statement    1.05(a)
Owned Real Property    4.08(a)
Parachute Payment    6.04
Parent    Preamble
Paying Agent    1.03(b)(i)
Plans    4.13(a)
Policies    4.20
Pre-Closing Merger    1.06
Restricted Persons    7.06(a)
Recovery Period    11.14(b)
Restricted Period    7.06(a)
R&W Insurance Policy    7.08
Recovery Period    11.14(b)
Restricted Period    7.06(a)
SAR Holders    1.03(b)(ii)
Schedule Supplement    6.07
Securities Act    5.07
Sellers    Preamble
Seller Representative    Preamble
Seller Representative Holdback Amount    1.04
Shares    Recitals
Stock Appreciation Right Payments    1.01(b)
Tail Policy    7.01(c)
WARN Act    4.17(b)

 

53


ARTICLE XI

MISCELLANEOUS

11.01 Press Releases and Communications . No press release, public announcement or any other communication to the employees, consultants, customers or suppliers of the Company and its Subsidiaries related to this Agreement or the transactions contemplated herein shall be issued or made by any party hereto or any of its Affiliates without the joint approval of Buyer and Seller Representative, unless required by Legal Requirements or stock exchange rules (upon the advice of counsel) in which case Buyer and Seller Representative shall have the right to review such press release, announcement or communication prior to its issuance, distribution or publication.

11.02 Expenses . Except as otherwise specified in this Agreement, all fees and expenses incurred in connection with the transactions contemplated by this Agreement shall be borne by the Person incurring such fees and expenses, whether or not the Closing shall have occurred.

11.03 Notices . All notices, requests, demands, claims or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given at the earlier of the date (a) when delivered personally, by messenger or by overnight delivery service by a recognized commercial carrier to an officer of the other party or (b) when received via facsimile or electronic mail (confirmed by telephone or email in each case), in all cases addressed to the Person for whom it is intended at the address set forth below or to such other address as a party shall have designated by notice in writing to the other party in the manner provided by this Section 11.03 :

Notices to any Buyer Party or, following the Closing, the Company :

Green Plains Inc.

450 Regency Parkway, Suite 400

Omaha, NE 68114

Attn: Michelle Mapes, EVP-General Counsel & Corporate Secretary

Tel: (402) 315-1629

Fax: (402) 884-8700

Email: Michelle.Mapes@gpreinc.com

 

54


with a copy to (which shall not constitute notice) :

Husch Blackwell LLP

4801 Main Street, Suite 1000

Kansas City, MO 64112

Attn: Michael J. Eason, Esq.

Tel: (816) 983-8000

Fax: (816) 983-8080

Email: michael.eason@huschblackwell.com

Notices to any Seller, Seller Representative and, prior to Closing, the Company :

Stone Canyon Industries LLC

1250 4 th Street

Santa Monica, California 90401

Attn: Adan Cohn

Tel: 424-316-2061

Fax: 424-316-2062

Email: acohn@stonecanyonllc.com

with a copy to (which shall not constitute notice) :

Goodwin Procter LLP

620 Eighth Avenue

New York, NY 10018

Attn: Thomas C. Meriam, Esq.

Tel: (212) 813-8810

Fax: (646) 558-4152

Email: TMeriam@goodwinlaw.com

Any party may change the address to which notices, requests, demands, claims, and other communications required or permitted hereunder are to be delivered by giving the other party(ies) notice in the manner herein set forth.

11.04 Assignment . This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, except that neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated (a) by Buyer or, after the Closing, the Company, without the prior written consent of Seller Representative or (b) Seller Representative or, prior to the Closing, the Company, without the prior written consent of Buyer. Notwithstanding the foregoing, upon and after the Closing, Buyer may assign all of its rights under this Agreement for collateral security purposes to any lender providing financing to Buyer, but no such assignment shall relieve Buyer of any Liability or obligation hereunder; provided , however , that Buyer may assign its rights, interests and obligations hereunder, without the consent of any Person, to an Affiliate.

 

55


11.05 Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under Legal Requirements, but if any provision of this Agreement is held to be prohibited by or invalid under Legal Requirements, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

11.06 References . The table of contents and the section and other headings and subheadings contained in this Agreement and the exhibits hereto are solely for the purpose of reference, are not part of the agreement of the parties hereto, and shall not in any way affect the meaning or interpretation of this Agreement or any exhibit hereto. All references to “days” or “months” shall be deemed references to calendar days or months. All references to “$” or “dollars” shall be deemed references to United States dollars. Unless the context otherwise requires, any reference to an “Article”, “Section,” “Exhibit,” or “Schedule” shall be deemed to refer to an article of this Agreement, section of this Agreement, exhibit to this Agreement or a schedule to this Agreement, as applicable. Any reference to any federal, state, county, local or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. For all purposes of and under this Agreement, (a) the words “include”, “includes” and “including” shall be deemed to be immediately followed by the words “without limitation”; (b) words (including defined terms) in the singular shall be deemed to include the plural and vice versa; (c) words of one gender shall be deemed to include the other genders as the context requires; (d) “or” is not exclusive; (e) the word “will” shall be construed to have the same meaning and effect as the word “shall”; (f) unless otherwise stated, any reference herein to any Person shall be construed to include such Person’s successors and assigns; and (g) the terms “hereof,” “herein,” “hereto,” “herewith”, “hereunder” and any other words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including the exhibits hereto and the Disclosure Schedule) and not to any particular term or provision of this Agreement, unless otherwise specified.

11.07 No Strict Construction . The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any Person.

11.08 Amendment and Waiver . Any provision of this Agreement or the schedules or exhibits hereto may be amended or waived only in a writing signed by Buyer, Seller Representative and the Company. No waiver of any provision hereunder or any breach or default thereof shall extend to or affect in any way any other provision or prior or subsequent breach or default.

11.09 Complete Agreement . This Agreement (including the exhibits and schedules hereto) and the documents referred to herein (including the Confidentiality Agreement and the Ancillary Agreements) contain the complete agreement between the parties hereto and supersede any prior understandings, agreements or representations by or between the parties, written or oral, which may have related to the subject matter hereof in any way.

 

56


11.10 Counterparts . This Agreement may be executed in multiple counterparts (including by means of telecopied signature pages), any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same instrument.

11.11 Waiver of Jury Trial . EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HERETO HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.11 .

11.12 Limitation of Remedies . UNDER NO CIRCUMSTANCES (SAVE FOR FRAUD) SHALL ANY PARTY BE LIABLE FOR ANY CONSEQUENTIAL, EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT OR INCIDENTAL DAMAGES, LOST PROFITS OR ECONOMIC LOSS ARISING OUT OF ANY CLAIM, DEMAND OR ACTION ARISING OUT OF OR WITH RESPECT TO THIS AGREEMENT.

11.13 Specific Performance .

(a) The parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the parties do not perform their obligations under the provisions of this Agreement (including failing to take such actions as are required of them hereunder to consummate the transactions contemplated by this Agreement) in accordance with its specified terms or otherwise breach such provisions. The parties acknowledge and agree that (i) the parties shall be entitled to an injunction, specific performance, or other equitable relief, to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, without proof of damages, this being in addition to any other remedy to which they are entitled under this Agreement, (ii) under the circumstances when specific performance is permitted pursuant to this Section 11.13 (A) are not intended to and do not adequately compensate for the harm that would result from a breach of this Agreement and (B) shall not be construed to diminish or otherwise impair in any respect any party’s right to specific enforcement and (iii) the right of specific enforcement is an integral part of the transactions contemplated by this Agreement and without that right, none of Sellers, the Company or Buyer would have entered into this Agreement. Each party agrees that it will not

 

57


oppose the granting of specific performance and other equitable relief on the basis that the other parties have an adequate remedy at law or that an award of specific performance is not an appropriate remedy for any reason at law or equity. The parties acknowledge and agree that any party seeking an injunction to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section shall not be required to provide any bond or other security in connection with any such injunction.

(b) Notwithstanding anything in this Agreement to the contrary: (x) no Person other than each Seller and the Company shall be entitled to seek specific performance of this Agreement against Buyer, and (y) no party shall be entitled to more than any one of (i) a monetary damages award, (ii) in the case of Sellers and the Company, receipt of any amounts in connection with the Confidentiality Agreement, or (iii) an order or similar equitable remedy pursuant to this Section 11.13(b) requiring a party to effect the Closing, plus any amounts payable in connection with the Confidentiality Agreement.

11.14 Governing Law; Consent to Jurisdiction .

(a) This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the Legal Requirements of the State of Delaware, without giving effect to principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of the Legal Requirements of another jurisdiction.

(b) Any action, suit or proceeding based upon, arising out of or related to this Agreement or the transactions contemplated hereby may be brought in the Delaware Court of Chancery (or, if the Delaware Court of Chancery shall be unavailable, any other court of the State of Delaware or, in the case of claims to which the federal courts have exclusive subject matter jurisdiction, any federal court of the United States of America sitting in the State of Delaware), and each of the parties irrevocably submits to the exclusive jurisdiction of each such court in any such action, suit or proceeding, waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, agrees that all claims in respect of the action, suit or proceeding shall be heard and determined only in any such court, and agrees not to bring any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by Legal Requirement or to commence legal proceedings or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any action, suit or proceeding brought pursuant to this Section 11.14(b) .

11.15 Legal Representation .

(a) Each of the parties to this Agreement hereby agrees, on its own behalf and on behalf of its directors, members, partners, officers, employees and Affiliates, that Goodwin Procter LLP may serve as counsel to each and any holder of the capital stock of the Company and its Affiliates (individually and collectively, the “ Holder Group ”), on the one hand, and the Company and its Subsidiaries, on the other hand, in connection with the negotiation, preparation,

 

58


execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, and that, following consummation of the transactions contemplated hereby, Goodwin Procter LLP (or any successor) may serve as counsel to the Holder Group or any director, member, partner, officer, employee or Affiliate of the Holder Group, in connection with any litigation, claim or obligation arising out of or relating to this Agreement or the transactions contemplated by this Agreement notwithstanding such representation and each of the parties hereto hereby consents thereto and waives any conflict of interest arising therefrom, and each of such parties shall cause any Affiliate thereof to consent to waive any conflict of interest arising from such representation.

(b) Each Buyer Party for itself and its Affiliates, including the Company and its Subsidiaries, and for its and their respective successors and assigns, irrevocably acknowledges and agrees that all communications between Sellers or their Affiliates, including the Company and its Subsidiaries, and its or their counsel, including Goodwin Procter LLP, made in connection with the negotiation, preparation, execution, delivery and closing under, or any dispute or proceeding arising under or in connection with, this Agreement which, immediately prior to the Closing, would be deemed to be privileged communications of Sellers or their Affiliates, including the Company and its Subsidiaries, and their counsel and would not be subject to disclosure to such Buyer Party or its Affiliates in connection with any process relating to a dispute, litigation or proceeding arising under or in connection with, this Agreement or otherwise, shall continue after the Closing to be privileged communications between Sellers or their Affiliates, including the Company and its Subsidiaries, and such counsel and none of such Buyer Party, any Affiliate of such Buyer Party or any Person acting or purporting to act on behalf of or through such Buyer Party or any Affiliate of such Buyer Party shall seek to obtain the same by any process on the grounds that the privilege attaching to such communications belongs to such Buyer Party or any Affiliate of such Buyer Party, including the Company and its Subsidiaries, and not Sellers or their Affiliates. For the avoidance of doubt, the parties to this Agreement agree that all pre-Closing communications between or among Goodwin Procter LLP, the Company, any Seller and/or the Seller Representative that relate in any way to this Agreement or the transactions contemplated hereby, the attorney-client privilege and all other rights to any evidentiary privilege belong to the Seller Representative and may be controlled by the Seller Representative and shall not pass to or be claimed by any Buyer Party or the Company. Prior to the Closing, the Sellers and the Company may retain and remove all documents, emails and other non-email electronic documents concerning any merger, acquisition or sale of the Company or any of its assets. It is acknowledged and agreed to by the parties that a failure by the Company and the Sellers to remove materials identified in the foregoing sentence, to the extent that such materials are otherwise protected by the attorney-client or work product privileges, is inadvertent and that the Seller Representative shall, after receiving written notice from any Buyer Party of said failure, to the extent discovered and known by such Buyer Party to constitute materials identified in the foregoing sentence, have ninety (90) days (the “ Recovery Period ”) to request the return of such documents from such Buyer Party and/or the Company and its Subsidiaries. At all times prior to the lapse of the Recovery Period, each Buyer Party agrees not to knowingly take any actions (and will cause the Company and its Subsidiaries not to knowingly take any actions) with regard to the documents that would be inconsistent with such claims of privilege.

 

59


(c) Each Buyer Party acknowledges that its consent and waiver under this Section 11.15 is voluntary and informed and that Buyer has obtained independent legal advice with respect to this consent and waiver. Without limiting anything set forth in this Agreement, each Buyer Party acknowledges and agrees that each Seller is relying on the foregoing consent and waiver set forth in this Section 11.15 .

11.16 No Third-Party Beneficiaries . Nothing in this Agreement, express or implied, is intended or shall be construed to confer upon or give any Person, other than the parties hereto, any rights or remedies under or by reason of this Agreement except for (a) in the event the Closing occurs, the present and former officers and directors of the Company and its Subsidiaries (and their personal successors, heirs and representatives) are intended third-party beneficiaries of, and may enforce, Section 7.01 .

11.17 Guarantee . Parent irrevocably and unconditionally guarantees to the Sellers and SAR Holders the due and punctual performance of the obligations of Buyer under this Agreement and the Ancillary Agreements to which Buyer is a party (the “ Guaranteed Obligations ”), subject to the terms and conditions set forth herein. If, for any reason whatsoever, Buyer shall fail to or be unable to duly, punctually and fully pay or perform the Guaranteed Obligations, Parent will forthwith pay and cause to be paid in lawful currency of the United States, with respect to payment obligations, or perform or cause to be performed, with respect to performance obligations, the Guaranteed Obligations. It is acknowledged and agreed that the foregoing is a guarantee of payment and of performance, as applicable, and not of collection.

*        *        *         *

 

60


IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase Agreement on the day and year first above written.

 

SELLERS AND SAR HOLDERS :
SCIFSC LLC, as Seller
By: Stone Canyon Industries LLC, its manager
By:   /s/ Adam Cohn
Name: ADAM COHN
Title: CO-CHIEF EXECUTIVE OFFICER
SBC FUNDING, LLC, as Seller
By:   /s/ Anthony D. Minella
Name: ANTHONY D. MINELLA
Title: SVP
KENNETH M. SIMRIL, as Seller and SAR Holder
By:   /s/ Kenneth M. Simril
ROBERT KOSTRINSKY, as Seller and SAR Holder
By:   /s/ Robert Kostrinsky
SYLVAIN NORTON AND ISABELLE MICHEL NORTON REVOCABLE LIVING TRUST, as Seller
By:   /s/ Sylvain Norton
SYLVAIN NORTON, as SAR Holder
By:   /s/ Sylvain Norton


COMPANY :
SCI INGREDIENTS HOLDINGS, INC.
By:   /s/ Adam Cohn
Name: ADAM COHN
Title: DIRECTOR


SELLER REPRESENTATIVE :
STONE CANYON INDUSTRIES LLC
By:   /s/ Adam Cohn
Name: ADAM COHN
Title: CO-CHIEF EXECUTIVE OFFICER


IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase Agreement on the day and year first above written.
BUYER :
GREEN PLAINS II LLC
By:   /s/ Todd Becker
Name:   Todd Becker
Title:   President and CEO
PARENT :
GREEN PLAINS INC.
By:   /s/ Todd Becker
Name:   Todd Becker
Title:   President and CEO

Exhibit 10.1(a)

 

 

 

CREDIT AGREEMENT

Dated as of October 3, 2016

by and among

GREEN PLAINS II LLC,

as Borrower Representative,

GREEN PLAINS II LLC

and

THE OTHER PERSONS FROM TIME TO TIME PARTY HERETO DESIGNATED AS

“BORROWER”,

collectively, the Borrowers

and

THE OTHER PERSONS PARTY HERETO THAT

ARE DESIGNATED AS CREDIT PARTIES,

and

MARANON CAPITAL, L.P.,

as Agent

and

THE OTHER FINANCIAL INSTITUTIONS, FUNDS AND INVESTORS PARTY HERETO,

as Lenders

 

 

 


TABLE OF CONTENTS

 

                        Page  
  SECTION 1. AMOUNTS AND TERMS OF LOANS      2   
    1.1         Loans      2   
    1.2         Interest and Applicable Margins      6   
    1.3         Fees      8   
    1.4         Payments      10   
    1.5         Prepayments      10   
    1.6         Maturity      14   
    1.7         Loan Accounts      14   
    1.8         Increased Costs; Illegality      14   
    1.9         Taxes      16   
    1.10         Inability to Determine Rates      19   
    1.11         Reserves on LIBOR Loans      20   
    1.12         Funding Losses      20   
    1.13         Borrower Representative      21   
  SECTION 2. AFFIRMATIVE COVENANTS      21   
    2.1         Compliance With Laws      21   
    2.2         Insurance      21   
    2.3         Inspection; Lender Meeting      22   
    2.4         Organizational Existence; Maintenance of Properties      22   
    2.5         Environmental Matters      23   
    2.6         Landlords’ Agreements, Mortgagee Agreements and Bailee Letters      23   
    2.7         Further Assurances      24   
    2.8         Cash Management Systems      24   
    2.9         [Reserved]      25   
    2.10         Post-Closing Covenants      25   
    2.11         ERISA      25   
    2.12         Separateness      25   
  SECTION 3. NEGATIVE COVENANTS      26   
    3.1         Indebtedness      26   
    3.2         Liens and Related Matters      29   
    3.3         Investments      30   
    3.4         Contingent Obligations      33   
    3.5         Restricted Payments      34   
    3.6         Restriction on Fundamental Changes      38   
    3.7         Disposal of Assets or Subsidiary Stock      39   
    3.8         Transactions with Affiliates      40   
    3.9         Conduct of Business      41   
    3.10         Changes Relating to Certain Indebtedness      42   
    3.11         Fiscal Year      42   
    3.12         Hazardous Materials      42   
    3.13         ERISA      42   
    3.14         Use of Loan Proceeds      42   
    3.15         OFAC and Patriot Act      43   
    3.16         Sale-Leasebacks      43   
    3.17         Changes to Governing Documents; Closing Date Acquisition Documents; Management Agreement      43   

 

i


    SECTION 4. FINANCIAL COVENANTS/REPORTING      43   
      4.1       Minimum Fixed Charge Coverage Ratio      43   
      4.2       Maximum Total Net Leverage Ratio      44   
      4.3       [Reserved]      44   
      4.4       Financial Statements and Other Reports      44   
      4.5       Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement      48   
  SECTION 5. REPRESENTATIONS AND WARRANTIES      48   
      5.1       Disclosure      48   
      5.2       No Material Adverse Effect      49   
      5.3       No Conflict      49   
      5.4       Organization, Powers, Capitalization and Good Standing      49   
      5.5       Financial Statements and Projections      50   
      5.6       Intellectual Property      50   
      5.7       Investigations, Audits, Etc.      50   
      5.8       Employee Matters.      50   
      5.9       Solvency      51   
      5.10       Litigation; Adverse Facts      51   
      5.11       Use of Proceeds; Margin Regulations      51   
      5.12       Ownership of Property; Liens      52   
      5.13       Environmental Matters      52   
      5.14       Employee Benefits      53   
      5.15       Brokers      53   
      5.16       Deposit and Disbursement Accounts      53   
      5.17       Closing Date Acquisition Documents      54   
      5.18       Insurance      54   
      5.19       Anti-Terrorism Law      54   
      5.20       Compliance with Laws      55   
      5.21       Taxes and Tax Returns      55   
      5.22       Compliance with Food Laws      55   
      5.23       Separateness      55   
  SECTION 6. DEFAULT, RIGHTS AND REMEDIES      55   
      6.1       Event of Default      55   
      6.2       Suspension or Termination of Commitments      58   
      6.3       Acceleration and other Remedies      58   
      6.4       Performance by Agent      58   
      6.5       Application of Proceeds      58   
      6.6       Cash Collateral for Letters of Credit      59   
      6.7       Cure Right      59   

 

ii


  SECTION 7. CONDITIONS TO LOANS      60   
      7.1       Conditions to Initial Loans      60   
      7.2       Conditions to All Loans after the Closing Date      61   
    SECTION 8. ASSIGNMENT AND PARTICIPATION      62   
      8.1       Assignment and Participations      62   
      8.2       Agent      65   
      8.3       Set Off and Sharing of Payments      70   
      8.4       [Reserved]      71   
      8.5       Disbursements of Advances; Payment      71   
  SECTION 9. MISCELLANEOUS      72   
      9.1       Indemnities      72   
      9.2       Amendments and Waivers      73   
      9.3       Notices; Effectiveness      74   
      9.4       Failure or Indulgence Not Waiver; Remedies Cumulative      76   
      9.5       Marshaling; Payments Set Aside      76   
      9.6       Severability      76   
      9.7       Lenders’ Obligations Several; Independent Nature of Lenders’ Rights      76   
      9.8       Headings      76   
      9.9       Applicable Law      76   
      9.10       Successors and Assigns      76   
      9.11       No Fiduciary Relationship; Limited Liability      77   
      9.12       Construction      77   
      9.13       Confidentiality      77   
      9.14       CONSENT TO JURISDICTION      78   
      9.15       WAIVER OF JURY TRIAL      78   
      9.16       Survival of Warranties and Certain Agreements      78   
      9.17       Entire Agreement      78   
      9.18       Counterparts; Effectiveness      78   
      9.19       Replacement of Lenders      79   
      9.20       Delivery of Termination Statements and Mortgage Releases      80   
      9.21       Release      80   
      9.22       Joint and Several      80   
      9.23       Press Release; Public Offering Materials      80   
      9.24       Keepwell      81   
      9.25       Acknowledgement and Consent to Bail-In of EEA Financial Institutions      81   
  SECTION 10. CROSS-GUARANTY      81   
      10.1       Cross-Guaranty      81   
      10.2       Waivers by Credit Parties      82   
      10.3       Benefit of Guaranty      83   
      10.4       Waiver of Subrogation, Etc.      83   
      10.5       Election of Remedies      84   
      10.6       Limitation      84   
      10.7       Contribution with Respect to Guaranty Obligations      85   
      10.8       Liability Cumulative      85   

 

iii


INDEX OF APPENDICES

Annexes

 

Annex A

     —         Definitions

Annex B

     —         Pro Rata Shares and Commitment Amounts

Annex C

     —         Closing Checklist

Annex D

     —         Pro Forma

Annex E

     —         [Reserved]

Annex F

     —         Compliance and Excess Cash Flow Certificate

Exhibits

 

Exhibit 1.1(a)

     —         Form of Term Note

Exhibit 1.1(b)(i)

     —         Form of Revolving Note

Exhibit 1.1(b)(ii)

     —         Form of Notice of Revolving Credit Advance

Exhibit 1.2(e)

     —         Form of Notice of Continuation/Conversion

Exhibit 8.1(a)

     —         Form of Assignment Agreement

Exhibit 1.9(1)

     —         Form of U. S. Tax Compliance Certificate

Exhibit 1.9(2)

     —         Form of U. S. Tax Compliance Certificate

Exhibit 1.9(3)

     —         Form of U. S. Tax Compliance Certificate

Exhibit 1.9(4)

     —         Form of U. S. Tax Compliance Certificate

Schedules

 

Schedule 3.1

     —         Indebtedness

Schedule 3.2

     —         Liens

Schedule 3.3

     —         Investments

Schedule 3.4

     —         Contingent Obligations

Schedule 3.8(a)

     —         Affiliate Transactions

Schedule 5.4(a)

     —         Jurisdictions of Organization and Qualifications

Schedule 5.4(b)

     —         Capitalization

Schedule 5.6

     —         Intellectual Property

Schedule 5.7

     —         Investigations and Audits

Schedule 5.8

     —         Employment Contracts

Schedule 5.11

     —         Sources and Uses of Funds

Schedule 5.12

     —         Real Estate

Schedule 5.13

     —         Environmental Matters

Schedule 5.14

     —         ERISA

Schedule 5.15

     —         Brokerage Fees

Schedule 5.16

     —         Deposit and Disbursement Accounts

Schedule 5.18

     —         Insurance

Schedule 5.21

     —         Taxes

 

iv


CREDIT AGREEMENT

This CREDIT AGREEMENT is dated as of October 3, 2016 (as amended, restated, amended and restated, supplemented and otherwise modified from time to time, the “ Agreement ”), and is entered into by and among Green Plains II LLC, a Delaware limited liability company (“ GP II ”; GP II in its capacity as the initial Borrower, and each other Person that becomes a party hereto as a “Borrower” pursuant to a joinder agreement in form and substance satisfactory to Agent (including, upon the consummation of the Closing Date Acquisition, SCI Ingredients Holdings, Inc., a Delaware corporation (“ SCI ”), FVC Intermediate Holdings, Inc., a Delaware corporation (“ FVC Intermediate ”), Fleischmann’s Vinegar Company, Inc., a Delaware corporation (“ FVC ”), and FVC Houston, Inc., a Delaware corporation (“ FVC Houston ”), are collectively referred to herein as the “ Borrowers ” and individually as a “ Borrower ”), GP II, in its capacity as Borrower Representative (the “ Borrower Representative ”), Green Plains I LLC, a Delaware limited liability company (“ Holdings ”) and the other persons designated as “Credit Parties” on the signature pages hereof, the financial institutions, funds and other investors who are or hereafter become parties to this Agreement as Lenders, and Maranon Capital, L.P. (in its individual capacity, “ Maranon ”), as Agent.

R E C I T A L S:

WHEREAS, Borrowers desire that Lenders extend a term loan facility and a revolving credit facility (including a letter of credit sub facility) to Borrowers to fund, together with the Equity Contribution, a portion of the purchase price in connection with the Closing Date Acquisitions and pay costs and expenses in connection therewith, to fund the repayment of certain indebtedness of the Closing Date Targets and their Subsidiaries, to fund portions of the purchase price of future Permitted Acquisitions, to provide working capital financing for Borrowers and to provide funds for other general corporate purposes of Borrowers;

WHEREAS, Borrowers desire to secure all of their Obligations (as hereinafter defined) under the Loan Documents (as hereinafter defined) by granting to Agent, for the benefit of Agent and Lenders, a security interest in and lien upon substantially all of their assets;

WHEREAS, Holdings directly owns all of the Stock of Borrower Representative and indirectly owns all of the Stock of the other Borrowers and is willing to guarantee all of the Obligations and to pledge to Agent, for the benefit of Agent and Lenders, all of the Stock of Borrowers and its other wholly-owned Domestic Subsidiaries and to grant Agent, for the benefit of Agent and Lenders, a security interest in and lien upon substantially all of its assets, in each case, to secure the Obligations; and

WHEREAS, each of the other wholly-owned Domestic Subsidiaries of Holdings (other than the Borrowers and Excluded Foreign Holding Companies) is willing to guarantee all of the Obligations and, subject to the terms and conditions of this Agreement and the Collateral Documents, to pledge to Agent, for the benefit of Agent and Lenders, all of the Stock of their respective wholly-owned Domestic Subsidiaries (subject to the provisions herein contained as to Excluded Foreign Holding Companies) to secure the Obligations; and

WHEREAS, all capitalized terms herein shall have the meanings ascribed thereto in Annex A hereto which is incorporated herein by reference.

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, Borrowers, Borrower Representative, the other Credit Parties, Lenders and Agent agree as follows:


SECTION 1.

AMOUNTS AND TERMS OF LOANS

1.1 Loans . Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Borrowers and the other Credit Parties contained herein:

(a) Term Loan . Each Term Loan Lender agrees, severally and not jointly, to lend to Borrowers in one draw, on the Closing Date, its Pro Rata Share of the aggregate Term Loan Commitment of all Term Loan Lenders, the original principal amount of which is equal to $130,000,000 (the “ Term Loan ”). Borrowers jointly and severally agree to pay the principal amount of the Term Loan in installments (each a “ Scheduled Installment ”) on the dates and in the respective amounts shown below:

 

Date of Payment

   Scheduled Installment

December 31, 2016

   $325,000.00

March 31, 2017

   $325,000.00

June 30, 2017

   $325,000.00

September 30, 2017

   $325,000.00

December 31, 2017

   $325,000.00

March 31, 2018

   $325,000.00

June 30, 2018

   $325,000.00

September 30, 2018

   $325,000.00

December 31, 2018

   $325,000.00

March 31, 2019

   $325,000.00

June 30, 2019

   $325,000.00

September 30, 2019

   $325,000.00

December 31, 2019

   $325,000.00

March 31, 2020

   $325,000.00

June 30, 2020

   $325,000.00

September 30, 2020

   $325,000.00

December 31, 2020

   $325,000.00

March 31, 2021

   $325,000.00

June 30, 2021

   $325,000.00

September 30, 2021

   $325,000.00

December 31, 2021

   $325,000.00

March 31, 2022

   $325,000.00

June 30, 2022

   $325,000.00

September 30, 2022

   $325,000.00

October 3, 2022

   $122,200,000 (or the remainder of

the principal)

 

2


Amounts borrowed under this Section 1.1(a) and repaid or prepaid may not be reborrowed. Payments of principal of the Term Loan shall reduce the Term Loan in the amount of any such payment. The Term Loan may be evidenced by promissory notes substantially in the form of Exhibit 1.1(a) (as amended, modified, extended, substituted or replaced from time to time, each a “ Term Note ” and, collectively, the “ Term Notes ”), and, except as provided in Section 1.7 , all of the Borrowers shall jointly execute and deliver each Term Note to the applicable Term Loan Lender, upon such Term Loan Lender’s request. Each Term Note shall represent the joint and several obligation of each Borrower to pay the amount of the applicable Term Loan Lender’s Term Loan, together with interest thereon.

(b) Revolving Loans . Each Revolving Lender agrees, severally and not jointly, to make available to Borrowers from time to time until the Commitment Termination Date its Pro Rata Share of advances (each a “ Revolving Credit Advance ”) requested by Borrower Representative on behalf of the Borrowers hereunder. All Revolving Credit Advances must be in a minimum amount of $250,000. The Pro Rata Share of the Revolving Loan of any Revolving Lender, together with its Pro Rata Share of Letter of Credit Participation Liability, shall not at any time exceed its separate Revolving Loan Commitment. Revolving Credit Advances may be repaid and reborrowed; provided , that (x) the amount of such requested Revolving Credit Advance, when taken together with the principal balance of all Revolving Credit Advances then outstanding, and the aggregate amount of Letter of Credit Participation Liability, does not exceed the Maximum Amount then in effect and (y) each of the other conditions precedent in Section 7.2 hereof is satisfied. All Revolving Credit Advances shall be repaid in full on the Commitment Termination Date. Except as provided in Section 1.7 , each Borrower shall execute and deliver to the applicable Revolving Lender, upon such Revolving Lender’s request, a note to evidence the Revolving Loan Commitment of that Revolving Lender.

(i) Each such note shall be in the principal amount of the Revolving Loan Commitment of the applicable Revolving Lender and substantially in the form of Exhibit 1.1(b)(i) (each a “ Revolving Note ” and, collectively, the “ Revolving Notes ”).

(ii) Revolving Credit Advances which are (x) Base Rate Loans may be requested with three (3) Business Days prior written notice to Agent in the form of a Notice of Revolving Credit Advance prior to 11:00 a.m. (Chicago time) or (y) LIBOR Loans may be requested with three (3) Business Days prior written notice to Agent in the form of a Notice of Revolving Credit Advance prior to 11:00 a.m. (Chicago time).

(iii) Not more than $5,000,000 of Revolving Credit Advances may be requested on the Closing Date.

(c) Funding Authorization . Following receipt of a Notice of Revolving Credit Advance or Notice of Initial Term Loan Advance, as applicable, Agent shall notify each Lender of its pro rata share of each requested Loan as set forth therein. Each Lender shall send its pro rata share of the requested Loan to Agent’s account in immediately available funds no later than 12:00 p.m. (Chicago time) on the date of the requested borrowing. The proceeds of all Loans made pursuant to this Agreement subsequent to the Closing Date are to be funded by Agent by wire transfer to the account for the Borrowers designated by Borrower Representative below or such other account for the Borrowers as Borrower Representative may designate by written notice to Agent from time to time (the “ Disbursement Account ”):

 

Bank:        Comerica Bank
Routing # (wire):        121137522
Account Name:        Concentration
Account No.:   

 

3


Borrower Representative shall provide Agent with written notice of any change in the foregoing instructions at least three (3) Business Days before the desired effective date of such change.

(d) Lender Letters of Credit and Letter of Credit Participation Agreements .

(i) Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of the Credit Parties herein set forth, the Revolving Loan Commitment may, in addition to Revolving Credit Advances, in an aggregate amount not to exceed $2,000,000, be utilized, upon the request of the Borrower Representative, for either (i) the issuance of letters of credit by, or arranged by, the L/C Issuer (each such letter of credit, a “ Lender Letter of Credit ”) or (ii) the issuance of letter of credit participation agreements by Agent (each such letter of credit participation, a “ Letter of Credit Participation Agreement ”) to confirm payment to commercial banks (whether or not such banks are Lenders), reasonably acceptable to Agent, which issue letters of credit for the account of any Borrower on behalf of each Revolving Lender (severally and not jointly) according to such Lender’s Revolving Loan Commitment. The Stated Amount with respect to all Lender Letters of Credit and Letter of Credit Participation Agreements outstanding at any time shall not exceed $0. Further, after giving effect to each such issuance, the aggregate amount of Letter of Credit Participation Liability taken together with the principal balance of all Revolving Credit Advances then outstanding, shall not exceed the Maximum Amount.

(ii) The Borrowers shall be irrevocably and unconditionally obligated forthwith without presentment, demand, protest or other formalities of any kind, to reimburse Agent and the L/C Issuer promptly for any amounts paid by the L/C Issuer under any Lender Letter of Credit or Letter of Credit Participation Agreement. Without duplication of any interest, penalty or fees payable to the L/C Issuer under any applicable letter of credit application documentation between L/C Issuer and the Borrowers as a result of unreimbursed drawings, all amounts paid by the L/C Issuer with respect to any Lender Letter of Credit or Letter of Credit Participation Agreement that are not promptly repaid by the Borrowers with the proceeds of a Revolving Credit Advance or otherwise shall bear interest at the interest rate then applicable to Revolving Credit Advances, calculated using the Adjusted Base Rate and the Applicable Base Rate Margin then in effect. Each Borrower hereby authorizes and directs the Revolving Lenders, at Agent’s option, to make a Revolving Credit Advance in the amount of any payment made by the L/C Issuer with respect to any Lender Letter of Credit or Letter of Credit Participation Agreement. Each Revolving Lender agrees to fund its Pro Rata Share of any Revolving Credit Advance made pursuant to this paragraph and, if no such Revolving Credit Advances are made, each Revolving Lender agrees to purchase, and shall be deemed to have purchased on the date on which it pays to Agent its ratable portion of any payments made by the L/C Issuer, a participation in such Lender Letter of Credit or Letter of Credit Participation Agreement in an amount equal to its ratable share of such Lender Letter of Credit or Letter of Credit Participation Agreement based upon the Revolving Loan Commitments then in effect (or which were in effect at the time the Revolving Loan Commitments terminated) and each Revolving Lender agrees to pay to Agent promptly such share of any payments made by the L/C Issuer under such Lender Letter of Credit or Letter of Credit Participation Agreement. The obligations of each Revolving Lender under the preceding two (2) sentences shall be absolute and unconditional and such remittance shall be made notwithstanding the occurrence or continuation of an Event of Default or Default or the failure to satisfy any condition set forth in Section 7.2 hereof.

 

4


(iii) In addition to all other terms and conditions set forth in this Agreement, the issuance by the L/C Issuer of any Lender Letter of Credit or Letter of Credit Participation Agreement shall be subject to the condition precedent that the Lender Letter of Credit, Letter of Credit Participation Agreement or the letter of credit or written contract for which a Borrower requests a Letter of Credit Participation Agreement shall support a transaction entered into by the Borrowers or one of their Subsidiaries in the ordinary course of business or other transaction permitted by this Agreement, or otherwise reasonably acceptable to Agent.

(iv) The expiration date of each Lender Letter of Credit shall be on a date which is the earlier of (a) one (1) year from its date of issuance ( provided , however , subject to the following clause (b), that any Lender Letter of Credit with a term not exceeding one (1) year may provide for its renewal for additional periods not exceeding one (1) year as long as the applicable Borrower and the L/C Issuer each have the option to prevent such renewal before the expiration of such term or any such period), and (b) the tenth (10th) day before the Commitment Termination Date. Each Letter of Credit Participation Agreement shall provide that the Letter of Credit Participation Agreement terminates and all demands or claims for payment must be presented by a date certain, which date will be the earlier of (a) one (1) year from its date of issuance ( provided , however , subject to the following clause (b), that any Letter of Credit Participation Agreement with a term not exceeding one (1) year may provide for its renewal for additional periods not exceeding one (1) year as long as each of Borrower and the L/C Issuer each have the option to prevent such renewal before the expiration of such term or any such period), and (b) the tenth (10th) day before the Commitment Termination Date.

(v) The Borrower Representative shall give Agent at least three (3) Business Days’ prior written notice specifying the date a Lender Letter of Credit or Letter of Credit Participation Agreement is to be issued, identifying the beneficiary and describing the nature of the transactions proposed to be supported thereby, and concurrently therewith deliver a completed letter of credit application as may be requested by the L/C Issuer (or the issuer of the underlying letter of credit). The application shall be accompanied by the drawing terms for the Lender Letter of Credit or form of each letter of credit signed by a Borrower as applicant and account party. In the event of any inconsistency between the terms of any letter of credit application and the terms of this Agreement, the terms of this Agreement shall control.

(vi) Notwithstanding anything to the contrary contained in this Agreement, in the event that there is a Non-Funding Lender having any portion of the Revolving Loan Commitment, the L/C Issuer shall not be required to issue any Lender Letter of Credit or Letter of Credit Participation Agreement, or increase the face amount of or extend any Lender Letter of Credit or Letter of Credit Participation Agreement, unless the L/C Issuer and Agent have entered into arrangements satisfactory to them with respect to the participation in the Lender Letter of Credit or Letter of Credit Participation Agreement by such Non-Funding Lender, which arrangement may include a requirement that the Borrowers provide cash collateral to Agent to hold on behalf of the Borrowers, on terms and conditions reasonably satisfactory to the L/C Issuer and Agent, in an amount equal to such Non-Funding Lender’s Pro Rata Share in any Lender Letter of Credit or Letter of Credit Participation Agreement.

 

5


1.2 Interest and Applicable Margins .

(a) Borrowers shall pay interest to Agent, for the ratable benefit of Lenders, in accordance with the various Loans being made by each Lender, in arrears on each applicable Interest Payment Date, at the following rates: (i) with respect to the Revolving Credit Advances which are designated as Base Rate Loans (and for all other Obligations not otherwise set forth below), the Adjusted Base Rate plus the Applicable Revolver Base Rate Margin per annum, (ii) with respect to Revolving Credit Advances which are designated as LIBOR Loans, the LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum, (iii) with respect to such portion of the Term Loan designated as a Base Rate Loan, the Adjusted Base Rate plus the Applicable Term Loan Base Rate Margin per annum, and (iv) with respect to such portion of the Term Loan designated as a LIBOR Loan, the LIBOR Rate plus the Applicable Term Loan LIBOR Margin per annum,.

The Applicable Margins are as follows:

 

Applicable Revolver Base Rate Margin

     6.00

Applicable Revolver LIBOR Margin

     7.00

Applicable Term Loan Base Rate Margin

     6.00

Applicable Term Loan LIBOR Margin

     7.00

The Applicable Margins shall be adjusted (up or down) prospectively on a quarterly basis as set forth below, commencing on the first day of the month immediately following the month in which Holdings’ quarterly Financial Statements and related Compliance Certificate are delivered in accordance with Section 4.4 for the Fiscal Quarter ending September 30, 2017. Adjustments in Applicable Margins will be determined by reference to the following grid:

 

If, as of the last day of the

most recently ended Fiscal

Quarter, the Total Net

Leverage Ratio is:

  

Level of Applicable Revolver

Base Rate Margin and

Applicable Term Loan Base

Rate Margin

  

Level of Applicable Revolver

LIBOR Margin and

Applicable Term Loan LIBOR Margin

Greater than or equal to 5.00 to 1.00

   6.00%    7.00%

Less than 5.00 to 1.00 but greater than or equal to 4.50 to 1.00

   5.50%    6.50%

Less than 4.50 to 1.00

   5.00%    6.00%

All adjustments in the Applicable Margins on or after September 30, 2017 shall become effective quarterly on a prospective basis, commencing on the first day of the month immediately following the date the quarterly unaudited Financial Statements and the related Compliance Certificate for the immediately preceding Fiscal Quarter are delivered in accordance with Section 4.4 . Failure to deliver such Financial Statements or the related Compliance Certificate as required by Section 4.4 shall, at the election of Agent (or upon the written request of the Requisite Lenders), confirmed by written notice from Agent to Borrower Representative, in addition to any other remedy provided for in this Agreement, result in an increase in the Applicable Margins to the highest levels set forth in the foregoing grid, until the first Business Day following the delivery of such Financial

 

6


Statements and the related Compliance Certificate demonstrating that such an increase is not required. If any Specified Event of Default has occurred and is continuing at the time any reduction in the Applicable Margins is to be implemented, that reduction shall be deferred until the first day of the first Business Day following the date on which all Defaults or Events of Default are waived or cured. Notwithstanding the foregoing, at all times so long as any Additional Interest Period shall be in effect, each of the Applicable Margins set forth above shall be deemed increased by 1.00%.

(b) [Reserved].

(c) All computations of Fees calculated on a per annum basis (other than Agent’s fee and certain other fees, in each case, set forth in the Maranon Fee Letter, which shall be paid in accordance with the terms thereof) and interest shall be made by Agent on the basis of a three hundred sixty (360) day year, (or, solely for purposes of computing interest with respect to Base Rate Loans, a three hundred sixty five/three hundred sixty six (365/366) day year) in each case for the actual number of days occurring in the period for which such Fees and interest are payable. The Adjusted Base Rate is a floating rate determined for each day. Each determination by Agent of an interest rate and Fees hereunder shall be final, binding and conclusive on Borrowers, absent demonstrable error.

(d) Automatically upon and during the continuance of a Specified Event of Default, and at the written election of Agent or Requisite Lenders upon and during the continuation of any other Event of Default, the interest rates applicable to the Loans (including the Applicable Margin applicable thereto) shall be increased by two percentage points (2%) per annum above the rates of interest otherwise applicable hereunder (the aggregate increased interest rate, the “ Default Rate ”), and all outstanding Obligations shall bear interest at the Default Rate applicable to such Obligations; provided , Obligations that do not otherwise accrue interest, but for the implementation of the Default Rate, shall bear interest at the Default Rate applicable to Revolving Loans that are Base Rate Loans. Interest at the Default Rate shall accrue from the initial date of such Event of Default until that Event of Default is cured or waived in writing in accordance with the terms hereof and shall be payable upon demand, but in any event, shall be payable on the next regularly scheduled payment date set forth herein for such Obligation.

(e) Borrower Representative shall have the option to (i) convert at any time all or any part of outstanding Loans from Base Rate Loans to LIBOR Loans, (ii) convert any LIBOR Loan to a Base Rate Loan, or (iii) continue all or any portion of any Loan as a LIBOR Loan upon the expiration of the applicable LIBOR Period and the succeeding LIBOR Period of that continued Loan shall commence on the last day of the LIBOR Period of the Loan to be continued. In the case of any conversion or continuation, such election must be made pursuant to a written notice delivered to Agent (a “ Notice of Conversion/Continuation ”) in the form of Exhibit 1.2(e) (i ) in the case of a conversion to or continuation of a LIBOR loan, no later than 11:00 a.m. (Chicago time) three (3) Business Days prior to the beginning of the applicable LIBOR Period and (ii) in the case of a conversion to Base Rate Loan, no later than 11:00 a.m. one (1) Business Day prior to the beginning of the applicable LIBOR period. No Loan shall be made, converted into or continued as a LIBOR Loan, if an Event of Default has occurred and is continuing and Agent or Requisite Lenders have determined not to make or continue any Loan as a LIBOR Loan as a result thereof. Unless a Notice of Conversion/Continuation has been timely provided to Agent in respect of any existing LIBOR Loan requesting that all or any portion of such LIBOR Loan be converted into a Base Rate Loan, such LIBOR Rate Loan shall automatically be continued as a LIBOR Loan with a one (1) month LIBOR Period effective as of the expiration of the then applicable LIBOR Period. There shall be no more than five (5) LIBOR Loans outstanding at any time.

 

7


(f) Notwithstanding anything to the contrary set forth in this Section 1.2 , if a court of competent jurisdiction determines in a final order that the rate of interest payable hereunder exceeds the highest rate of interest permissible under law (the “ Maximum Lawful Rate ”), then so long as the Maximum Lawful Rate would be so exceeded, the rate of interest payable hereunder shall be equal to the Maximum Lawful Rate; provided , however , that if at any time thereafter the rate of interest payable hereunder is less than the Maximum Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum Lawful Rate until such time as the total interest received by Agent, on behalf of Lenders, is equal to the total interest that would have been received had the interest rate payable hereunder been (but for the operation of this paragraph) the interest rate payable since the Closing Date as otherwise provided in this Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of interest and in the manner provided in Sections 1.2(a) through (d) , unless and until the rate of interest again exceeds the Maximum Lawful Rate, and at that time this paragraph shall again apply. In no event shall the total interest received by any Lender pursuant to the terms hereof exceed the amount that such Lender could lawfully have received had the interest due hereunder been calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum Lawful Rate is calculated pursuant to this paragraph, such interest shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made. If, notwithstanding the provisions of this Section 1.2(f) , a court of competent jurisdiction shall determine by a final, non-appealable order that a Lender has received interest hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent permitted by applicable law, promptly apply such excess as specified in Section 1.5(f) and thereafter shall refund any excess to Borrowers or as such court of competent jurisdiction may otherwise order.

1.3 Fees .

(a) Fee Letter . Borrowers shall pay to Maranon, for the sole account of Maranon, the Fees specified in that certain fee letter dated on or about the date hereof among Borrowers and Maranon (the “ Maranon Fee Letter ”), at the times specified for payment therein.

(b) Unused Line Fee . As additional compensation for the Revolving Lenders, Borrowers shall pay to Agent, for the ratable benefit of such Revolving Lenders, in arrears, on the last Business Day of each calendar quarter prior to the Commitment Termination Date and on the Commitment Termination Date, a fee for Borrowers’ non-use of available funds (the “ Unused Line Fee ”) in an amount equal to 0.50% per annum multiplied by the difference between (x) the Revolving Loan Commitment (as it may be reduced from time to time) and (y) the sum of (1) the average for the period of the daily closing balances of the Revolving Loans outstanding during the period for which such Fee is due and (2) the average for the period of the daily Letter of Credit Participation Liability during the period for which such fee is due.

(c) Letter of Credit Participation Fee . The Borrowers shall pay to Agent, for the ratable benefit of the Revolving Lenders, fees for each Lender Letter of Credit and each Letter of Credit Participation Agreement (the “ Letter of Credit Participation Fee ”) for the period from and including the date of issuance of same to and including the date of expiration or termination, equal to the average daily amount of aggregate Stated Amount multiplied by the Applicable Revolver LIBOR Margin; provided , however , without duplication of Section 1.2(d) above, at any time that an Event of Default has occurred and is continuing, at the written

 

8


election of Agent or Requisite Lenders (or automatically and without notice upon the occurrence and during the continuance of a Specified Event of Default), such percent shall be increased by two percent (2.0%) per annum (the “ Letter of Credit Default Rate ”). Letter of Credit Participation Fees at the Letter of Credit Default Rate shall accrue from the initial date of such Event of Default until that Event of Default is cured or waived in writing in accordance with the terms hereof and shall be payable upon demand, but in any event, shall be payable on the next regularly scheduled payment date set forth herein for Letter of Credit Participation Fees. The Letter of Credit Participation Fee is payable quarterly in arrears on the last Business Day of each calendar quarter (and also on the date upon which the respective Lender Letter of Credit or Letter of Credit Participation Agreement expires or is terminated). In addition, with respect to each Lender Letter of Credit and Letter of Credit Participation Agreement, the Borrowers agree to pay to L/C Issuer, for its own account, (i) such fees and expenses as the L/C Issuer customarily requires (or, as the case may be, is required to pay to the issuer of the letter of credit) in connection with the issuance, negotiation, processing and/or administration of letters of credit in similar situations and (ii) a letter of credit fronting fee in the amount and at the times agreed to by the Borrowers and L/C Issuer. The Borrowers shall also reimburse Agent for any and all fees and expenses, if any, paid by Agent to the issuer of any letter of credit subject to a Letter of Credit Participation Agreement. It is understood and agreed that so long as the maximum outstanding Stated Amount with respect to all Lender Letters of Credit and Letter of Credit Participation Agreements is $0, no fees, including Letter of Credit Participation Fees and fronting or other similar fees, or any other amounts in respect thereof shall accrue or be payable by the Borrowers hereunder.

(d) In the event, for any reason, all or any part of the Term Loans are prepaid prior to the second anniversary of the Closing Date (whether voluntary or mandatory, and whether before or after acceleration of the Obligations or the commencement of any bankruptcy or insolvency proceeding, but in any event (A) including any such prepayment in connection with (u) a Change of Control, (v) an acceleration of the Obligations as a result of the occurrence of an Event of Default, (w) foreclosure and sale of, or collection of, the Collateral, (x) sale of the Collateral in any Insolvency Proceeding, (y) the restructure, reorganization, or compromise of the Obligations by the confirmation of a plan of reorganization or any other plan of compromise, restructure, or arrangement in any Insolvency Proceeding, or (z) the termination of this Agreement for any reason), the Borrowers shall pay a prepayment fee (“ Prepayment Fee ”) on the amount of the Term Loans being repaid equal to (i) two percent 2.0% if repaid (or required to be prepaid) on or prior to the first anniversary of the Closing Date, and (ii) one percent 1.0% if repaid (or required to be prepaid) after the first anniversary of the Closing but on or prior to the second anniversary of the Closing Date; provided that, (i) if the Loans are repaid in full during the foregoing periods, the Prepayment Fee shall also apply to the Revolving Loan Commitments, and (ii) no Prepayment Fee shall be required to be paid in respect of any prepayment of the Term Loans or the Revolving Loan Commitments resulting from the mandatory prepayment required pursuant to Sections 1.5(b) , 1.5(c) , 1.5(d) , 1.5(e)(A)(y) and 1.5(g) ; provided , for purposes of clarity, the Prepayment Fee shall, in any event, be payable with respect to prepayments of the Term Loans occurring on or prior to the second anniversary of the Closing Date in connection with any refinancing (in full or in part) of the Loans other than resulting from any transaction referred to in this clause (ii) above.

(e) Expenses and Attorneys’ Fees . Except with respect to Taxes which are governed by Section 1.9 , Borrowers agree to promptly pay all reasonable fees, charges, costs and expenses (including reasonable attorneys’ fees and expenses (but limited to (a) one primary counsel for Agent and, if deemed reasonably appropriate by Agent, one counsel in each relevant jurisdiction where a Credit Party is located and any special regulatory counsel and (b)

 

9


one counsel for the Initial Lenders, taken as a whole)) incurred by Agent and the Initial Lenders in connection with any matters contemplated by or arising out of the Loan Documents, in connection with the examination, review, due diligence investigation, documentation, negotiation, closing and syndication of the transactions contemplated herein and in connection with the continued administration of the Loan Documents, including in connection with any inspection right(s) and with any amendments, modifications, consents and waivers thereto. Borrowers agree to promptly pay all reasonable fees, charges, costs and expenses (including fees, charges, costs and expenses of external attorneys, auditors, appraisers (subject to limitations specified in Section 2.3 ), consultants and advisors (but limited to (a) one primary counsel for Agent and, if deemed reasonably appropriate by Agent, one counsel in each relevant jurisdiction where a Credit Party is located and any special regulatory counsel and (b) one counsel for the Lenders, taken as a whole (except in the case of a conflict of interest between the Lenders, in which case, one additional counsel for each Lender similarly situated in respect of such conflict of interest) and if deemed reasonably appropriate by Requisite Lenders, one counsel for the Lenders in each relevant jurisdiction where a Credit Party is located and any special regulatory counsel)) incurred by Agent or, to the extent permitted above, the Lenders, in each case, in connection with any amendment, waiver or consent with respect to the Loan Documents, Event of Default, work-out or action to enforce any Loan Document or to collect any payments due from Borrowers or any other Credit Party. All fees, charges, costs and expenses for which Borrowers are responsible under this Section 1.3(e) shall be deemed part of the Obligations when incurred, payable in accordance with the final sentence of Section 1.4 and secured by the Collateral.

1.4 Payments . All payments by the Credit Parties of the Obligations shall be without deduction, defense, setoff or counterclaim, except as required by applicable law pursuant to Section 1.9, and shall be made in same day funds and delivered to Agent for the benefit of Agent and Lenders, as applicable, by wire transfer to the account as Agent may from time to time designate in writing.

Borrowers shall receive credit on the day of receipt for funds received by Agent by 12:00 p.m. (Chicago time). In the absence of timely receipt, such funds may, in Agent’s discretion, be deemed to have been paid on the next Business Day. Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, the payment may be made on the next succeeding Business Day (except as set forth in the definition of LIBOR Period) (unless the next succeeding Business Day would be in the next succeeding month after the stated due date for such payment, in which case such payment shall be made on the last Business Day immediately prior to the stated due date) and such extension of time shall be included in the computation of the amount of interest and Fees due hereunder.

At the sole option of Agent and Revolving Lenders, Revolving Lenders may make Revolving Credit Advances for the payment of Scheduled Installments, interest, Fees and expenses when due and owing in accordance with the terms hereof or any other Loan Document, in each case whether or not the conditions precedent to such Revolving Credit Advances in Section 7.02 have been met; provided that nothing herein shall relieve the Borrowers from timely funding each payment required under this Agreement as and when due.

1.5 Prepayments . The Borrower Representative shall provide one (1) Business Day’s prior written notice, not later than 4:00 p.m. (Chicago time), to Agent of any prepayments of the Loans made pursuant to this section, which notice shall be irrevocable and set forth the amount of the principal of the Loans being prepaid, the day the prepayment will be made (which shall be a Business Day), and the subsection hereunder pursuant to which such prepayment is being made; provided that if such prepayment is for all of the then outstanding Loans, then the Borrower Representative may revoke such notice and/or extend the prepayment date set forth therein by not more than five (5) Business Days.

 

10


(a) Voluntary Prepayments of Loans . At any time, Borrowers may prepay the Loans, in whole or in part, subject to the payment of the Prepayment Fee specified in Section 1.3(d) , if applicable; provided that each partial optional prepayment shall be in the minimum amount of $250,000 or an integral multiple of $250,000 in excess thereof (unless repaid in full). Prepayments of the Term Loan shall be applied in accordance with Section 1.5(f) .

(b) Prepayments from Excess Cash Flow . Within five (5) Business Days after the delivery of the audited year-end Financial Statements pursuant to and in accordance with Section 4.4(b) (or, in any case, by the date on which such delivery is required hereunder), commencing with the Fiscal Year ended December 31, 2017, Borrowers shall prepay the Loans in an amount equal to the Applicable Percentage of the Excess Cash Flow of the Borrowers and their Subsidiaries for the prior Fiscal Year, less (B) the amount of any voluntary prepayments of the Term Loan and the Revolving Loans (to the extent accompanied by a concurrent and equivalent reduction in the Revolving Loan Commitment) during such Fiscal Year ( provided , the foregoing calculation shall never be less than zero). The calculation shall be based on the audited consolidated Financial Statements for Borrowers and their Subsidiaries for each such Fiscal Year. Prepayments of the Loans under this Section 1.5(b) shall be applied in accordance with Section 1.5(f) .

(c) Prepayments from Extraordinary Receipts . Promptly upon the receipt by any Credit Party or any of its Subsidiaries of any Extraordinary Receipts in excess of $750,000 during any Fiscal Year (the “ Extraordinary Receipts Threshold Amount ) , the Borrowers shall prepay the Loans in an amount equal to one hundred percent (100%) of such excess amount (net of any reasonable expenses incurred in collecting such Extraordinary Receipts (to the extent such expenses are not already deducted in accordance with the definition of Extraordinary Receipts)), except, so long as no Event of Default has occurred and is continuing, that Borrowers may reinvest or commit to reinvest all or any portion of such Extraordinary Receipts in assets (other than inventory) of a kind used or useful in the Credit Parties’ business within twelve (12) months; provided , with respect to any such commitment to reinvest, such Extraordinary Receipts are actually reinvested in such assets within eighteen (18) months of receipt thereof. Pending (a) reinvestment thereof or reimbursement in respect thereof in accordance with this Agreement or (b) such reinvestment, the Extraordinary Receipts shall be deposited and maintained in a deposit account of a Borrower for which Agent shall have received (or already have) a Control Agreement until such reinvestment occurs in accordance with the terms set forth above or such Extraordinary Receipts are otherwise applied to the Obligations as a prepayment thereof. If Borrowers do not intend to so reinvest or commit to reinvest such Extraordinary Receipts or if the applicable period set forth in the immediately preceding sentence expires without Borrowers having reinvested or committed to reinvest the full amount of such Extraordinary Receipts, then Borrowers shall apply all such remaining Extraordinary Receipts in excess of the Extraordinary Receipts Threshold Amount to payment of the Loans in accordance with Section 1.5(f) .

(d) Prepayments from Asset Dispositions; Casualty Events .

(i) Promptly upon receipt of Net Proceeds from any Asset Disposition in excess of $750,000 (the “ Threshold Amount ”) during any Fiscal Year, Borrowers shall prepay the Loans in an amount equal to such Net Proceeds in excess of such amount, except, so long as no Event of Default has occurred and is continuing, that Borrowers may reinvest or commit to reinvest all or any portion of such Net Proceeds of any such Asset Disposition in assets (other than inventory) of a kind used or useful in the Credit

 

11


Parties’ business within twelve (12) months; provided , with respect to any such commitment to reinvest, such Net Proceeds are actually reinvested in such assets within eighteen (18) months of receipt thereof. Pending such reinvestment, the Net Proceeds shall be deposited and maintained in a deposit account of a Borrower for which Agent shall have received (or already have) a Control Agreement until such reinvestment occurs in accordance with the terms set forth above or such Net Proceeds are otherwise applied to the Obligations as a prepayment thereof. If Borrowers do not intend to so reinvest or commit to reinvest such Net Proceeds or if the applicable period set forth in the immediately preceding sentence expires without Borrowers having reinvested or committed to reinvest the full amount of the Net Proceeds of any such Asset Disposition, then Borrowers shall apply all such remaining Net Proceeds of such Asset Disposition in excess of the Threshold Amount to payment of the Loans in accordance with Section 1.5(f) .

(ii) Subject to the terms of Section 2.2 , immediately following the receipt of any Net Proceeds in excess of $750,000 from a Casualty Event, the Borrowers shall prepay the Loans in an amount equal to such Net Proceeds, to the extent not otherwise permitted by Section 2.2 to be used to replace, repair, restore or rebuild the destroyed or damaged assets or reinvest all or any portion of such Net Proceeds in assets (other than inventory) of a kind used or useful in the Credit Parties’ business within twelve (12) months; provided , with respect to any such commitment to reinvest, such Net Proceeds are actually reinvested in such assets within eighteen (18) months of receipt thereof. Pending such reinvestment, the Net Proceeds shall be deposited and maintained in a deposit account of a Borrower for which Agent shall have received a Control Agreement until such reinvestment occurs in accordance with the terms set forth above or such Net Proceeds are otherwise applied to the Obligations as a prepayment thereof. If Borrowers do not intend to so reinvest or commit to reinvest such Net Proceeds or if the applicable period set forth in the immediately preceding sentence expires without Borrowers having reinvested or committed to reinvest the full amount of the Net Proceeds of any such Casualty Event, then Borrowers shall apply all such remaining Net Proceeds of such Casualty Event in excess of $750,000 to the payment of the Loans in accordance with Section 1.5(f) .

(e) Prepayments from Equity and Debt Issuances; Equity Cure Issuances . Promptly upon the receipt by Holdings or any of its Subsidiaries of the proceeds of (A) (x) any Equity Issuance (other than from an Excluded Equity Issuance) and (y) any Excess Specified Equity Contribution, Borrowers shall prepay the Loans in an amount equal to one hundred percent (100%) of the proceeds of such Equity Issuance or Excess Specified Equity Contribution, as applicable, or (B) debt securities (other than the proceeds from the issuance of debt securities in respect of Indebtedness permitted hereunder), Borrowers shall prepay the Loans in an amount equal to one hundred percent (100%) of the proceeds of such debt issuance. The payments shall be applied in accordance with Section 1.5(f) .

(f) Application of Proceeds .

(i) Subject to Section 6.5 , with respect to any prepayments made by Borrowers pursuant to Sections 1.5(b) , 1.5(c) , 1.5(d) and 1.5(e) , such prepayments shall be applied as follows: first , in payment of the Term Loan on a pro rata basis, and as to each such Loan, against the next four (4) Scheduled Installments thereof in direct order of maturity, second in payment of the Term Loan on a pro rata basis, and as to each such Loan, against all remaining Scheduled Installments thereof on a pro rata basis based on

 

12


the amounts thereof until such Loans shall have been prepaid in full, third , to the Revolving Credit Advances outstanding until the same has been repaid in full but not as a permanent reduction of the Revolving Loan Commitment, and fourth , to Agent as cash collateral for all outstanding Lender Letters of Credit and Letter of Credit Participation Agreements up to an amount equal to one hundred three percent (103%) of the aggregate Letter of Credit Participation Liability thereunder. Notwithstanding the forgoing, each Lender may elect, by prior written notice to Agent and the Borrower Representative, to decline to receive the proceeds of any mandatory prepayment event set forth in Sections 1.5(b) , 1.5(c) , 1.5(d) and 1.5(e) (excluding, in any event, Section 1.5(e)(A)(ii) ) above allocable to such Lender, and, upon Agent’s and the Borrower Representative’s receipt of such written notice, the Borrowers shall be permitted to keep and retain such portion of the proceeds so declined by such Lender (such declined amount, the “ Declined Prepayment Amount ”).

(ii) Subject to Section 6.5 , with respect to any payments of Term Loans pursuant to Section 1.5(a) , such prepayments shall be applied to Scheduled Installments thereof as specified by the Borrowers; provided , that, any such prepayment must be applied on a pro rata basis to the Term Loans funded on the Closing Date.

(g) Overadvances . If at any time the sum of the (i) then outstanding principal balance of Revolving Loans plus (ii) aggregate amount of Letter of Credit Participation Liabilities exceeds the Maximum Amount, then the Borrowers shall immediately prepay outstanding Revolving Loans in an amount sufficient to eliminate such applicable excess.

(h) No Implied Consent . Provisions contained in this Section 1.5 for the application of proceeds of certain transactions shall not be deemed to constitute consent by Agent or any Lender to transactions that are not otherwise expressly permitted by the terms hereof.

(i) Restricted Amounts . Notwithstanding the foregoing, to the extent any or all of the Net Proceeds of any mandatory prepayment event of the type described in Sections 1.5(b) , 1.5(c) , 1.5(d) and 1.5(e) (excluding, in any event, Section 1.5(e)(A)(ii) ) are attributable to the Excess Cash Flow, Extraordinary Receipts, Asset Disposition, Casualty Event or Net Proceeds of, by or received by, a Foreign Subsidiary and such amounts are prohibited or delayed by any applicable local Requirements of Law from being repatriated to of any of the Borrowers or any Domestic Subsidiary (each, a “ Repatriation ”; with “ Repatriated ” having a correlative meaning) (Borrowers hereby agreeing to cause the applicable Foreign Subsidiary to take promptly all actions reasonably required by such Requirements of Law to permit such Repatriation), the portion of such amounts so affected, will not be required to be applied to prepay Loans at the times provided in this Section 1.8 and may be retained by the applicable Foreign Subsidiary; provided, that if and to the extent any such Repatriation ceases to be prohibited or delayed by applicable local Requirements of Law at any time, the Credit Parties shall reasonably promptly Repatriate, or cause to be Repatriated, an amount equal to such previously prohibited amount (such amount, the “ Excluded Prepayment Amount ”), and the Credit Parties shall reasonably promptly pay the Excluded Prepayment Amount to the Lenders, which payment shall be applied in accordance with Section 1.5(f) . For the avoidance of doubt, the non-application of any such portion of the mandatory prepayment amount pursuant to this Section 1.5(i) shall not constitute a Default or an Event of Default.

 

13


1.6 Maturity . All of the Obligations shall become due and payable as otherwise set forth herein, but in any event all of the remaining Obligations shall become due and payable upon the Commitment Termination Date. Until all Obligations have been fully paid and satisfied (other than contingent indemnification obligations to the extent that no unsatisfied claim has been asserted) and the Revolving Loan Commitment shall have been terminated, Agent shall be entitled to retain the security interests in the Collateral granted under the Collateral Documents and the ability to exercise all rights and remedies available to it under the Loan Documents and applicable laws.

1.7 Loan Accounts . Agent shall maintain a loan account (the “ Loan Account ”) on its books to record: the Loans, all payments made by Borrowers or the other Credit Parties with respect to the Loans, and all other debits and credits as provided in this Agreement with respect to the Loans and any other Obligations. Without limiting the foregoing, Agent may, from time to time, at Agent’s discretion, charge the Loan Account for any amounts due and owing by Borrowers under the Loan Documents whereupon the same shall be deemed added to the balance of Obligations owing by Borrowers. All entries in the Loan Account shall be made in accordance with customary accounting practices of Agent as in effect from time to time. The balance in the Loan Account shall, absent demonstrable error, be presumptive evidence of the amounts due and owing to Agent and Lenders by Borrowers; provided that any failure to so record or any error in so recording shall not limit or otherwise affect Borrowers’ duty to pay the Obligations. Upon the request of Borrower Representative, Agent shall render to Borrower Representative a quarterly accounting of transactions with respect to the Loans and any other Obligations setting forth the balance of the Loan Account for the immediately preceding quarter. Unless Borrower Representative notifies Agent in writing of any objection to any such accounting (specifically describing the basis for such objection), within thirty (30) days after the date of receipt thereof, each and every such accounting shall, absent demonstrable error, be presumptive evidence as to all matters reflected therein. Only those items expressly objected to in such notice shall be deemed to be disputed by Borrowers. Notwithstanding any provision herein contained to the contrary, any Lender may elect (which election may be revoked) to dispense with the issuance of Notes to that Lender and may rely on the Loan Account as evidence of the amount of Obligations from time to time owing to it.

1.8 Increased Costs; Illegality .

(a) Increased Costs .

(i) If any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender or any L/C Issuer; (ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or (iii) impose on any Lender or any L/C Issuer or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein; and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make any such Loan, or to increase the cost to such Lender, such L/C Issuer or such other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender, L/C Issuer or other Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, L/C Issuer or other Recipient, Borrowers will pay to such Lender, L/C Issuer or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, L/C Issuer or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

 

14


(ii) If any Lender or L/C Issuer determines that any Change in Law affecting such Lender or L/C Issuer or any lending office of such Lender or such Lender’s or L/C Issuer’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s or L/C Issuer’s capital or on the capital of such Lender’s or L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by any L/C Issuer, to a level below that which such Lender or L/C Issuer or such Lender’s or L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or L/C Issuer’s policies and the policies of such Lender’s or L/C Issuer’s holding company with respect to capital adequacy), then from time to time Borrowers will pay to such Lender or L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or L/C Issuer or such Lender’s or L/C Issuer’s holding company for any such reduction suffered.

(iii) A certificate of a Lender or L/C Issuer setting forth the amount or amounts necessary to compensate such Lender or L/C Issuer or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section and delivered to Borrower Representative, shall be conclusive absent manifest error. Borrowers shall pay such Lender or L/C Issuer, as the case may be, the amount shown as due on any such certificate within fifteen (15) days after receipt thereof.

(iv) Failure or delay on the part of any Lender or L/C Issuer to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or L/C Issuer’s right to demand such compensation; provided that Borrowers shall not be required to compensate a Lender or L/C Issuer pursuant to this Section for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that such Lender or L/C Issuer, as the case may be, notifies Borrower Representative of the Change in Law giving rise to such increased costs or reductions, and of such Lender’s or L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine (9)-month period referred to above shall be extended to include the period of retroactive effect thereof).

(b) Illegality . Notwithstanding anything to the contrary contained herein, if any Change in Law shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender to agree to make or to continue to fund or maintain any LIBOR Loan, then, unless that Lender is able to make or to continue to fund or to maintain such LIBOR Loan at another branch or office of that Lender without, in that Lender’s opinion, adversely affecting it or its Loans or the income obtained therefrom, on notice thereof and demand therefor by such Lender to Borrower Representative through Agent, the LIBOR Loans of such Lender will, at the option of such Lender, be deemed to be computed by reference to the Adjusted Base Rate as expressly provided in the definition of LIBOR Rate during the period of such illegality. If any Lender shall determine that it is unlawful to maintain any LIBOR Loan, the Borrowers shall either (x) prepay in full all LIBOR Loans of such Lender then outstanding, together with interest accrued thereon, either on the last day of the LIBOR Period thereof if such Lender may lawfully continue to maintain such LIBOR Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such

 

15


LIBOR Loans, together with any amounts required to be paid in connection therewith pursuant to Section 1.12 or (y) convert all outstanding LIBOR Loans of such Lender into Base Rate Loans either on the last day of the LIBOR Period thereof if such Lender may lawfully continue such LIBOR Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such LIBOR Loans (and concurrently therewith pay any amounts required to be paid pursuant to Section 1.12 ).

1.9 Taxes .

(a) Payments Free of Taxes . Any and all payments by or on account of any obligation of any Credit Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Credit Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(b) Payment of Other Taxes by the Credit Parties . The Credit Parties shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of Agent timely reimburse it for the payment of, any Other Taxes.

(c) Indemnification by the Credit Parties . The Credit Parties shall jointly and severally indemnify each Recipient, within fifteen (15) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto (other than Indemnified Taxes and expenses payable by reason of the gross negligence, bad faith or willful misconduct of the applicable Recipient), whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority; provided that if the Credit Party reasonably believes that such Taxes were not correctly or legally asserted, Agent, or Lender, as applicable, will use reasonable efforts to cooperate with the Credit Party to obtain a refund of such Taxes (which shall be repaid to the Credit Party in accordance with Section 1.9(g) ) so long as such efforts would not, in the sole discretion of Agent or such Lender, result in any additional out-of-pocket costs or expenses not reimbursed by the Credit Party or be otherwise materially disadvantageous to Agent or such Lender, as applicable. A certificate as to the amount of such payment or liability delivered to the Borrower Representative by a Lender (with a copy to Agent), or by Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(d) Indemnification by the Lenders . Each Lender shall severally indemnify Agent, within fifteen (15) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Credit Party has not already indemnified Agent for such Indemnified Taxes and without limiting the obligation of the Credit Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 8.1 relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to

 

16


such Lender, in each case, that are payable or paid by Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by Agent shall be conclusive absent manifest error. Each Lender hereby authorizes Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by Agent to the Lender from any other source against any amount due to Agent under this paragraph (d).

(e) Evidence of Payments . As soon as practicable after any payment of Taxes by any Credit Party to a Governmental Authority pursuant to this Section, such Credit Party shall deliver to Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Agent.

(f) Status of Lenders . (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower Representative and Agent, at the time or times reasonably requested by the Borrower Representative or Agent, such properly completed and executed documentation reasonably requested by the Borrower Representative or Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower Representative or Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower Representative or Agent as will enable the Borrower Representative or Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 1.9(f)(ii)(A) , (ii)(B) and (ii)(D) below) shall not be required if in any Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

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

(A) any Lender that is a U.S. Person shall deliver to the Borrower Representative and Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower Representative or Agent), executed copies of IRS Form W-9 certifying that such Lender is not subject to U.S. federal backup withholding tax;

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

(i) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect

 

17


to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(ii) executed originals of IRS Form W-8ECI;

(iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the IRC, (x) a certificate substantially in the form of Exhibit 1.9-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the IRC, a “10 percent shareholder” of the Borrowers within the meaning of Section 881(c)(3)(B) of the IRC, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the IRC (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E; or

(iv) to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit 1.9-2 or Exhibit 1.9-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit 1.9-4 on behalf of each such direct and indirect partner;

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

(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the IRC, as applicable), such Lender shall deliver to the Borrower Representative and Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower Representative or Agent such documentation

 

18


prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the IRC) and such additional documentation reasonably requested by the Borrower Representative or Agent as may be necessary for the Borrowers and Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

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

(g) Treatment of Certain Refunds . If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section (including by the payment of additional amounts pursuant to this Section), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (i) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (i), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (i) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(h) Survival . Each party’s obligations under this Section shall survive the resignation or replacement of Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

(i) Defined Terms . For purposes of this Section 1.9 , the term “Lender” includes any L/C Issuer, and the term “applicable law” includes FATCA.

1.10 Inability to Determine Rates . If Agent shall have determined in good faith that for any reason adequate and reasonable means do not exist for ascertaining the LIBOR Rate for any requested LIBOR Period with respect to a proposed LIBOR Loan or that the LIBOR Rate for any requested LIBOR Period with respect to a proposed LIBOR Loan does not adequately and fairly reflect the cost to the Lenders of funding such Loan, Agent will forthwith give notice of such determination to the Borrower Representative and each Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Loans hereunder shall be suspended until Agent revokes such notice in writing. Upon receipt of such notice, the Borrower Representative may revoke any Notice of Revolving Credit Advance or Notice of Conversion/Continuation then submitted by it. If the Borrower Representative does not revoke such notice, the Lenders shall make, convert or continue

 

19


the Loans, as proposed by the Borrower Representative, in the amount specified in the applicable notice submitted by the Borrower Representative, but such Loans shall be made, converted or continued as Base Rate Loans; provided that, to the extent a comparable or successor rate is approved by Agent in connection herewith, such 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 Agent, such approved rate shall be applied as otherwise reasonably determined by Agent.

1.11 Reserves on LIBOR Loans . The Borrowers shall pay to each Lender, as long as such Lender shall be required under regulations of the Federal Reserve Board to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “ Eurocurrency liabilities ”), additional costs on the unpaid principal amount of each LIBOR Loan equal to actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive absent demonstrable error), payable on each date on which interest is payable on such Loan provided the Borrowers shall have received at least fifteen (15) days’ prior written notice (with a copy to Agent) of such additional interest from the Lender. If a Lender fails to give notice fifteen (15) days prior to the relevant Interest Payment Date, such additional interest shall be payable fifteen (15) days from receipt of such notice. Notwithstanding the foregoing, a Lender shall not be entitled to be compensated for such additional costs hereunder unless (i) such Lender is imposing similar assessments on other borrowers of such Lender that such Lender has classified as similar to Borrowers and (ii) the increased costs were incurred within one hundred eighty (180) days of the date that such Lender notified the Borrower Representative, in writing of the event that give rise to such increased costs and of such Lender’s intention to claim compensation thereof; provided , further, that if the circumstance giving rise to such increased costs is retroactive, then the one hundred eighty (180) day period referred to above shall be extended to include the period of retroactive effect thereof.

1.12 Funding Losses . The Borrowers agree to reimburse each Lender and to hold each Lender harmless from any loss or expense which such Lender may sustain or incur as a consequence of:

(a) the failure of the Borrowers to make any payment or mandatory prepayment of principal of any LIBOR Loan (including payments made after any acceleration thereof);

(b) the failure of the Borrowers to borrow a LIBOR Loan, continue a LIBOR Loan or convert a Base Rate Loan into a LIBOR Loan after the Borrower Representative has given (or is deemed to have given) a Notice of Revolving Credit Advance or a Notice of Conversion/Continuation;

(c) the failure of the Borrowers to make any prepayment of a LIBOR Loan after the Borrowers have given a notice in accordance with Section 1.5(a) ;

(d) the prepayment (including pursuant to Section 1.5 ) of a LIBOR Loan on a day which is not the last day of the LIBOR Period with respect thereto; or

(e) the conversion pursuant to Section 1.5 of any LIBOR Loan to a Base Rate Loan on a day that is not the last day of the applicable LIBOR Period;

 

20


including any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its LIBOR Loans hereunder or from fees payable to terminate the deposits from which such funds were obtained. Solely for purposes of calculating amounts payable by the Borrowers to the Lenders under this Section 1.12 ; each LIBOR Loan made by a Lender (and each related reserve, special deposit or similar requirement) shall be conclusively deemed to have been funded at the LIBOR Rate used in determining the interest rate for such LIBOR Loan by a matching deposit or other borrowing in the interbank eurodollar market for a comparable amount and for a comparable period, whether or not such LIBOR Loan is in fact so funded.

1.13 Borrower Representative . Each Borrower and each other Credit Party hereby designates GP II as its representative and agent on its behalf for the purposes of issuing Notices of Revolving Credit Advances and Notices of Conversion/Continuation, Compliance and Excess Cash Flow Certificates giving instructions with respect to the disbursement of the proceeds of the Loans, selecting interest rate options, giving and receiving all other notices and consents hereunder or under any of the other Loan Documents, entering into amendments, consents, waivers and other modifications in respect of any of the Loan Documents and taking all other actions (including in respect of compliance with covenants) on behalf of any Borrowers or other Credit Parties under the Loan Documents. Borrower Representative hereby accepts such appointment. Agent and each Lender may regard any notice or other communication pursuant to any Loan Document from Borrower Representative as a notice or communication from all Borrowers and/or Credit Parties, as applicable. Each warranty, covenant, agreement and undertaking made on its behalf by Borrower Representative shall be deemed for all purposes to have been made by such Borrower and/or Credit Parties, as applicable, and shall be binding upon and enforceable against such Borrower and/or Credit Parties, as applicable, to the same extent as it if the same had been made directly by such Borrower and/or Credit Parties, as applicable.

SECTION 2.

AFFIRMATIVE COVENANTS

Each Credit Party executing this Agreement jointly and severally agrees as to all Credit Parties and their Subsidiaries that, from and after the date hereof and until the Termination Date:

2.1 Compliance With Laws . Each Credit Party will and will cause its Subsidiaries to (a) comply with the requirements of all applicable material laws, rules, regulations and orders of any Governmental Authority (including laws, rules, regulations and orders relating to taxes, employer and employee contributions, securities, employee retirement and welfare benefits, environmental protection matters and employee health and safety, ERISA, the provisions of OFAC and the Patriot Act described in Section 5.19 hereof, and all Food Laws) as now in effect and which are imposed in the future in all jurisdictions in which any Credit Party or any of its Subsidiaries is doing business other than those laws, rules, regulations and orders the noncompliance with which (including the occurrence of an ERISA Event whether caused or permitted by a Credit Party or an ERISA Affiliate) would not be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect, and (b) maintain or obtain all licenses, qualifications and permits now held or hereafter required to be held by such Credit Party or any of its Subsidiaries, for which the loss, suspension, revocation or failure to obtain or renew, would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. This Section 2.1 shall not preclude any Credit Party or its Subsidiaries from contesting any taxes or other payments, if they are being diligently contested in good faith in a manner which stays enforcement thereof and if appropriate reserves have been recorded in conformity with GAAP, subject to Section 3.2 and no Lien (other than a Permitted Encumbrance) in respect thereof has been created.

2.2 Insurance . Each Credit Party will and will cause its Subsidiaries to maintain or cause to be maintained, with financially sound and reputable insurers, public liability, property damage and business interruption insurance with respect to its business and properties and the business and properties of its Subsidiaries against loss or damage of the kinds and in the amounts customarily carried

 

21


or maintained by corporations of established reputation engaged in similar businesses and will deliver evidence thereof to Agent. Each Credit Party shall, pursuant to endorsements and/or assignments in form and substance reasonably satisfactory to Agent, (i) cause Agent to be named as lender’s loss payee in the case of casualty insurance, and assignee in the case of all business interruption insurance, in each case for the benefit of Agent and Lenders and (ii) cause Agent on behalf of the Lenders, to be named as additional insured in the case of all liability insurance. Agent acknowledges and agrees that the Credit Parties’ insurance as in effect on the Closing Date, subject to Section 2.10(c) , is, under the circumstances prevailing as of the Closing Date, acceptable. In the event any Credit Party fails to provide Agent with evidence of the insurance coverage required by this Agreement within five (5) Business Days of Agent’s written request therefor, Agent may purchase insurance at such Credit Party’s expense to protect Agent’s interests in the Collateral. This insurance may, but need not, protect such Credit Party’s interests. The coverage purchased by Agent may or may not pay any claim made by such Credit Party or any claim that is made against such Credit Party in connection with the Collateral. Such Credit Party may later cancel any such insurance purchased by Agent, but only after providing Agent with evidence that such Credit Party has obtained insurance as required by this Agreement. If Agent purchases such insurance for the Collateral, such Credit Party will be responsible for the costs of that insurance, including interest and other reasonable charges imposed by Agent in connection with the placement of such insurance, until the effective date of the cancellation or expiration of such insurance. The costs of such insurance may be added to the Obligations. The costs of such insurance may be more than the cost of insurance such Credit Party is able to obtain on its own.

2.3 Inspection; Lender Meeting . Each Credit Party shall permit any authorized representatives of Agent to visit, audit and inspect any of the properties of such Credit Party and its Subsidiaries, including its and their financial and accounting records, and to make copies and take extracts therefrom, and to discuss its and their affairs, finances and business with its and their officers and certified public accountants (so long as a reasonable opportunity to be present at such meeting with the certified public accountants is provided to the Borrower) and agents, at such reasonable times during normal business hours and as often as may be reasonably requested. Borrowers shall pay all reasonable audit and field examination fees and reasonable out-of-pocket expenses of Agent related to any such visit, audit, inspection and/or field examination (“ Examination Costs ”); provided that so long as no Event of Default shall have occurred and remain continuing, Borrowers shall not be obligated to pay Examination Costs for more than one (1) such visit by Agent each calendar year. Representatives of each Lender will be permitted to accompany representatives of Agent during each visit, inspection and discussion referred to in the immediately preceding sentence. Without in any way limiting the foregoing, each Credit Party will participate and will cause key management personnel (including, but not limited to, the chief executive officer and chief financial officer) of each Borrower and its Subsidiaries to participate in a meeting (either in-person or via teleconference at the sole discretion of Agent) with Agent and Lenders at least once during each Fiscal Quarter, which meeting shall be held at such time as may be reasonably requested by Agent. Lenders shall receive, in each case, reasonably in advance of such meeting, notice of any such meeting, along with applicable discussion materials and any other necessary information needed to attend of such meeting. Borrowers shall pay all reasonable costs and expenses of Agent and the Lenders related to any such meeting.

2.4 Organizational Existence; Maintenance of Properties . Except as otherwise permitted by Section 3.6 , each Credit Party will and will cause its Subsidiaries to at all times preserve and keep in full force and effect its organizational existence and, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect, all rights and franchises necessary in the normal conduct of its business. Each Credit Party will maintain and will cause its Subsidiaries to maintain all of its real and personal property reasonably necessary to the normal conduct of its business in good working order and condition, ordinary wear and tear and involuntary casualty and condemnation excepted and shall make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect.

 

22


2.5 Environmental Matters . Each Credit Party shall and shall cause each of its Subsidiaries to: (a) conduct its operations and keep and maintain its Real Estate in compliance with all Environmental Laws and Environmental Permits other than noncompliance that would not reasonably be expected to have a Material Adverse Effect; (b) implement any and all investigation, remediation, removal and response actions that are necessary to maintain, in all material respects, the value and marketability of the Real Estate or to otherwise comply with Environmental Laws and Environmental Permits pertaining to the presence, generation, treatment, storage, use, disposal, transportation or Release of any Hazardous Material on, at, in, under, above, to, from or about any of its Real Estate, except where the failure to conduct such action or comply with such Environmental Laws or Environmental Permits would not reasonably be expected to have a Material Adverse Effect; (c) notify Agent promptly after such Credit Party or any Person within its control becomes aware of any violation of Environmental Laws or Environmental Permits or any Release on, at, in, under, above, to, from or about any Real Estate that is reasonably likely to result in Environmental Liabilities to a Credit Party or its Subsidiaries in excess of $750,000; and (d) promptly forward to Agent a copy of any order, notice, request for information or other communication or report received by such Credit Party or any Person within its control in connection with any such violation or Release or any other matter relating to any Environmental Laws or Environmental Permits that would reasonably be expected to result in Environmental Liabilities to a Credit Party or its Subsidiaries in excess of $750,000, in each case whether or not the Environmental Protection Agency or any Governmental Authority has taken or threatened any action in connection with any such violation, Release or other matter. If Agent at any time has a reasonable basis to believe that there may be a violation of any Environmental Laws or Environmental Permits by any Credit Party or any Person under its control or any Environmental Liability arising thereunder, or a Release of Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate, that, in each case, would reasonably be expected to have a Material Adverse Effect, then each Credit Party and its Subsidiaries shall, upon Agent’s written request (i) cause the performance of such environmental audits including subsurface sampling of soil and groundwater, and preparation of such environmental reports, at Borrowers’ expense, as Agent may from time to time reasonably request, which shall be conducted by reputable environmental consulting firms reasonably acceptable to Agent and shall be in form and substance reasonably acceptable to Agent, and (ii) if the Credit Parties fail to perform (or cause performance) of any environmental audits under Section 2.5(d)(i) above within a reasonable time after receiving a written request from Agent, Credit Parties shall permit Agent or its representatives to have reasonable access to the Real Estate that is the subject of such violation, Environmental Liability or Release of Hazardous Substances for the purpose of conducting such environmental audits and testing as Agent deems reasonably appropriate, including subsurface sampling of soil and groundwater.

2.6 Landlords’ Agreements, Mortgagee Agreements and Bailee Letters . After the Closing Date and subject to Section 2.10 below, each Credit Party shall use commercially reasonable efforts to obtain a landlord’s agreement or mortgagee agreement or bailee letter, as applicable, from the lessor of any Real Estate leased by any Credit Party, the mortgagee of any Real Estate owned by any Credit Party or a bailee waiver from the bailee with respect to any warehouse, processor or converter facility or other location (i) constituting or functioning as the corporate headquarters for such Credit Party and (ii) where Collateral is stored or located, as applicable, with a fair market value (as reasonably determined by the Borrower Representative) in excess of $750,000 for any individual location and $2,000,000 in aggregate for all such locations, which agreement or letter shall contain a waiver or subordination of all Liens or claims that the landlord, bailee or mortgagee may assert against the Collateral at that location, shall permit Agent access to the related premises and shall otherwise be reasonably satisfactory in form and substance to Agent.

 

23


2.7 Further Assurances .

(a) Each Credit Party shall, from time to time, execute such guarantees, financing statements, documents, security agreements and reports as Agent at any time may reasonably request to evidence, perfect (subject to the qualifications set forth in Section 4(c) of the Security Agreement) or otherwise implement the guarantees and security for repayment of the Obligations contemplated by the Loan Documents.

(b) In the event any Credit Party acquires a fee ownership interest in real property after the Closing Date with a fair market value in excess of $500,000, such Credit Party shall, within sixty (60) days (or such longer period of time as Agent may agree in its reasonable discretion) following such acquisition, deliver to Agent a fully executed mortgage or deed of trust over such real property in form and substance reasonably satisfactory to Agent, together with such customary title insurance policies, surveys, appraisals, evidence of insurance, local counsel opinions, environmental assessments and other documents and certificates as shall be reasonably required by Agent.

(c) Each Credit Party shall, within fifteen (15) Business Days (or such later date as Agent may agree in its reasonable discretion) following the acquisition or creation of a Domestic Subsidiary, (i) cause each Person that is a wholly-owned Domestic Subsidiary (other than an Excluded Foreign Holding Company) of such Credit Party ( provided that this shall not be construed to constitute consent by any of the Lenders to any transaction not expressly permitted by the terms of this Agreement), promptly to guaranty the Obligations, to grant to Agent, for the benefit of Agent and Lenders, a security interest in the Collateral of such Person to secure the Obligations, and (ii) pledge, or cause to be pledged, to Agent, for the benefit of Agent and Lenders, one hundred percent (100%) of the Stock of each such wholly-owned Domestic Subsidiary (other than an Excluded Foreign Holding Company) to secure the Obligations and one hundred percent (100%) of the non-Voting Stock and sixty five percent (65%) of the Voting Stock of any First Tier Foreign Subsidiary and any first tier Excluded Foreign Holding Company created or acquired by any Credit Party. The documentation for such guaranty, security, joinder and pledge shall be substantially similar to the Loan Documents executed concurrently herewith with such modifications as are reasonably requested by Agent.

2.8 Cash Management Systems . Subject to Section 2.10 below, Borrowers shall, and shall cause each other Credit Party to, enter into Control Agreements with respect to each deposit and securities account maintained by each Credit Party (other than any Excluded Account) as of or after the Closing Date. Each such Control Agreement shall be in form and substance reasonably satisfactory to Agent and permit Agent to assume exclusive dominion and control of such deposit accounts; provided that Agent shall not exercise its exclusive dominion and control with respect to such accounts so long as no Event of Default has occurred and remains continuing. Unless and until an Event of Default has occurred and remains continuing, Borrowers shall have the exclusive and sole right to make transfers and withdrawals from and write checks against amounts in such deposit accounts.

 

24


2.9 [Reserved] .

2.10 Post-Closing Covenants .

(a) No later than ninety (90) days following the Closing Date (or such later date as may be agreed to by Agent in its sole discretion), the Credit Parties shall deliver to Agent a fully executed mortgage or deed of trust over such real property in form and substance reasonably satisfactory to Agent, together with such customary title insurance policies, surveys, appraisals, evidence of insurance, local counsel opinions, environmental assessments and other documents and certificates as shall be reasonably required by Agent in respect of the Borrowers’ owned real property located at (i) 10 Procter Street, Montgomery, Alabama 36101, (ii) 444 Roosevelt Avenue, Montebello, California 90640, (iii) 4801 South Oakley Avenue, Chicago, Illinois 60609, (iv) 1900 Brand Avenue, Baltimore, Maryland 21209, (v) 201 Gene Street, Nixa, Missouri 65714, and (vi) 4754 Route 414, North Rose, New York 14516, in each case, in form and substance reasonably satisfactory to Agent;

(b) No later than sixty (60) days following the Closing Date (or such later date as may be agreed to by Agent in its sole discretion), (i) the Credit Parties shall deliver to Agent Control Agreements for each deposit and securities account required to be subject to a Control Agreement pursuant to Section 2.8 above, in each case, in form and substance reasonably satisfactory to Agent and duly executed by the applicable Credit Parties and the applicable financial institution with whom such accounts are maintained and (ii) the Credit Parties will use commercially reasonable efforts to provide bailee/landlord waivers with respect to certain material locations as required by Section 2.6 ; and

(c) No later than sixty (60) days following the Closing Date (or such later date as may be agreed to by Agent in its sole discretion), the Credit Parties shall deliver to Agent endorsements to the Credit Parties’ liability and property policies naming Agent, as applicable, as an additional insured and loss payee thereunder, in each case, in form and substance reasonably satisfactory to Agent and duly executed by the applicable insurance provider and effective.

2.11 ERISA . The Credit Parties shall not, and shall not cause or permit any ERISA Affiliate to, cause or permit to occur an ERISA Event to the extent such ERISA Event would reasonably be expected to result in a Lien or otherwise have a Material Adverse Effect.

2.12 Separateness .

(a) Each Credit Party shall, and shall cause each of its Subsidiaries to, (a) pay its debts and liabilities only from its own assets, (b) comply with the provisions of its Governing Documents, (c) do all things necessary to observe organizational formalities and to preserve its existence, and not amend, modify, waive provisions of or otherwise change its Governing Documents, (d) maintain all of its books, records, financial statements and bank accounts separate from those of its Affiliates (except that the financial statements of such Affiliates may be consolidated to the extent consolidation is required under GAAP or as a matter of Requirements of Law; provided, that (i) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Credit Parties and their Subsidiaries from such Affiliate and to indicate that each Credit Party’s and each Subsidiary’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (ii) such assets shall also be listed on each Credit Party’s and each Subsidiary’s own separate balance sheet) and file its own tax returns (except to the extent consolidation is required or permitted under Requirements of Law), (e) be, and at all times hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate), correct any known misunderstanding regarding its status as a separate entity,

 

25


conduct business in its own name, and not identify itself or any of its Affiliates as a division of the other, (f) maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations and shall remain Solvent, (g) not commingle its funds or other assets with those of any Affiliate or any other Person and shall maintain its properties and assets in such a manner that it would not be costly or difficult to identify, segregate or ascertain its properties and assets from those of others, (h) maintain its properties, assets and accounts separate from those of any Affiliate or any other Person, (i) not hold itself out to be responsible for the debts or obligations of any other Person, (j) maintain a sufficient number of employees, including management executives and officers, in light of contemplated business operations, (k) use separate stationary, invoices and checks bearing its own name, (l) maintain separate customer and supplier relationships and separate invoice of such customers and suppliers, and (m) not pledge its assets to secure the obligations of any other Person, (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity.

(b) The Credit Parties and their Subsidiaries shall be treated, in all respects, as “unrestricted subsidiaries” under or otherwise not be subject to or obligated in respect of (or required to be subject to or obligated in respect of) any representations, warranties, covenants, (including, without limitation, any requirement to guaranty any obligations or grant any Liens or any other security interest in favor of any creditor), events of default or any other terms or conditions or provisions of Loan, note, credit documents, indentures, purchase agreements or similar arrangements involving Parent or any of its Affiliates (other than the Credit Parties).

SECTION 3.

NEGATIVE COVENANTS

Each Credit Party executing this Agreement jointly and severally agrees as to all Credit Parties and their Subsidiaries that from and after the date hereof until the Termination Date:

3.1 Indebtedness . The Credit Parties shall not and shall not cause or permit their Subsidiaries directly or indirectly to create, incur, assume, or otherwise become or remain directly or indirectly liable with respect to any Indebtedness (other than pursuant to a Contingent Obligation permitted under Section 3.4 ) except:

(a) Indebtedness described on Schedule 3.1 ;

(b) the Obligations;

(c) Indebtedness arising from extensions of credit made by (i) any Credit Party (other than Holdings) to any Borrower, (ii) any Borrower or other Credit Party to any other Credit Party (other than Holdings), (iii), any Subsidiary that is not a Credit Party to any other Subsidiary that is not a Credit Party or (iv) any Credit Party (other than Holdings) to any Subsidiary that is not a Credit Party in an aggregate amount not to exceed, when taken together with any Investments in such Subsidiary permitted by Section 3.3(i) , $2,000,000 for all such Subsidiaries taken as a whole; provided , however , that, in the case of clause (iv), if owing by any Credit Party, such Indebtedness shall, at the request of Agent, be evidenced by one or more subordinated promissory notes in form and substance reasonably satisfactory to Agent and otherwise having terms reasonably satisfactory to Agent and, subject to the terms and provisions of the Security Agreement, the sole originally executed counterparts of all such promissory notes, if any, shall be pledged and delivered to Agent, for the benefit of Agent and Lenders, as security for the Obligations;

 

26


(d) Subordinated Debt (other than Seller Debt) for which the Requisite Lenders have provided prior written consent acting in its sole discretion;

(e) Indebtedness not to exceed the applicable Maximum Capital Lease Indebtedness in the aggregate at any time outstanding secured by purchase money Liens or incurred with respect to Capital Leases or equipment financing facilities the obligations in respect of which are secured by the equipment purchased with the proceeds thereof;

(f) Indebtedness that may be deemed to exist pursuant to any performance and completion guarantees or customs, stay, performance, bid, surety, statutory, appeal, performance and return of money bonds, tenders, statutory obligations, leases, governmental contracts, trade contracts or similar obligations incurred in the ordinary course of business and with a maximum aggregate unpaid liability thereunder not exceeding $1,000,000 in aggregate at any time outstanding;

(g) to the extent constituting Indebtedness, (i) obligations owed to suppliers, customers and licensees in the ordinary course of business, including take-or-pay obligations contained in supply arrangements in the ordinary course of business (including obligations thereunder in respect of advances, deferred purchase price or progress payments), and (ii) obligations in respect of workers compensation claims, unemployment insurance (including premiums related thereto) and other types of social security obligations, pension obligations, vacation pay obligations and health, disability or employee benefit obligations, in each case, incurred in the ordinary course of business;

(h) modifications, replacements, renewals, extensions and refinancings of Indebtedness permitted under clauses (a), (d), (e) and (j) that do not (i) materially increase the interest rate or fees applicable to such Indebtedness; (ii) accelerate the dates upon which payments of principal or interest are due; (iii) increase the principal amount of such Indebtedness (except by an amount equal to unpaid accrued interest and premiums (including tender premiums) thereon plus underwriting discounts, other reasonable and customary fees, commissions and expenses (including upfront fees, original issue discount or initial yield payments) incurred in connection with such modification, replacement, renewal, extension or refinancing); (iv) add or make materially more restrictive any covenant or event of default with respect to such Indebtedness; (v) change the redemption or prepayment provisions of such Indebtedness in a manner materially adverse to the applicable obligor; (vi) make materially less restrictive the subordination provisions applicable thereto (or the subordination terms of any guaranty thereof), if any; (vii) add any Credit Parties as additional obligors on such Indebtedness unless such Credit Parties also guarantee the Obligations; (viii) enhance the collateral securing such Indebtedness or the priority of the Liens thereon, in each case to the extent such collateral constitutes Collateral; (ix) otherwise materially increase the obligations of the obligor or confer additional material rights on the holder of such Indebtedness in a manner adverse to any Credit Party or Lenders; or (x) increase the portion of interest payable in cash with respect to any Indebtedness for which interest is payable by the issuance of payment-in-kind notes or is permitted to accrue;

(i) unsecured Indebtedness of Holdings or any other Credit Party owing to sellers as payments of the purchase price of Permitted Acquisitions (and which does not constitute Earnouts), but only if the aggregate amount thereof (together with all Indebtedness described in Section 3.1(o) ) does not exceed $3,000,000 at any time outstanding and the Credit Parties are in compliance with the Acquisition Cap, in each case, solely to the extent (i) such Indebtedness does not require the cash payment of any principal, premium, interest, fees or other amounts

 

27


owing in respect thereof prior to the 180 th day after the scheduled maturity date of the Loans then in effect; provided, such Indebtedness further is on terms and conditions which provide that, if the Credit Parties comply with the restrictions set forth in Section 3.5(f) (and therefore not permitted to make payments thereon), no default, violation, breach, penalty, premium, increase in interest rates or redemption or prepayment right in respect of such Indebtedness would result, arise, accrue or vest (other than as a result of customary change of control and bankruptcy events of default), (ii) such Indebtedness does not have any maturity, amortization, redemption, sinking fund or other similar payment prior to the 180th day after scheduled maturity date of the Loans then in effect (other than in connection with a Change of Control or a sale of all or substantially all of the assets of the Credit Parties and their Subsidiaries or other similar event), (iii) such Indebtedness does not have any covenants or defaults (other than payment default, a bankruptcy or insolvency event of Holdings or change of control defaults but otherwise subject to the subordination provisions thereof), and (iv) such Indebtedness (and any guaranty thereof) is subordinated to the Obligations as to right and time of payment and as to other rights and remedies thereunder reasonably satisfactory to Agent (such Indebtedness, “ Seller Debt ”);

(j) Indebtedness (i) of any Person that becomes a Subsidiary after the Closing Date or (ii) assumed by any Credit Party in connection with any acquisition of assets after the Closing Date, in each case, pursuant to a Permitted Acquisition, provided that such Indebtedness (A) exists at the time such Person becomes a Subsidiary, or such assets are acquired, (B) is not created or incurred in contemplation of or in connection with such Permitted Acquisition and (C) is not a working capital, revolver or other similar liquidity facility and is secured only by fixed assets (and not working capital assets or, in any event, a blanket or similar general lien on the subject assets);

(k) to the extent constituting Indebtedness, other contingent liabilities of any Credit Party in respect of any customary purchase price adjustment, non-competition or consulting agreement or deferred compensation agreement, or other indemnity obligations in each case owing to the seller, buyer or any Affiliate thereof or their respective officers or directors, in each case, incurred in connection with a disposition of asset permitted under this Agreement or a Permitted Acquisition;

(l) to the extent constituting Indebtedness, unsecured obligations (contingent or otherwise) of any Credit Party existing or arising under any Rate Contracts, in each case entered into in the ordinary course of business and not for speculative purposes;

(m) unsecured Indebtedness that is evidenced by promissory notes issued by Holdings (or any direct or indirect parent thereof) to directors, consultants, managers, members of management, officers and employees (or their spouses, partners, trusts or estates) of the Borrowers and their Subsidiaries in connection with repurchases or redemptions of capital Stock of Holdings (or any direct or indirect parent thereof) issued to such director, consultant, manager, member of management, officer or employee (or their spouses, partners, trusts or estates) so long as the aggregate principal amount of all such Indebtedness does not exceed $750,000 at any time;

(n) Indebtedness in connection with the financing of insurance premiums arising as a result of the payment of such premiums in installments in the ordinary course of business (expressly excluding third party financing);

 

28


(o) Earnouts in an aggregate amount (together with all Indebtedness under Section 3.1(i) ) not to exceed $3,000,000 at any time outstanding, and only to the extent the Credit Parties are in compliance with the Acquisition Cap; provided, that, if at any time all or any portion of any Earnout is realized and becomes evidenced by a promissory note or other instrument, becomes payable over time or otherwise accrues interest, then such Earnout (or portion) shall be required to satisfy the requirements of Seller Debt;

(p) to the extent constituting Indebtedness, obligations (i) resulting from a bank or other financial institution honoring a check, draft or similar instrument in the ordinary course of business or (ii) arising under or in connection with cash management services (including intercompany cash and treasury management arrangements) or reasonable and customary overdraft protection in the ordinary course of business;

(q) Indebtedness owed to issuers of letters of credit or bank guarantees or similar instruments in an aggregate amount not to exceed $1,000,000, to the extent cash collateralized and such cash collateral is the sole recourse of the issuers thereof with respect to unreimbursed amounts paid by such issuers; and

(r) any other Indebtedness not to exceed $1,000,000 in the aggregate at any time outstanding.

3.2 Liens and Related Matters .

(a) No Liens . The Credit Parties shall not and shall not cause or permit their Subsidiaries to create, incur, assume or permit to exist any Lien on or with respect to any property or asset of such Credit Party or any such Subsidiary, whether now owned or hereafter acquired, or any income or profits therefrom, except Permitted Encumbrances (including those Liens constituting Permitted Encumbrances existing on the date hereof as set forth on Schedule 3.2 and modifications, replacements, renewals and extensions thereof).

(b) No Negative Pledges . The Credit Parties shall not and shall not cause or permit their Subsidiaries to enter into or assume any agreement (other than the Loan Documents) prohibiting the creation or assumption of any Lien upon its properties or assets, whether now owned or hereafter acquired, other than (i) provisions restricting subletting, assignment or other transfers (including the granting of any Lien) of any lease governing a leasehold interest of any Borrower or a Subsidiary of any Borrower entered into in the ordinary course of business, (ii) provisions of customary documentation of any Indebtedness secured by a Permitted Encumbrance, but only if such restrictions apply only to the Person or Persons obligated under such indebtedness and its or their Subsidiaries or the property or assets securing such Indebtedness, (iii) Liens expressly permitted by the definition of “Permitted Encumbrances”, (iv) agreements relating to any Asset Disposition expressly permitted hereunder, provided that such prohibitions and limitations apply only to the property to be sold (or the Persons the Stock of which is the subject of such agreement), (v) leases, subleases, licenses, sublicenses and other agreements containing customary provisions prohibiting or limiting the assignment or other transfer thereof that are entered into in the ordinary course of business, (vi) restrictions with respect to a Subsidiary of the Borrowers imposed pursuant to an agreement that has been entered into in connection with the disposition of such Subsidiary’s assets or all of such Subsidiary’s Stock, in each case, only to the extent such restrictions are imposed during the pendency of such disposition and such disposition is either expressly permitted hereunder or, in connection with the disposition of all of such Subsidiary’s Stock, such Stock disposition shall give rise to the concurrent repayment in full of the Obligations no

 

29


later than thirty (30) days following the date of entering into such agreement, (v) in the case of any Subsidiary that is not a wholly-owned Subsidiary, customary provisions in partnership agreements, limited liability company organizational governance documents, joint venture agreements and other similar agreements that restrict the transfer of the assets of, or ownership interest in, such partnership, limited liability company, joint venture or similar Person, (vi) restrictions on deposits (including cash and Cash Equivalents) imposed by Persons under contracts entered into in the ordinary course of business or for whose benefit such cash, Cash Equivalents or other deposits exist and (vii) restrictions set forth in documents which exists on the Closing Date; provided that such amendments, modifications, restatements, renewals, supplements, refunding, replacements or refinancings are, in the good faith judgment of the Borrower Representative, no more restrictive with respect to such encumbrances and other restrictions, taken as a whole, than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

(c) No Restrictions on Subsidiary Distributions to Borrowers . Except as provided herein or in any of the other Loan Documents, the Credit Parties shall not and shall not cause or permit their Subsidiaries to create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any such Subsidiary to: (1) pay dividends or make any other distribution on any of such Subsidiary’s Stock owned by any Borrower or any other Subsidiary or (2) make or repay loans or advances to any Borrower or any other Subsidiary, except for (i) restrictions with respect to a Subsidiary of the Borrowers imposed pursuant to an agreement that has been entered into in connection with the disposition of such Subsidiary’s assets or all of such Subsidiary’s Stock, in each case, to the extent such restrictions are imposed during the pendency of such disposition and such disposition is either expressly permitted hereunder or, in connection with the disposition of all of such Subsidiary’s Stock, such Stock disposition shall give rise to the concurrent repayment in full of the Obligations no later than thirty (30) days following the date of entering such agreement, (ii) restrictions and conditions existing on the Closing Date and any amendment, modification, renewal, increase, supplement, refunding, replacement or refinancing of such contract or agreement containing such restriction or condition, in each case, so long as not done so in a manner materially adverse to the interest of the Lenders, taken as a whole, (iii) in the case of a Subsidiary that is not a wholly-owned Subsidiary, restrictions or conditions imposed by its Governing Documents or any related joint venture or similar agreement, (iv) restrictions in any agreement evidencing Indebtedness of a Subsidiary that is not a Credit Party permitted by Section 3.1 or Indebtedness permitted by Section 3.1 that is secured by a Permitted Encumbrance if such encumbrance or restriction applies only to the Person obligated under such Indebtedness or the property or assets intended to secure such Indebtedness, (v) customary provisions restricting assignments, subletting or other transfers contained in leases, subleases, licenses, sublicenses, joint venture agreements and similar agreements entered into in the ordinary course of business and customary net worth or similar provisions and (vi) restrictions arising under applicable law, rule, regulation or order.

3.3 Investments . The Credit Parties shall not and shall not cause or permit their Subsidiaries to make or own any Investment in any Person, except:

(a) Investments in cash and Cash Equivalents;

(b) Intercompany loans to the extent expressly permitted under Section 3.1(c) ;

 

30


(c) Loans and advances to employees for moving, entertainment, travel and other similar expenses in the ordinary course of business not to exceed $750,000 in the aggregate at any time outstanding;

(d) Investments representing non-cash consideration received in accordance with Section 3.7 ;

(e) Investments existing on the Closing Date as set forth on Schedule 3.3 and any modifications, extensions, renewals, amendments and replacements thereof that do not increase the amount thereof except by the terms thereof on the Closing Date or as otherwise permitted by this Section 3.3 ;

(f) Investments (i) comprised of notes payable, stock or other securities issued by financially troubled Account Debtors (excluding Affiliates) to any Credit Party pursuant to agreements with respect to settlement of such Account Debtor’s Accounts with such Credit Party negotiated in the ordinary course of business or in connection with the bankruptcy or reorganization of such Account Debtor, (ii) comprised of other assets received (A) in connection with the bankruptcy or reorganization of any Person, (B) in settlement of delinquent obligations of, or other disputes with, customers, suppliers or other account debtors, (C) upon foreclosure and/or (D) as a result of the settlement, compromise or resolution of any litigation, arbitration or other disputes;

(g) Investments constituting Permitted Acquisitions (including Seller Debt and Earnouts otherwise permitted hereunder);

(h) extensions of reasonable and customary trade credit and other customary trade arrangements with customers and suppliers in the ordinary course of business;

(i) Investments in (i) the Credit Parties (other than Holdings) by Holdings or any other Credit Party, (ii) any Subsidiary that is not a Credit Party by a Credit Party provided such Investments, when taken together with any intercompany loans to such Subsidiaries permitted by Section 3.1(c)(iv) , do not exceed $2,000,000 for all such Subsidiaries taken as a whole and (iii) any Subsidiary that is not a Credit Party by any other Subsidiary that is not a Credit Party;

(j) Investments by the Credit Parties constituting Rate Contracts, in each case entered into in the ordinary course of business and not for speculative purposes;

(k) Investments consisting of endorsements of negotiable instruments for collection or deposit in the ordinary course of business;

(l) Investments by the Borrowers in the form of a loan to Holdings, solely in respect of amounts that could have otherwise been made as a cash distribution expressly permitted under Section 3.5 (and the amount of such loan shall for all purposes be treated as a distribution for purposes of Section 3.5 and the financial covenants herein contained), and such loans are evidenced by one or more subordinated promissory notes in form and substance reasonably satisfactory to Agent and otherwise having terms reasonably satisfactory to Agent, and the sole originally executed counterparts of all such promissory notes shall be pledged and delivered to Agent, for the benefit of Agent and Lenders, as security for the Obligations;

(m) Investments in joint ventures in an aggregate amount not to exceed $750,000 at any time outstanding;

 

31


(n) loans and advances by a Credit Party to present or former employees, directors, members of management, officers, managers or consultants, independent contractors or other service providers or other equity investors (or their respective spouses, partners, trusts or estates) in Holdings (or any direct or indirect parent thereof) used solely to fund such Person’s purchase of Stock (excluding, in any event, Disqualified Stock) in Holdings (or any direct or indirect parent thereof) and as permitted by Section 3.5 ; provided such loans are secured by such Stock (solely to the extent any such loan exceeds $750,000 in aggregate principal amount) and evidenced by promissory notes and the sole originally executed counterparts of all such promissory notes shall be pledged and delivered to Agent, for the benefit of Agent and Lenders, as security for the Obligations;

(o) in addition to Investments otherwise expressly permitted by this Section 3.3 , Investments by Borrowers or any of their Subsidiaries in an aggregate amount not to exceed $750,000 at any time outstanding;

(p) to the extent constituting Investments, Indebtedness permitted under Section 3.1 , Liens permitted under Section 3.2 , Restricted Payments permitted under Section 3.5 and transactions permitted under Sections 3.6 and 3.7 ;

(q) loans and advances of payroll payments or other compensation to present or former employees, directors, members of management, officers, managers or consultants of any Credit Party or any direct or indirect parent thereof in the ordinary course of business to the extent such payments or other compensation relate to services provided by such Person;

(r) Investments (other than Investments that would otherwise constitute Permitted Acquisitions or other acquisitions similar thereto) to the extent that the payment for such Investments is made solely with the Stock (excluding, in any event, Disqualified Stock) of Holdings (or any direct or indirect parent thereof);

(s) Investments of a Subsidiary acquired after the Closing Date pursuant to a Permitted Acquisition or of any Person acquired by, or merged into or consolidated or amalgamated with, the Borrowers or any Subsidiary after the Closing Date, in each case, pursuant to an Investment otherwise permitted by this Section 3.3 , in each case, to the extent that such Investments of such Person were not made in contemplation of or in connection with such transaction and were in existence on the date of such Permitted Acquisition or such other permitted Investment (and any modification, replacement, renewal or extension of any such Investment so long as such modification, replacement, renewal or extension thereof does not increase the amount of such Investment except as otherwise permitted by this Section 3.3 ), it being understood that this provisions shall not permit transactions the purpose of which is to acquire such existing Investments of such Subsidiary or other Person that would not otherwise be permitted under this Agreement or to avoid compliance with the requirements of the definition of Permitted Acquisitions;

(t) the Closing Date Acquisition;

(u) Investments in the Credit Parties and their Subsidiaries in connection with intercompany cash management and treasury arrangements and related activities in the ordinary course of business; provided the aggregate amount of all such Investments in Subsidiaries that are not Credit Parties shall not exceed $750,000 at any time outstanding; and

 

32


(v) Investments made after the Closing Date by the Credit Parties (other than Holdings) and their Subsidiaries in an aggregate outstanding amount not to exceed the portion, if any, of the Available Amount on the date of such Investment; provided all of the following conditions are satisfied:

(i) no Default or Event of Default shall have occurred and be continuing or would result therefrom;

(ii) after giving effect to such Investment, on a pro forma basis as of the last day of the most recently ended Fiscal Quarter for which financial statements have been delivered pursuant to Section 4.4(a)(ii) , (x) the Credit Parties are in compliance with the covenants set forth in Sections 4.1 and 4.2 hereof and (y) the Total Net Leverage Ratio is not greater than 4.50 to 1.00; and

(iii) after giving effect to such investment, Liquidity is no less than $5,000,000.

3.4 Contingent Obligations . The Credit Parties shall not and shall not cause or permit their Subsidiaries to create or become or be liable with respect to any Contingent Obligation except:

(a) those resulting from endorsement of negotiable instruments or other instruments for collection or deposit in the ordinary course of business or otherwise from the honoring by a bank or other financial institution of a check, draft or other item of payment drawn against insufficient funds in the ordinary course of business;

(b) those existing on the Closing Date and described in Schedule 3.4 and any modification, replacement, renewal or extension thereof that does not increase the amount of such Contingent Obligation;

(c) those arising under indemnity agreements to title insurers to cause such title insurers to issue to Agent mortgagee title insurance policies;

(d) those arising with respect to customary indemnification obligations and post-closing purchase price adjustments incurred in connection with Asset Dispositions permitted hereunder;

(e) those incurred in the ordinary course of business with respect to surety and appeal bonds, performance and return-of-money bonds and other similar obligations to the extent permitted by Section 3.1(f) ;

(f) those incurred with respect to Indebtedness permitted by Section 3.1 provided that any such Contingent Obligation is subordinated to the Obligations to the same extent as the Indebtedness to which it relates is subordinated to the Obligations;

(g) Contingent Obligations of any Credit Party in respect of any customary purchase price adjustment, non-competition or consulting agreement or deferred compensation agreement (excluding Earnouts and Seller Notes), or other indemnity obligations in each case owing to the seller or any Affiliate thereof or their respective officers or directors in connection with a Permitted Acquisition or other Investment permitted by Section 3.3 ;

 

33


(h) Contingent Obligations of any Credit Party existing or arising under a Rate Contract, in each case entered into in the ordinary course of business and not for speculative purposes;

(i) customary indemnities or other payment obligations under operating contracts entered into in the ordinary course of business;

(j) additional Contingent Obligations not described in the preceding clauses of this Section 3.4 in an aggregate principal amount not to exceed $750,000 at any one time outstanding; and

(k) arising under the Loan Documents.

3.5 Restricted Payments . The Credit Parties shall not and shall not cause or permit their Subsidiaries to directly or indirectly declare, order, pay, make or set apart any sum for any Restricted Payment, except that:

(a) The Credit Parties and their Subsidiaries may pay any reasonable, documented and reasonably allocated (i) general administrative costs and expenses for any services and/or products provided by independent third parties (including customary wages, salary, bonus and other benefits payable to consultants and/or independent contractors of Holdings (or any direct or indirect parent thereof)), in each case, solely to the extent attributable to the ownership or operations of Holdings (or any direct or indirect parent thereof) (but excluding, for the avoidance of doubt, the portion of any amount, if any, that is attributable to the ownership or operation of any Subsidiary of any parent company of Holdings other than Holdings and/or its Subsidiaries), the other Credit Parties or their Subsidiaries, (ii) third party audit and other third party accounting and reporting expenses at Holdings (or any direct or indirect parent thereof) solely to the extent relating to the ownership or operations of Holdings (or any direct or indirect parent) (but excluding, for the avoidance of doubt, the portion of any such expenses, if any, attributable to the ownership or operations of any Subsidiary of any parent company other than Holdings and/or its Subsidiaries), the other Credit Parties or their Subsidiaries and (iii) insurance premiums solely to the extent relating to the ownership or operations of Holdings (or any direct or indirect parent thereof) (but excluding, for the avoidance of doubt, the portion of such premiums, if any, attributable to the ownership or operations of any Subsidiary of any parent company other than Holdings and/or its Subsidiaries), the other Credit Parties and their Subsidiaries; provided, for purposes of clarity, this Section 3.5(a) shall exclude and thus not permit payments to Parent pursuant to the Management Services Agreement, which such payments are permitted as and to the extent set forth in Section 3.5(g) below;

(b) each Credit Party may make distributions to other Credit Parties (other than Holdings) and to Holdings (or any other direct or indirect parent entity) and in the case of Holdings, distributions to Parent (or any direct or indirect parent entity), to permit such recipient Credit Party (other than Holdings), Holdings or Parent (or any other direct or indirect parent entity) to pay (i) in the event the Credit Party files a consolidated, combined, unitary or similar type tax return with such recipient Credit Party (other than Holdings), Holdings or Parent (or any other direct or indirect parent entity), or is classified as an entity disregarded as separate from (and its income and activities are reflected on the tax returns of) such recipient Credit Party (other than Holdings), Holdings, Parent (or any other direct or indirect parent entity), federal and state and local income taxes then due and payable pursuant to those returns, to the extent applicable to the income and activities of the Credit Parties and their Subsidiaries, and (ii) franchise taxes and other similar licensing expenses incurred in the ordinary course of

 

34


business; provided , that the amount of such distributions shall not be greater than the amount of any such taxes or expenses that would have been due and payable by such recipient Credit Party (other than Holdings), Holdings or Parent (or any other direct or indirect parent entity) had such recipient Credit Party (other than Holdings), Holdings or Parent (or any other direct or indirect parent entity) not filed a consolidated, combined, unitary or similar type tax return;

(c) [reserved];

(d) [reserved];

(e) (i) Wholly-owned direct and indirect Subsidiaries of a Credit Party may make Restricted Payments to the Credit Party (other than Holdings) which is the direct owner of such wholly-owned Subsidiary and (ii) non-wholly-owned direct and indirect Subsidiaries of a Credit Party may make Restricted Payments to the Credit Party (other than Holdings) which is the direct owner of such non-wholly-owned Subsidiary and each other direct equityholder, in each case, on a pro rata basis in accordance with such Person’s ownership interests;

(f) Borrowers may make regularly scheduled payment-in-kind “PIK” interest in each case pursuant to the terms of the Subordinated Debt as in effect on the date hereof if and to the extent permitted to be paid pursuant to the terms of the Subordination Agreement corresponding to such Subordinated Debt;

(g) Borrowers may pay the “Corporate Overhead Fees” (as defined in the Management Services Agreement) to Parent pursuant to the Management Services Agreement in equal monthly installments of an aggregate amount not to exceed for any twelve (12) month period, the greater of (x) $1,000,000 or (y) 3.5% of EBITDA of the Credit Parties; provided that (i) no Default or Event of Default has occurred and is continuing at the time of any such Restricted Payment or would result after giving effect thereto, (ii) Borrowers are in pro forma compliance with the financial covenants set forth herein recomputed for the most recently ended Fiscal Quarter for which Financial Statements and the related Compliance and Excess Cash Flow Certificate have been delivered in accordance with the terms hereof (as if such payment was made on the last day of such Fiscal Quarter), and (iii) after giving effect to such payment, Liquidity is no less than $5,000,000; provided , further , that it is expressly agreed that any such “Corporate Overhead Fees” described in the foregoing clause above not permitted to be so paid may be accrued and paid when (i) all Events of Default have been cured and no Event of Default would arise as a result of thereof; (ii) Borrowers are in pro forma compliance with the financial covenants set forth herein recomputed for the most recently ended Fiscal Quarter for which Financial Statements and the related Compliance and Excess Cash Flow Certificate have been delivered in accordance with the terms hereof (as if such payment was made on the last day of such Fiscal Quarter), and (iii) after giving effect to such payment, Liquidity is no less than $5,000,000;

(h) Borrowers may pay dividends to Holdings (or any direct or indirect parent thereof) to permit Holdings (or any direct or indirect parent thereof) to repurchase, redeem, retire or otherwise acquire or retire for value Stock owned by any future, current or former directors, officers, members of management, managers, employees or consultants (or their spouses, partners, trusts or estates) of or engaged by any Credit Party or any Subsidiary thereof, provided that such Restricted Payments shall not exceed $750,000 in any Fiscal Year or $1,500,000 during the term of this Agreement in the aggregate and provided that no Event of Default exists at the time of such Restricted Payment or would occur as a result thereof;

 

35


(i) Borrowers may make payments and distributions to Holdings (whether directly or through sequential upstream Restricted Payments) that are used by Holdings to pay Holdings’ directors fees and expenses to the extent expressly permitted pursuant to Section 3.8(d) ;

(j) Borrowers may make Restricted Payments to Holdings (or any direct or indirect parent thereof) to enable Holdings (or any direct or indirect parent thereof) to make cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Stock of Holdings (or any such direct or indirect parent thereof);

(k) Borrowers may repurchase (or make Restricted Payments to Holdings (or any direct or indirect parent thereof) to enable it to repurchase) Stock upon the exercise of options or warrants or other securities convertible into or exchangeable for Stock if such Stock represents all or a portion of the exercise price of such options or warrants or other securities as part of a “cashless” exercise;

(l) Borrowers may make Restricted Payments the proceeds of which are applied solely to effect the consummation of the Related Transactions and to satisfy any payment obligations owing under the Closing Date Acquisition Documents;

(m) Borrowers may make additional Restricted Payments in an amount not to exceed the portion, if any, of the Available Amount on such date; provided all of the following conditions are satisfied:

(i) no Default or Event of Default shall have occurred and be continuing or would result therefrom;

(ii) after giving effect to such Restricted Payment, on a pro forma basis as of the last day of the most recently ended Fiscal Quarter for which financial statements have been delivered pursuant to Section 4.4(a)(ii) , (x) the Credit Parties are in compliance with the covenants set forth in Sections 4.1 and 4.2 hereof and (y) the Total Net Leverage Ratio is not greater than 4.00 to 1.00; and

(iii) after giving effect to such Investment, Liquidity is no less than $7,500,000;

(n) to the extent constituting a Restricted Payment, the Credit Parties may make Investments pursuant to Section 3.3 and effectuate other transactions pursuant to Section 3.6 and Section 3.7 , in each case to the extent expressly permitted by this Agreement;

(o) [reserved];

(p) the Credit Parties may make cash payments in respect of any Earnouts as and when due and payable; provided and only so long as:

(i) (x) both immediately before and after giving effect to such payment, the Total Net Leverage Ratio, recomputed on a pro forma basis, as of the last day of the most recently ended Fiscal Quarter for which financial statements have been delivered pursuant to Section 4.4 , is not in excess of the lesser of (I) 5.00 to 1.00 and (II) the maximum Total Net Leverage Ratio covenant set forth in Section 4.2 as of the last day of the most recently ended Fiscal Quarter for which financial statements have been delivered pursuant to Section 4.4 , and (y) after giving effect to such payment, Liquidity is no less than $5,000,000;

 

36


(ii) immediately before giving effect to such payment no Default or Event of Default exists and be continuing and no Default or Event of Default would be caused by or otherwise result from the making of any such payment; and

(iii) at least five (5) Business Days prior to the payment of such Earnout, the Borrower Representative shall have delivered to Agent a written notice of intent to pay such Earnout which notice shall contain (x) the proposed date of such payment, (y) the expected amount of such payment and the calculation thereof, and (z) certification that all of the conditions in this Section 3.5(p) shall be satisfied both immediately prior and after giving effect to such payment;

(q) [reserved];

(r) Borrowers may make an annual distribution to Holdings (which shall be immediately distributed to Parent) within ten (10) Business Days after the making of the prepayment under Section 1.5 (commencing with the Fiscal Year ending December 31, 2017) in an amount not to exceed the amount of Excess Cash Flow that is not required to be applied as a mandatory prepayment pursuant to Section 1.5(b) in respect of such Fiscal Year (prior to giving effect to any voluntary prepayments that reduce the amount of such required mandatory prepayment, and, for the avoidance of doubt, without adjusting for the amount of any Declined Prepayment Amount) (the “ Retained ECF ”); provided and only so long as:

(i) no Default or Event of Default would be caused by or otherwise result from the making of any such distribution;

(ii) after giving effect to such distribution, (x) Liquidity is no less than $7,500,000, (y) Borrowers are in pro forma compliance with the financial covenants set forth herein recomputed for the most recently ended Fiscal Quarter for which Financial Statements and the related Compliance and Excess Cash Flow Certificate have been delivered in accordance with the terms hereof (as if such distribution was made on the last day of such Fiscal Quarter), and (z) the Total Net Leverage Ratio, recomputed on a pro forma basis, as of the last day of the most recently ended Fiscal Quarter for which financial statements have been delivered pursuant to Section 4.4 , is less than 4.50 to 1.00; provided that, if the condition in this subclause (z) is not satisfied but the Total Net Leverage Ratio is less than 5.00 to 1.00 but greater than or equal to 4.50 to 1.00 and the other conditions set forth in this clause (r) have been satisfied, Borrowers may make such annual distribution to Holdings in an amount not to exceed fifty percent (50%) of such Retained ECF; and

(s) Borrowers may make distributions to Parent in amounts equal to prior Specified Equity Contributions (less the aggregate amount of the Specified Equity Contributions (x) used to prepay the Term Loans pursuant to Section 1.5(a) and (y) required to prepay the Term Loans pursuant to Section 6.7 hereof); provided and only so long as:

(i) no Specified Equity Contributions have been made in the most recent consecutive four fiscal quarter period;

 

37


(ii) no Default or Event of Default would be caused by or otherwise result from the making of any such distribution;

(iii) after giving effect to such distribution, (x) Liquidity is no less than $10,000,000, (y) Borrowers are in pro forma compliance with the financial covenants set forth herein recomputed for the most recently ended Fiscal Quarter for which Financial Statements and the related Compliance and Excess Cash Flow Certificate have been delivered in accordance with the terms hereof (as if such distribution was made on the last day of such Fiscal Quarter), and (z) the Total Net Leverage Ratio, recomputed on a pro forma basis, as of the last day of the most recently ended Fiscal Quarter for which financial statements have been delivered pursuant to Section 4.4 , is less than 4.25 to 1.00; and

(iv) delivery to Agent of (x) the calculations prepared with respect to the condition set forth in Section 3.5(s)(iii) above, and (y) a certification that all of the conditions in this Section 3.5(s) shall be satisfied after giving effect to such distribution.

3.6 Restriction on Fundamental Changes . The Credit Parties shall not and shall not cause or permit their Subsidiaries to:

(a) enter into any transaction of merger or consolidation except (i) any wholly-owned Subsidiary of any Borrower may be merged or consolidated with or into any Borrower ( provided that such Borrower is the surviving entity) or any Credit Party ( provided that any such Credit Party is the surviving entity), (ii) any Credit Party (other than Holdings) may be merged with or into any other Credit Party (other than Holdings and provided that, in the case of any merger involving the Borrower Representative, the Borrower Representative is the surviving entity) and (iii) any Subsidiary may be merged or consolidated with or into any Credit Party or any Subsidiary or other Person ( provided that (A) in the case of such transaction involving any Borrower, such Borrower is the surviving entity, (B) in the case of any such transaction involving any Credit Party, either such Credit Party is the surviving entity or such transaction shall be treated as an Investment and shall comply with Section 3.3 and (C) in the case of any transaction involving a Subsidiary that is neither a Borrower nor a Credit Party, such Subsidiary shall be the surviving entity or such transaction shall be treated as an Investment and shall comply with Section 3.3 ; it being agreed and understood that, after the Closing Date, upon prior written notice to Agent, (x) any of GP II, SCI, FVC Intermediate and/or FVC may merge or consolidate with and into one another ( provided that with respect to any merger or consolidation involving FVC, FVC shall be the surviving entity), and (y) FVC Houston may merge or consolidate with FVC ( provided that FVC shall be the surviving entity); or

(b) liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution) or change its organizational form, unless, solely with respect to any liquidation, winding-up or dissolution of any Subsidiary of the Borrower Representative, (i) the Borrower Representative determines in good faith that such liquidation, dissolution or change in organizational form is in the best interests of the Credit Parties and their Subsidiaries, taken as a whole, and is not materially disadvantage to the Lenders and, in the case of any liquidation or dissolution of any Subsidiary of the Borrower Representative, either the Borrower Representative or a Subsidiary receives any assets of such dissolved or liquidate Subsidiary ( provided that in the case of a dissolution or liquidation of a Credit Party that results in the distribution of assets to a Subsidiary that is not a Credit Party, such distribution of assets shall be treated as an Investment and shall comply with Section 3.3 and provided further that in the case of a dissolution or

 

38


liquidation of a Borrower that is a Subsidiary of the Borrower Representative, the Person receiving the assets of such dissolved or liquidated Subsidiary is a Credit Party, and (ii) the transaction shall comply with the terms and provisions of this Agreement (including Section 2.7 ); it being agreed and understood that, after the Closing Date, upon prior written notice to Agent, (x) any of GP II, SCI, FVC Intermediate and/or FVC may merge or consolidate with and into one another ( provided that with respect to any merger or consolidation involving FVC, FVC shall be the surviving entity), and (y) FVC Houston may merge or consolidate with FVC ( provided that FVC shall be the surviving entity).

3.7 Disposal of Assets or Subsidiary Stock . The Credit Parties shall not and shall not cause or permit their Subsidiaries to convey, sell, lease, sublease, transfer or otherwise dispose of, in one transaction or a series of related transactions, any of its property, business or assets, whether now owned or hereafter acquired, except for:

(a) (i) sales of inventory by the Borrowers and their Subsidiaries to customers in the ordinary course of business (including on an intercompany basis) and (ii) dispositions of surplus, obsolete, used or worn-out equipment or other assets no longer used or useful in the business or otherwise economically impracticable to maintain;

(b) Asset Dispositions by (i) a Credit Party to another Credit Party (other than Holdings), (ii) a Subsidiary of Holdings that is not a Credit Party to any Credit Party (other than Holdings) and (ii) a Subsidiary of Holdings (other than a Borrower) to another Subsidiary of Holdings ( provided that any such Asset Disposition by a Credit Party to a Subsidiary that is not a Credit Party shall be (A) for fair market value, in an amount not to exceed $750,000 in the aggregate during the term of this Agreement and at least 85% of the consideration for such Asset Disposition consists of cash or Cash Equivalents at the time of such Asset Disposition or (B) treated as an Investment and otherwise made in compliance with Section 3.3 ;

(c) (i) the sale or issuance by a Subsidiary of a Credit Party of such Subsidiary’s Stock to such Credit Party so long as such Stock (to the extent constituting Collateral and required to be pledged) is pledged to Agent as Collateral pursuant to and in accordance with this Agreement and the other Loan Documents and (ii) the sale or issuance by a Subsidiary of a Credit Party of such Subsidiary’s Stock to another Subsidiary so long as (A) such transaction is treated as an Investment and otherwise made in compliance with Section 3.3 and (B) such Stock (to the extent constituting Collateral and required to be pledged) is pledged to Agent as Collateral pursuant to and in accordance with this Agreement and the other Loan Documents;

(d) the disposition of cash or Cash Equivalents (or other assets that were Cash Equivalents when the original Investment was made) in the ordinary course of business;

(e) to the extent constituting dispositions, the making of Investments and Restricted Payments and the consummation of any fundamental change as described in Section 3.6 , in each case, otherwise expressly permitted hereunder;

(f) the discount or write-off of accounts receivable or the sale of any such accounts receivable for the purposes of collection or compromise thereof, in each case, in the ordinary course of business;

(g) (i) licenses, sublicenses, leases or subleases granted to third parties in the ordinary course of business (including any licenses or sublicenses of Intellectual Property) not interfering in any material respect with the business of the Credit Parties or any of their

 

39


Subsidiaries, (ii) the leasing or subleasing of real property and the termination of leases, in each case, in the ordinary course of business, (iii) the expiration of any option agreement in respect of real or personal property, (iv) the surrender or wavier of any contractual rights or the settlement, release or surrender of contractual rights or litigation claims in the ordinary course of business and (v) the disposition, abandonment, cancellation or lapse of Intellectual Property which, in the reasonable good faith determination of the Borrower Representative, are not material to the operation of its business or are no longer economically practical to maintain in light of its use;

(h) Casualty Events to the extent the Net Proceeds thereof are applied to the Obligations or reinvested in the business of the Credit Parties in accordance with this Agreement;

(i) Asset Dispositions by Borrowers and their Subsidiaries (excluding sales of Accounts and Stock of any Credit Party) if all of the following conditions are met: (i) the aggregate fair market value of assets sold or otherwise disposed of in any Fiscal Year does not exceed $750,000; (ii) the consideration received is at least equal to the fair market value of such assets (as determined in good faith by the Borrower Representative); (iii) at least 75% of the consideration received is cash; and (iv) the Net Proceeds of such Asset Disposition are applied as required by Section 1.5(d)(i) ;

(j) dispositions or similar transfers of assets to the extent that (i) the relevant property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of the relevant disposition or transfer are promptly applied to the purchase of such replacement property;

(k) dispositions of Investments in joint ventures or non-wholly-owned Subsidiaries to the extent required by, or made pursuant to, buy/sell arrangements between the joint venture or similar party set forth in the joint venture arrangement or similar binding arrangement;

(l) (i) the disposition or sale of motor vehicles and information technology equipment purchased at the end of an operating lease and resold thereafter and (ii) the disposition or sale of motor vehicles for fair market value (as reasonably determined by the Borrower Representative) so long as the proceeds from such disposition or sale are reinvested in other motor vehicles to be used in the operations of the Credit Parties; and

(m) exchanges or swaps of Real Estate, including transactions covered by Section 1031 of the IRC (or any comparable provision in any foreign jurisdiction), so long as the exchange is made for fair value (as reasonably determined by the Borrower Representative) for like Real Estate ( provided that (A) the Credit Parties shall comply with the provisions of Section 2.7(c) and (b) the transaction was otherwise made in accordance with this Agreement.

3.8 Transactions with Affiliates . The Credit Parties shall not and shall not cause or permit their Subsidiaries to directly or indirectly enter into or permit to exist any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any management, consulting, investment banking, advisory or other similar services) with any Affiliate or with any director, officer or employee of any Credit Party, except:

(a) transactions described on Schedule 3.8(a) and any amendment, modification, renewal or extension thereto to the extent such amendment, modification, renewal or extension, taken as a whole, is not (i) adverse to the Lenders or any Credit Party in any material respect or (ii) more disadvantageous to the Lenders or any Credit Party than the relevant transaction in existence on the Closing Date in any material respect;

 

40


(b) transactions in the ordinary course of business and upon fair and reasonable terms that are no less favorable to any such Credit Party or any of its Subsidiaries than would be obtained in a comparable arm’s length transaction with a Person that is not an Affiliate and that, to the extent such transaction involves payments in excess of $100,000 in a Fiscal Year, have been fully disclosed to Agent;

(c) (i) payment of reasonable compensation (including bonuses and other similar payments) to current or former officers, members of management and employees for services actually rendered to any such Credit Party or any of its Subsidiaries and (ii) payment of reasonable out-of-pocket costs and expenses to and indemnities provided on behalf of current or former officers, employees or members of management of the Credit Parties and their Subsidiaries in the ordinary course of business and to the extent attributable to the operations of the Credit Parties and their Subsidiaries;

(d) Payment of independent director’s fees, costs and expenses not to exceed $250,000 in the aggregate for any Fiscal Year of Credit Parties;

(e) [reserved];

(f) any transaction between or among the Credit Parties and/or one or more Subsidiaries (or any entity that becomes a Subsidiary as a result of such transaction) to the extent expressly permitted or not restricted by this Agreement;

(g) any loan or advance or other similar transaction expressly permitted by Section 3.1 and the agreements pursuant to which such loan or advance or other similar transaction are required to be made;

(h) Investments and Restricted Payments expressly permitted in Sections 3.3 and 3.5 and the agreements pursuant to which such Investments and/or Restricted Payments are required to be made; and

(i) reimbursement of employee travel and lodging costs incurred in the ordinary course of business.

3.9 Conduct of Business . Holdings shall not engage in any business activity other than (a) its ownership of the Stock of its Subsidiaries (other than de minimis assets relating to such ownership and administrative and other similar activities incidental thereto), (b) customary administrative, accounting, treasury and other corporate overhead matters on behalf of the Borrowers and their Subsidiaries, including preparing reports and other deliverables for governmental or regulatory authorities, providing indemnification for its current or former officers, directors or members of management and complying with all applicable Requirements of Law, (c) its performance of the Loan Documents and the Related Transaction Documents, (d) issuing its own Stock (including, for the avoidance of doubt, the making of any dividend or distribution on account of, or any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value of, any shares of any class of Stock, in each case, solely to the extent not prohibited hereunder), (e) holding equity holder meetings and (f) performing its obligations under the Management Services Agreement. The Credit Parties shall not and shall not cause or permit their Subsidiaries to directly or indirectly engage in any material line of business other than the businesses engaged in by the Borrower Representative and its Subsidiaries on the Closing Date and similar, complimentary, ancillary, incidental or related businesses thereto.

 

41


3.10 Changes Relating to Certain Indebtedness . The Credit Parties shall not and shall not cause or permit their Subsidiaries to directly or indirectly change or amend the terms of any of governing agreements for any Subordinated Debt except as permitted by the terms of the applicable Subordination Agreement.

3.11 Fiscal Year. No Credit Party shall change its Fiscal Year or permit any of its Subsidiaries to change their respective Fiscal Years; provided , the Credit Parties may change their respective Fiscal Years so long as (a) such change is being made in connection with a corresponding change to the Fiscal Year of Parent, and (b) each Credit Party and Agent shall promptly, in good faith, implement any necessary or reasonably advisable changes to this Agreement or any other Loan Document to as a result of such change.

3.12 Hazardous Materials . The Credit Parties shall not and shall not cause or permit their Subsidiaries to cause or permit a Release of any Hazardous Material on, at, in, under, above, to, from or about any of the Real Estate where such Release would (a) violate in any respect, or form the basis for any Environmental Liabilities by the Credit Parties or any of their Subsidiaries under, any Environmental Laws or Environmental Permits or (b) otherwise adversely impact the value or marketability of any of the Real Estate or any of the Collateral, other than such violations or Environmental Liabilities, in each case, that could not reasonably be expected to have a Material Adverse Effect.

3.13 ERISA . The Credit Parties shall not and shall not cause or permit any ERISA Affiliate to, cause or permit to occur an ERISA Event to the extent such ERISA Event could reasonably be expected to result in a Lien or otherwise have a Material Adverse Effect.

3.14 Use of Loan Proceeds . The Credit Parties shall not use proceeds of any Loans provided by Lenders for any of the following purposes:

(a) provision of money to a Person who has been convicted of a criminal offense, or held liable in a civil proceeding, that negatively reflects on the Person’s business integrity, based on a finding of embezzlement, theft, forgery, bribery, falsification or destruction of records, receiving stolen property, or violation of state or federal antitrust statutes. As used in this Section, if a Person is a business entity, such Person includes Subsidiaries, Affiliates, and managerial employees of such Person, and any Person who, directly or indirectly, holds a pecuniary interest in that business entity of twenty percent (20%) or more;

(b) provision of money that would contribute to the violation of internationally recognized workers’ rights, as defined in Section 507(4) of the Trade Act of 1974, 19 USC 2467(4), of workers in a country other than the United States, including any designated zone or area in that country;

(c) “buying” or “carrying” “margin stock” within the respective meanings of such terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect or for any other purpose that violates the provisions of the regulations of the Board of Governors of the Federal Reserve System; or

(d) provision of money to a corporation or an Affiliate of the corporation who is incorporated in a tax haven country after September 11, 2001, while maintaining the United States as the principal market for the public trading of the corporation’s stock. As used in this

 

42


Section, “tax haven country” includes a country with tax laws that facilitate avoidance by a corporation or an Affiliate of the corporation of United States tax obligations, including Barbados, Bermuda, British Virgin Islands, Cayman Islands, Commonwealth of the Bahamas, Cyprus, Gibraltar, Isle of Man, the principality of Liechtenstein, the principality of Monaco, and the Republic of the Seychelles.

3.15 OFAC and Patriot Act . No Credit Party shall and no Credit Party shall permit any of its Subsidiaries to fail to comply in all material respects with the laws, regulations and executive orders referenced in Section 5.19 hereof.

3.16 Sale-Leasebacks . The Credit Parties shall not and shall not cause or permit any of their Subsidiaries to engage in any sale-leaseback, synthetic lease or similar transaction involving any of its assets.

3.17 Changes to Governing Documents; Closing Date Acquisition Documents; Management Agreement . The Credit Parties shall not and shall not cause or permit any of their Subsidiaries (i) to change or amend the terms of the Governing Documents in any manner that is materially adverse to the rights or interests of Agent and the Lenders or would cause such Credit Party or such Subsidiary to violate the separateness covenant set forth in Section 2.13 , (ii) to waive, amend, supplement or otherwise modify in a manner material and adverse to the Lenders the Closing Date Acquisition Agreement (without the consent of Agent (such consent not to be unreasonably withheld, delayed or conditioned)), or (iii) to change or amend the terms of the Management Services Agreement in any manner that is materially adverse to Agent, the Lenders or the Credit Parties.

SECTION 4.

FINANCIAL COVENANTS/REPORTING

The Credit Parties covenant and agree that from and after the date hereof until the Termination Date, the Credit Parties shall perform and comply with, and shall cause each of the other Credit Parties and their Subsidiaries to perform and comply with, all covenants in this Section 4 applicable to such Person.

4.1 Minimum Fixed Charge Coverage Ratio . Holdings and its Subsidiaries shall have, on a consolidated basis at the end of each Fiscal Quarter, commencing on December 31, 2016, a Fixed Charge Coverage Ratio for the twelve (12) month period ending on such date, of not less than the following:

 

Period

  

Fixed Charge Coverage Ratio

December 31, 2016 through June 30, 2019

   1.00 to 1.00

September 30, 2019 through December 31, 2020

   1.05 to 1.00

March 31, 2021 through June 30, 2022, and each twelve (12) month period ending thereafter

   1.10 to 1.00

 

43


4.2 Maximum Total Net Leverage Ratio . Holdings and its Subsidiaries on a consolidated basis shall have, at the end of each Fiscal Quarter set forth below, a Total Net Leverage Ratio as of the last day of such Fiscal Quarter, of not more than the following:

 

Period

  

Leverage Ratio

December 31, 2016

   7.00 to 1.00

March 31, 2017

   6.75 to 1.00

June 30, 2017

   6.50 to 1.00

September 30, 2017

   6.50 to 1.00

December 31, 2017

   6.25 to 1.00

March 31, 2018

   6.25 to 1.00

June 30, 2018

   6.00 to 1.00

September 30, 2018

   6.00 to 1.00

December 31, 2018

   5.75 to 1.00

March 31, 2019

   5.75 to 1.00

June 30, 2019

   5.50 to 1.00

September 30, 2019

   5.50 to 1.00

December 31, 2019

   5.25 to 1.00

March 31, 2020

   5.25 to 1.00

June 30, 2020

   5.25 to 1.00

September 30, 2020

   5.25 to 1.00

December 31, 2020

   5.00 to 1.00

March 31, 2021

   5.00 to 1.00

June 30, 2021

   5.00 to 1.00

September 30, 2021

   5.00 to 1.00

December 31, 2021

   5.00 to 1.00

March 31, 2022

   5.00 to 1.00

June 30, 2022, and the last day of each Fiscal Quarter thereafter

   5.00 to 1.00

4.3 [Reserved].

4.4 Financial Statements and Other Reports. Holdings will maintain, and cause each of its Subsidiaries to maintain, a system of accounting to permit the preparation of Financial Statements in conformity with GAAP (it being understood that monthly Financial Statements are not required to have footnote disclosures and may be subject to normal year-end adjustments). Borrower Representative will deliver each of the Financial Statements and other reports described below to Agent (who will distribute to the Lenders).

(a) Unaudited Financials . Within (i) thirty (30) days after the end of each of the first two months of each Fiscal Quarter (or forty-five (45) days in the case of the months of October and November 2016), Borrower Representative will deliver (1) the consolidated balance sheets of Holdings and its Subsidiaries, as at the end of such month, and the related consolidated statements of income, stockholders’ equity and cash flow for such month and for the period from the beginning of the then current Fiscal Year of Holdings to the end of such month, and (2) a report setting forth in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year and the corresponding figures from the most recent Projections for the current Fiscal Year delivered pursuant to Section 4.4(f) and (ii) forty-five (45) days after the end of each Fiscal Quarter (or sixty (60) days in the case of the first two Fiscal Quarters ending following the Closing Date) (including the last Fiscal Quarter of

 

44


Holdings’ Fiscal Year), Borrower Representative will deliver (1) the consolidated balance sheets of Holdings and its Subsidiaries, as at the end of such Fiscal Quarter, and the related consolidated statements of income, stockholders’ equity and cash flow for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year of Holdings to the end of such Fiscal Quarter, (2) a report setting forth in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year and the corresponding figures from the most recent Projections for the current Fiscal Year delivered pursuant to Section 4.4(f) .

(b) Year-End Financials . Within ninety (90) days after the end of each Fiscal Year of Holdings, Borrower Representative will deliver (1) the consolidated balance sheets of Holdings and its Subsidiaries, as at the end of such year, and the related consolidated statements of income, stockholders’ equity and cash flow for such Fiscal Year, and (2) a report with respect to the consolidated Financial Statements from a nationally recognized firm of certified public accountants in good standing selected by Holdings, which report shall be prepared in accordance with Statement of Auditing Standards No. 58 “Reports on Audited Financial Statements” and such report shall be unqualified as to scope, going concern and consistent application of accounting principles and exclude any qualifications with respect to going concern (except for any qualification with respect to Obligations being considered current debt in their last year of maturity).

(c) Accountants’ Reports . Promptly upon receipt thereof, Borrower Representative will deliver copies of all final copies of significant reports submitted by Holdings’ firm of certified public accountants in connection with each annual, interim or special audit or review of any type of the Financial Statements or related internal control systems of Holdings or its Subsidiaries made by such accountants, including any final comment letter submitted by such accountants to management in connection with their services.

(d) Management Report . Together with each delivery of Financial Statements of Holdings and its Subsidiaries pursuant to Sections 4.4(a)(i) and 4.4(a)(ii) , Borrower Representative will deliver a management report, in reasonable detail, (1) describing the operations and financial condition of Holdings and its Subsidiaries for the quarter then ended and the portion of the current Fiscal Year then elapsed (or for the Fiscal Year then ended in the case of year-end financials) and (2) discussing the reasons for any significant variations.

(e) Appraisals . From time to time, at Borrowers’ expense, at any time while and so long as an Event of Default shall have occurred and be continuing, and in the absence of a Default or an Event of Default not more than once during each calendar year, Agent may obtain appraisal reports in form and substance and from appraisers satisfactory to Agent stating the then current market values of all or any portion of the Real Estate and personal property owned by any of the Credit Parties.

(f) Projections and Operating Plan . Within thirty (30) days following the end of each of Holdings’ Fiscal Years, Borrower Representative will deliver (a) Projections of Holdings and its Subsidiaries for the forthcoming Fiscal Year, month by month and (b) a board approved budget for Holdings and its Subsidiaries for the forthcoming Fiscal Year.

(g) SEC Filings and Press Releases . Promptly upon their becoming available, Borrower Representative will deliver copies of (1) all Financial Statements, reports, notices and proxy statements made publicly available by Holdings or any of its Subsidiaries to their Stockholders, (2) all regular and periodic reports and all registration statements and prospectuses, if any, filed by Holdings or any of their Subsidiaries with any securities exchange

 

45


or with the Securities and Exchange Commission, any Governmental Authority or any private regulatory authority, which shall then satisfy all of the reporting obligations specified in Sections 4.4(a) , 4.4(b) , 4.4(c) and 4.4(d) above and (2) all press releases and other statements made available by Holdings or any of its Subsidiaries to the public concerning developments in the business of any such Person. It being understood that if this Section 4.4(g) is applicable, all such documents may be delivered electronically and shall be deemed to have been delivered on the date on which the Borrower Representative (or any direct or indirect parent thereof) posts such documents, or provides a link thereto, on the Borrower Representative’s website.

(h) Events of Default, Etc. Promptly upon any Responsible Officer of any Credit Party obtaining knowledge of any of the following events or conditions, Borrower Representative shall deliver copies of all written notices given or received by Holdings or any of its Subsidiaries with respect to any such event or condition and a certificate of a Responsible Officer specifying the nature and period of existence of such event or condition and what action Holdings or any of its Subsidiaries has taken, is taking and proposes to take with respect thereto: (1) any Event of Default or Default; or (2) any event or condition that would reasonably be expected to result in any Material Adverse Effect.

(i) Litigation . Promptly upon any Responsible Officer of any Credit Party obtaining knowledge of (1) the institution of any action, charge, claim, demand, suit, proceeding, petition, governmental investigation, tax audit or arbitration now pending or threatened in writing against or affecting any Credit Party or any of its Subsidiaries or any property of any Credit Party or any of its Subsidiaries (“ Litigation ”) not previously disclosed by Borrower Representative to Agent or (2) any material development in any action, suit, proceeding, governmental investigation or arbitration at any time pending against or affecting any Credit Party or any property of any Credit Party which, in each case of clause (1) and (2), would reasonably be expected to have a Material Adverse Effect, Borrower Representative will promptly give written notice thereof to Agent and provide such other information as may be reasonably available to them to enable Agent and its counsel to evaluate such matter.

(j) Notice of Corporate and other Changes . Borrower Representative shall provide prompt written notice of (1) any material amendment or other modification to the Governing Documents of any Credit Party, (2) any Subsidiary created or acquired by any Credit Party or any of its Subsidiaries after the Closing Date, such notice, in each case, to identify the applicable jurisdictions, organizational form, legal name, capital structures or Subsidiaries, as applicable, and (3) any change in a Credit Party’s organizational form, legal name, jurisdiction of organization or formation or Fiscal Year. The foregoing notice requirement shall not be construed to constitute consent by any of the Lenders to any transaction referred to above which is not expressly permitted by the terms of this Agreement.

(k) Other Information . With reasonable promptness, Borrower Representative will deliver such other financial information and pertinent data with respect to any Credit Party or any Subsidiary of any Credit Party as from time to time may be reasonably requested by Agent (or any Lender through Agent).

(l) Acquisition Documents . Promptly upon (and in any event within ten (10) Business Days after) receipt thereof, the Borrower Representative shall deliver to Agent copies of all notices of material purchase price adjustments, indemnity claims or other material notices received by any Credit Party in connection with (or pursuant to) any of the Acquisition Documents.

 

46


(m) Compliance and Excess Cash Flow Certificate. Together with each delivery of Financial Statements of Holdings and its Subsidiaries pursuant to Sections 4.4(a)(ii) and 4.4(b), Borrower Representative will deliver a fully and properly completed Compliance and Excess Cash Flow Certificate (in substantially the same form as Annex F ) (the “ Compliance and Excess Cash Flow Certificate ”) signed by Borrower Representative’s chief executive officer, chief financial officer, treasurer or controller (it being understood that the Excess Cash Flow calculation on such Compliance and Excess Cash Flow Certificate shall only be required in connection with the delivery of Financial Statements pursuant to Section 4.4(b) ).

(n) Taxes . Borrower Representative shall provide prompt written notice of (i) the execution or filing with the IRS or any other Governmental Authority of any agreement or other document extending, or having the effect of extending, the period for assessment or collection of any Charges by any Credit Party or any of its Subsidiaries in connection with any IRS or other Governmental Authority audit or investigation, in each case, in respect of taxes or other liabilities (except for the filing by or on behalf of any Credit Party of any voluntary disclosure agreement or similar document, and any related filings, during the period ending on the first anniversary of the Closing Date, with respect to sales and use taxes attributable to any taxable period ending on or before the Closing Date) in excess of $1,500,000 or which could reasonably be expected to have a Material Adverse Effect and (ii) any agreement by any Credit Party or any of its Subsidiaries or request directed to any Credit Party or any of its Subsidiaries to make any adjustment under IRC Section 481(a), by reason of a change in accounting method or otherwise, which would reasonably be expected to have a Material Adverse Effect.

(o) [Reserved] .

(p) ERISA . Within ten (10) days after any Credit Party or any ERISA Affiliate knows of the occurrence of any of the following, Borrower Representative shall provide written notice thereof: (i) an ERISA Event which could result in material liability to any Credit Party, (ii) that any Credit Party or ERISA Affiliate has filed or anticipates filing any request for a receipt of a minimum funding waiver under Section 412 of the IRC, (iii) any Multiemployer Plan has notified any Credit Party or ERISA Affiliate that it is or is expected to be in critical or endangered status under Title IV of ERISA, or (iii) that any Title IV Plan is or is expected to be in at-risk status under Title IV of ERISA, setting forth the full details as to such occurrence and the action, if any, that, such Credit Party or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given or filed by such Credit Party, the Plan administrator or such ERISA Affiliate to or with the PBGC or any other Governmental Authority, or a Plan, or Multiemployer Plan or participant and any notices received by such Credit Party or ERISA Affiliate from the PBGC or any other Governmental Authority, or a Plan, Multiemployer Plan or Plan participant with respect thereto.

(q) Borrower Representative shall provide prompt written notice of any change in the business relationship with respect to any material supplier to the Credit Parties and their Subsidiaries.

(r) At such time any Credit Party or any Subsidiary enters into a supplier agreement or other similar agreement or arrangement with Parent, Borrower Representative shall provide prompt written notice thereof and shall promptly provide to Agent a copy of the executed agreement.

 

47


4.5 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement . For purposes of this Agreement, all accounting terms not otherwise defined herein shall have the meanings assigned to such terms in conformity with GAAP. Financial statements and other information furnished to Agent pursuant to Section 4.4 or any other section (unless specifically indicated otherwise) shall be prepared in accordance with GAAP as in effect at the time of such preparation; provided if an Accounting Change occurs that shall affect financial covenants, standards or terms in this Agreement, the Borrower Representative and Agent agree to enter into negotiations to amend such provisions of this Agreement so as to reflect equitably such Accounting Change with the desired result that the criteria for evaluating Holdings’ financial condition shall be the same after such Accounting Change as if such Accounting Change had not been made; provided further that until such time as such an amendment shall have been executed and delivered by the Borrower Representative and Agent, Credit Parties shall prepare footnotes to the Financial Statements required to be delivered hereunder that show the differences between the Financial Statements delivered (which reflect such Accounting Changes) and the basis for calculating financial covenant compliance (without reflecting such Accounting Changes). All such adjustments described in clause (c) of the definition of the term Accounting Changes resulting from expenditures made subsequent to the Closing Date (including capitalization of costs and expenses or payment of pre-Closing Date liabilities) shall be treated as expenses in the period the expenditures are made. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to in this Section 4 shall be made, without giving effect to any election under Accounting Standards Codification 825-10 (or other Financial Account Standard having a similar result or effect) to value any Indebtedness or other liabilities of any Credit Party or any Subsidiary of any Credit Party at “fair value.” A breach of a financial covenant contained in this Section 4 or otherwise shall be deemed to have occurred as of the last day of any specified measurement period regardless of when the Financial Statements or the related Compliance and Excess Cash Flow Certificate reflecting such breach are delivered to Agent.

SECTION 5.

REPRESENTATIONS AND WARRANTIES

To induce Agent and Lenders to enter into the Loan Document and to make Loans hereunder and the L/C Issuer to issue Lender Letters of Credit and Letter of Credit Participation Agreements, Borrowers and the other Credit Parties executing this Agreement, jointly and severally, represent, warrant and covenant to Agent and each Lender that the following statements before and, after giving effect to the Related Transactions, are true, correct and complete:

5.1 Disclosure . As of the Closing Date, no representation or warranty of (i) any Credit Party contained in this Agreement, the Financial Statements referred to in Section 5.5 , the other Related Transactions Documents or any other document, certificate or written statement furnished to Agent or any Lender by or on behalf of any such Person for use in connection with the Loan Documents or the Related Transaction Documents, when taken as a whole, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading in any material respect in light of the circumstances in which the same were made; provided , that (a) with respect to financial estimates, projected financial information, forecasts and other forward-looking information, each Credit Party represents and warrants only that such information, when taken as a whole, was prepared in good faith based upon assumptions that are reasonable at the time of preparation and at the time such financial estimates, projected financial information, forecasts and other forward looking information are made available to Agent or Lenders; it being understood that (i) such projections are not to be viewed as facts, (ii) such projections are subject to significant uncertainties and contingencies, many of which are beyond the Credit Parties’ control, (iii) no assurance can be given that any particular projections will be realized and (iv) actual results during the period or periods covered by any such projections may differ significantly from the projected results and such differences may be material and (b) no representation or warranty is made with respect to information of a general economic or general industry nature.

 

48


5.2 No Material Adverse Effect; No Default . Since June 24, 2016, no Material Adverse Effect has occurred. No Default or Event of Default has occurred and is continuing.

5.3 No Conflict . The consummation of the Related Transactions does not and will not (i) violate or conflict with any laws, rules, regulations or orders of any Governmental Authority applicable to any Credit Party or (ii) violate, conflict with, result in a breach of, or constitute a default (with due notice or lapse of time or both) under (x) any Contractual Obligation of Borrowers or any Credit Party or any of their respective Subsidiaries or (y) any Governing Documents of any Credit Party or any of their respective Subsidiaries, except if, in the case of clauses (i) and (ii)(x), such violations, conflicts, breaches or defaults could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

5.4 Organization, Powers, Capitalization and Good Standing .

(a) Organization and Powers . Each of the Credit Parties and each of their Subsidiaries is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and qualified to do business in all states where such qualification is required except where failure to be so qualified could not reasonably be expected to have a Material Adverse Effect. As of the Closing Date, the jurisdiction of organization and all jurisdictions in which each Credit Party is qualified to do business are set forth on Schedule 5.4(a) . Each of the Credit Parties and each of their Subsidiaries has all requisite organizational power and authority to own and operate its properties, to carry on its business as now conducted, to enter into and perform each Related Transactions Document to which it is a party and to incur the Obligations, to grant liens and security interests in the Collateral and to carry out the Related Transactions.

(b) Capitalization . As of the Closing Date: (i) the authorized Stock of Holdings and each of the Credit Parties and each of their Subsidiaries is as set forth on Schedule 5.4(b) ; (ii) the identity of the holders of the Stock of Holdings and each of the Credit Parties and each of their Subsidiaries and the percentage of their fully-diluted ownership of the Stock of Holdings and each of the Credit Parties and each of their Subsidiaries is set forth on Schedule 5.4(b) ; and (iii) no Stock of Holdings or any Credit Party or any of their Subsidiaries, other than those described above, are issued and outstanding. As of the Closing Date, all issued and outstanding Stock of Holdings and each of the Credit Parties and each of their Subsidiaries (x) is duly authorized and validly issued, fully paid and nonassessable, (y) is free and clear of all Liens other than those created under the Collateral Documents in favor of Agent for the benefit of Agent and Lenders and Permitted Encumbrances that have priority by operation of law and (z) was issued in compliance with all applicable state, federal and foreign laws concerning the issuance of securities. Except as provided in Schedule 5.4(b) , as of the Closing Date, there are no preemptive or other outstanding rights, options, warrants, conversion rights or similar agreements or understandings for the purchase or acquisition from Holdings or any Credit Party or any of their Subsidiaries of any Stock of any such entity.

(c) Binding Obligation . This Agreement and the other Related Transactions Documents are the legally valid and binding obligations of the applicable Credit Parties party thereto, each enforceable against each such Credit Party party thereto, as applicable, in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and the effects of general principles of equity.

 

49


5.5 Financial Statements and Projections . All Financial Statements concerning the Closing Date Targets and their Subsidiaries, as well as the Credit Parties, which have been furnished to Agent pursuant to this Agreement, if any, including those listed below, have been prepared in accordance with GAAP consistently applied (except as disclosed therein) and do present fairly in all material respects the financial condition of the entities covered thereby as at the dates thereof and the results of their operations for the periods then ended, subject to, in the case of unaudited Financial Statements, the absence of footnotes and normal year-end adjustments:

(a) the audited consolidated balance sheets and the related statements of income, changes in equity and cash flows of the Closing Date Targets for June 24, 2016; and

(b) the unaudited consolidated balance sheets and the related statements of income, changes in equity and cash flows of Closing Date Targets for August 31, 2016.

The Projections delivered on or prior to the Closing Date or the Closing Date, as applicable, and the updated Projections delivered pursuant to Section 4.4(f) have been prepared by Holdings and Borrowers based upon estimates and assumptions that Holdings and Borrowers believe to be reasonable and fair at the time made in light of current conditions and facts know to Holdings and Borrowers and, as of the date made, represent the good faith estimate of Holdings, Borrowers and their senior management of the future financial performance of their business and the business of their Subsidiaries on a consolidated basis (it being acknowledged and agreed by Agent and Lenders that projections as to future events are subject to uncertainties and contingencies, many of which are beyond the control of the Credit Parties, not to be viewed as facts, that no assurance can be given that such Projections will actually be realized and that the actual results during the period or periods covered by such projections may differ from the projected results by a material amount).

5.6 Intellectual Property . Each of the Credit Parties and its Subsidiaries owns, is licensed to use or otherwise has the right to use, all Intellectual Property used in or necessary for the conduct of its business as currently conducted that is material to the condition (financial or other), business or operations of such Credit Party and its Subsidiaries, except where the failure to own, be licensed to use or otherwise have the right to use would not reasonably be expected to have a Material Adverse Effect. As of the Closing Date, all Intellectual Property registered to one or more of the Credit Parties and their Subsidiaries is identified on Schedule 5.6 . All Intellectual Property owned or licensed by the Credit Parties is (a) fully protected, except where the failure to protect such Intellectual Property would not reasonably be expected to have a Material Adverse Effect, and (b) in the case of registered Intellectual Property set forth on Schedule 5.6 , duly and properly registered, filed or issued in the appropriate office and jurisdictions for such registrations, filings or issuances. Except as disclosed in Schedule 5.6 , as of the Closing Date, the use of such Intellectual Property by the Credit Parties and their Subsidiaries and the conduct of their businesses (i) to the knowledge of any Credit Party or any Subsidiary of any Credit Party does not, and (ii) has not been alleged in writing by any Person to infringe on the rights of any Person.

5.7 Investigations, Audits, Etc . Except as set forth on Schedule 5.7 , no Credit Party or any of their Subsidiaries is, to the knowledge of any Credit Party or such Subsidiaries, the subject of any review or audit by the IRS or any governmental investigation concerning the violation or possible violation of any law.

5.8 Employee Matters . (a) No Credit Party or Subsidiary of a Credit Party nor any of their respective employees is subject to any collective bargaining agreement, (b) to the best knowledge of any Credit Party or any Subsidiary of any Credit Party, no petition for certification or union election is pending with respect to the employees of any Credit Party or any of their Subsidiaries and no union or

 

50


collective bargaining unit has sought such certification or recognition with respect to the employees of any Credit Party or any of their Subsidiaries, (c) there are no strikes, slowdowns, work stoppages or controversies pending or, to the best knowledge of any Credit Party after due inquiry, threatened between any Credit Party or any of their Subsidiaries and its respective employees, other than employee grievances arising in the ordinary course of business which could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect and (d) hours worked by and payment made to employees of each Credit Party and each of their Subsidiaries comply with the Fair Labor Standards Act and each other federal, state, provincial, local or foreign law applicable to such matters. Except as set forth on Schedule 5.8 , no Credit Party nor any of its Subsidiaries is party to an employment contract.

5.9 Solvency . The Credit Parties and their Subsidiaries, taken as a whole, are, on the Closing Date, Solvent.

5.10 Litigation; Adverse Facts . There are no judgments outstanding against any Credit Party or any of its Subsidiaries or affecting any property of any Credit Party or any of its Subsidiaries, nor is there any Litigation pending or, to the knowledge of any Credit Party, threatened against any Credit Party or any of its Subsidiaries, in either case, which could reasonably be expected to result in any Material Adverse Effect.

5.11 Use of Proceeds; Margin Regulations .

(a) No part of the proceeds of any Loan will be used for “buying” or “carrying” “margin stock” within the respective meanings of such terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect or for any other purpose that violates the provisions of the regulations of the Board of Governors of the Federal Reserve System.

(b) Borrowers shall utilize the proceeds of the Loans solely for the financing of the Closing Date Acquisition and the Refinancing (and to pay any related transaction expenses), for the financing of Borrowers’ ordinary working capital needs, for the financing of a portion of Permitted Acquisitions and to pay related fees, costs, and expenses not prohibited by this Agreement. Schedule 5.11 contains a description of Borrowers’ sources and uses of funds as of the Closing Date, including Loans to be made on that date, and a funds flow memorandum detailing how funds from each source are to be transferred for particular uses.

(c) None of Holdings, any Borrower or any of its Subsidiaries is (i) an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940 or (ii) a “holding company” as defined in, or subject to regulation under, any public utility holding company act adopted in any State.

(d) No part of the proceeds of any Loan will be used, directly or indirectly, for any improper payments, including bribes, to any governmental official or employee, employee of any government-owned or government-controlled entity, political party, any official of a political party, candidate for political office, official of any public international organization or anyone else acting in an official capacity or commercial counterparty in order to obtain, retain or direct business or obtain any improper advantage. Each of the Credit Parties has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that each such Credit Party and its Affiliates is and will continue to be in compliance with all applicable current and future anti-corruption laws or regulations in the U.S. and any non-U.S. country or jurisdiction, including but not limited to, the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010.

 

51


5.12 Ownership of Property; Liens . As of the Closing Date, the real estate (“ Real Estate ”) listed in Schedule 5.12 constitutes all of the real property owned, leased, subleased, or used by any Credit Party or any of its Subsidiaries. As of the Closing Date, each of the Credit Parties and each of its Subsidiaries owns good and marketable fee simple title to all of its owned Real Estate, and valid leasehold interests in all of its leased Real Estate. Schedule 5.12 further describes any Real Estate with respect to which any Credit Party or any of its Subsidiaries is a lessor, sublessor or assignor as of the Closing Date. As of the Closing Date, each of the Credit Parties and each of its Subsidiaries also has good and marketable title to, or valid leasehold interests in, all of its personal property and assets except (i) for defects in title that do not materially interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes or (ii) where the failure to have such title or interests would not reasonably be expected to have a Material Adverse Effect. As of the Closing Date, none of the properties and assets of any Credit Party or any of its Subsidiaries are subject to any Liens other than Permitted Encumbrances. As of the Closing Date, Schedule 5.12 also describes any purchase options, rights of first refusal or other similar contractual rights pertaining to any Real Estate.

5.13 Environmental Matters .

(a) Except as set forth in Schedule 5.13 , as of the Closing Date: (i) the Real Estate is free of contamination from any Hazardous Material except for such contamination that could not reasonably be expected to result in a Material Adverse Effect; (ii) no Credit Party and no Subsidiary of a Credit Party has caused or suffered to occur any Release of Hazardous Materials on, at, in, under, above, to, from or about any of their Real Estate that could reasonably be expected to result in a Material Adverse Effect; (iii) the Credit Parties and their Subsidiaries are and have been in compliance with all Environmental Laws, except for such noncompliance that could not reasonably be expected to result in a Material Adverse Effect; (iv) the Credit Parties and their Subsidiaries have obtained, and are in compliance with, all Environmental Permits required by Environmental Laws for the operations of their respective businesses as presently conducted or as proposed to be conducted, except where the failure to so obtain or comply with such Environmental Permits could not reasonably be expected to result in a Material Adverse Effect, and all such Environmental Permits are valid, uncontested and in good standing except as otherwise could not reasonably be expected to result in a Material Adverse Effect; (v) no Credit Party and no Subsidiary of a Credit Party is involved in operations or knows of any facts, circumstances or conditions, including any Releases of Hazardous Materials, that are likely to result in any Environmental Liabilities of such Credit Party or Subsidiary which could reasonably be expected to result in a Material Adverse Effect, and no Credit Party or Subsidiary of a Credit Party has permitted any current or former tenant or occupant of the Real Estate to engage in any such operations; (vi) there is no Litigation arising under or related to any Environmental Laws, Environmental Permits or Hazardous Material that seeks damages, penalties, fines, costs or expenses in excess of $100,000 in the aggregate or injunctive relief against, or that alleges criminal misconduct by any Credit Party or any Subsidiary of a Credit Party; (vii) no notice has been received by any Credit Party or any Subsidiary of a Credit Party identifying any of them as a “potentially responsible party” under CERCLA or analogous state statutes or requesting information under CERCLA or analogous state statutes, and to the knowledge of the Credit Parties, there are no facts, circumstances or conditions that may result in any of the Credit Parties or their Subsidiaries being identified as a “potentially responsible party” under CERCLA or analogous state statutes, in each case, that would reasonably be expected to have a Material Adverse Effect; and (viii) the Credit Parties have provided to Agent copies of all existing environmental reports, reviews and audits prepared within the last three years, in each case in possession of the Credit Parties relating to any of the Credit Parties or their Subsidiaries.

 

52


(b) Each Credit Party hereby acknowledges and agrees that Agent (i) is not now, and has not ever been, in control of any of the Real Estate or affairs of such Credit Party or its Subsidiaries, and (ii) does not have the capacity through the provisions of the Loan Documents to control any Credit Party’s or its Subsidiaries’ conduct with respect to the ownership, operation or management of any of their Real Estate or compliance with Environmental Laws or Environmental Permits.

5.14 Employee Benefits .

(a) Except as would not reasonably be expected to result in a Material Adverse Effect or except with respect to Multiemployer Plans, (i) each Qualified Plan has been determined by the IRS to qualify under Section 401 of the IRC or a Credit Party is entitled to rely on a prototype opinion letter that the form of the plan meets the requirements under Section 401 of the IRC, and nothing has occurred that would reasonably be expected to cause the loss of such qualification, (ii) each Plan is in compliance with the applicable provisions of ERISA and the IRC, including the timely filing of all reports required under the IRC or ERISA, and (iii) no “prohibited transaction,” as defined in Section 406 of ERISA and Section 4975 of the IRC in connection with any Plan has occurred, that would subject any Credit Party to tax on prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of the IRC.

(b) Except as set forth in Schedule 5.14 or as otherwise would not reasonably be expected to result in a Material Adverse Effect (i) no ERISA Event has occurred or is reasonably expected to occur; and (ii) there are no pending, or to the knowledge of any Borrower, threatened claims (other than claims for benefits in the normal course), sanctions, actions or lawsuits, asserted or instituted against any Plan or any Person as fiduciary or sponsor of any Plan;

(c) Except as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect (i) each Foreign Pension Plan has been maintained in compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities; all contributions required to be made with respect to a Foreign Pension Plan have been timely made, (ii) no Credit Party has incurred any obligation in connection with the termination of, or withdrawal from, any Foreign Pension Plan and (iii) the present value of the accrued benefit liabilities (whether or not vested) under each Foreign Pension Plan, determined as of the end of each Foreign Pension Plans’ most recently ended fiscal year on the basis of actuarial assumptions, each of which is reasonable, did not exceed the current value of the assets of such Foreign Pension Plan allocable to such benefit liabilities.

5.15 Brokers . Except as disclosed in Schedule 5.15, no broker or finder acting on behalf of any Credit Party or Affiliate thereof brought about the obtaining, making or closing of the Loans or the Related Transactions, and no Credit Party or Affiliate thereof has any obligation to any Person in respect of any finder’s or brokerage fees in connection therewith.

5.16 Deposit and Disbursement Accounts . Schedule 5.16 lists all banks and other financial institutions at which any Credit Party maintains deposit or other accounts as of the Closing Date, including the Disbursement Account, and Schedule 5.16 correctly identifies the name, address and telephone number of each depository, the name in which the account is held, a description of the purpose of the account, the complete account number therefore and listing of any lockboxes maintained through any financial institutions for processing payments by account debtors and other proceeds of Collateral.

 

53


5.17 Closing Date Acquisition Documents . As of the Closing Date, GP II has delivered to Agent a complete and correct copy of the Closing Date Acquisition Documents (including all schedules, exhibits, amendments, supplements, modifications and assignments). No Credit Party and no other Person party thereto is in default in the performance or compliance with any provisions thereof. Each such Closing Date Acquisition Document complies with, and the Closing Date Acquisition has been consummated in accordance with, all applicable laws. Each such Closing Date Acquisition Document is in full force and effect as of the Closing Date and has not been terminated, rescinded or withdrawn. All requisite approvals by Governmental Authorities having jurisdiction over any seller party to such Closing Date Acquisition Documents, any Closing Date Target, any Credit Party and other Persons referenced therein, with respect to the transactions contemplated by such Closing Date Acquisition Documents, have been obtained, and no such approvals impose any conditions to the consummation of the transactions contemplated by such Closing Date Acquisition Documents or to the conduct by any Closing Date Target or an Credit Party of its business thereafter. To the best of GP II’s knowledge, no representations or warranties of any seller party to any such Closing Date Acquisition Document contain any untrue statement of a material fact or omit any fact necessary to make the statements therein not misleading.

5.18 Insurance . Schedule 5.18 lists all insurance policies of any nature maintained, as of the Closing Date, for current occurrences by each Credit Party, as well as a summary of the key business terms of each such policy such as deductibles, coverage limits and term of policy.

5.19 Anti-Terrorism Law .

(a) Compliance with Law . No Credit Party and, to the knowledge of the Credit Parties, none of its Affiliates, is in violation of any laws relating to terrorism or money laundering (“ Anti-Terrorism Laws ”), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “ Executive Order ”), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56.

(b) Prohibited Lists . No Credit Party and to the knowledge of the Credit Parties, no Affiliate or other agent of any Credit Party acting or benefiting in any capacity in connection with the Loans is any of the following:

(i) a person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;

(ii) a person owned or controlled by, or acting for or on behalf of, any person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;

(iii) a person that commits, threatens or conspires to commit or support “terrorism” as defined in the Executive Order; or

(iv) a person that is named as a “specialty designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control (“ OFAC ”) at its official website or any replacement website or other replacement official publication of such list.

(c) Relationships . No Credit Party and, to the knowledge of the Credit Parties, no other agent of any Credit Party acting in any capacity in connection with the Loans, (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any person described in paragraph (b) above, (ii) deals in, or

 

54


otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

5.20 Compliance with Laws . Each Credit Party is in compliance and each of its Subsidiaries is in compliance with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority other than those laws, rules, regulations and orders the noncompliance with which could not be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect.

5.21 Taxes and Tax Returns . Except as disclosed on Schedule 5.21 , (i) all federal and material state, local and foreign tax returns required to be filed (or appropriate extensions have been timely requested) by the Credit Parties have been timely and properly filed and (ii) all taxes for which a notice of assessment or collection has been received (other than amounts being diligently contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP), have been paid except for any such filings, payments or accruals which would not have individually, or in the aggregate, a Material Adverse Effect. No Governmental Authority has asserted any claim for taxes, or to any Credit Party’s knowledge, has threatened to assert any claim for taxes that would in either case, if paid by a Credit Party, have a Material Adverse Effect. All taxes required by law to be withheld or collected and remitted (including income, tax, unemployment insurance and workman’s compensation premiums) with respect to the Credit Parties have been timely withheld or collected and timely paid to the appropriate Governmental Authorities, except for amounts which would not, individually or in the aggregate, have a Material Adverse Effect.

5.22 Compliance with Food Laws . All products produced by the Credit Parties since January 1, 2008 have been produced in material compliance with all Food Laws and to the knowledge of the Credit Parties, all products produced by the Credit Parties on or prior to January 1, 2008 have been produced in material compliance with all Food Laws. No such product produced since January 1, 2008 have been adulterated or misbranded in any material respect within the meaning of the Food Laws and, to the knowledge of the Credit Parties, no such product produced on or prior January 1, 2008 has been adulterated or misbranded in any material respect within the meaning of the Food Laws.

5.23 Separateness . The Credit Parties and their Subsidiaries are not treated, in any respect, as “unrestricted subsidiaries” under and are otherwise not subject to or obligated in respect of (or required to be subject to or obligated in respect of) any representations, warranties, covenants, (including, without limitation, any requirement to guaranty any obligations or grant any Liens or any other security interest in favor of any creditor), events of default or any other terms or conditions or provisions of Loan, note, credit documents, indentures, purchase agreements or similar arrangements involving Parent or any of its Affiliates (other than the Credit Parties).

SECTION 6.

DEFAULT, RIGHTS AND REMEDIES

6.1 Event of Default . “ Event of Default ” shall mean the occurrence or existence of any one or more of the following:

(a) Payment . Failure to pay (i) when due, any principal of, or premium in respect of, any Loan, including at maturity of the Loans, or to pay any Letter of Credit Participation Liability when due, or (ii) within three (3) days after the same shall become due, interest on any Loan, any Fee or any other amount under this Agreement or any of the other Loan Documents; or

 

55


(b) Default in Other Agreements . (1) Any Credit Party or any of its Subsidiaries fails to pay when due or within any applicable grace period any principal or interest on any Indebtedness having an aggregate principal amount in excess of $750,000 (other than the Loans) or Contingent Obligations having an aggregate maximum amount in excess of $750,000 or (2) any breach by or default of any Credit Party or any of its Subsidiaries, or the occurrence of any condition or event, with respect to any Indebtedness (other than the Loans) or any Contingent Obligations, if the effect of such failure, breach, default or occurrence is to cause or to permit the holder or holders then to cause, Indebtedness and/or Contingent Obligations having an aggregate principal amount in excess of $750,000 to become or be declared due prior to their stated maturity; or

(c) Breach of Certain Provisions . Failure of any Credit Party to perform or comply with any term or condition contained in Section 2.2 , Section 2.10 , Section 2.12 , Section 2.13 , Section 3 , Section 4.1 ( provided that an Event of Default thereunder is subject to cure pursuant to Section 6.7 ), Section 4.2 ( provided that an Event of Default thereunder is subject to cure pursuant to Section 6.7 ) or Section 4.4(a) , (b) , (d) , (h)  or (m)  (the aforementioned provisions of Section 4.4 being referred to herein as the “ Financial Delivery Covenants ”); or

(d) Breach of Warranty . Any representation, warranty, certification or other statement made by any Credit Party in any Loan Document or in any statement or certificate at any time given by such Person in writing pursuant to or in connection with any Loan Document is false in any material respect (without duplication of materiality qualifiers contained therein) on the date made; or

(e) Other Defaults Under Loan Documents . Any Credit Party defaults in the performance of or compliance with any term contained in this Agreement or the other Loan Documents (other than occurrences described in other provisions of this Section 6.1 for which a different grace or cure period is specified, or for which no cure period is specified and which constitute immediate Events of Default) and such default is not remedied or waived within thirty (30) days after the earlier of (1) receipt by Borrower Representative of notice from Agent or Requisite Lenders of such default or (2) actual knowledge of any Responsible Officer of any Borrower or any other Credit Party of such default; or

(f) Involuntary Bankruptcy; Appointment of Receiver, Etc. (1) A court enters a decree or order for relief with respect to any Credit Party or any of their Subsidiaries (other than Immaterial Subsidiaries) in an involuntary case under the Bankruptcy Code, which decree or order is not stayed or other similar relief is not granted under any applicable federal or state law within sixty (60) days of its entry; or (2) the continuance of any of the following events for sixty (60) days unless dismissed, bonded or discharged: (a) an involuntary case is commenced against any Credit Party or any of their Subsidiaries (other than Immaterial Subsidiaries), under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect; or (b) a decree or order of a court for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over any Credit Party or any of their Subsidiaries (other than Immaterial Subsidiaries), or over all or a substantial part of its property, is entered; or (c) a receiver, trustee or other custodian is appointed without the consent of a Credit Party or any of their Subsidiaries (other than Immaterial Subsidiaries), for all or a substantial part of its property; or

 

56


(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. (1) any Credit Party or any of their Subsidiaries (other than Immaterial Subsidiaries) commences a voluntary case under the Bankruptcy Code, or consents to the entry of an order for relief in an involuntary case or to the conversion of an involuntary case to a voluntary case under any such law or consents to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or (2) any Credit Party or any of their Subsidiaries (other than Immaterial Subsidiaries) makes any assignment for the benefit of creditors; or (3) the Board of Directors (or equivalent) of any Credit Party or any of their Subsidiaries (other than Immaterial Subsidiaries) adopts any resolution or otherwise authorizes action to approve any of the actions referred to in this Section 6.1(g) ; or

(h) Judgment and Attachments . Any money judgment, writ or warrant of attachment, or similar process (other than those described elsewhere in this Section 6.1 ) involving (1) an amount in any individual case in excess of $1,500,000 or (2) an amount in the aggregate for all judgments, writs, warrants and similar processes at any time in excess of $1,500,000 (in either case to the extent not adequately covered by third-party insurance or a binding indemnification agreement) is entered or filed against one or more of the Credit Parties or any of their Subsidiaries or any of their respective assets and remains undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days; or

(i) Dissolution . Any order, judgment or decree is entered against any Credit Party or any of their Subsidiaries decreeing the dissolution or split up of such Credit Party or Subsidiary and such order remains undischarged or unstayed for a period in excess of ten (10) Business Days; or

(j) Solvency . Any Credit Party or any of their Subsidiaries ceases to be Solvent, fails to pay its debts as they become due or admits in writing its present or prospective inability to pay its debts as they become due; or

(k) Invalidity of Loan Documents . Any of this Agreement, any material Guarantee or any material Collateral Document for any reason, other than the occurrence of the Termination Date or a partial or full release in accordance with the terms thereof, ceases to be in full force and effect or is declared to be null and void, or any Credit Party denies in writing that it has any further liability (other than by reason of the occurrence of the Termination Date) under any Loan Documents to which it is party, or gives written notice to such effect; or

(l) Change of Control . A Change of Control occurs; or

(m) Employee Benefits . The occurrence of an ERISA Event, which either individually or in the aggregated results in or could result in the imposition of a Lien, or granting of a security interest and such Lien, security interest or liability for the ERISA Event either individually or in the aggregate has had, or could reasonably be expected to have a Material Adverse Effect; or

(n) Invalidity of Subordination Provisions . Any of the subordination provisions of any Subordination Agreement or provisions with respect to any Subordinated Debt, for any reason, other than the payment in full of such Subordinated Debt, as permitted hereunder or the Termination Date or a partial or full release in accordance with the terms thereof, ceases to be in full force and effect, the validity or enforceability of which is challenged or declared in writing by any Credit Party, Parent or any of their respective Affiliates to be null and void.

 

57


6.2 Suspension or Termination of Commitments . Upon the occurrence of any Default or Event of Default, Maranon Agent may, and, in any event, Agent shall at the request of Requisite Lenders, without notice or demand, immediately suspend or terminate all or any portion of Lenders’ obligations to make additional Loans under the Revolving Loan Commitment and the L/C Issuer’s obligations to issue Lender Letters of Credit or Letter of Credit Participant Agreements; provided that, in the case of a Default, if the subject condition or event is waived by Requisite Lenders or cured within any applicable grace or cure period, the Revolving Loan Commitment shall be reinstated.

6.3 Acceleration and other Remedies . Upon the occurrence of any Event of Default described in Sections 6.1(f) or 6.1(g) , the Commitments shall be immediately terminated, the Obligation of the L/C Issuer to issue Lender Letters of Credit and Letter of Credit Participation Agreements shall be immediately terminated and all of the Obligations (including the Revolving Loans and the Term Loan) shall automatically become immediately due and payable, without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other requirements of any kind, all of which are hereby expressly waived (including for purposes of Section 10 ) by Borrowers. Upon the occurrence and during the continuance of any other Event of Default, Agent may and, in any event, Agent shall at the request of, the Requisite Lenders, by written notice to Borrower Representative (a) terminate the Commitments or reduce the aggregate amount of the Commitments from time to time, (b) declare all or any portion of the Loans then outstanding and all or any portion of the other Obligations accrued hereunder to be, and the same shall forthwith become, immediately due and payable together with accrued interest thereon, (c) terminate all or any portion of the obligations of Lenders to make Revolving Credit Advances and/or the obligations of the L/C Issuer and Agent to issue Lender Letters of Credit or Letter of Credit Participation Agreements, respectively, and/or (d) exercise any other remedies which may be available under the Loan Documents or applicable law.

6.4 Performance by Agent . If any Credit Party shall fail to perform any covenant, duty or agreement contained in any of the Loan Documents, Agent may perform or attempt to perform such covenant, duty or agreement on behalf of such Credit Party after the expiration of any cure or grace periods set forth herein. In such event, such Credit Party shall, at the request of Agent, promptly pay any amount reasonably expended by Agent in such performance or attempted performance to Agent, together with interest thereon at the highest rate of interest in effect upon the occurrence of an Event of Default as specified in Section 1.2(d) from the date of such expenditure until paid. Notwithstanding the foregoing, it is expressly agreed that Agent shall not have any liability or responsibility for the performance of any obligation of any Credit Party under this Agreement or any other Loan Document.

6.5 Application of Proceeds . Notwithstanding anything to the contrary contained in this Agreement or any other Loan Document, upon the occurrence and during the continuance of an Event of Default, (a) Borrowers irrevocably waive the right to direct the application of any and all payments at any time or times thereafter received by Agent from or on behalf of Borrowers, and Agent shall have the continuing and exclusive right to apply and to reapply any and all payments received at any time or times after the occurrence and during the continuance of an Event of Default and (b) payments (including the proceeds of any sale of, or other realization upon, all or any part of the Collateral) received after acceleration of the Obligations shall be applied as follows:

first , to all Fees, costs and expenses incurred by or owing to Agent, the L/C Issuer and any Lender with respect to this Agreement, the other Loan Documents or the Collateral;

second , to accrued and unpaid interest on the Obligations (including any interest which but for the provisions of the Bankruptcy Code, would have accrued on such amounts);

 

58


third , to the principal amount of the Obligations outstanding (including cash collateralization of Letter of Credit Participation Liability but excluding Obligations under any Qualified Rate Contract);

fourth , to the Obligations in respect of Qualified Rate Contracts; and

fifth , to any other obligations of Borrowers owing to Agent, the L/C Issuer or any Lender under the Loan Documents.

Any balance remaining shall be delivered to Borrowers or to whomever may be lawfully entitled to receive such balance or as a court of competent jurisdiction may direct. No payments by a Guarantor and no proceeds of Collateral of a Guarantor shall be applied to Excluded Rate Contract Obligations of such Guarantor.

6.6 Cash Collateral for Letters of Credit . If an Event of Default has occurred and is continuing or this Agreement (or the Revolving Loan Commitment) shall be terminated for any reason, then the Maranon Agent may, and, in any event, Agent shall at the request of Requisite Lenders, demand (which demand shall be deemed to have been delivered automatically upon any acceleration of the Loans and other obligations hereunder pursuant to Section 6.3 hereof) that, and the Borrowers shall thereupon shall provide, Letter of Credit Collateralization in respect of the aggregate Stated Amount as additional collateral security in respect of any outstanding Lender Letter of Credit and Letter of Credit Participation Agreement. Agent may at any time apply any or all of such cash and cash collateral to the payment of any or all of the Obligations in respect of any Lender Letters of Credit or Letter of Credit Participation Agreements. Pending such application, Agent may (but shall not be obligated to) invest the same in an interest bearing account in Agent’s name, for the benefit of Agent and the Lenders entitled thereto, under which deposits are available for immediate withdrawal, at such bank or financial institution as Agent may, in its discretion, select.

6.7 Cure Right . For purposes of determining compliance with the financial covenants contained in Sections 4.1 or 4.2 above, purchased capital Stock of (or cash capital contributions to) Holdings not constituting Disqualified Stock, which shall be immediately contributed in cash to the Borrowers, in each case, after the last day of any Fiscal Quarter and on or prior to the day that is ten (10) Business Days after the day on which financial statements are required to be delivered for such Fiscal Quarter will, at the request of Holdings, be included in the calculation of EBITDA for purposes of determining compliance with such financial covenants for the applicable Fiscal Quarter and applicable subsequent periods (any such equity contribution so included in the calculation of EBITDA, a “ Specified Equity Contribution ”); provided that (a) with respect to any four Fiscal Quarter period, in the event the aggregate amount of all Specified Equity Contributions during the four Fiscal Quarter period ending as of the applicable date of measurement exceeds $3,000,000 (all such additional amounts above $3,000,000, “ Excess Specified Equity Contributions ”), one hundred percent (100%) of the Excess Specified Equity Contribution shall be promptly used by the Borrowers to prepay the Term Loans as set forth in Section 1.5(e) ), (b) the amount of any Specified Equity Contribution shall not exceed the amount required to cause the Borrowers to be in compliance with such financial covenants, and (c) all Specified Equity Contributions will be used solely for curing the applicable financial covenants and will be disregarded for purposes of determining the availability of any baskets, pricing or step-downs with respect to other provisions contained in the Loan Documents; provided that such prepayment of Term Loans set forth in the foregoing subclause (a) shall be disregarded for purposes of calculating the financial covenants for the Fiscal Quarter for which such Specified Equity Contribution is made.

 

59


SECTION 7.

CONDITIONS TO LOANS

The obligations of Lenders to make Loans and the L/C Issuer or Agent to issue Lender Letters of Credit or Letter of Credit Participation Agreement are subject to satisfaction of all of the applicable conditions set forth below.

7.1 Conditions to Initial Loans . The obligations of Lenders to make the initial Loans and issue Lender Letters of Credit or Letter of Credit Participation Agreements on the Closing Date are subject to the following conditions precedent:

(a) (i) the representations and warranties by any Credit Party contained herein or in any other Loan Document shall be true and correct in all material respect, except to the extent such representation or warranty (x) is qualified by materiality, Material Adverse Effect or words of similar effect, in which case such representation or warranty shall be true and correct in all respects, or (y) expressly relates to an earlier date in which case such representation or warranty shall be true and correct as of such earlier date, and (ii) all material information provided by or on behalf of Parent or Borrowers to Agent shall be true and correct in all material respects;

(b) both before and immediately after giving effect to the funding of the initial Loans hereunder and the consummation of the Related Transactions, no Default or Event of Default;

(c) the delivery of all documents listed on, the taking of all actions set forth on and all other conditions precedent listed in the Closing Checklist attached hereto as Annex C shall be satisfied, all in form and substance, or in a manner, satisfactory to Agent and Lenders;

(d) since June 24, 2016, there shall not have occurred any Material Adverse Effect;

(e) Borrowers shall have delivered (i) unaudited consolidated balance sheets and related statements of income, changes in equity and cash flows of Borrowers for August 31, 2016, and (ii) a pro forma consolidated balance sheet of the Borrowers as of the date of the most recent consolidated balance sheet delivered pursuant to the preceding subclause (i) and pro forma Projections, in each case, adjusted to give effect to the Related Transactions, and the other transactions related thereto;

(f) Borrowers shall have delivered evidence to the reasonable satisfaction of Agent demonstrating that the Total Net Leverage Ratio calculated on a pro forma basis for the twelve month period ending August 31, 2016 (or such later date for which financials have been delivered pursuant to subclause (d)(i) above), shall not exceed 5.75 to 1.00;

(g) Borrowers shall have no less than $22,500,000 of EBITDA for the twelve month period ending August 31, 2016 (or such later date for which financials have been delivered pursuant to subclause (d)(i) above);

(h) the Closing Date Acquisition shall have been consummated (or concurrently with the funding of the initial Loans will be consummated) in accordance with the terms of the Closing Date Acquisition Agreement;

(i) (i) all governmental and third-party consents and approvals (including, if any, shareholder and director consents and approvals) necessary for the execution, delivery and performance of this Agreement or any other Loan Document and the consummation of the Related Transactions shall have been obtained and in full force and effect on the Closing Date,

 

60


and (ii) all applicable waiting periods shall have expired without any action being taken by any Governmental Authority, and, in the reasonable judgment of Agent, no law or regulation shall be applicable that restrains, prevents or imposes materially adverse conditions upon this Agreement, the other Loan Documents and the Related Transactions;

(j) there shall be no order, injunction or decree of any Governmental Authority restraining or prohibiting the financing transactions contemplated hereunder;

(k) Parent shall have made (or substantially concurrently with the funding of the initial Loans shall make) the Equity Contribution (which shall have been contributed on a dollar for dollar basis to the Borrowers);

(l) Agent shall have received evidence reasonably satisfactory to Agent that, upon funding of the initial Loans on the Closing Date, all Prior Lender Obligations (other than Prior Lender Obligations pursuant to any Indebtedness described in Schedule 3.1 ) shall be concurrently satisfied and discharged, all related loan documents with the Prior Lender shall be concurrently terminated, and all Liens (other than Permitted Encumbrances) securing the Prior Lender Obligations shall be concurrently released;

(m) the tax and organizational structure of Borrowers and each of their Subsidiaries on the Closing Date shall not be different in any material respect from that, if any, disclosed to Agent prior to the Closing Date; and

(n) Agent shall have received all documentation and other information required by Governmental Authorities under applicable “know your customer” and anti-money laundering rules and regulations, including a completed W-9 tax form for each Borrower.

7.2 Conditions to All Loans after the Closing Date . Except as otherwise expressly provided herein, no Lender shall be obligated to fund any Advance or other Loan and the L/C Issuer will not be required to issue (or cause to be issued) any Lender Letter of Credit or Letter of Credit Participation Agreement, in each case, after the Closing Date, if, as of the date thereof (each, a “ Funding Date ”):

(a) Agent shall not have received a Notice of Revolving Credit Advance;

(b) any representation or warranty by any Credit Party contained herein or in any other Loan Document is untrue or incorrect in any material respect as of such date, except to the extent such representation or warranty (i) is qualified by materiality, Material Adverse Effect or words of similar effect, in which case such representation or warranty is untrue or incorrect in any respect, or (ii) expressly relates to an earlier date in which case such representation or warranty is untrue or incorrect as of such earlier date;

(c) any Default or Event of Default (excluding, for purposes of clarity, any Default or Event of Default waived in accordance with the terms and conditions hereof) has occurred and is continuing or would result after giving effect to any Advance or other Loan, or the incurrence of any Letter of Credit Participation Liability;

(d) after giving effect to any Advance or the issuance of any Lender Letter of Credit or Letter of Credit Participation Agreement, the outstanding amount of the Revolving Loans plus Letter of Credit Participation Liability would exceed the Maximum Amount; or

 

61


(e) after giving effect to any Advance or the issuance of any Lender Letter of Credit or Letter of Credit Participation Agreement, the Credit Parties are not able to comply with the covenants set forth in Sections 4.1 and 4.2 .

The request and acceptance by Borrower Representative or any other Borrower of the proceeds of any Advance or other Loan or of any Lender Letter of Credit or Letter of Credit Participation Agreement shall be deemed to constitute, as of the applicable Funding Date thereof, (i) a representation and warranty by Borrowers that the conditions in this Section 7.2 have been satisfied and (ii) a reaffirmation by Credit Parties of the cross-guaranty provisions set forth in Section 10 and of the granting and continuance of Agent’s Liens, on behalf of itself and Lenders, pursuant to the Collateral Documents.

SECTION 8. ASSIGNMENT AND PARTICIPATION

8.1 Assignment and Participations .

(a) Subject to the terms of this Section 8.1 , any Lender may make an assignment to a Qualified Assignee of, or sale of participations in, at any time or times, the Loan Documents, Loans and any Commitment or any portion thereof or interest therein, including any Lender’s rights, title, interests, remedies, powers or duties thereunder. Any assignment by a Lender shall: (i) require the consent of Agent (except with respect to any assignment by a Lender to another Lender or to an Affiliate or Related Fund of a Lender) (which consent shall not be unreasonably withheld, conditioned or delayed with respect to a Qualified Assignee) and the execution, and delivery to Agent, of an assignment agreement (an “ Assignment Agreement ” substantially in the form attached hereto as Exhibit 8.1(a) and otherwise in form and substance reasonably satisfactory to, and acknowledged by, Agent) and such other “know-your-customer” information as reasonably requested by Agent in connection thereto; (ii) be conditioned on such assignee Lender representing to the assigning Lender and Agent that it is purchasing the applicable Loans to be assigned to it for its own account, for investment purposes and not with a view to the distribution thereof; (iii) (except with respect to any assignment by a Lender to an Affiliate or Related Fund of such Lender) after giving effect to any such partial assignment, the assignee Lender shall have Commitments in an amount at least equal to $1,000,000 and the assigning Lender shall have retained Commitments in an amount at least equal to $1,000,000; (iv) (except with respect to any assignment by a Lender to another Lender or to an Affiliate or Related Fund of a Lender) require the consent of the Borrower Representative (which consent shall not be unreasonably withheld, conditioned or delayed and which consent shall not be required in any event so long as an Event of Default shall have occurred and be continuing, and shall have been deemed to be received in the event the Borrower Representative has not provided any response within ten (10) Business Days of receipt of notice

 

62


of such assignment) for an assignment to any Person other than a Qualified Assignee of the type described in clause (a) of the definition thereof; and (v) (except with respect to any assignment by a Lender to another Lender or to an Affiliate or Related Fund of a Lender) require a payment to Agent of an assignment fee of $3,500 (unless waived by Agent). Notwithstanding the above, Agent may, in its sole and absolute discretion, permit any assignment by a Lender to a Person or Persons that are not Qualified Assignees (other than a Credit Party or an Affiliate of a Credit Party (including, but not limited to, Parent and Parent’s Affiliates)), subject to Borrower Representative’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned (or required if any Default or Event of Default has occurred and is continuing, and shall have been deemed to be received in the event the Borrower Representative has not provided any response within ten (10) Business Days of receipt of notice of such assignment). In the case of an assignment by a Lender under this Section 8.1 , the assignee shall have, to the extent of such assignment, the same rights, benefits and obligations as all other Lenders hereunder. The assigning Lender shall be relieved of its obligations hereunder with respect to its Commitments or assigned portion thereof and the Loans and other interests assigned by it from and after the date of such assignment. Borrowers hereby acknowledge and agree that any assignment shall give rise to a direct obligation of Borrowers to the assignee and that the assignee shall be considered to be a “Lender.” In all instances, each Lender’s liability to make Loans hereunder shall be several and not joint and shall be limited to such Lender’s Pro Rata Share of the applicable Commitment. In the event Agent or any Lender assigns or otherwise transfers all or any part of the Obligations, Agent or any such Lender shall so notify Borrowers and Borrowers shall, upon the request of Agent or such Lender, execute new Notes in exchange for the Notes, if any, being assigned. Notwithstanding the foregoing provisions of this Section 8.1(a) , (a) any Lender may at any time assign or pledge all or any portion of the Obligations held by it and such Lender’s rights under this Agreement and the other Loan Documents, including to any Federal Reserve Bank, the United States Treasury or any lender or other financing source of such Lender as collateral security to secure obligations of such Lender, including any assignment or pledge pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank, (b) any Lender that is an investment fund may assign the Obligations held by it and such Lender’s rights under this Agreement and the other Loan Documents to another investment fund managed by the same investment advisor or pledge such Obligations and rights to trustee for the benefit of its investors, (c) any Lender may assign the Obligations to an Affiliate of such Lender or to a Person that is a Lender prior to the date of such assignment and (d) Agent may, in its sole discretion, (i) refuse to permit an assignment or sale of participation to a Person that would be a Non-Funding Lender, a holder of Subordinated Debt or an Affiliate of such a holder, or (ii) impose conditions or limitations (including limitations on voting) upon assignments or sale of participations to any such Persons; provided , that any payment in respect of such assigned Obligations (pursuant to the foregoing clauses (a), (b) or (c)) made by Borrowers to or for the account of the assigning or pledging Lender in accordance with the terms of this Agreement shall satisfy Borrowers’ obligations hereunder in respect to such assigned Obligations to the extent of such payment. No such assignment shall release the assigning Lender from its obligations hereunder.

(b) Any participation by a Lender of all or any part of its Commitments shall be made with the understanding that all amounts payable by Borrowers hereunder shall be determined as if that Lender had not sold such participation, and that the holder of any such participation shall not be entitled to require such Lender to take or omit to take any action hereunder except actions directly affecting (i) any reduction in the principal amount of, or interest rate or Fees payable with respect to, any Loan in which such holder participates, (ii) any extension of the scheduled amortization of the principal amount of any Loan in which such holder participates or the final maturity date thereof, and (iii) any release of all or substantially all of the Collateral (other than in accordance with the terms of this Agreement, the Collateral Documents or the other Loan Documents). Solely for purposes of Sections 1.8 , 1.9 , 8.3 and 9.1 , but subject to the requirements and limitations therein, including the requirements under Section 1.9(f) to provide documentation as though it were a Lender, Borrowers acknowledge and agree that the participant and the participant shall be considered to be a “Lender” for such purposes; provided that such participant (A) agrees to be subject to the provisions of Section 9.19 as if it were a Lender, and (B) shall not be entitled to receive any greater payment than its participating Lender would have been entitled to receive. Except as set forth in the preceding sentence no Borrower or any other Credit Party shall have any obligation or duty to any participant. Neither Agent nor any Lender (other than the Lender selling a participation) shall have any duty to any participant and may continue to deal solely with the Lender selling a

 

63


participation as if no such sale had occurred. Each Lender that sells a participation to a participant pursuant to this Section 10.04(c) shall, acting solely for this purpose as a non-fiduciary agent of Borrowers (and such agency being solely for tax purposes), maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Loans or other obligations under this Agreement (the “ Participant Register ”). The entries in the Participant Register shall be conclusive and such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. This Section 8.1(b) shall be construed so that the participations are at all times maintained in “registered form” within the meaning of IRC Sections 163(f), 871(h)(2) and 881(c)(2). For the avoidance of doubt, Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.

(c) Except as expressly provided in this Section 8.1 , no Lender shall, as between Borrowers and that Lender, or Agent and that Lender, be relieved of any of its obligations hereunder as a result of any sale, assignment, transfer or negotiation of, or granting of participation in, all or any part of the Loans, the Notes or other Obligations owed to such Lender.

(d) Each Credit Party shall assist each Lender permitted to sell assignments or participations under this Section 8.1 as required to enable the assigning or selling Lender to effect any such assignment or participation, including the execution and delivery of any and all agreements, notes and other documents and instruments as shall be requested by Agent. Agent, acting as a non-fiduciary agent of Borrowers (such agency being solely for tax purposes and solely with respect to the actions described in this Section 8.1(d) ), shall establish and maintain at its address referred to in Section 9.3 (or at such other address as Agent may notify Borrowers) (A) a record of ownership (the “ Register ”) in which Agent agrees to register by book entry the interests (including any rights to receive payments hereunder) of Agent and each Lender in Term Loans and Revolving Loans, each of their obligations under this Agreement to participate in each Loan, and any assignment of any such interest, obligation or right and (B) accounts in the Register in accordance with its usual practice in which it shall record (1) the names and addresses of the Lenders (and each change thereto pursuant to this Section 8.1 and Section 9.19 ), (2) the Commitments of each Lender, (3) the amount of each Loan and each funding of any participation described in clause (A) above, for LIBOR Loans, the LIBOR Period applicable thereto, (4) the amount of any principal or interest due and payable or paid, and (5) any other payments received by Agent from Borrowers and its application to the Obligations. Notwithstanding anything to the contrary contained in this Agreement, the Loans (including any Notes evidencing such Loans) are registered obligations, the right, title and interest of the Lenders and their assignees in and to such Loans shall be transferable only upon notation of such transfer in the Register and no assignment thereof shall be effective until recorded therein. This Section 8.1 shall be construed so that the Loans are at all times maintained in “registered form” within the meaning of IRC Sections 163(f), 871(h)(2) and 881(c)(2). The Credit Parties, Agent, the L/C Issuer and Lenders shall treat each Person whose name is recorded in the Register as a Lender for all purposes of this Agreement. Information contained in the Register with respect to any Lender shall be available for access by Borrowers, Agent or such Lender at any reasonable time and from time to time upon reasonable prior notice. No Lender shall, in such capacity, have access to or be otherwise permitted to review any information in the Register other than information with respect to such Lender unless otherwise agreed by Agent.

 

64


(e) A Lender may furnish any information concerning Credit Parties in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants); provided that such Lender shall obtain from assignees or participants confidentiality covenants substantially equivalent to those contained in Section 9.13 .

8.2 Agent .

(a) Appointment . Each Lender hereby designates and appoints Maranon as its Agent under this Agreement and the other Loan Documents, and each Lender hereby irrevocably authorizes Agent to execute and deliver the Collateral Documents and to take such action or to refrain from taking such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers as are set forth herein or therein, together with such other powers as are reasonably incidental thereto. Agent is authorized and empowered to amend, modify, or waive any provisions of this Agreement or the other Loan Documents on behalf of Lenders subject to the requirement that certain of Lenders’ consent be obtained in certain instances as provided in this Section 8.2 and Section 9.2 . The provisions of this Section 8.2 are solely for the benefit of Agent and Lenders and neither Borrowers nor any other Credit Party shall have any rights as a third party beneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement, Agent shall act solely as agent of the applicable Lenders and does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency or trust with or for Borrowers or any other Credit Party. Agent may, upon any term or condition it specifies, delegate or exercise any of its rights, powers and remedies under, and delegate or perform any of its duties or any other action with respect to, any Loan Document by or through any trustee, co-Agent, sub-Agent, employee, attorney-in-fact and any other Person (including any Secured Party). Any such Person shall benefit from this Article 8 to the extent provided by Agent.

(b) Nature of Duties . The duties of Agent shall be mechanical and administrative in nature. Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender. Nothing in this Agreement or any of the Loan Documents, express or implied, is intended to or shall be construed to impose upon Agent any obligations in respect of this Agreement or any of the Loan Documents except as expressly set forth herein or therein. Each Lender shall make its own independent investigation of the financial condition and affairs of each Credit Party in connection with the extension of credit hereunder and shall make its own appraisal of the creditworthiness of each Credit Party and Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto (other than as expressly required herein). If Agent seeks the consent or approval of any Lenders to the taking or refraining from taking any action hereunder, then Agent shall send notice thereof to each applicable Lender. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Credit Party, Agent (irrespective of whether the principal of any Loan or any other Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether Agent shall have made any demand on the Borrowers) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise: (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the L/C Issuers and Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuers and Agent and their respective agents and counsel and all other amounts due the Lenders, the L/C Issuers and Agent

 

65


under the Loan Documents) allowed in such judicial proceeding; and (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and L/C Issuer to make such payments to Agent and, in the event that Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuers, to pay to Agent any amount due for the reasonable compensation, expenses, disbursements and advances of Agent and its agents and counsel, and any other amounts due Agent under the Loan Documents.

(c) Rights, Exculpation, Etc. Neither Agent nor any of its respective officers, directors, employees or agents shall be liable for any action taken or omitted by them hereunder or under any of the Loan Documents, or in connection herewith or therewith, except that Agent shall be liable to the extent of its own gross negligence or willful misconduct as determined by a final non-appealable order by a court of competent jurisdiction. Agent shall not be liable for any apportionment or distribution of payments made by it in good faith and if any such apportionment or distribution is subsequently determined to have been made in error the sole recourse of any Lender to whom payment was due but not made, shall be to recover from other Lenders any payment in excess of the amount to which they are determined to be entitled (and such other Lenders hereby agree to return to such Lender any such erroneous payments received by them). In no event shall Agent be liable for punitive, special, consequential, incidental, exemplary or other similar damages. In performing its functions and duties hereunder, Agent shall exercise the same care which it would in dealing with loans for its own account, but neither Agent nor any of its respective agents or representatives shall be responsible to any Lender for any recitals, statements, representations or warranties herein or for the execution, effectiveness, genuineness, validity, enforceability, collectability, or sufficiency of this Agreement or any of the Loan Documents or the transactions contemplated thereby, or for the financial condition of any Credit Party. Agent shall not be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or any of the Loan Documents or the financial condition of any Credit Party, or the existence or possible existence of any Default or Event of Default. Agent may at any time request instructions from Requisite Lenders or all affected Lenders with respect to any actions or approvals which by the terms of this Agreement or of any of the Loan Documents, Agent is permitted or required to take or to grant. If such instructions are promptly requested, Agent shall be absolutely entitled to refrain from taking any action or to withhold any approval and shall not be under any liability whatsoever to any Person for refraining from any action or withholding any approval under any of the Loan Documents until it shall have received such instructions from the Requisite Lenders or such other portion of the Lenders as shall be prescribed by this Agreement. Without limiting the foregoing, no Lender shall have any right of action whatsoever against Agent as a result of Agent acting or refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of Requisite Lenders or all affected Lenders, as applicable; and, notwithstanding the instructions of Requisite Lenders or all affected Lenders, as applicable, Agent shall have no obligation to take any action if it believes, in good faith, that such action is deemed to be illegal by Agent or exposes Agent to any liability for which it has not received satisfactory indemnification in accordance with Section 8.2(e) .

(d) Reliance . Agent shall be entitled to rely, and shall be fully protected in relying, upon any written or oral notices, statements, certificates, orders or other documents or any telephone message or other communication (including any writing, telex, fax or telegram) believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement or any of the Loan Documents and its duties hereunder or thereunder. Agent shall be entitled to rely upon the advice of legal counsel, independent accountants, and other experts selected by Agent in its sole discretion.

 

66


(e) Indemnification . Lenders will reimburse and indemnify Agent for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including attorneys’ fees and expenses), advances or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against Agent in its capacity as such in any way relating to or arising out of this Agreement or any of the Loan Documents or any action taken or omitted by Agent in its capacity as such in under this Agreement or any of the Loan Documents, in proportion to each Lender’s Pro Rata Share, but only to the extent that any of the foregoing is not reimbursed by Borrowers; provided , however , that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, advances or disbursements to the extent resulting from Agent’s gross negligence or willful misconduct as determined by a final non-appealable order by a court of competent jurisdiction. If any indemnity furnished to Agent for any purpose shall, in the opinion of Agent, be insufficient or become impaired, Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against even if so directed by the Requisite Lenders or such other portion of the Lenders as shall be prescribed by this Agreement until such additional indemnity is furnished. The obligations of Lenders under this Section 8.2(e) shall survive the payment in full of the Obligations and the termination of this Agreement.

(f) Maranon (or any Successor Agent) Individually . With respect to its Commitments hereunder, Maranon (or any Successor Agent) shall have and may exercise the same rights and powers hereunder and is subject to the same obligations and liabilities as and to the extent set forth herein for any other Lender. The terms “Lenders”, “Requisite Lenders”, and any similar terms shall, unless the context clearly otherwise indicates, include Maranon (or any successor Agent) in its individual capacity as a Lender or one of the Requisite Lenders. Maranon (or any successor Agent), either directly or through strategic affiliations, may lend money to, acquire equity or other ownership interests in, provide advisory services to and generally engage in any kind of banking, trust or other business with any Credit Party as if it were not acting as Agent pursuant hereto and without any duty to account therefor to Lenders. Maranon (or any successor Agent), either directly or through strategic affiliations, may accept fees and other consideration from any Credit Party for services in connection with this Agreement or otherwise without having to account for the same to Lenders.

 

67


(g) Successor Agents .

(i) Resignation . Agent may resign from the performance of all its agency functions and duties hereunder at any time by giving at least thirty (30) Business Days’ prior written notice to Borrower Representative and Lenders. Such resignation shall take effect upon the acceptance by a successor Agent of appointment pursuant to clause (ii) below or as otherwise provided in clause (ii) below.

(ii) Appointment of Successor . Upon any such applicable notice of resignation pursuant to clause (i) above, Requisite Lenders shall appoint a successor Agent, which, unless an Event of Default has occurred and is continuing, shall be reasonably acceptable to Borrowers. If a successor Agent shall not have been so appointed within the thirty (30) Business Day period referred to in clause (i) above, the retiring Agent upon notice to Borrower Representative, shall then appoint a successor Agent who shall serve as Agent until such time, if any, as Requisite Lenders appoint a successor Agent in the manner as provided above.

(iii) Successor Agents . Upon the acceptance of any appointment as Agent under the Loan Documents by a successor Agent such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations under the Loan Documents. After any retiring Agent’s resignation as Agent the provisions of this Section 8.2 shall continue to inure to its benefit as to any actions taken or omitted to be taken by it in its capacity as Agent.

(h) Collateral Matters .

(i) Release of Collateral . Lenders hereby irrevocably authorize Agent, at its option and in its discretion, to release any Lien granted to or held by Agent upon any Collateral (w) upon termination of the Commitments and payment and satisfaction of all Obligations (other than contingent indemnification obligations to the extent no claims give rise thereto have been asserted), (x) constituting property being sold or disposed of if Borrowers (or any of them) certify to Agent that the sale or disposition is made in compliance with the provisions of this Agreement (and Agent may rely in good faith conclusively on any such certificate, without further inquiry), (y) in connection with the exercise of any right or remedy in accordance with the terms of the Loan Documents or (z) in accordance with the provisions of the next sentence. In addition, with the consent of Requisite Lenders, Agent may release any Lien granted to or held by Agent upon any Collateral having a book value not greater than ten percent (10%) of the total book value of all Collateral, either in a single transaction or in a series of related transactions.

(ii) Confirmation of Authority; Execution of Releases . Without in any manner limiting Agent’s authority to act without any specific or further authorization or consent by Lenders (as set forth in Section 8.2(h)(i) ), each Lender agrees to confirm in writing, upon request by Agent or Borrower Representative, the authority to release any Collateral conferred upon Agent under clauses (w), (x), (y) and (z) of Section 8.2(h)(i) . Upon receipt by Agent of any required confirmation from the Requisite Lenders of its authority to release any particular item or types of Collateral, and upon at least ten (10) Business Days’ prior written request by Borrower Representative, Agent shall (and is hereby irrevocably authorized by Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to Agent upon such Collateral;

 

68


provided , however , that (x) Agent shall not be required to execute any such document on terms which, in Agent’s opinion, would expose Agent to liability or create any obligation or entail any consequence other than the release of such Liens without recourse or warranty, and (y) such release shall not in any manner discharge, affect or impair the Obligations or any Liens upon (or obligations of any Credit Party, in respect of), all interests retained by any Credit Party, including the proceeds of any sale, all of which shall continue to constitute part of the Collateral.

(iii) Absence of Duty . Agent shall have no obligation whatsoever to any Lender or any other Person to assure that the property covered by the Collateral Documents exists or is owned by Borrowers or any other Credit Party or is cared for, protected or insured or has been encumbered or that the Liens granted to Agent have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent in this Section 8.2(h) or in any of the Loan Documents, it being understood and agreed that in respect of the property covered by the Collateral Documents or any act, omission or event related thereto, Agent may act in any manner it may deem appropriate, in its discretion, given Agent’s own interest in property covered by the Collateral Documents as one of the Lenders and that Agent shall have no duty or liability whatsoever to any of the other Lenders, provided that Agent shall exercise the same care which it would in dealing with loans for its own account.

(i) Agency for Perfection . Agent and each Lender hereby appoint each other Lender as agent for the purpose of perfecting Agent’s security interest in assets which, in accordance with the Code in any applicable jurisdiction, can be perfected by possession or control. Should any Lender (other than Agent) obtain possession or control of any such assets, such Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor, shall deliver such assets to Agent or in accordance with Agent’s instructions or transfer control to Agent in accordance with Agent’s instructions. Each Lender agrees that it will not have any right individually to enforce or seek to enforce any Collateral Document or to realize upon any collateral security for the Loans unless instructed to do so by Agent in writing, it being understood and agreed that such rights and remedies may be exercised only by Agent.

(j) Notice of Default . Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default except with respect to defaults in the payment of principal, interest and Fees required to be paid to Agent for the account of Lenders, unless Agent shall have received written notice from a Lender or Borrower Representative referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. Agent will use reasonable efforts to notify each Lender of its receipt of any such notice, unless such notice is with respect to defaults in the payment of principal, interest and fees, in which case Agent will notify each Lender of its receipt of such notice. Agent shall take such action with respect to such Default or Event of Default as may be requested by Requisite Lenders in accordance with Section 6 . Unless and until Agent has received any such request, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interests of Lenders.

(k) Lender Actions Against Collateral . Each Lender agrees that it will not take any enforcement action, nor institute any actions or proceedings, with respect to the Loans, against any Borrower or any Credit Party hereunder or under the other Loan Documents or against any

 

69


Collateral (including the exercise of any right of set-off) without the consent of Agent and Requisite Lenders. All such Lender enforcement actions and proceedings shall be taken in concert and at the direction and with the consent of Agent and Requisite Lenders. Agent is authorized to issue all notices to be issued by or on behalf of Lenders with respect to any Subordinated Debt. With respect to any action by Agent to enforce the rights and remedies of Agent and the Lenders under this Agreement and the other Loan Documents, each Lender hereby consents to the jurisdiction of the court in which such action is maintained, and agrees to deliver its Notes to Agent to the extent necessary to enforce the rights and remedies of Agent for the benefit of the Lenders under the Collateral Documents in accordance with the provisions hereof.

(l) Agent Reports . Each Lender may from time to time receive one or more reports or other information (each, a “ Report ”) prepared by or on behalf of Agent (or one or more of Agent’s affiliates). With respect to each Report, each Lender hereby agrees that:

(i) Agent (and Agent’s affiliates) shall have no duties or obligations in connection with or as a result of a Lender receiving a copy of a Report, which will be provided solely as a courtesy, without consideration. Each Lender will perform its own diligence and will make its own independent investigation of the operations, financial conditions and affairs of the Credit Parties and will not rely on any Report or make any claim that it has done so. In addition, each Lender releases, and agrees that it will not assert, any claim against Agent (or one or more of Agent’s affiliates) that in any way relates to any Report or arises out of a Lender having access to any Report or any discussion of its contents, and each Lender agrees to indemnify and hold harmless Agent (and Agent’s affiliates) and their respective officers, directors, employees, agents and attorneys from all claims, liabilities and expenses relating to a breach by such Lender or any of its personnel of this Section or otherwise arising out of such Lender’s access to any Report or any discussion of its contents;

(ii) Each Report may not be complete and certain information and findings obtained by Agent (or one or more of Agent’s affiliates) regarding the operations and condition of the Credit Parties may not be reflected in each Report. Agent (and Agent’s affiliates) makes no representations or warranties of any kind with respect to (i) any existing or proposed financing; (ii) the accuracy or completeness of the information contained in any Report or in any other related documentation; (iii) the scope or adequacy of Agent’s (and Agent’s affiliates’) due diligence, or the presence or absence of any errors or omissions contained in any Report or in any other related documentation; and (iv) any work performed by Agent (or one or more of Agent’s affiliates) in connection with or using any Report or any related documentation; and

(iii) Except as provided by Section 9.13 , Each Lender agrees to safeguard each Report and any related documentation with the same care which it uses with respect to information of its own which it does not desire to disseminate or publish, and agrees not to reproduce or distribute or provide copies of or disclose any Report or any other related documentation or any related discussions to anyone.

8.3 Set Off and Sharing of Payments . In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, during the continuance of any Event of Default, each Lender is hereby authorized by each Credit Party at any time or from time to time, with reasonably prompt subsequent notice to Borrower Representative (any prior or contemporaneous notice being hereby expressly waived) to set off and to appropriate and to apply any

 

70


and all (A) balances held by such Lender at any of its offices for the account of any Credit Party (regardless of whether such balances are then due to any such Credit Party) (excluding any such balances maintained in Excluded Accounts), and (B) other property at any time held or owing by such Lender to or for the credit or for the account of any such Credit Party, against and on account of any of the Obligations; except that no Lender shall exercise any such right without the prior written consent of Agent. Notwithstanding anything herein to the contrary, the failure to give notice of any set off and application made by such Lender to Borrower Representative shall not affect the validity of such set off and application. Any Lender exercising a right to set off shall purchase for cash (and the other Lenders shall sell) interests in each of such other Lender’s Pro Rata Share of the Obligations as would be necessary to cause all Lenders to share the amount so set off with each other Lender entitled to share in the amount so set off in accordance with their respective Pro Rata Shares in a manner consistent with Section 6.5 . Borrowers agree, to the fullest extent permitted by law, that any Lender may exercise its right to set off with respect to amounts in excess of its Pro Rata Share of the Obligations and upon doing so shall deliver such amount so set off to Agent for the benefit of all Lenders entitled to share in the amount so set off in accordance with their Pro Rata Shares.

8.4 [ Reserved ].

8.5 Disbursements of Advances; Payment .

(a) Advances; Payments . At least once each week or more frequently at Agent’s election (each, a “ Settlement Date ”), to the extent as such payments shall have been received during such week, Agent shall advise each Lender by telephone or email of the amount of such Lender’s Pro Rata Share of interest and Fees paid for the benefits of Lenders with respect to each applicable Loan. Provided that each Lender has funded all payments and Advances required to be made by it and purchased all participations required to be purchased by it under this Agreement and the other Loan Documents as of such Settlement Date, Agent shall pay to each Lender such Lender’s Pro Rata Share of interest and Fees paid by or on behalf of Borrowers to Agent since the previous Settlement Date for the benefit of such Lender on the Loans held by it. All payments of principal received by Agent shall be promptly delivered to each Lender based on each Lender’s Pro Rata Share. Such payments shall be made by wire transfer to such Lender’s account (as designated by such Lender in writing to Agent on or before the Closing Date or from time to time thereafter or as set forth in the applicable Assignment Agreement) not later than 1:00 p.m. (Chicago time) on the next Business Day following each Settlement Date. To the extent that any Lender (a “ Non-Funding Lender ”) has failed to fund all such payments or Advances or failed to fund the purchase of all such participations required to be funded or purchased by such Lender pursuant to this Agreement within two (2) Business Days following the required date for such funding, Agent shall be entitled to set off the funding shortfall against that Non-Funding Lender’s Pro Rata Share of all payments received from or on behalf of Borrowers.

(b) Availability of Lender’s Pro Rata Share . Agent may assume that each Revolving Lender will make its Pro Rata Share of each Revolving Credit Advance available to Agent on each Funding Date. If such Pro Rata Share is not, in fact, paid to Agent by such Revolving Lender when due, Agent will be entitled to recover such amount on demand from such Revolving Lender without setoff, counterclaim or deduction of any kind. If any Revolving Lender fails to pay the amount of its Pro Rata Share forthwith upon Agent’s demand, Agent shall promptly notify Borrower Representative and Borrowers shall promptly repay such amount to Agent. Nothing in this Section 8.5(b) or elsewhere in this Agreement or the other Loan Documents shall be deemed to require Agent to advance funds on behalf of any Revolving Lender or to relieve any Revolving Lender from its obligation to fulfill its

 

71


Commitments hereunder or to prejudice any rights that Borrowers may have against any Revolving Lender as a result of any default by such Revolving Lender hereunder. To the extent that Agent advances funds to Borrower Representative and/or any Borrower on behalf of any Revolving Lender and is not reimbursed therefor on the same Business Day as such Advance is made, Agent shall be entitled to retain for its account all interest accrued on such Advance until reimbursed by the applicable Revolving Lender.

(c) Return of Payments .

(i) If Agent pays an amount to a Lender under this Agreement in the belief or expectation that a related payment has been or will be received by Agent from or on behalf of Borrowers and such related payment is not received by Agent then Agent will be entitled to recover such amount from such Lender on demand without setoff, counterclaim or deduction of any kind.

(ii) If Agent determines at any time that any amount received by Agent under this Agreement must be returned to any Borrower or paid to any other Person pursuant to any insolvency law or otherwise, then, notwithstanding any other term or condition of this Agreement or any other Loan Document, Agent shall not be required to distribute any portion thereof to any Lender. In addition, each Lender will repay to Agent on demand any portion of such amount that Agent has distributed to such Lender, together with interest at such rate, if any, as Agent is required to pay to any Borrower or such other Person, without setoff, counterclaim or deduction of any kind.

(d) Non-Funding Lenders . The failure of any Non-Funding Lender to make any Revolving Credit Advance or any payment required by it hereunder on the date specified therefor shall not relieve any other Lender (each such other Revolving Lender, an “ Other Lender ”) of its obligations to make such Advance or purchase such participation, but neither any Other Lender nor Agent shall be responsible for the failure of any Non-Funding Lender to make an Advance, purchase a participation or make any other payment required hereunder. Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender shall not have any voting or consent rights under or with respect to any Loan Document or constitute a “Lender”, a “Requisite Revolving Lender”, or a “Revolving Lender” (or be included in the calculation of “Requisite Lenders” hereunder) for any voting or consent rights under or with respect to any Loan Document.

SECTION 9.

MISCELLANEOUS

9.1 Indemnities . The Credit Parties agree, jointly and severally, to indemnify, pay, and hold Agent, the L/C Issuer, each Lender and their respective Affiliates, officers, directors, employees, agents, and attorneys (the “ Indemnitees ”) harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs and expenses (including all reasonable fees and expenses of counsel to such Indemnitees (limited to one primary counsel for Agent and, if deemed appropriate by Agent, one counsel in each relevant jurisdiction and any special counsel, and one counsel for the Initial Lenders (except in the case of a conflict, in which case one additional counsel for each Lender similarly situated in respect of such conflict)) of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Indemnitee as a result of such Indemnitees being a party to this Agreement or the transactions consummated pursuant to this Agreement or otherwise relating to any of the Related Transactions; provided , that no Credit Party shall have any obligation to an Indemnitee hereunder with respect to liabilities to the extent resulting from (i) the gross negligence, bad faith or

 

72


willful misconduct of that Indemnitee (or any of its commonly controlled affiliates, or its or its commonly controlled affiliates’ respective officers, directors, trustees, employees, agents and controlling persons) as determined by a court of competent jurisdiction or (ii) a material breach of the material obligations of such Indemnitee under the Loan Documents at a time when no Credit Party has breached its obligations thereunder in any material respect as determined by a court of competent jurisdiction in a final non-appealable judgment or (iii) disputes solely among Indemnitees at a time when no Event of Default has occurred and is continuing (excluding, in any event, claims against any such Indemnitee in its capacity or in fulfilling its role as Agent) or (iv) any settlement of a claim by such Indemnitee without the Borrowers’ consent (such consent not to be unreasonably withheld, delayed or conditioned); provided, if such claim is settled with the Borrowers’ consent or if there is a final judgment for the plaintiff in any proceeding related thereto, the Credit Parties shall indemnify such Indemnitee for all liabilities, losses, damages, penalties, claims, costs and expenses by reason of such settlement or judgment. This Section 9.1 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

9.2 Amendments and Waivers .

(a) Except for actions expressly permitted to be taken by Agent, no amendment, modification, termination or waiver of any provision of this Agreement or any other Loan Document, or any consent to any departure by any Credit Party therefrom, shall in any event be effective unless the same shall be in writing and signed (i) by Borrowers (or Borrower Representative on behalf of Borrowers), and (ii) by Requisite Lenders or all directly affected Lenders, as applicable. Except as set forth in clauses (b) and (c) below, all such amendments, modifications, terminations or waivers requiring the consent of any Lenders shall only require the written consent of Requisite Lenders.

(b) No amendment, modification, termination or waiver of or consent with respect to any provision of this Agreement that waives compliance with the conditions precedent set forth in Section 7.2 to the making of any Revolving Credit Advance (or the issuance of any Lender Letter of Credit or Letter of Credit Participation Agreement) shall be effective unless the same shall be in writing and signed by Requisite Revolving Lenders (in addition to, for the avoidance of doubt, Requisite Lenders) and Borrowers (or Borrower Representative on behalf of Borrowers). Notwithstanding anything contained in this Agreement to the contrary, no waiver or consent with respect to any Default or any Event of Default shall be effective for purposes of the conditions precedent to the making of Revolving Loans (or the issuance of any Lender Letter of Credit or Letter of Credit Participation Agreement) set forth in Section 7.2 unless the same shall be in writing and signed by Requisite Revolving Lenders (in addition to, for the avoidance of doubt, Requisite Lenders) and Borrowers (or Borrower Representative on behalf of Borrowers).

(c) Subject to Section 9.2(a) with respect to Borrowers’ consent, no amendment, modification, termination or waiver of or under this Agreement or any other Loan Document shall, unless in writing and signed by each Lender directly affected thereby: (i) increase the principal amount, or postpone or extend the scheduled date of expiration, of any Lender’s Commitment (which action shall be deemed to directly affect all Lenders); (ii) reduce the principal of, rate of interest on (other than any determination or waiver to charge or not charge interest at the Default Rate) or Fees payable with respect to any Loan of any affected Lender; (iii) extend any regularly scheduled payment date or final maturity date of the principal amount of any Loan of any affected Lender; (but excluding prepayments under clauses (b), (c), (d) and (e) of Section 1.5 hereof); (iv) waive, forgive, defer, extend or postpone any payment of interest or Fees (other than any determination or waiver to charge or not charge interest at the Default

 

73


Rate) as to any affected Lender (which action shall be deemed only to directly affect those Lenders to whom such payments are made); (v) release any Guaranty (other than a Guaranty provided by a Subsidiary that is sold or otherwise disposed of, liquidated or dissolved as expressly permitted under Section 3.7 ) or release or subordinate Agent’s Lien on all or substantially all of the Collateral, except as otherwise provided in this Agreement or the other Loan Documents ( provided , for purposes of clarity, the foregoing shall not prohibit Agent from subordinating Agent’s Lien on the Collateral to the first priority security interest of a capital lease or purchase money financing in connection with a capital lease or purchase money financing that is permitted pursuant to a customary short-form subordination agreement); (vi) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans that shall be required for Lenders or any of them to take any action hereunder (which action shall be deemed to directly affect all Lenders); and (vii) amend or waive Section 6.5 , Section 8.3 , this Section 9.2 or the definition of the terms “Requisite Lenders” insofar as such definition affects the substance of this Section 9.2 or the term “Pro Rata Share” (which action shall be deemed to directly affect all Lenders). Furthermore, no amendment, modification, termination or waiver affecting the rights or duties of Agent under this Agreement or any other Loan Document shall be effective unless in writing and signed by Agent in addition to Lenders required hereinabove to take such action. Each amendment, modification, termination or waiver shall be effective only in the specific instance and for the specific purpose for which it was given. No amendment, modification, termination or waiver shall be required for Agent to take additional Collateral pursuant to any Loan Document. No amendment, modification, termination or waiver of any provision of any Note shall be effective without the written concurrence of the holder of that Note. No notice to or demand on any Credit Party in any case shall entitle such Credit Party or any other Credit Party to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 9.2 shall be binding upon each holder of the Notes at the time outstanding and each future holder of the Notes.

(d) Notwithstanding anything to the contrary contained in this Section 9.2 , (x) Agent may amend Annex B to reflect assignments entered into pursuant to Section 9.10 , and (y) Agent and Borrowers may amend or modify this Agreement and any other Loan Document to (1) cure any ambiguity, omission, defect or inconsistency therein, or (2) grant a new Lien for the benefit of Agent, L/C Issuer and Lenders, extend an existing Lien over additional property or join additional Persons as Credit Parties.

9.3 Notices; Effectiveness . Any Communication required shall be in writing addressed to the respective party as set forth below and may be personally served by e-mail, telecopier transmission (other than with respect to Communications between Agent and the Lenders), by United States certified or registered mail or by a nationally-recognized overnight courier. A Communication shall be deemed to have been given: (i) upon receipt, if delivered in person; (ii) upon receipt (confirmed by automatic answer back or like evidence of receipt), if sent by telecopier during normal business hours at the office of the recipient on the date of transmission if transmitted on a Business Day before 3:00 p.m. Chicago Time; (iii) upon receipt (confirmed by express acknowledgment of receipt by the intended addressee (expressly excluding any automatic reply e-mail or similar response)), if sent by e-mail during normal business hours at the office of the recipient on the date of transmission if transmitted on a Business Day before 3:00 p.m. Chicago Time; (iv) one (1) Business Day after delivery to the courier properly addressed, if delivered by overnight courier; or (v) four (4) Business Days after deposit with postage prepaid and properly addressed, if delivered by United States certified or registered mail.

 

74


In any such case, such Communication to any party shall, if made in writing, be made to the address of such party indicated below for receiving Communications in writing and, if made by telecopier, shall be made to such Fax number as indicated below. Any party may from time to time change its address for receiving Communications in writing, or its Fax number, by sending a notice to the other parties hereto in writing.

While the parties may communicate by electronic means to the electronic addresses set forth below, no Communication shall be deemed given unless and until the same is deemed given in accordance with the first paragraph in this Section 9.3 .

 

  If to Borrower Representative or any other Credit Party:    12604 Hiddencreek Way, Suite A
     Cerritos, California 90703
     ATTN: Chief Financial Officer
     Fax: (562) 483-4687
     Electronic address: Robert.Kostrinsky@Fvinegar.com
  With copies to (which shall not constitute notice):    Green Plains, Inc.
     450 Regency Parkway, Suite 400
     Omaha, Nebraska
     ATTN: Michelle Mapes
     Fax: (402) 952-4916
     Electronic address: michelle.mapes@gpreinc.com
  If to Agent:    Maranon Capital, L.P.
     303 West Madison Street, Suite 2500
     Chicago, Illinois 60606
     ATTN: Chief Financial Officer
     Phone: (312) 646-1200
     Fax: (312) 578-0047
  With a copy to (which shall not constitute notice):    Katten Muchin Rosenman LLP
     525 West Monroe Street
     Chicago, IL 60661
     ATTN: Michael A. Jacobson
     Fax: (312) 902-1061
     Electronic address:
     michael.jacobson@kattenlaw.com
     and
     Cortland Capital Markets Services LLC
     225 W. Washington Street, 21 st floor
     Chicago, Illinois 60606
     ATTN: Agency Services – Maranon
     Phone: (312) 564-5100
     Fax: (312) 376-0751
     Electronic address: maria.villagomez@cortlandglobal.com and legal@cortlandglobal.com
  If to a Lender:    To the address on file with Agent or set forth in the applicable Assignment Agreement

 

75


9.4 Failure or Indulgence Not Waiver; Remedies Cumulative . No failure or delay on the part of Agent or any Lender to exercise, nor any partial exercise of, any power, right or privilege hereunder or under any other Loan Documents shall impair such power, right, or privilege or be construed to be a waiver of any Default or Event of Default. All rights and remedies existing hereunder or under any other Loan Document are cumulative to and not exclusive of any rights or remedies otherwise available.

9.5 Marshaling; Payments Set Aside . Neither Agent nor any Lender shall be under any obligation to marshal any assets in payment of any or all of the Obligations. To the extent that Borrowers make payment(s) or Agent enforces its Liens or Agent or any Lender exercises its right of set-off, and such payment(s) or the proceeds of such enforcement or set-off is subsequently invalidated, declared to be fraudulent or preferential, set aside, or required to be repaid by anyone (whether as a result of any demand, litigation, settlement or otherwise), then to the extent of such recovery, the Obligations or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor, shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or set-off had not occurred.

9.6 Severability . The invalidity, illegality, or unenforceability in any jurisdiction of any provision under the Loan Documents shall not affect or impair the remaining provisions in the Loan Documents.

9.7 Lenders’ Obligations Several; Independent Nature of Lenders’ Rights . The obligation of each Lender hereunder is several and not joint and no Lender shall be responsible for the obligation or commitment of any other Lender hereunder. In the event that any Lender at any time should fail to make a Loan as herein provided, the Lenders, or any of them, at their sole option, may make the Loan that was to have been made by the Lender so failing to make such Loan. Nothing contained in any Loan Document and no action taken by Agent or any Lender pursuant hereto or thereto shall be deemed to constitute Lenders to be a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt.

9.8 Headings . Section and subsection headings are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purposes or be given substantive effect.

9.9 Applicable Law . The laws of the State of Illinois shall govern all matters arising out of, in connection with or relating to this Agreement, including its validity, interpretation, construction, performance and enforcement (including any claims sounding in contract or tort law arising out of the subject matter hereof and any determinations with respect to post-judgment interest).

9.10 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns except that no Credit Party may assign its rights or obligations hereunder without the written consent of all Lenders and nothing hereunder shall waive or otherwise release (or be deemed or construed to waive or otherwise release) (i) any Credit Party from its obligations hereunder as a result of any assignment not permitted hereunder or (ii) any assignee of any Credit Party (including any assignee under an assignment not permitted hereunder) from such Credit Party’s obligations hereunder.

 

76


9.11 No Fiduciary Relationship; Limited Liability . No provision in the Loan Documents and no course of dealing between the parties shall be deemed to create any fiduciary duty owing to any Credit Party by Agent, L/C Issuer or any Lender. Credit Parties agree that none of Agent, L/C Issuer nor any Lender shall have liability to any Credit Party (whether sounding in tort, contract or otherwise) for losses suffered by any Credit Party in connection with, arising out of, or in any way related to the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless and to the extent that it is determined that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought as determined by a final non-appealable order by a court of competent jurisdiction. Neither Agent nor any Lender shall have any liability with respect to, and Credit Parties hereby waive, release and agree not to sue for, any special, indirect or consequential damages suffered by any Credit Party in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby.

9.12 Construction . Agent, each Lender, L/C Issuer, Borrowers and each other Credit Party acknowledge that each of them has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review the Loan Documents with its legal counsel and that the Loan Documents shall be construed as if jointly drafted by Agent, each Lender, Borrowers and each other Credit Party.

9.13 Confidentiality . Until two (2) years after the Termination Date, Agent and each Lender agree to use commercially reasonable efforts to keep confidential any Confidential Information (as defined below) and not to disclose such information to Persons other than to potential assignees or participants or to any Affiliate of, investors in or partners of, lenders or other financing sources of, or Persons employed by or engaged by, Agent, a Lender or any of Agent’s and any Lender’s respective Affiliates or a Lender’s assignees or participants (including attorneys, auditors, professional consultants, rating agencies, insurance industry associations and portfolio management services) or to Persons who are potential investors in or partners of Agent, a Lender or Related Funds thereof, in each of the foregoing cases, on a “need to know” basis solely in connection with the transactions completed hereby and who are advised of the confidential nature of such information and instructed (or, in the case of any lender or other financing source of Agent or any Lender, enters into a written agreement or is otherwise subject to professional confidentiality requirements consistent with this Section 9.13 ) to keep such information confidential in accordance herewith (it being understood and agreed that “commercially reasonable efforts” on behalf of any Agent or Lender for purposes of this Section 9.13 shall mean providing confidential treatment to Confidential Information in a manner substantially consistent with Agent’s or such Lender’s, as applicable, management, administration and protection of its own confidential information. The confidentiality provisions contained in this Section 9.13 shall not apply to disclosures (i) required to be made by Agent, L/C Issuer or any Lender to any regulatory or Governmental Authority or pursuant to law, rule, regulations or legal process or (ii) consisting of general portfolio information that does not specifically identify Borrowers. Each Credit Party consents to the publication by Agent or any Lender of a tombstone, press release or similar advertising material relating to the financing transactions contemplated by this Agreement. Agent or such Lender shall provide a draft of any such tombstone, press release or similar advertising material to each Credit Party for review and comment prior to the publication thereof. Agent may provide to industry trade organizations information with respect to the Credit Facility that is necessary and customary for inclusion in league table measurements. The obligations of Agent and Lenders under this Section 9.13 shall supersede and replace the obligations of Agent and Lenders under any confidentiality agreement in respect of this financing executed and delivered by Agent or any Lender prior to the date hereof. For the purposes of this Section, “ Confidential Information ” means all information received relating to the Credit Parties and/or any of their subsidiaries and their respective businesses, the Parent or the Transactions (including any information obtained by Agent or any Lender, or any of their respective Affiliates, based on a review of the books and records

 

77


relating to Holdings and/or any of its subsidiaries and their respective Affiliates from time to time, including prior to the date hereof) other than any such information that is or becomes publicly available to Agent or any Lender on a non-confidential basis prior to disclosure by any Credit Party.

9.14 CONSENT TO JURISDICTION . BORROWERS AND THE OTHER CREDIT PARTIES, AGENT, L/C ISSUER AND EACH LENDER HEREBY CONSENT TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS LOCATED IN THE CITY OF CHICAGO, OR OF THE UNITED STATES OF AMERICA SITTING IN THE CITY OF CHICAGO AND IRREVOCABLY AGREE THAT, SUBJECT TO AGENT’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. EACH PARTY HERETO EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH OF THE PARTIES HERETO HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH PARTY BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH PARTY AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.

9.15 WAIVER OF JURY TRIAL . BORROWERS, THE OTHER CREDIT PARTIES, AGENT, L/C ISSUER AND EACH LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. BORROWERS, THE OTHER CREDIT PARTIES, AGENT, THE L/C ISSUER AND EACH LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWERS, THE OTHER CREDIT PARTIES, AGENT, THE L/C ISSUER AND EACH LENDER WARRANT AND REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

9.16 Survival of Warranties and Certain Agreements . All agreements, representations and warranties made herein shall survive the execution and delivery of this Agreement, the making of the Loans and the execution and delivery of the Notes. Notwithstanding anything in this Agreement or implied by law to the contrary, the agreements of each Borrower and any other Credit Party set forth in Sections 1.3(e) , 1.8 , 1.9 , 9.1 and 9.13 shall survive the repayment of the Obligations and the termination of this Agreement.

9.17 Entire Agreement . This Agreement, the Notes and the other Loan Documents embody the entire agreement among the parties hereto and supersede all prior commitments, agreements, representations, and understandings, whether oral or written, relating to the subject matter hereof, and may not be contradicted or varied by evidence of prior, contemporaneous, or subsequent oral agreements or discussions of the parties hereto. All Exhibits, Schedules and Annexes referred to herein are incorporated in this Agreement by reference and constitute a part of this Agreement.

9.18 Counterparts; Effectiveness . This Agreement and any amendments, waivers, consents or supplements may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all of which counterparts together shall constitute but one and the same instrument. Signature pages to this Agreement and the other Loan Documents may be detached from multiple separate counterparts and attached to the same document and a telecopy of any such executed signature page shall be valid as an original. This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto.

 

78


9.19 Replacement of Lenders .

(a) Within fifteen (15) days after receipt by Borrower Representative of written notice and demand from any Lender for payment pursuant to Section 1.8 or 1.9 or, as provided in this Section 9.19(c) , in the case of certain refusals by any Lender to consent to certain proposed amendments, modifications, terminations or waivers with respect to this Agreement that require the consent of all Lenders or all affected Lenders and that have been approved by Requisite Lenders (any such Lender demanding such payment or refusing to so consent being referred to herein as an “ Affected Lender ”), Borrowers may, at their option, notify Agent and such Affected Lender of its intention to do one of the following:

(i) Borrowers may obtain, at Borrowers’ expense, a replacement Lender (“ Replacement Lender ”), which Replacement Lender shall be required to be a Qualified Assignee, for such Affected Lender. In the event Borrowers obtain a Replacement Lender that will purchase all outstanding Obligations owed to such Affected Lender and assume its Commitments hereunder within ninety (90) days following notice of Borrowers’ intention to do so, the Affected Lender shall sell and assign all of its rights and delegate all of its obligations under this Agreement to such Replacement Lender in accordance with the provisions of Section 8.1 , provided that Borrowers have paid or reimbursed such Affected Lender for the Prepayment Fee, if any, payable pursuant to Section 1.3(d) (based on the date of such replacement and calculated as if such replacement gave rise to Borrowers’ obligation to pay such Prepayment Fee pursuant to such Section 1.3(d) ), any administrative fee payable pursuant to Section 8.1 and, in any case where such replacement occurs as the result of a demand for payment pursuant to Section 1.8 or 1.9 , paid all amounts required to be paid to such Affected Lender pursuant to Section 1.8 or 1.9 through the date of such sale and assignment; or

(ii) so long as no Default or Event of Default exists, Borrowers may, subject to Section 1.5 , with Agent’s consent, prepay in full all outstanding Obligations owed to such Affected Lender and terminate such Affected Lender’s Pro Rata Share of the applicable Commitment in which case the applicable Commitment will be reduced by the amount of such Pro Rata Share. Borrowers shall, subject to Section 1.5 , within ninety (90) days following notice of their intention to do so, prepay in full all outstanding Obligations owed to such Affected Lender (including, any amounts owing under Sections 1.3(b) and 1.3(d) (based on the date of such replacement and calculated as if such replacement gave rise to Borrowers’ obligation to pay such Prepayment Fee pursuant to such Section 1.3(d) ), respectively, and, in any case where such prepayment occurs as the result of a demand for payment for increased costs, such Affected Lender’s increased costs for which it is entitled to reimbursement under this Agreement through the date of such prepayment), and terminate such Affected Lender’s obligations under the applicable Commitment.

(b) In the case of a Non-Funding Lender pursuant to Section 8.5(a) , at Borrower Representative’s request, Agent or a Person acceptable to Agent shall have the right with Agent’s consent and in Agent’s sole discretion (but shall have no obligation) to purchase from any Non-Funding Lender, and each Non-Funding Lender agrees that it shall, at Agent’s request, sell and assign to Agent or such Person, all of the Loans and Commitments of that

 

79


Non-Funding Lender for an amount equal to the principal balance of all Loans held by such Non-Funding Lender and all accrued interest and Fees with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to an executed Assignment Agreement. Without limiting the foregoing obligation and agreement of any Non-Funding Lender, to the extent such Non-Funding Lender does not execute and deliver the requisite Assignment Agreement within five (5) Business Days of the request therefor, Agent shall be, and each Lender, by execution of this Agreement or any Assignment Agreement pursuant to which such Lender becomes a Lender hereunder, hereby agrees that Agent shall be, fully authorized and empowered to execute any and all such Assignment Agreements on behalf of such Non-Funding Lender necessary to effectuate the foregoing.

(c) If, in connection with any proposed amendment, modification, waiver or termination pursuant to Section 9.2 (a “ Proposed Change ”) requiring the consent of all affected Lenders, the consent of Requisite Lenders is obtained, but the consent of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained as described in this clause (c) being referred to as a “ Non-Consenting Lender ”); then, so long as Agent is not a Non-Consenting Lender, at Borrower Representative’s request Agent, or a Person reasonably acceptable to Agent, shall have the right with Agent’s consent and in Agent’s sole discretion (but shall have no obligation) to purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree that they shall, upon Agent’s request, sell and assign to Agent or such Person, all of the Loans and Commitments of such Non-Consenting Lenders for an amount equal to the principal balance of all Loans held by the Non-Consenting Lenders and all accrued interest and Fees and other Obligations owing with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to an executed Assignment Agreement.

9.20 Delivery of Termination Statements and Mortgage Releases . Upon payment in full in cash and performance of all of the Obligations (other than indemnification Obligations as to which no claim has been asserted), termination of the Commitments and a release of all claims against Agent and Lenders, and so long as no suits, actions proceedings, or claims are pending or threatened against any Indemnitee asserting any damages, losses or liabilities that are indemnified liabilities hereunder, Agent shall deliver to Borrower Representative termination statements, mortgage releases and other documents necessary or appropriate to evidence the termination of the Liens securing payment of the Obligations.

9.21 Release . Execution of this Agreement by the Credit Parties constitutes a full, complete and irrevocable release of any and all claims which each Credit Party may have at law or in equity in respect of all prior discussions and understandings, oral or written, relating to the subject matter of this Agreement and the other Loan Documents. In no event shall any Indemnitee be liable on any theory of liability for any special, indirect, consequential or punitive damages (including any loss of profits, business or anticipated savings).

9.22 Joint and Several . The obligations of the Credit Parties hereunder and under the other Loan Documents are joint and several.

9.23 Press Release; Public Offering Materials . Each Credit Party executing this Agreement agrees that neither it nor its Affiliates will in the future issue any press releases or other public disclosure, including any prospectus, proxy statement or other materials filed with any Governmental Authority relating to a public offering of the Stock of any Credit Party, using the name of any Initial Lender or any of their respective affiliates or referring to this Agreement, the other Loan Documents or the Related Transactions Documents without at least two (2) Business Days’ prior notice to the applicable Initial Lender and without the prior written consent of the applicable Initial Lender unless (and only to the extent that) such Credit Party or Affiliate is required to do so under law and then, in any event, such Credit Party or Affiliate will, to the extent permitted by law, consult with the applicable Initial Lender before issuing such press release or other public disclosure.

 

80


9.24 Keepwell . Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Credit Party to honor all of its payment obligations under the Guaranty and Security Agreement in respect of Swap Obligations under any Qualified Rate Contract (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section 9.24 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 9.24, or otherwise under the Guaranty and Security Agreement, voidable under applicable Requirements of Law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Guarantor under this Section 9.24 shall remain in full force and effect until the guarantees in respect of Swap Obligations under each Qualified Rate Contract have been discharged, or otherwise released or terminated in accordance with the terms of this Agreement. Each Qualified ECP Guarantor intends that this Section 9.24 constitute, and this Section 9.24 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Credit Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

9.25 Acknowledgement and Consent to Bail-In of EEA Financial Institutions . Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: (a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution, and (b) the effects of any Bail-in Action on any such liability, including, if applicable: (i) a reduction in full or in part or cancellation of any such liability, (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document, or (iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

SECTION 10.CROSS-GUARANTY

10.1 Cross-Guaranty . Each Credit Party hereby agrees that such Credit Party is jointly and severally liable for, and hereby absolutely and unconditionally guarantees to Agent, the L/C Issuer and Lenders, the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Obligations owed or hereafter owing to Agent, the L/C Issuer and Lenders by each other Credit Party. Each Credit Party agrees that its guaranty obligation hereunder is a continuing guaranty of payment and performance and not of collection, that its obligations under this Section 10 shall not be discharged until payment and performance, in full, of the Obligations (other than contingent indemnification Obligations for which no unsatisfied claim giving rise thereto has been asserted) has occurred, and that its obligations under this Section 10 shall be absolute and unconditional, irrespective of, and unaffected by:

(a) the genuineness, validity, regularity, enforceability or any future amendment of, or change in, this Agreement, any other Loan Document or any other agreement, document or instrument to which any Credit Party is or may become a party;

 

81


(b) the absence of any action to enforce this Agreement (including this Section 10 ) or any other Loan Document or the waiver or consent by Agent, the L/C Issuer and Lenders with respect to any of the provisions thereof;

(c) the existence, value or condition of, or failure to perfect its Lien against, any security for the Obligations or any action, or the absence of any action, by Agent, the L/C Issuer and Lenders in respect thereof (including the release of any such security);

(d) the insolvency of any Credit Party; or

(e) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.

Each Credit Party shall be regarded, and shall be in the same position, as principal debtor with respect to the Obligations guaranteed hereunder.

10.2 Waivers by Credit Parties .

(a) Each Credit Party expressly waives all rights it may have now or in the future under any statute, or at common law, or at law or in equity, or otherwise, to compel Agent, the L/C Issuer or any Lender to marshal assets or to proceed in respect of the Obligations guaranteed hereunder against any other Credit Party, any other party or against any security for the payment and performance of the Obligations before proceeding against, or as a condition to proceeding against, such Credit Party.

(b) To the maximum extent permitted by law, each Credit Party, in its capacity as a Guarantor hereunder or a surety as a result of joint and several obligations hereunder, hereby waives and agrees not to assert or take advantage of: (i) the unenforceability or invalidity of any security or guaranty or the lack of perfection or continuing perfection, or failure of priority of any security for the Obligations; (ii) any and all rights and defenses arising out of an election of remedies by Agent, the L/C Issuer or any Lender; (iii) any defense based upon any failure to disclose to such Credit Party any information concerning the financial condition of any other Credit Party or any other Person or any other circumstances bearing on the ability of any other Credit Party or any other Person to pay and perform all obligations due under this Agreement or any of the other Loan Documents; (iv) any failure of Agent, the L/C Issuer or any Lender to comply with applicable laws in connection with the sale or disposition of security, including any failure by Agent, the L/C Issuer or any Lender to conduct a commercially reasonable sale or other disposition of such security; (v) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other respects more burdensome than that of a principal, or that reduces a surety’s or guarantor’s obligations in proportion to the principal’s obligation; (vi) any use of cash collateral under Section 363 of the Bankruptcy Code; (vii) any defense based upon an election by Agent, the L/C Issuer or any Lender, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code or any successor statute; (viii) any defense based upon any borrowing or any grant of a security interest under Section 364 of the Bankruptcy Code; (ix) any right of subrogation, any right to enforce any remedy which Agent, the L/C Issuer or any Lender may have against any other Credit Party or any other Person and any right to participate in, or benefit from, any security now or hereafter held by Agent, the L/C Issuer or any Lender for the Obligations; (x) presentment, demand, protest and notice of any kind, including notice of acceptance of this Agreement and of the existence, creation or incurring of new or additional Obligations; (xi) the benefit of any statute of limitations affecting

 

82


the liability of any other Credit Party or other Person, enforcement of this Agreement or any other Loan Documents, the liability of any Credit Party hereunder or the enforcement hereof; (xii) relief from any applicable valuation or appraisement laws; (xiii) any other action by Agent, the L/C Issuer or any Lender, whether authorized by this Agreement or otherwise, or any omission by Agent, the L/C Issuer or any Lender or other failure of Agent, LC Issuer or any Lender to pursue, or delay in pursuing, any other remedy in its power; and (xiv) any and all claims and/or rights of counterclaim, recoupment, setoff or offset. Each Credit Party agrees that the payment and performance of all Obligations or any part thereof or other act which tolls any statute of limitations applicable to this Agreement or the other Loan Documents shall similarly operate to toll the statute of limitations applicable to such Credit Party’s liability hereunder.

(c) It is agreed among each Credit Party, Agent, the L/C Issuer and Lenders that the foregoing waivers are of the essence of the transaction contemplated by this Agreement and the other Loan Documents and that, but for the provisions of this Section 10 and such waivers, Agent and Lenders would decline to enter into this Agreement.

10.3 Benefit of Guaranty . Each Credit Party agrees that the provisions of this Section 10 are for the benefit of Agent, the L/C Issuer and Lenders and their respective successors, transferees, endorsees and assigns, and nothing herein contained shall impair, as between any other Credit Party and Agent, the L/C Issuer or Lenders, the obligations of such other Credit Party under the Loan Documents.

10.4 Waiver of Subrogation, Etc . Notwithstanding anything to the contrary in this Agreement or in any other Loan Document, and except as set forth in Section 10.7, each Credit Party hereby expressly and irrevocably waives any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off and any and all defenses available to a surety, guarantor or accommodation co-obligor until all Obligations (other than contingent indemnification Obligations for which no unsatisfied claim giving rise thereto has been asserted) have been indefeasibly paid in full in cash and all Commitments of Agent and/or Lenders to provide further credit have been terminated and all obligations of L/C Issuer to issue Lender Letters of Credit or Letter of Credit Participation Agreements have been terminated. As further security, any and all debts and liabilities now or hereafter arising and owing by any Credit Party to any other Guarantor are hereby subordinated to Agent and Lender’s claims (including the Obligations) and without the prior written consent of Agent during the occurrence and continuance of an Event of Default, no Guarantor shall demand, sue for or otherwise attempt to collect any indebtedness of any Credit Party owing to it until the Obligations (other than contingent indemnification Obligations for which no unsatisfied claim giving rise thereto has been asserted) shall have been paid in full in cash and this Agreement shall have terminated; provided that no Guarantor shall have any rights hereunder against any Credit Party or any of its Subsidiaries if all or any portion of the Obligations shall have been satisfied in connection with an exercise of remedies in respect of the Stock of any Credit Party or any of its Subsidiaries pursuant to a Collateral Document. If, notwithstanding the foregoing sentence, a Guarantor shall collect, enforce or receive any amounts in respect of any indebtedness, such amounts shall be held in trust for the benefit of Agent and the Lenders, and such Guarantor shall immediately deliver any such amounts to Agent for application to the Obligations. Each Guarantor acknowledges and agrees that this waiver is intended to benefit Agent, L/C Issuer and Lenders and shall not limit or otherwise affect such Guarantor’s liability hereunder or the enforceability of this Section 10, and that Agent, L/C Issuer and the Lenders and their respective successors and assigns are intended third party beneficiaries of the waivers and agreements set forth in this Section 10.4 and that such waivers and agreements shall remain in effect until all Obligations (other than contingent indemnification Obligations for which no unsatisfied claim giving rise thereto has been asserted) have been paid in full in cash and all Commitments of Agent, L/C Issuer and/or Lenders to provide further credit (and/or issue Lender Letters of Credit or Letter of Credit Participation Agreements), in each case, have been terminated.

 

83


Each Credit Party acknowledges and agrees that this waiver is intended to benefit Agent and Lenders and shall not limit or otherwise affect such Credit Party’s liability hereunder or the enforceability of this Section 10 , and that Agent, L/C Issuer, that Lenders and their respective successors and assigns are intended third party beneficiaries of the waivers and agreements set forth in this Section 10.4 and that such waivers and agreements shall remain in effect until all Obligations (other than contingent indemnification Obligations for which no unsatisfied claim giving rise thereto has been asserted) have been paid in full in cash and all Commitments of Agent and/or Lenders to provide further credit have, in each case, been terminated. This Section 10 shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned to Agent or Lenders or any other Person upon the insolvency, bankruptcy or reorganization of a Borrower or any other Credit Party or otherwise, all as though such payment had not been made.

10.5 Election of Remedies . If Agent or any Lender may, under applicable law, proceed to realize its benefits under any of the Loan Documents giving Agent or such Lender a Lien upon any Collateral, whether owned by any Credit Party or by any other Person, either by judicial foreclosure or by non-judicial sale or enforcement, Agent or any Lender may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Section 10 . If, in the exercise of any of its rights and remedies, Agent or any Lender shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Credit Party or any other Person, whether because of any applicable laws pertaining to “election of remedies” or the like, each Credit Party hereby consents to such action by Agent or such Lender and waives any claim based upon such action, even if such action by Agent or such Lender shall result in a full or partial loss of any rights of subrogation that each Credit Party might otherwise have had but for such action by Agent or such Lender. Any election of remedies that results in the denial or impairment of the right of Agent or any Lender to seek a deficiency judgment against any Credit Party shall not impair any other Credit Party’s obligation to pay the full amount of the Obligations. In the event Agent or any Lender shall bid at any foreclosure or trustee’s sale or at any private sale permitted by law or the Loan Documents, Agent or such Lender may bid all or less than the amount of the Obligations and the amount of such bid need not be paid by Agent or such Lender but shall be credited against the Obligations. The amount of the successful bid at any such sale, whether Agent, Lender or any other party is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under this Section 10 , notwithstanding that any present or future law or court decision or ruling may have the effect of reducing the amount of any deficiency claim to which Agent or any Lender might otherwise be entitled but for such bidding at any such sale.

10.6 Limitation . Notwithstanding any provision herein contained to the contrary, each Credit Party’s liability under this Section 10 (which liability is in any event in addition to amounts for which such Credit Party is liable under Section 1 ) shall be limited to an amount not to exceed as of any date of determination the amount that could be claimed by Agent and Lenders from such Credit Party under this Section 10 without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law after taking into account, among other things, such Credit Party’s right of contribution and indemnification from each other Credit Party under Section 10.7 .

 

84


10.7 Contribution with Respect to Guaranty Obligations .

(a) To the extent that any Credit Party shall make a payment under this Section 10 of all or any of the Obligations (a “ Guarantor Payment ”) that, taking into account all other Guarantor Payments then previously or concurrently made by any other Credit Party, exceeds the amount that such Credit Party would otherwise have paid if each Credit Party had paid the aggregate Obligations satisfied by such Guarantor Payment in the same proportion that such Credit Party’s Allocable Amount (as defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each of the Credit Parties as determined immediately prior to the making of such Guarantor Payment, then, following payment in full in cash of the Obligations (other than contingent indemnification Obligations for which no unsatisfied claim giving rise thereto has been asserted) and termination of the Commitments such Guarantor shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each other Credit Party for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment.

(b) As of any date of determination, the “ Allocable Amount ” of any Credit Party shall be equal to the maximum amount of the claim that could then be recovered from such Credit Party under this Section 10 without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law.

(c) This Section 10.7 is intended only to define the relative rights of Credit Parties and nothing set forth in this Section 10.7 is intended to or shall impair the obligations of Credit Parties, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Agreement, including Section 10.1 . Nothing contained in this Section 10.7 shall limit the liability of any Credit Party to pay the Loans made directly or indirectly to that Credit Party and accrued interest, Fees and expenses with respect thereto for which such Credit Party shall be primarily liable.

(d) The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of the Credit Party to which such contribution and indemnification is owing.

(e) The rights of the indemnifying Credit Parties against other Credit Parties under this Section 10.7 shall be exercisable upon the full and payment of the Obligations (other than contingent indemnification Obligation for which no unsatisfied claim giving rise thereto has been asserted) and the termination of the Commitments.

10.8 Liability Cumulative . The liability of Credit Parties under this Section 10 is in addition to and shall be cumulative with all liabilities of each Credit Party to Agent, L/C Issuer and Lenders under this Agreement and the other Loan Documents to which such Credit Party is a party or in respect of any Obligations or obligation of the other Credit Party, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

[Remainder of Page Intentionally Left Blank]

[Signature Pages Follow]

 

85


Witness the due execution hereof by the respective duly authorized officers of the undersigned as of the date first written above.

 

Borrowers :
GREEN PLAINS II LLC , a Delaware limited liability company
By:   /s/ Todd Becker
Name:   Todd Becker
Title:   CEO
Borrower Representative :
GREEN PLAINS II LLC , a Delaware limited liability company
By:   /s/ Todd Becker
Name:   Todd Becker
Title:   CEO

 

Credit Agreement


Credit Parties :
GREEN PLAINS I LLC , a Delaware limited liability company
By:   /s/ Todd Becker
Name:   Todd Becker
Title:   CEO

 

Credit Agreement


Agent:
MARANON CAPITAL, L.P. , as Agent
By:   /s/ GREGORY M. LONG
Name:   GREGORY M. LONG
Title:   MANAGING DIRECTOR

 

Credit Agreement


Lenders:
MARANON SENIOR CREDIT IV, LLC , as a Lender
By:   Maranon Capital, L.P., its designated Advisor under power of attorney
By:   Maranon Capital Ultimate General Partner LLC, its general partner
By:   /s/ GREGORY M. LONG
Name:   GREGORY M. LONG
Title:   MANAGING DIRECTOR

 

Credit Agreement


THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY , as a Lender
By:   Northwestern Mutual Investment Management Company, LLC, its investment adviser
By:   /s/ Daniel J. Julka
Name:   Daniel J. Julka
Title:   Managing Director

 

Credit Agreement (FVC)


AXA EQUITABLE LIFE INSURANCE COMPANY , as a Lender
By:   /s/ Justin Grimm
Name:   Justin Grimm
Title:   Investment Officer

 

Credit Agreement (FVC)


METROPOLITAN LIFE INSURANCE COMPANY , as a Lender
By:   /s/ Justin Ryvicker
Name:   Justin Ryvicker
Title:   Director

 

METROPOLITAN INSURANCE COMPANY USA , as a Lender
By:   Metropolitan Life Insurance Company , its Investment Manager
By:   /s/ Justin Ryvicker
Name:   Justin Ryvicker
Title:   Director

 

Credit Agreement (FVC)


ORIX FINANCE, LP , as a Lender
By:   /s/ Mark Campbell
Name:   Mark Campbell
Title:   Authorized Representative

 

Credit Agreement (FVC)


ARES CENTRE STREET PARTNERSHIP, L.P. , as a Lender
By:   Ares Centre Street GP, L.P. , its general partner
By:   /s/ Ian Fitzgerald
Name:   Ian Fitzgerald
Title:   Authorized Signatory

 

Credit Agreement (FVC)


IVY HILL INVESTMENT HOLDINGS, LLC , as a Lender
By:   /s/ Kevin Braddish
Name:   Kevin Braddish
Title:  

 

Credit Agreement (FVC)


VOYA INSURANCE AND ANNUITY COMPANY , as a Lender
By:   Voya Investment Management LLC , as Agent
  /s/ Gregory R. Addicks
By:   Gregory R. Addicks
Its:   Senior Vice President

 

VOYA RETIREMENT INSURANCE AND ANNUITY COMPANY , as a Lender
By:   Voya Investment Management LLC , as Agent
  /s/ Gregory R. Addicks
By:   Gregory R. Addicks
Its:   Senior Vice President

 

RELIASTAR LIFE INSURANCE COMPANY , as a Lender
By:   Voya Investment Management LLC , as Agent
  /s/ Gregory R. Addicks
By:   Gregory R. Addicks
Its:   Senior Vice President

 

SECURITY LIFE OF DENVER INSURANCE COMPANY , as a Lender
By:   Voya Investment Management LLC , as Agent
  /s/ Gregory R. Addicks
By:   Gregory R. Addicks
Its:   Senior Vice President

 

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK , as a Lender
By:   Voya Investment Management LLC , as Agent
  /s/ Gregory R. Addicks
By:   Gregory R. Addicks
Its:   Senior Vice President

 

Credit Agreement (FVC)


CARLYLE GMS FINANCE, INC. , as a Lender
By:   /s/ Dan Chohn-Sfetou
Name:   Dan Chohn-Sfetou
Title:   Managing Director

 

Credit Agreement (FVC)


ANNEX A

to

CREDIT AGREEMENT

DEFINITIONS

Capitalized terms used in the Loan Documents shall have (unless otherwise provided elsewhere in the Loan Documents) the following respective meanings and all references to Sections, Exhibits, Schedules or Annexes in the following definitions shall refer to Sections, Exhibits, Schedules or Annexes of or to the Agreement:

Account Debtor ” means any Person who may become obligated to any Credit Party under, with respect to, or on account of, an Account, Chattel Paper or General Intangibles (including a payment intangible).

Accounting Changes ” means (a) changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (or successor thereto or any agency with similar functions); (b) changes in accounting principles concurred in by Borrower’s certified public accountants; (c) purchase accounting adjustments under FASB ASC 805,  Business Combinations (SFAS No. 141(R)), and the application of the accounting principles set forth in FASB ASC 740, Income Taxes (SFAS No. 109), including the establishment of reserves pursuant thereto and any subsequent reversal (in whole or in part) of such reserves; and (d) the reversal of any reserves established as a result of purchase accounting adjustments. Notwithstanding anything to the contrary, any purchase accounting adjustments which may result from the application of FASB ASC 805,  Business Combinations (SFAS No. 141(R)) which (i) are related to cash expenditures made on or prior to the Closing Date or (ii) are non-cash adjustments will be excluded from the computation of EBITDA under this Agreement.

Accounts ” means all “accounts,” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, including (a) all accounts receivable, other receivables, book debts and other forms of obligations (other than forms of obligations evidenced by Chattel Paper or Instruments), (including any such obligations that may be characterized as an account or contract right under the Code), (b) all of each Credit Party’s rights in, to and under all purchase orders or receipts for goods or services, (c) all of each Credit Party’s rights to any goods represented by any of the foregoing (including unpaid sellers’ rights of rescission, replevin, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), (d) all rights to payment due to any Credit Party for property sold, leased, licensed, assigned or otherwise disposed of, for a policy of insurance issued or to be issued, for a secondary obligation incurred or to be incurred, for energy provided or to be provided, for the use or hire of a vessel under a charter or other contract, arising out of the use of a credit card or charge card, or for services rendered or to be rendered by such Credit Party or in connection with any other transaction (whether or not yet earned by performance on the part of such Credit Party), (e) all healthcare insurance receivables, and (f) all collateral security of any kind, now or hereafter in existence, given by any Account Debtor or other Person with respect to any of the foregoing.

Acquisition Agreement Assignments ” means that certain Assignment of Representations, Warranties, Covenants and Indemnities dated as of the Closing Date by and between GP II and Agent, as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms and conditions of this Agreement.

Acquisition Closing Date ” has the meaning set forth in the definition of Permitted Acquisition.

 

Annex A-1


Acquisition Documents ” means each of (i) the Closing Date Acquisition Documents and (ii) any agreements, documents and instruments entered into by a Credit Party in connection with a Permitted Acquisition.

Acquisition Cap ” has the meaning ascribed to it in the definition of “Permitted Acquisition.”

Acquisition Financial Statements ” has the meaning set forth in the definition of Permitted Acquisition.

Additional Interest Period ” means each period beginning with the making of the first Specified Equity Contribution pursuant to Section 6.7 which results in the aggregate amount of Specified Equity Contributions, inclusive of the subject Specified Equity Contribution, exceeding $6,000,000 for the four Fiscal Quarter period ending as of the Fiscal Quarter in respect of which such Specified Equity Contribution was made and ending on the first day of the month immediately following the date upon which the Borrowers deliver financial statements and the related Compliance Certificate pursuant to Sections 4.4(a) and 4.4(m) , respectively, demonstrating the Borrower’s compliance in any subsequent Fiscal Quarter with the financial covenants set forth in Sections 4.1 and 4.2 without the benefit of any Specified Equity Contribution in respect of the most recent Fiscal Quarter in such calculation period and no other Event of Default shall have existed or shall then exist.

Adjusted Base Rate ” means, the highest of (a) the rate publicly quoted from time to time by The Wall Street Journal as the “prime” rate (or, if The Wall Street Journal ceases quoting a prime rate of the type described, the highest per annum rate of interest published by the Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled “Selected Interest Rates” as the Bank prime loan rate or its equivalent), (b) the Federal Funds Rate plus fifty (50) basis points per annum and (c) the sum of (x) the LIBOR Rate based on a LIBOR Period of one (1) month determined two (2) Business Days prior to the applicable day (but for the avoidance of doubt, not less than one percent (1.00%) per annum), plus (y) 1.00%.

Advances ” means any Revolving Credit Advance.

Affected Lender ” has the meaning ascribed to it in Section 9.19(a) .

Affiliate ” means, with respect to any Person, (a) each Person that, directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, 10% or more of the Stock having ordinary voting power in the election of directors of such Person, (b) each Person that controls, is controlled by or is under common control with such Person and (c) each of such Person’s officers, directors, joint venturers and partners. For the purposes of this definition, “ control ” of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise; provided , however , that the term “ Affiliate ” shall specifically exclude Agent, each Lender, Maranon and each Person that is controlled by Maranon.

Agent ” means Maranon in its capacity as Agent for Lenders and the L/C Issuer or its successor appointed pursuant to Section 8.2 .

Agreement ” means this Credit Agreement (including all schedules, subschedules, annexes and exhibits hereto), as the same may be amended, supplemented, restated, amended and restated, or otherwise modified from time to time.

Allocable Amount ” has the meaning ascribed to it in Section 10.7 .

 

Annex A-2


Anti-Terrorism Laws ” has the meaning ascribed to it in Section 5.19 .

Applicable Base Rate Margin ” means, with respect to the Term Loan, the Applicable Term Loan Base Rate Margin then in effect, and with respect to the Revolving Loan, the Applicable Revolver Base Rate Margin then in effect.

Applicable LIBOR Margin ” means, with respect to the Term Loan, the Applicable Term Loan LIBOR Margin then in effect, and with respect to the Revolving Loan, the Applicable Revolver LIBOR Margin then in effect.

Applicable Margins ” means collectively, the Applicable Revolver Base Rate Margin, the Applicable Revolver LIBOR Margin, the Applicable Term Loan Base Rate Margin and the Applicable Term Loan LIBOR Margin.

Applicable Percentage means 50%; provided , that, if the Total Net Leverage Ratio as of the last day of any Fiscal Year is (a) less than 4.25:1.00 but greater than or equal to 2.50:1.00, then 25%, or (b) less than 2.50:1.00, then 0%.

Applicable Revolver Base Rate Margin ” means the per annum interest rate margin from time to time in effect and payable in addition to the Adjusted Base Rate applicable to the Revolving Loan, as determined by reference to Section 1.2(a) .

Applicable Revolver LIBOR Margin ” means the per annum interest rate from time to time in effect and payable in addition to the LIBOR Rate applicable to the Revolving Loan, as determined by reference to Section 1.2(a) .

Applicable Term Loan Base Rate Margin ” means the per annum interest rate from time to time in effect and payable in addition to the Adjusted Base Rate applicable to the Term Loan, as determined by reference to Section 1.2(a) .

Applicable Term Loan LIBOR Margin ” means the per annum interest rate from time to time in effect and payable in addition to the LIBOR Rate applicable to the Term Loan, as determined by reference to Section 1.2(a) .

Asset Disposition ” means the disposition whether by conveyance, sale, lease, sublease, assignment, transfer or other disposition (including by way of merger or consolidation and including any sale and leaseback transaction) of any of the following: (a) any of the Stock or other equity or ownership interest of any of Holdings’ Subsidiaries or (b) any or all of the assets of Holdings or any of its Subsidiaries other than sales of Inventory in the ordinary course of business.

Assignment Agreement ” has the meaning ascribed to it in Section 8.1(a) .

Availability ” means, as of any date of determination, the amount by which the Maximum Amount exceeds the sum of (x) the aggregate outstanding principal balance of all Revolving Loans and (y) the aggregate amount of all Letter of Credit Participation Liability.

Available Amount ” has the meaning ascribed to it in Schedule 1 to Annex F .

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.

 

Annex A-3


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.

Bankruptcy Code ” means the provisions of title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. or other applicable bankruptcy, insolvency or similar laws (whether foreign or domestic).

Base Rate ” means, for any day, the Adjusted Base Rate.

Base Rate Loan ” means a Loan or portion thereof bearing interest by reference to the Adjusted Base Rate.

Borrower ” and “ Borrowers ” have the respective meanings ascribed to them in the preamble to the Agreement.

Borrower Representative ” has the respective meanings ascribed to it in the preamble to the Agreement.

Business Day ” means any day that is not a Saturday, a Sunday or a day on which banks are required or permitted to be closed in the State of Illinois or New York and in reference to LIBOR Loans shall mean any such day that is also a LIBOR Business Day.

Capital Lease ” means, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, would be required to be classified and accounted for as a capital lease on a balance sheet of such Person; provided , however , for the avoidance of doubt, any lease that was classified or accounted for as an operating lease as of the Closing Date in accordance with GAAP and any similar lease entered into after the Closing Date shall be classified or accounted for as an operating lease and not a Capital Lease, even though, as a result of a change in GAAP after the Closing Date, such lease would be classified and accounted for as a Capital Lease.

Capital Lease Obligation ” means, with respect to any Capital Lease of any Person, the amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease; provided , however , for the avoidance of doubt, any lease that was classified or accounted for as an operating lease as of the Closing Date in accordance with GAAP and any similar lease entered into after the Closing Date shall be classified or accounted for as an operating lease and not a Capital Lease, even though, as a result of a change in GAAP after the Closing Date, such lease would be classified and accounted for as a Capital Lease.

Cash Equivalents ” means: (i) marketable securities (A) issued or directly and unconditionally guaranteed as to interest and principal by the United States government or (B) issued by any agency of the United States government the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one (1) year after acquisition thereof; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one (1) year after acquisition thereof and having, at the time of acquisition, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iii) commercial paper maturing no more than one year (1) from the date of acquisition and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iv) amounts on deposit in a deposit account with or certificates of deposit or bankers’ acceptances issued or accepted by any Lender or by any commercial bank organized under the laws of the United States of

 

Annex A-4


America or any state thereof or the District of Columbia that is at least (A) “adequately capitalized” (as defined in the regulations of its primary Federal banking regulator) and (B) has Tier 1 capital (as defined in such regulations) of not less than $250,000,000, in each case maturing within one year after issuance or acceptance thereof; and (v) shares of any money market mutual or similar funds that (A) has substantially all of its assets invested continuously in the types of investments referred to in clauses (i) through (iv) above, (B) has net assets of not less than $500,000,000 and (C) has the highest rating obtainable from either S&P or Moody’s.

Casualty Event ” means, with respect to any property (including Real Estate) of any Person, any loss of title with respect to such property or any loss of or damage to or destruction of, or any condemnation or other taking (including by any Governmental Authority) of, such property for which such Person or any of its Subsidiaries receives insurance proceeds or proceeds of a condemnation award or other compensation. “Casualty Event” shall include but not be limited to any taking of all or any part of any Real Estate of any Person or any part thereof, in or by condemnation or other eminent domain proceedings pursuant to any law, or by reason of the temporary requisition of the use or occupancy of all or any part of any Real Estate of any Person or any part thereof by any Governmental Authority, civil or military. “Casualty Event” shall not include any loss or claim arising under any key-man life insurance policies, director and officer insurance policies or business interruption insurance policies.

Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority (including, without limitation, the NAIC and its SVO) 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 (including, without limitation, the NAIC and its SVO); provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

Change of Control ” means any event, transaction or occurrence as a result of which (a) Parent ceases to own or control, directly or indirectly, as applicable, all of the economic and voting rights associated with the ownership of at least eighty percent (80%) of all classes of the outstanding Stock of Holdings, or (b) Holdings ceases to own and control, directly or indirectly, as applicable, all of the economic and voting rights associated with ownership of at least hundred percent (100)% of all classes of the outstanding Stock of (i) the Borrower Representative or (ii) any of the other Borrowers, in each case, other than as a result of a fundamental change transaction or sale or other disposition expressly permitted hereunder.

Charges ” means all federal, state, county, city, municipal, local, foreign or other governmental premiums and other amounts (including premiums and other amounts owed to the PBGC at the time due and payable), levies, assessments, charges, liens, claims or encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c) the employees, payroll, income or gross receipts of any Credit Party, (d) any Credit Party’s ownership or use of any properties or other assets, or (e) any other aspect of any Credit Party’s business.

Chattel Paper ” means any “chattel paper,” as such term is defined in the Code, including electronic chattel paper, now owned or hereafter acquired by any Credit Party, wherever located.

 

Annex A-5


Closing Checklist ” means the schedule, including all appendices, exhibits or schedules thereto, listing certain documents and information to be delivered in connection with the Agreement, the other Loan Documents and the transactions contemplated thereunder, substantially in the form attached hereto as Annex C .

Closing Date ” means October 3, 2016.

Closing Date Acquisition ” means the acquisition by GP II of all of the outstanding Stock of the Closing Date Targets pursuant to the terms of the Closing Date Acquisition Agreement.

Closing Date Acquisition Agreement ” means that certain Stock Purchase Agreement dated as of October 3, 2016, by and among GP II, the “Sellers” party thereto (as defined therein) and Stone Canyon Industries LLC, a Delaware limited liability company, as a representative for the Sellers.

Closing Date Acquisition Documents ” means the Closing Date Acquisition Agreement and each other document, instrument and agreement, in each case, entered into in connection therewith.

Closing Date Targets ” means each of SCI, FVC Intermediate, FVC and FVC Houston.

Code ” means the Uniform Commercial Code as the same may, from time to time, be enacted and in effect in the State of New York; provided , that to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Agent’s or any Lender’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “ Code ” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.

Collateral ” means the property covered by the Security Agreement and the other Collateral Documents and any other property, real or personal, tangible or intangible, now existing or hereafter acquired, that may at any time be or become subject to a security interest or Lien in favor of Agent, on behalf of itself, L/C Issuer and Lenders, to secure the Obligations or any portion thereof.

Collateral Documents ” means the Security Agreement, the Pledge Agreements, any Trademark Security Agreement, any Copyright Security Agreement, any Patent Security Agreement, any Acquisition Agreement Assignment, any Mortgage, any Control Agreement and all similar agreements entered into guaranteeing payment of, or granting a Lien upon property as security for payment of, the Obligations or any portion thereof, each as amended, restated, amended and restated, supplemented or otherwise modified from time to time.

Commitment Termination Date ” means the earliest of (a) October 3, 2022, (b) the date of termination of Lenders’ obligations to make Advances, other Loans or permit existing Loans to remain outstanding, and L/C Issuer’s obligations hereunder, pursuant to Section 6.3 , and (c) the date of (i) indefeasible prepayment in full by Borrowers of the Term Loans, and (ii) the permanent reduction of the Commitments to zero dollars ($0).

Commitments ” means (a) as to any Lender, the aggregate of such Lender’s Revolving Loan Commitment and Closing Date Term Loan Commitment as set forth on Annex B to this Agreement or in the most recent Assignment Agreement executed by such Lender and (b) as to all Lenders, the aggregate

 

Annex A-6


of all Lenders’ Revolving Loan Commitments and Closing Date Term Loan Commitments, which aggregate commitment shall be ONE HUNDRED FORTY-FIVE MILLION DOLLARS AND 00/100 ($145,000,000.00) on the Closing Date, as such Commitments may be reduced, amortized or adjusted from time to time in accordance with this Agreement.

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

Communication ” means any notice or other communication required or permitted to be given or made under this Agreement.

Compliance and Excess Cash Flow Certificate ” has the meaning ascribed to it in Section 4.4(m) .

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 Net Income ” has the meaning ascribed to it in Attachment A to Schedule 1 to Annex F .

Contingent Obligation ” means, as applied to any Person, any direct or indirect liability of that Person: (i) with respect to Guaranteed Indebtedness and with respect to any Indebtedness, lease, dividend or other obligation of another Person if the purpose or intent of the Person incurring such liability, or the effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto; (ii) with respect to any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings; (iii) under Rate Contracts; (iv) to make take-or-pay or similar payments if required regardless of nonperformance by any other party or parties to an agreement; or (v) pursuant to any agreement to purchase, repurchase or otherwise acquire any obligation or any property constituting security therefor, to provide funds for the payment or discharge of such obligation or to maintain the solvency, financial condition or any balance sheet item or level of income of another. The amount of any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise supported or, if not a fixed and determined amount, the maximum amount so guaranteed.

Contractual Obligations ” means, as applied to any Person, any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject including the Related Transactions Documents.

Control Agreement ” means tri-party deposit account, securities or commodities account control agreements by and among the applicable Credit Party, Agent and the depository or securities intermediary or commodities intermediary, and each in form and substance reasonably satisfactory to Agent and in any event providing to Agent springing “control” of such deposit account, securities or commodities account within the meaning of Articles 8 and 9 of the Code, as amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms and conditions thereof and of this Agreement.

Copyright License ” means any and all rights now owned or hereafter acquired by any Credit Party under any written agreement granting any right to use any Copyright or Copyright registration.

Copyright Security Agreements ” means any copyright security agreement made in favor of Agent, on behalf of itself and Lenders, by any applicable Credit Party, as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms and conditions of this Agreement.

 

Annex A-7


Copyrights ” means all of the following now owned or hereafter adopted or acquired by any Credit Party in the United States, any state or territory thereof, or any other country or any political subdivision thereof: (a) all copyrightable works, including any rights in and to any Software (including source code and executable code), writings, documentation, marketing brochures, website content, and other works of authorship (whether or not fixed in a tangible medium of expression and whether or not original), (b) any copyrights and applications, registrations, renewals, extensions, reissues, termination rights, and reversionary interests in connection therewith and all translations, localizations, adaptations, derivations, collections, and compilations thereof; and (c) all rights in or to any of the foregoing.

Credit Parties ” means Holdings, Borrowers and each of their respective wholly-owned Domestic Subsidiaries (other than Excluded Foreign Holding Companies) and each other Person who executes this Agreement as a “Credit Party” or a Guaranty and who grants a Lien on all or substantially all of its assets to secure all of part of the Obligations and all of the Stock of which is pledged to Agent for the benefit of itself and Lenders.

Credit Parties Pledge Agreement ” means the Pledge Agreement of even date herewith executed by certain Credit Parties in favor of Agent, on behalf of itself, L/C Issuer and Lenders, pledging all Stock of each of Holdings’ wholly-owned Domestic Subsidiaries (other than Excluded Foreign Holding Companies), all non-Voting Stock of each of Holdings’ Foreign Subsidiaries and Excluded Foreign Holding Companies, 65% of all Voting Stock of each of Parent’s Foreign Subsidiaries and Excluded Foreign Holding Companies, and certain material Intercompany Notes owing to or held by such Credit Parties.

Current Assets ” means, with respect to any Person, all current assets of such Person as of any date of determination calculated in accordance with GAAP (but excluding, without duplication, cash, Cash Equivalents, Indebtedness due from Affiliates and permitted loans made to third parties, the current portion of current and deferred Taxes based on income, profits or capital, assets held for sale, pension assets, deferred bank fees, derivative financial instruments and insurance claims)

Current Liabilities ” means, with respect to any Person, all current liabilities of such person as of any date of determination calculated in accordance with GAAP (but excluding, without duplication, the current portion of long-term Indebtedness and other long-term liabilities, the aggregate outstanding principal balances of the Revolving Loans, any liabilities arising as a result of funds deposited in third party accounts, the current portion of interest expense, the current portion of any Capital Leases, the current portion of current and deferred Taxes based on income, profits or capital, liabilities in respect of unpaid earnouts and other contingent consideration obligations, accruals relating to restructuring reserves, any liabilities recorded in connection with stock-based awards, partnership interest-based awards, awards of profit interests, deferred compensation awards and similar incentive based compensation awards and liabilities in respect of Restricted Payments declared but not yet paid).

Declined Prepayment Amount ” shall have the meaning set forth in Section 1.5(f)(i) .

Default ” means any event that, with the passage of time or notice or both, would, unless cured or waived, become an Event of Default.

Default Rate ” has the meaning ascribed to it in Section 1.2(d) .

Deposit Accounts ” means all “deposit accounts” as such term is defined in the Code.

 

Annex A-8


Disbursement Account ” has the meaning ascribed to it in Section 1.1(c) .

Disclosure Schedules ” means the Schedules prepared by Borrowers and denominated as Schedules 3.1 through 5.21 in the Index of Appendices to the Agreement.

Disqualified Stock ” means any Stock which by it terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures or is mandatorily redeemable (other than upon a change of control or an optional redemption by the issuer thereof), pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other than upon a change of control), in whole or in part, on or prior to the date that is ninety-one (91) days following the stated maturity date of the Term Loan, (b) unless at the sole option of the issuer thereof, is convertible into or exchangeable for (i) debts securities or (ii) any Stock referred to in (a) above, in each case, at any time on or prior to the date that is ninety-one (91) days following the Commitment Termination Date, (c) is entitled to a dividend or distribution (other than for taxes attributable to the operations of the business of the Credit Parties) prior to the time that the Obligations (other than contingent indemnification obligations for which no unsatisfied claim giving rise thereto has been asserted) are paid in full, in cash and all Commitments to lend (and obligations to issue Lender Letters of Credit or Letter of Credit Participation Agreements), in each case, have terminated or (d) has the benefit of any financial covenants or agreements that restrict the payment of any of the Obligations.

Documents ” means any “document,” as such term is defined in the Code, including electronic documents, now owned or hereafter acquired by any Credit Party, wherever located.

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

Domestic Subsidiary ” means any Subsidiary that is a U.S. Person.

Earnouts ” means unsecured earnout purchase obligations that are contingent in nature and incurred by the Borrowers or a Domestic Subsidiary of the Borrowers under Permitted Acquisitions. For purposes of Section 3.1(o) and the Acquisition Cap, the amount of an Earnout shall be deemed to equal the maximum amount that may be due or owing in respect thereof, assuming for such purposes that all conditions (including financial hurdles or thresholds) to the obligation, realization and earning thereof are fully attained, met and satisfied, regardless of GAAP valuation or recognition to the contrary, and upon final and irrevocable determination in accordance with its terms that an Earnout (or such portion) will never be realized or determined, then such unpaid or unsatisfied Earnout (or portion thereof) shall be deemed to be zero for all such purposes (including the financial covenants in Sections 4.1 and 4.2 ).

EBITDA ” has the meaning ascribed to it in Attachment A to Schedule 1 to Annex F .

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.

 

Annex A-9


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.

Environmental Laws ” means all applicable federal, state, local and foreign laws, statutes, ordinances, codes, rules, and regulations, now or hereafter in effect, and any applicable judicial or administrative interpretation thereof, including any applicable judicial or administrative order, consent decree, order or judgment, imposing liability or standards of conduct for or relating to the regulation and protection of human health, safety, the environment and natural resources (including ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws include the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. §§ 9601 et seq. ) (“ CERCLA ”); the Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C. §§ 5101 et seq. ); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et seq. ); the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et seq. ); the Toxic Substance Control Act (15 U.S.C. §§ 2601 et seq. ); the Clean Air Act (42 U.S.C. §§ 7401 et seq. ); the Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq. ); the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq. ); and the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq. ), and any and all regulations promulgated thereunder, and all analogous state, local and foreign counterparts or equivalents and any transfer of ownership notification or approval statutes.

Environmental Liabilities ” means, with respect to any Person, all liabilities, obligations, responsibilities, response, remedial and removal costs, investigation and feasibility study costs, capital costs, operation and maintenance costs, losses, damages, punitive damages, property damages, natural resource damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants), fines, penalties, sanctions and interest incurred as a result of or related to any claim, suit, action, investigation, proceeding or demand by any Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law, arising under or related to any Environmental Laws, Environmental Permits, or in connection with any Release or threatened Release or presence of a Hazardous Material whether on, at, in, under, from or about or in the vicinity of any real or personal property.

Environmental Permits ” means all permits, licenses, authorizations, certificates, approvals or registrations required by any Governmental Authority under any Environmental Laws.

Equipment ” means all “equipment,” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, wherever located and, in any event, including all such Credit Party’s machinery and equipment, including processing equipment, conveyors, machine tools, data processing and computer equipment, including embedded Software and peripheral equipment and all engineering, processing and manufacturing equipment, office machinery, furniture, materials handling equipment, tools, attachments, accessories, automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other equipment of every kind and nature, trade fixtures and fixtures not forming a part of real property, together with all additions and accessions thereto, replacements therefor, all parts therefor, all substitutes for any of the foregoing, fuel therefor, and all manuals, drawings, instructions, warranties and rights with respect thereto, and all products and proceeds thereof and condemnation awards and insurance proceeds with respect thereto.

Equity Contribution ” means the cash common equity investment in Holdings by Parent in an amount not less than thirty-five percent (35%) of the total pro forma capitalization of Holdings, on terms and conditions reasonably acceptable to Agent.

 

Annex A-10


Equity Issuance ” means (a) any issuance or sale by Holdings or any of its Subsidiaries after the Closing Date of (i) any Stock of Holdings or such Subsidiary, (ii) any warrants, options or other Stock exercisable in respect of its Stock, or (iii) any other security or instrument representing Stock (or the right to obtain any Stock) in Holdings or any of its Subsidiaries, or (b) the receipt by Holdings or any of its Subsidiaries after the Closing Date of any capital contribution (whether or not evidenced by any equity security issued by the recipient of such contribution); provided that Equity Issuance shall not include (the following, “ Excluded Equity Issuances ”) (1) any warrants or options issued to directors, officers or employees of Holdings or any of its Affiliates pursuant to employee benefit plans established in the ordinary course of business and approved in writing by Agent and any Stock of Holdings issued upon the exercise of such warrants or options, in an amount not to exceed $750,000, or (2) any issuance, sale or contribution in respect of any Stock of Holdings to Parent, including, without limitation, any issuance, sale or contribution made for purposes of funding capital expenditures or general working capital of or with respect to the Credit Parties.

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

ERISA Affiliate ” means, with respect to any Credit Party, any trade or business (whether or not incorporated) that, together with such Credit Party, are treated as a single employer within the meaning of Sections 414(b), (c), (m) or (o) of the IRC.

ERISA Event ” means, with respect to any Credit Party or any ERISA Affiliate, any of the following: (a) a reportable event described in Section 4043(b) of ERISA (or, unless the notice requirement has been duly waived) with respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of any Credit Party or ERISA Affiliate from any Multiemployer Plan; (d) with respect to any Multiemployer Plan, the filing of a notice of “critical” status under IRC Section 432 or IRC Section 305 of ERISA, or the filing of a notice of reorganization, insolvency or termination (or treatment of a plan amendment as termination) under Section 4041A of ERISA; (e) the filing of a notice of intent to terminate a Title IV Plan (or treatment of a plan amendment as termination) under Section 4041 of ERISA; (f) the institution of proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (g) the failure to make any required contribution to any Title IV Plan or Multiemployer Plan when due; (h) the imposition of a Lien under IRC Section 430(k) or IRC Section 303(k) or 4068 of ERISA on any property (or rights to property, whether real or personal) of any Credit Party or ERISA Affiliate; (i) the failure of a Qualified Plan or any trust thereunder intended to qualify for tax exempt status under IRC Section 401 or 501 or other Requirements of Law to qualify thereunder; and (j) any other event or condition that might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the imposition of any liability upon any Credit Party or ERISA Affiliate under Title IV of ERISA other than for PBGC premiums due but not delinquent.

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

Event of Default ” has the meaning ascribed to it in Section 6.1 .

Excess Cash Flow ” has the meaning ascribed to it in Schedule 2 to Annex F .

Excess Specified Equity Contribution ” shall have the meaning set forth in Section 6.7 .

 

Annex A-11


Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

Excluded Account ” means any deposit account that is (a) a zero balance payroll account or which is used for the sole purpose of making payroll and withholding tax payments related thereto, (b) an employee wage or benefit account, a withholding account or a similar fiduciary or trust fund account and any segregated deposit account into which client funds (and only client funds) are deposited (c) an escrow account established in connection with the Closing Date Acquisitions or any Permitted Acquisition to provide for the funding of contingent indemnification obligations or purchase price adjustment obligations thereunder, (d) accounts established or maintained for the sole purpose of cash collateralizing obligations permitted by Section 3.1(q) or (e) which, individually or in the aggregate with all other similarly situated deposit accounts, has an average daily balance for any fiscal month of less than $250,000.

Excluded Equity Issuance ” shall have the meaning ascribed to such term in the definition of Equity Issuance.

Excluded Foreign Holding Company ” means a Domestic Subsidiary substantially all of the assets of which are Stock of one or more Foreign Subsidiaries, directly or through another Excluded Foreign Holding Company.

Excluded Rate Contract Obligation ” means, with respect to any Guarantor, any guarantee of any Swap Obligation under a Qualified Rate Contract if, and only to the extent that and for so long as, all or a portion of the guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation under a Qualified Rate Contract (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act at the time the guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation under a Qualified Rate Contract. If Swap Obligations under a Qualified Rate Contract arises under a master agreement governing more than one Rate Contract, such exclusion shall apply only to the portion of such Swap Obligations under a Qualified Rate Contract that is attributable to swaps for which such guarantee or security interest is or becomes illegal.

Excluded Taxes ” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), gross income, gross receipts, franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Recipient 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 Borrowers under Section 9.19 ) or in the case of any other Recipient, such Recipient becomes a party hereto, or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 1.9 , 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 1.9(f) and (d) any U.S. federal withholding Taxes imposed under FATCA.

 

Annex A-12


Executive Order ” has the meaning ascribed to it in Section 5.19 .

Extraordinary Receipts ” means any cash received by any Credit Party or any Subsidiary of a Credit Party not in the ordinary course of business (and not consisting of proceeds of an Asset Disposition or a Casualty Event), including (i) pension plan reversions, (ii) proceeds of insurance (excluding proceeds under business interruption insurance), (iii) judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, (iv) indemnity payments (other than those described hereafter in clause (v) or received under ordinary course operating contracts) and (vi) indemnification and reimbursement payments or other amounts received under any Acquisition Documents in excess of amounts used to (A) replace, repair or restore any properties giving rise to the claim for indemnification, (B) pay (or provide reimbursement of payments made for) claims and settlements to third parties that are not Affiliates of a Credit Party, or (C) otherwise cover any out-of-pocket expenses incurred by a Credit Party in obtaining amounts described in any of clauses (i) – (v) above (it being understood and agreed that any net working capital adjustments in connection with the Closing Date Acquisitions shall be excluded from this definition).

Extraordinary Receipts Threshold Amount ” has the meaning ascribed to it in Section 1.5(c) .

Fair Labor Standards Act ” means the Fair Labor Standards Act, 29 U.S.C. §201 et seq.

FATCA ” means Sections 1471 through 1474 of the IRC, 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, any applicable agreements entered into pursuant to Section 1471(b)(1) of the IRC, any applicable intergovernmental agreement with respect to the foregoing, and any applicable fiscal or regulatory legislation or rules adopted pursuant to any such intergovernmental agreement.

Federal Funds Rate ” means, for any day, a floating rate equal to the weighted average of the rates on overnight federal funds transactions among members of the Federal Reserve System, as determined by Agent in its sole discretion, which determination shall be final, binding and conclusive (absent manifest error).

Federal Reserve Board ” means the Board of Governors of the Federal Reserve System.

Fees ” means any and all fees payable to Agent or any Lender pursuant to the Agreement or any of the other Loan Documents.

Financial Statements ” means the consolidated income statements, statements of cash flows, statements of stockholders’ equity and balance sheets of Holdings and its Subsidiaries, as applicable, delivered in accordance with Section 4.4 .

First Tier Foreign Subsidiary ” means any Foreign Subsidiary the interests of which are owned directly by any one or more of any Credit Party, any Domestic Subsidiary or any other Subsidiary that is classified as a disregarded entity or partnership for U.S. Federal income tax purposes.

Fiscal Quarter ” means any of the quarterly accounting periods of Holdings and its Subsidiaries, ending on March 31, June 30, September 30 and December 31 of each year.

Fiscal Year ” means any of the annual accounting periods of Borrowers and its Subsidiaries ending on December 31 of each year.

 

Annex A-13


Fixed Charges ” has the meaning ascribed to it in Section 4.1 of Schedule 1 to Annex F .

Fixed Charge Coverage Ratio ” has the meaning ascribed to it in Section 4.1 of Schedule 1 to Annex F .

Fixtures ” means all “fixtures” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, wherever located.

Food Laws ” means all federal, state, provisional and local statutes, codes, laws, ordinance, statutes, rule, regulation, order, policy or other legal requirement or determination of any Governmental Authority relating to the production, packaging or labeling of food products for human consumption, which are applicable to Holdings, Borrowers and their Subsidiaries, and shall include, without limitation, the U.S. Federal Food Drug and Cosmetic Act, as amended.

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

Foreign Subsidiaries ” means each Subsidiary that is not a U.S. Person.

Foreign Pension Plan ” means any plan, fund (including any superannuation fund) or other similar program established or maintained outside the United States by any Credit Party or any one or more of its Subsidiaries primarily for the benefit of employees of any Credit Party or such Subsidiaries residing outside the United States, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the IRC.

Funded Debt ” means, with respect to any Person, without duplication, all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or similar evidences of Indebtedness and that by its terms matures more than one year from, or is directly or indirectly renewable or extendible at such Person’s option under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year from the date of creation thereof, and specifically including all Letter of Credit Participation Liability, Capital Lease Obligations, current maturities of long-term Indebtedness, revolving credit and short-term Indebtedness extendible beyond one year at the option of such Person, and also including, in the case of Borrowers, the Obligations and, without duplication, Guaranteed Indebtedness consisting of guaranties of Funded Debt of other Persons.

Funding Date ” has the meaning ascribed to it in Section 7.2 .

Funds Control Event ” has the meaning ascribed to it in Section 2.8 .

Funds Control Event Period ” has the meaning ascribed to it in Section 2.8 .

FVC ” has the meaning ascribed to it in the preamble to the Agreement.

FVC Houston ” has the meaning ascribed to it in the preamble to the Agreement.

FVC Intermediate ” has the meaning ascribed to it in the preamble to the Agreement.

GAAP ” means generally accepted accounting principles in the United States of America, consistently applied.

 

Annex A-14


General Intangibles ” means “general intangibles,” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, including all right, title and interest that such Credit Party may now or hereafter have in or under any Contractual Obligation, all payment intangibles, rights and interests in Intellectual Property, interests in partnerships, joint ventures and other business associations, licenses, permits, all rights and claims in or under insurance policies (including insurance for fire, damage, loss and casualty, whether covering personal property, real property, tangible rights or intangible rights, all liability, life, key man and business interruption insurance, and all unearned premiums), uncertificated securities, chooses in action, deposit, checking and other bank accounts, rights to receive tax refunds and other payments, rights to receive dividends, distributions, cash, Instruments and other property in respect of or in exchange for pledged Stock and Investment Property, rights of indemnification, all books and records, correspondence, credit files, invoices and other papers, including all tapes, cards, computer runs and other papers and documents in the possession or under the control of such Credit Party or any computer bureau or service company from time to time acting for such Credit Party.

Goods ” means any “goods,” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, wherever located, including embedded software to the extent included in “goods” as defined in the Code, manufactured homes, standing timber that is cut and removed for sale and unborn young of animals.

Governing Documents ” means, as to any Person, the certificate of formation, articles or certificate of incorporation, by-laws, articles or certificate of organization, partnership agreement, operating agreement, or other organizational or governing documents of such Person.

Governmental Authority ” means the government of the United States of America 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 any supra-national bodies such as the European Union, the European Central Bank or the National Association of Insurance Commissioners (“ NAIC ”) and its Securities Valuation Office (“ SVO ”).

Guaranteed Indebtedness ” means, as to any Person, any obligation of such Person guaranteeing, providing comfort or otherwise supporting any Indebtedness, lease, dividend, or other obligation (“ primary obligation ”) of any other Person (the “ primary obligor ”) in any manner, including any obligation or arrangement of such Person to (a) purchase or repurchase any such primary obligation, (b) advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor, (c) purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, (d) protect the beneficiary of such arrangement from loss (other than product warranties given in the ordinary course of business) or (e) indemnify the owner of such primary obligation against loss in respect thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed to be an amount equal to the lesser at such time of (x) the stated or determinable amount of the primary obligation in respect of which such Guaranteed Indebtedness is incurred and (y) the maximum amount for which such Person may be liable pursuant to the terms of the instrument embodying such Guaranteed Indebtedness, or, if not stated or determinable, the maximum reasonably anticipated liability (assuming full performance) in respect thereof.

Guarantees ” means, collectively, the Guarantees provided in Section 10 of this Agreement and any other guaranty of the Obligations executed by any Guarantor in favor of Agent, for itself and the ratable benefit of Lenders and L/C Issuer.

 

Annex A-15


Guarantor Payment ” has the meaning ascribed to it on Section 10.7 .

Guarantors ” means each Borrower, each other Credit Party and each other Person, if any, that executes a guaranty or other similar agreement in favor of Agent, for itself and the ratable benefit of Lenders, in connection with the transactions contemplated by the Agreement and the other Loan Documents.

Hazardous Material ” means any substance, material or waste that is regulated by, or forms the basis of liability now or hereafter under, any Environmental Laws, including any material or substance that is (a) defined as a “solid waste,” “hazardous waste,” “hazardous material,” “hazardous substance,” “dangerous goods,” “extremely hazardous waste,” “restricted hazardous waste,” “pollutant,” “contaminant,” “hazardous constituent,” “special waste,” “toxic substance” or other similar term or phrase under any Environmental Laws, or (b) petroleum or any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB’s), or any radioactive substance.

Immaterial Subsidiary ” means, as of any date, any Subsidiary of a Borrower having Consolidated Net Income in an amount of less than 2.5% of Consolidated Net Income of Holdings and its Subsidiaries for the most recently ended period for which financial statements have been delivered pursuant to Section 4.4(a)(ii) or 4.4(b) , as applicable; provided that the Consolidated Net Income (as so determined) of all Immaterial Subsidiaries shall not exceed 2.5% of Consolidated Net Income of Holdings and its Subsidiaries for the relevant period.

Indebtedness ” means, with respect to any Person, without duplication (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property payment for which is deferred six (6) months or more, but excluding obligations to trade creditors incurred in the ordinary course of business that are unsecured and not overdue by more than six (6) months unless being contested in good faith (but in any event inclusive of Earnouts and Seller Debt), (b) the face amount of all reimbursement and other obligations of such Person with respect to letters of credit, bankers’ acceptances and surety bonds, whether or not matured (including all Letter of Credit Participation Liability), (c) all obligations of such Person evidenced by notes, bonds, debentures or similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations of such Person and the present value (discounted at the Adjusted Base Rate as in effect on the Closing Date) of future rental payments under all synthetic leases, (f) all net payment obligations of such Person under Rate Contracts and commodity hedging contracts (provided that in no event shall the obligations in this clause (f) be deemed “Indebtedness” for any calculation of the financial covenants (including any component definitions thereto) in Section 4), (g) all Indebtedness referred to above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property or other assets (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, (h) “earnouts” and similar payment obligations of such Person excluding bonus, phantom stock or other similar compensation payments owed to employees, or officers and incurred in the ordinary course of business, (i) all Disqualified Stock, and (j) the Obligations; provided that the amount of Indebtedness of any Person for purposes of clause (g) shall be deemed to equal the lesser of (i) the aggregate unpaid amount of such Indebtedness and (ii) the fair market value of the property encumbered thereby as determined by such Person in good faith. Notwithstanding anything to the contrary contained in this Agreement, Indebtedness shall not include (a) premiums, interest (including post-petition interest and payment in kind interest), accretion or amortization of original issue discount, fees, expenses and charges with respect to Indebtedness permitted by the Agreement and (b) ordinary course intercompany payables.

 

Annex A-16


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 a Borrower or any other Credit Party under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

Indemnitees ” has the meaning ascribed to it in Section 9.1 .

Initial Lenders ” means each entity identified as a “Lender” on the signature pages hereto, and each of their respective Affiliates who are, in each case, Lenders as of the Closing Date.

Instruments ” means all “instruments,” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, wherever located, and, in any event, including all certificated securities, all certificates of deposit, and all promissory notes and other evidences of indebtedness, other than instruments that constitute, or are a part of a group of writings that constitute, Chattel Paper.

Intellectual Property ” means any and all (a) Patents, Copyrights, and Trademarks; (b) inventions (whether or not patentable and whether or not reduced to practice), utility models, invention disclosures, any other rights of invention, and all improvements thereon; (c) mask works and integrated circuit topologies, and any applications, registrations and renewals for any of the foregoing; (d) industrial designs and any applications, registrations and renewals for any of the foregoing; (e) trade secrets, know-how, show-how, technology, skills, expertise, experience, and all other confidential or proprietary business or technical information, in each case whether tangible or intangible, and all documentation relating to any of the foregoing, including, any ideas, concepts, research and development, customer and supplier lists and related information, pricing and cost information, business and marketing plans and proposals, any other financial, marketing and business data, technical data, research records, test data, test information, employee work product, records of invention, processes, methods, techniques, formulations, compilations, patterns, compositions, specifications, programs, device, schematics, drawings, designs, flow charts, state diagrams and sequence diagrams; (f) data, databases and data collections; (g) moral and economic rights of authors, artists and inventors, however denominated, and all other rights of priority and protection of interests therein, and waivers of such rights by others; (h) copies and tangible embodiments thereof (in whatever form or medium); (i) names, likenesses and biographical data of natural persons and other publicity rights, (j) rights to obtain and apply for Patents and register Trademarks and Copyrights; and (k) all other proprietary rights, including rights to sue at law or in equity for all claims or causes of actions arising out of or related to any past, present or future infringement, misappropriation or violation of any of the foregoing, including the right to receive all proceeds and damages therefrom.

Intercompany Notes ” has the meaning ascribed to it in Section 3.1 .

Interest Expense ” has the meaning ascribed to it in Section 4.1 of Schedule 1 to Annex F .

Interest Payment Date ” means (a) with respect to any LIBOR Loan (other than a LIBOR Loan having an LIBOR Period of six (6) months) the last day of each LIBOR Period applicable to such Loan, (b) with respect to any LIBOR Rate Loan having a LIBOR Period of six (6) months, the last Business Day of each three (3) month interval and, without duplication, the last day of such LIBOR Period, and (c) with respect to Base Rate Loans the last Business Day of each calendar month provided , that, each of (x) the date upon which all of the Commitments have been terminated and the Loans have been paid in full and (y) the Commitment Termination Date shall be deemed to be an “ Interest Payment Date ” with respect to any interest that has then accrued under the Agreement.

 

Annex A-17


Inventory ” means any “inventory,” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, wherever located, including inventory, merchandise, goods and other personal property that are held by or on behalf of any Credit Party for sale or lease or are furnished or are to be furnished under a contract of service, or that constitute raw materials, work in process, finished goods, returned goods, supplies or materials of any kind, nature or description used or consumed or to be used or consumed in such Credit Party’s business or in the processing, production, packaging, promotion, delivery or shipping of the same, including all supplies and embedded software.

Investmen t” means (i) any direct or indirect purchase or other acquisition by Holdings, Borrowers or any of their Subsidiaries of any Stock, or other ownership interest in, any other Person, and (ii) any direct or indirect loan, advance or capital contribution by Holdings, Borrowers or any of their Subsidiaries to any other Person, including all indebtedness and accounts receivable from that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business.

Investment Property ” means all “investment property,” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, wherever located, including: (i) all securities, whether certificated or uncertificated, including stocks, bonds, interests in limited liability companies, partnership interests, treasuries, certificates of deposit, and mutual fund shares; (ii) all securities entitlements of any Credit Party, including the rights of such Credit Party to any securities account and the financial assets held by a securities intermediary in such securities account and any free credit balance or other money owing by any securities intermediary with respect to that account; (iii) all securities accounts of any Credit Party; (iv) all commodity contracts of any Credit Party; and (v) all commodity accounts held by any Credit Party.

IRC ” means the U.S. Internal Revenue Code of 1986, as amended, and all regulations promulgated thereunder.

IRS ” means the U.S. Internal Revenue Service.

L/C Issuer ” means any Person designated by Agent from time to time, and identified in writing to the Borrower Representative, as an issuer under this Agreement of Lender Letters of Credit or Letter of Credit Participation Agreements in respect of underlying letters of credit.

Lender Letter of Credit ” shall have the meaning set forth in Section 1.1(d)(i) .

Lenders ” means the Revolving Lenders, the Term Loan Lenders and any other Person that shall have become a party hereto pursuant to an Assignment Agreement, other than any such Person that ceases to be a party hereto pursuant to an Assignment Agreement.

Letter of Credit Collateralization ” means, with respect to any Lender Letter of Credit or Letter of Credit Participation Agreement, any of (a) providing cash collateral (pursuant to documentation reasonably satisfactory to Agent, including provisions that specify that the Letter of Credit Participation Fee and all usage and other charges set forth in this Agreement will continue to accrue while such Lender Letter of Credit and Letter of Credit Participation Agreement is outstanding) to be held by Agent, for the benefit of those Lenders with a Revolving Loan Commitment, in an amount equal to one hundred three percent (103%) of the Stated Amount of such Lender Letter of Credit or Letter of Credit Participation Agreement; (b) causing such Lender Letter of Credit to be returned to the L/C Issuer or cancellation of such Letter of Credit Participation Agreement with the approval of the underlying letter of credit issuer; or (c) providing the L/C Issuer with a standby letter of credit, in form and substance reasonably satisfactory to the L/C Issuer and Agent, from a commercial bank reasonably acceptable to the L/C Issuer and Agent in an amount equal to one hundred three percent (103%) of the Stated Amount of such Lender Letter of Credit or Letter of Credit Participation Agreement (it being understood that the Letter of Credit Participation Fee and all usage and other charges set forth in this Agreement will continue to accrue while such Lender Letter of Credit and Letter of Credit Participation Agreement is outstanding).

 

Annex A-18


Letter of Credit Participation Agreement ” has the meaning set forth in Section 1.1(d)(i) .

Letter of Credit Participation Fee ” has the meaning set forth in Section 1.3(c) .

Letter of Credit Participation Liability ” means, as to each Lender Letter of Credit and each Letter of Credit Participation Agreement, all reimbursement obligations and all other liabilities of the Borrowers or any of their Subsidiaries to Agent and the Lenders in connection with the Lender Letter of Credit or to the obligee with respect to the transaction for which the Letter of Credit Participation Agreement was issued, whether contingent or otherwise, including with respect to any letter of credit: (a) the amount available to be drawn or which may become available to be drawn; (b) without duplication, all amounts which have been paid or made available by the issuing bank or by Agent under such Lender Letters of Credit or Letter of Credit Participation Agreement, in each instance, to the extent not reimbursed; and (c) all unpaid interest, fees and expenses. It being understood and agreed that so long as the maximum Stated Amount set forth in Section 1.1(d)(i) is $0, Letter of Credit Participation Liability shall equal $0.

LIBOR Business Day ” means a Business Day on which banks in the City of London are generally open for interbank or foreign exchange transactions.

LIBOR Determination Date ” means, for each LIBOR Period, the second (2 nd ) LIBOR Business Day immediately preceding the first (1 st ) day of such LIBOR Period.

LIBOR Loans ” means a Loan or any portion thereof bearing interest by reference to the LIBOR Rate.

LIBOR Period ” means, with respect to any LIBOR Loan, the period commencing on the Business Day such Loan is disbursed or continued or converted in accordance with the terms hereof and ending on the date (which shall be a Business Day) one (1) month, two (2) months, three (3) months or six (6) months thereafter, as selected by the Borrower Representative on behalf of Borrowers in its Notice of Borrowing or Notice of Conversion/Continuation; provided, however, (a) if any LIBOR Period would end on a day other than a Business Day, such LIBOR Period will be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such LIBOR Period will end on the next preceding Business Day; (b) any LIBOR 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 LIBOR Period) will end on the last Business Day of the calendar month at the end of such LIBOR Period; and (c) no LIBOR Period will extend beyond the applicable maturity date. Interest will accrue from and including the first day of an LIBOR Period to but excluding the last day of such LIBOR Period.

LIBOR Rate ” means, with respect to each LIBOR Period, the greater of (a) one percent (1.00%) per annum and (b) the offered rate per annum for deposits of Dollars for the applicable LIBOR Period that appears on the applicable Bloomberg LIBOR screen page as of 11:00 A.M. (London, England time) on the applicable LIBOR Determination Date. If no such offered rate exists, Agent shall request the principal London, England office of any four (4) major reference banks in the London interbank market selected by Agent to provide such bank’s offered quotation (expressed as a percentage per annum) to prime banks in the London interbank market for deposits in Dollars for the applicable LIBOR period as of 11:00 a.m. (London time) on such LIBOR Determination Date for amounts of not less than One Million Dollars ($1,000,000). If at least two (2) such offered quotations are so provided, LIBOR Rate shall be the

 

Annex A-19


arithmetic mean of such quotations. If fewer than two such quotations are so provided, Agent shall request any three major banks in New York, New York selected by Agent to provide such bank’s rate (expressed as a percentage per annum) for loans in Dollars to leading European banks for the applicable LIBOR period as of approximately 11:00 a.m. (New York time) on the applicable LIBOR Determination Date for amounts of not less than One Million Dollars ($1,000,000). If at least two (2) such rates are so provided, LIBOR Rate shall be the arithmetic mean of such rates. If fewer than two (2) rates are so provided, then LIBOR Rate for the applicable LIBOR Period shall be LIBOR Rate that was in effect for the immediately preceding LIBOR Period. LIBOR Rate shall be determined by Agent or its agent in accordance with this definition.

License ” means any license of rights or interests in or to any Intellectual Property to which any Credit Party is a party including any Copyright License, Patent License, and/or Trademark License.

Lien ” means any mortgage or deed of trust, pledge, hypothecation, collateral assignment, deposit arrangement, lien, charge, claim, security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the Code or comparable law of any jurisdiction), in each case, in the nature of security; provided that in no event shall an operating lease in and of itself be deemed a Lien.

Liquidity ” means the sum of (i) Availability and (ii) unrestricted cash of the Credit Parties maintained in deposit accounts subject to Control Agreements,.

Litigation ” has the meaning ascribed to it in Section 4.4(i) .

Loan Account ” has the meaning ascribed to it in Section 1.7 .

Loan Documents ” means the Agreement, the Notes, the Collateral Documents, the Maranon Fee Letter, Subordination Agreements, if any, any guaranty executed and delivered in respect of the Obligations, including without limitation, or being party to the guaranty, or any joinder to such guaranty set forth in Section 10 hereof, any other document, agreement or instrument designated by the Borrower Representative and Agent as a “Loan Document” and any other agreements, instruments and certificates executed and delivered to Agent on the Closing Date or thereafter in accordance with the provisions of this Agreement or the Collateral Documents. Any reference in the Agreement or any other Loan Document to a Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications thereto, and shall refer to the Agreement or such Loan Document as the same may be in effect at any and all times such reference becomes operative.

Loans ” means the Revolving Loans and the Term Loan.

Management Services Agreement ” means that certain management agreement dated as of October 3, 2016 by and among Parent and Holdings, as the same may be amended, restated, amended and restated, modified, supplemented, replaced or otherwise modified from time to time in accordance with their terms, but only to the extent that such agreements and any such amendment, restatement, amendment and restatement, modification, supplement, replacement or other modification thereto does not (x) increase the aggregate amount of fees or similar compensation payable thereunder as of the Closing Date (provided, it is understood and agreed that such restrictions shall not apply to any amounts payable on or following the Termination Date) or (y) materially expand or extend the type, scope or nature of services provided thereunder.

 

Annex A-20


Maranon ” means Maranon Capital, L.P., a Delaware limited partnership.

Maranon Agent ” means Maranon solely in its capacity as, and for as long as Maranon (but not any successor thereof in such capacity) shall serve as, Agent hereunder.

Maranon Fee Letter ” has the meaning ascribed to it in Section 1.3(a) .

Material Adverse Effect ” means a material adverse change in or to (a) the business, assets, results of operations or financial condition of the Credit Parties and their Subsidiaries, taken as a whole, (b) Borrowers’ ability to pay any of the Loans or any of the other Obligations in accordance with the terms of this Agreement, (c) the Collateral or Agent’s Liens, on behalf of itself, L/C Issuer and Lenders, on the Collateral or the priority of such Liens, in each case, taken as a whole, or (d) Agent’s rights and remedies (taken as a whole) under this Agreement and the other Loan Documents.

Maximum Amount ” means, as of any date of determination, an amount equal to the Revolving Loan Commitment of all Lenders as of that date.

Maximum Capital Lease Indebtedness ” means $5,000,000.

Maximum Lawful Rate ” has the meaning ascribed to it in Section 1.2(f) .

Moody’s ” means Moody’s Investor’s Services, Inc.

Mortgage ” means any deed of trust, leasehold deed of trust, mortgage, leasehold mortgage, deed to secure debt, leasehold deed to secure debt or other document creating a Lien in favor of Agent on real Property or any interest in real Property , as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms and conditions of this Agreement.

Multiemployer Plan ” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is making, is obligated to make or has made or been obligated to make, contributions on behalf of participants who are or were employed by any of them.

Net Proceeds ” means cash proceeds received by Holdings or any of its Subsidiaries from any Asset Disposition or Casualty Event (including insurance proceeds and awards of condemnation in connection with any Casualty Event and payments under notes or other debt securities received in connection with any Asset Disposition), net of (a) the costs and expenses of such Asset Disposition or Casualty Event (including taxes attributable to such sale, lease or transfer and taxes paid or reasonably estimated by Borrower to be payable as a result thereof either directly or as tax distributions permitted under Section 3.5 ) and any commissions and other customary transaction fees, costs and expenses), (b) amounts applied to repayment of Indebtedness (other than the Obligations) secured by a Lien permitted under the Agreement on the asset or property disposed (including amounts attributable to prepayment fees and penalties, accrued interest and LIBOR breakage costs), (c) any amounts required to be held in escrow until such time as such amounts are released from escrow whereupon such amounts shall be considered Net Proceeds, and (d) amounts held as a reserve attributable to any working capital, earnings, balance sheet or similar adjustment in connection with an Asset Disposition or otherwise held as a reserve, in accordance with GAAP, against any liabilities under any indemnification obligations in connection with an Asset Disposition.

Non-Consenting Lender ” has the meaning ascribed to it in Section 9.19(c) .

Non-Funding Lender ” has the meaning ascribed to it in Section 8.5(a) .

 

Annex A-21


Notes ” means, collectively, the Revolving Notes and the Term Notes.

Notice of Conversion/Continuation ” has the meaning ascribed to it in Section 1.2(e) .

Notice of Initial Term Loan Advance ” means the “Notice of Borrowing” delivered on the Closing Date in connection with the funding of the Term Loan.

Notice of Revolving Credit Advance ” has the meaning ascribed to it in Section 1.1(b)(ii) .

Obligations ” means all loans, advances, debts, liabilities and obligations, for the performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or such amounts are liquidated or determinable), owing by any Credit Party to Agent, any Lender or the L/C Issuer or any Qualified Swap Provider, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement or other instrument, in each case arising under the Agreement or any of the other Loan Documents or any Qualified Rate Contract. This term includes all principal, interest (including all interest that accrues after the commencement of any case or proceeding by or against any Credit Party in bankruptcy, whether or not allowed in such case or proceeding), Fees, Charges, expenses, attorneys’ fees and any other sum chargeable to any Credit Party under the Agreement or any of the other Loan Documents or any Qualified Rate Contract; provided , that Obligations of any Guarantor shall not include any Excluded Rate Contract Obligations solely of such Guarantor.

OFAC ” has the meaning ascribed to it in Section 5.19 .

Operating Cash Flow ” has the meaning ascribed to it in Section 4.1 of Schedule 1 to Annex F .

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 Lender ” has the meaning ascribed to it in Section 8.5(d) .

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 9.19 ).

Parent ” means Green Plains Inc., an Iowa corporation.

Participant Register ” has the meaning ascribed to it in Section 8.1(b) .

Patent License ” means rights under any written agreement now owned or hereafter acquired by any Credit Party granting any right with respect to any invention on which a Patent is in existence.

Patent Security Agreements ” means any patent security agreement made in favor of Agent, on behalf of itself, L/C Issuer and Lenders, by any applicable Credit Party, as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms and conditions of this Agreement.

 

Annex A-22


Patents ” means all of the following in which any Credit Party now holds or hereafter acquires any interest: (a) all letters patent of the United States or any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or of any other country, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State or any other country; (b) all revisions, renewals, extensions, reexaminations, provisionals, reissuances, continuations, continuations-in-part, divisions and divisionals thereof and any applications for any of the foregoing, and all filings claiming priority to or serving as a basis for priority thereof; and (c) all rights in or to any of the foregoing.

PBGC ” means the Pension Benefit Guaranty Corporation.

Pension Plan ” means a Plan described in Section 3(2) of ERISA.

Permit ” means any permit, approval, authorization, license, registration, certification, certificate of authority, variance, permission, franchise, qualification, order, filing or consent required from a Governmental Authority or other Person under an applicable Requirement of Law.

Permitted Acquisition ” means the acquisition by any Borrower (x) of all or substantially all of the property of any Person, or of any business or division of any Person, or (y) of one hundred percent (100%) of the Stock of any Person and otherwise causing such Person to become a Subsidiary of such Borrower (such Person, the “ Target ”), and, in the case of both clauses (x) and (y), subject to the satisfaction of each of the following conditions:

(a) Documentation and Information . Borrower shall (i) have notified Agent of such proposed acquisition (the “ Subject Acquisition ”) at least ten (10) days (or such shorter period of time as Agent may agree) prior to the consummation thereof, (ii) have furnished to Agent (A) at least ten (10) days (or such shorter period of time as Agent may agree) prior to the consummation thereof an executed term sheet and/or letter of intent to the extent that it exists (setting forth in reasonable detail the terms and conditions of such acquisition), (B) at least seven (7) days (or such shorter period of time as Agent may agree) prior to the consummation thereof, (x) pro forma financial statements of Holdings and its Subsidiaries giving effect to the consummation of such Subject Acquisition, (y) to the extent Pro Forma EBITDA of the Target and its Subsidiaries equals or exceeds $2,000,000, a quality of earnings report with respect to the Target and its Subsidiaries, in form and substance reasonably satisfactory to Agent, and (z) a business due diligence package, including, in each case, to the extent available and permitted to be shared (including such items shared pursuant to customary non-disclosure and non-reliance agreements), historical audited and unaudited, as applicable, financial statements of the Target, sources and uses for the Subject Acquisition and copies of all third party reports obtained by the Credit Parties or Parent in connection with such Subject Acquisition and (C) as promptly as practicable following the request of Agent therefor, such other information and documents that Agent may reasonably request, including the respective agreements, documents or instruments pursuant to which such acquisition is to be consummated (including any related management, non-compete, employment, option or other material agreements), any schedules to such agreements, documents or instruments and all other material ancillary agreements, instruments and documents to be executed or delivered in connection therewith and (iii) provide to Agent promptly upon execution thereof, executed counterparts of the respective documents or instruments pursuant to which such Subject Acquisition is consummated

 

Annex A-23


(b) Loan Documents . Borrower and its Subsidiaries (including any new Subsidiary) shall execute and deliver the agreements, instruments and other documents required by Section 2.7 .

(c) No Default; Positive EBITDA; Pro Forma Compliance . No Default or Event of Default shall have occurred and be continuing or shall occur as result of consummating the Subject Acquisition. The Target shall have Pro Forma EBITDA not less than zero ($0). After giving effect to the Subject Acquisition and the funding of all Loans contemplated in connection therewith, if any, on a pro forma basis as of the last day of the most recently ended Fiscal Quarter for which financial statements have been delivered pursuant to Section 4.4(a)(ii) , the Credit Parties are in compliance with the financial covenants set forth in Sections 4.1 and 4.2 hereof;

(d) Compliance and Approvals . The Subject Acquisition and all transactions related thereto shall be consummated in accordance with (a) all applicable laws, ordinances, rules, regulations and requirements of all Governmental Authorities to the extent such compliance is necessary to the effectiveness of such Subject Acquisition or any transaction related thereto, and (b) all other applicable laws, ordinances, rules, regulations and requirements of all Governmental Authorities, in each case, in all material respects;

(e) Liquidity . Both before and after giving effect to the Subject Acquisition, Liquidity shall be at least $5,000,000.

(f) Target Organization . Substantially all of the assets of Target shall be located in the United States or Canada (and, in connection with the acquisition of the Stock of a Target, such Target shall be formed, incorporated or otherwise organized under the laws of a State within the United States or Canada (or a province thereof) (such acquisition of a Target organized under the laws of Canada or a province thereof, together with a Target whose principal assets are located in Canada being referred to herein as a “ Canadian Target ”).

(g) Line of Business . The Target shall be in the same or a similar line of business as the Borrowers were engaged as of the Closing Date.

(h) Indebtedness . No Indebtedness (other than Indebtedness permitted by Section 3.1 hereof) shall be, in connection with such acquisition, assumed or incurred.

(i) Total Consideration . The total consideration paid or payable (including all transaction costs, assumed Indebtedness and liabilities incurred, assumed or reflected on a consolidated balance sheet of the Credit Parties and their Subsidiaries after giving effect to the Subject Acquisition, including the maximum amount of all deferred payments, including future earnouts, Indebtedness of the type described in Section 3.1(j) and promissory notes issued to sellers and Seller Debt) in connection with all Permitted Acquisitions shall not exceed (i) $10,000,000 in aggregate for each Permitted Acquisition or (ii) $25,000,000 in the aggregate for all Permitted Acquisitions during the term of this Agreement and in connection with Permitted Acquisitions in respect of Canadian Targets shall not exceed (i) $5,000,000 in aggregate for each such Permitted Acquisition or (ii) $10,000,000 in the aggregate for all such Permitted Acquisitions during the term of this Agreement (in each case, as applicable, the “ Acquisition Cap ”); provided, further, for purposes of the Acquisition Cap, with respect to any unpaid or unsatisfied Earnout (or any portion thereof), upon the final and irrevocable determination in accordance with its terms that such Earnout (or such portion) will never be realized or determined, and could never become due or owing under any circumstances (regardless of likelihood), then such unpaid and unsatisfied Earnout (or such portion) shall be deemed to be zero and disregarded for purposes of determining compliance with the Acquisition Cap thereafter.

 

Annex A-24


Permitted Encumbrances ” means the following encumbrances:

(a) Liens for taxes, assessments or governmental charges or levies not yet due and payable or Liens for taxes, assessments or governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with GAAP;

(b) Liens in respect of property or assets of any Credit Party or any of its Subsidiaries imposed by law which were incurred in the ordinary course of business and which have not arisen to secure Indebtedness for borrowed money, such as carriers’, materialmen’s, warehousemen’s and mechanics’ Liens, statutory and common law landlord’s Liens (or landlord’s Lien rights under leases solely in respect of past-due rent and similar obligations), and other similar Liens arising in the ordinary course of business, which secure amounts that are not delinquent for more than ninety (90) days and remain payable without penalty or which are being contested diligently and in good faith and by appropriate proceedings and for which adequate reserves in accordance with GAAP are being maintained;

(c) Liens created by or pursuant to this Agreement, the Collateral Documents or the other Loan Documents or otherwise securing Qualified Rate Contracts;

(d) Liens in existence on the Closing Date which are described on Schedule 3.2 , and any modification, replacements, refinancings, renewals or extensions thereof; provided , that such modification, replacement, refinancing, renewal or extension of the obligations secured or benefitted by such Liens, if constituting Indebtedness, is permitted by Section 3.1 (it being understood, for the avoidance of doubt, that individual financings of the type permitted by Section 3.1(e) provided by any lender or its Affiliates may be cross-collateralized to other financings of such type provided by such lender or its Affiliates);

(e) Liens arising from judgments, decrees, awards or attachments in circumstances not constituting an Event of Default;

(f) Liens (other than any Lien imposed by ERISA) (1) incurred or deposits made in the ordinary course of business in connection with insurance maintained by any Credit Party and its Subsidiaries, (2) incurred or deposits made in the ordinary course of business of any Credit Party and its Subsidiaries in connection with workers’ compensation, unemployment insurance and other types of social security benefits, (3) to secure the performance by any Credit Party and its Subsidiaries of tenders, statutory obligations, surety, stay, customs and appeal bonds, statutory bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) to the extent incurred in the ordinary course of business, and (4) to secure the performance by any Credit Party and its Subsidiaries of leases of Real Property, to the extent incurred or made in the ordinary course of business;

(g) licenses, sublicenses, leases or subleases granted to third Persons in the ordinary course of business not interfering in any material respect with the business of any Credit Party or any of its Subsidiaries;

 

Annex A-25


(h) easements, rights-of-way, restrictions, minor defects or irregularities in title, encroachments and other similar charges or encumbrances, in each case not interfering in any material respect with the ordinary conduct of the business of any Credit Party or any of its Subsidiaries;

(i) Liens arising from precautionary UCC financing statements regarding operating leases or consignment or bailee arrangements;

(j) (i) Liens created pursuant to or in connection with leases or Capital Leases permitted pursuant to this Agreement, provided that (1) such Liens only serve to secure the payment of rent or Indebtedness arising under such leases or Capital Leases and (2) the Liens encumbering the assets leased or purported to be leased under such leases or Capital Leases do not encumber any other assets of any Credit Party or any of its Subsidiaries ((i) other than (A) letters of credit, payment undertaking agreements, guaranteed investment contracts, deposits of cash or Cash Equivalents and other credit support arrangements, in each case having an aggregate value not exceeding the fair market value of the assets leased or purported to be leased under such leases or Capital Leases (each of such values determined at the time when the lease agreement relating to the relevant lease or Capital Lease is signed and delivered) and (B) the proceeds of or attributable to the assets so leased or purported be leased and (ii) it being understood, for the avoidance of doubt, that individual financings of the type permitted by Section 3.1(e) provided by any lender or its Affiliates may be cross-collateralized to other financings of such type provided by such lender or its Affiliates) and (ii) Liens arising in connection with other Indebtedness permitted under Section 3.1(e) ;

(k) (1) those liens, encumbrances, hypothecs and other matters affecting title to any Real Estate and found reasonably acceptable by Agent or insured against by title insurance, (2) as to any particular Real Estate at any time, such easements, encroachments, covenants, rights of way, minor defects, irregularities or encumbrances on title which could not reasonably be expected to materially impair such Real Estate for the purpose for which it is held by the mortgagor or grantor thereof, or the lien or hypothec held by Agent, (3) zoning and other municipal ordinances, (4) general real estate taxes and assessments not yet delinquent or which are being contested in good faith, (5) any Lien that would be disclosed on a true, correct and complete survey of the Real Estate that does not materially affect the use or enjoyment of the Real Estate, and (6) such other similar items as Agent may consent to;

(l) Liens arising pursuant to purchase money security interests securing Indebtedness representing the purchase price of assets acquired after the Closing Date, provided that (1) any such Liens attach only to the assets so purchased, upgrades thereon and, if the asset so purchased is an upgrade, the original asset itself (and such other assets financed by the same financing source or an Affiliate of the same financing source) and to the proceeds of or attributable to the assets so purchased, (2) the Indebtedness (other than Indebtedness incurred from the same financing source to purchase other assets and excluding Indebtedness representing obligations to pay installation and delivery charges for the property so purchased) secured by any such Lien does not exceed one hundred percent (100%) of the lesser of the fair market value or the purchase price of the property being purchased at the time of the incurrence of such Indebtedness and (3) the Indebtedness secured thereby is permitted to be incurred pursuant to this Agreement;

(m) any Lien existing on any property or asset prior to the acquisition thereof by a Credit Party or existing on any property or asset of any Person that becomes a Subsidiary after the Closing Date prior to the time such Person becomes a Subsidiary; provided that (1) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a

 

Annex A-26


Subsidiary, as the case may be, (2) such Lien shall not apply to any other property or assets of the Credit Parties (other than the proceeds and products thereof, accessions thereto and improvements thereon), and (3) such Lien shall secure only Indebtedness that is expressly permitted pursuant to Section 3.1(j) and refinancings of such Indebtedness in accordance with Section 3.1(h) ;

(n) normal and customary rights of setoff and netting or bankers’ liens upon deposits of cash in favor of banks or other depository institutions;

(o) Liens under Section 4-210 of the Code in favor of collecting banks and arising by operation of law under Article 2 of the Uniform Commercial Code in effect in the applicable jurisdiction;

(p) (i) Liens for the benefit of a seller in connection with a proposed Permitted Acquisition pursuant to and in accordance with a letter of intent or acquisition of purchase agreement related thereto, in any event, so long as such Lien attached solely to reasonable and customary cash deposits given by a Credit Party required pursuant to the terms of such letter of intent or acquisition or purchase agreement and (ii) other Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of any assets in the ordinary course of business and permitted by this Agreement (excluding, in any event, acquisitions);

(q) Liens in connection with financing of insurance premiums, provided such Liens attach solely to the insurance policies being financed and the proceeds thereof or the deposits made in connection with such insurance policies;

(r) Liens not otherwise permitted by the preceding clauses of this definition so long as the obligation secured thereby is permitted hereunder the aggregate principal outstanding amount of the obligations secured thereby does not exceed $500,000 at any one time;

(s) (i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business and (ii) Liens on specific items of inventory or other goods and the proceeds thereof securing such Person’s obligation in respect of documentary letters of credit or similar instruments issued or created in favor for the account of such Person to facilitate the purchase, shipment or storage of such inventory or goods;

(t) Liens on Stock of joint ventures securing capital contributions to or obligations of such Persons and customary rights of first refusal and tag, drag and similar rights in joint venture agreements and agreements with non-wholly owned Subsidiaries;

(u) Liens in connection with cash collateral securing letters of credit and other similar Indebtedness permitted under Section 3.1(q) in an aggregate amount not exceeding 105% of the face amount of such letters of credit or other Indebtedness; and

(v) Liens on cash and Cash Equivalents or other property arising in connection with the defeasance, discharge or redemption of Indebtedness, in each case, to the extent such defeasance, discharge or redemption is not prohibited hereunder.

Person ” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, public benefit corporation, other entity or government (whether federal, state, county, city, municipal, local, foreign, or otherwise, including any instrumentality, division, agency, body or department thereof).

 

Annex A-27


Plan ” means, at any time, an “employee benefit plan,” as defined in Section 3(3) of ERISA, that any Credit Party or, with respect to any Title IV Plan or Multiemployer Plan only, any ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them.

Pledge Agreement ” means (i) the Credit Parties Pledge Agreement, (ii) each pledge agreement entered into in favor of Agent, on behalf of itself and Lenders, pledging the Stock of any other Credit Party by any holder thereof other than a Credit Party and (iii) any other pledge agreement entered into after the Closing Date by any Credit Party, in each case, as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms and conditions of this Agreement.

Prepayment Fee ” has the meaning ascribed to it in Section 1.3(d) .

Prior Lender Obligations ” means any obligations incurred by any Credit Party in favor of the Prior Lenders.

Prior Lenders ” means (i) each of the “Lenders” (as defined therein) party to that certain First Lien Credit Agreement, dated as of January 30, 2015, by and among RLG-FVC Holdings, Inc., a Delaware corporation, RLJ-FVC Fleischmann’s Vinegar Company, Inc., a Delaware corporation, SCI Ingredients Holdings, Inc., a Delaware corporation, the lenders party thereto, Security Benefit Corporation, as administrative agent and as collateral agent for the lenders; and (ii) each of the “Lenders” (as defined therein) party to that certain Second Lien Credit Agreement, dated as of January 30, 2015, by and among RLG-FVC Holdings, Inc., a Delaware corporation, RLJ-FVC Fleischmann’s Vinegar Company, Inc., a Delaware corporation, SCI Ingredients Holdings, Inc., a Delaware corporation, the lenders party thereto, Security Benefit Corporation, as administrative agent and as collateral agent for the lenders.

Pro Forma ” means the unaudited consolidated and consolidating balance sheets of Holdings and its Subsidiaries prepared in accordance with GAAP as of the Closing Date after giving effect to the Related Transactions. The Pro Forma is annexed hereto as Annex D .

Pro Forma EBITDA ” has the meaning set forth in the Compliance and Excess Cash Flow Certificate.

Pro Forma Financial Statements ” has the meaning ascribed to it in the definition of “Permitted Acquisition”.

Pro Rata Share ” means, with respect to all matters relating to any Lender, (a) with respect to the Revolving Loan, the percentage obtained by dividing (i) the Revolving Loan Commitment of that Lender by (ii) the aggregate Revolving Loan Commitments of all Lenders, (b) with respect to the Term Loan, the percentage obtained by dividing (i) the Term Loan Commitment of that Lender by (ii) the aggregate Term Loan Commitments of all Lenders, and (c) with respect to all Loans on and after the Commitment Termination Date, the percentage obtained by dividing (i) the aggregate outstanding principal balance of the Loans and Letter of Credit Liability held by that Lender, by (ii) the outstanding principal balance of the Loans and Letter of Credit Liability held by all Lenders, as any such percentages may be adjusted by assignments pursuant to Section 8.1 .

Proceeds ” means all “proceeds” as such term is defined in the Code.

 

Annex A-28


Projections ” means Holdings’ and its Subsidiaries forecasted consolidated and consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow statements; and (d) capitalization statements, all prepared on a Subsidiary by Subsidiary or division-by-division basis, if applicable, and otherwise consistent with the historical consolidated Financial Statements of Holdings and its Subsidiaries, together with appropriate supporting details and a statement of underlying assumptions.

Proposed Change ” has the meaning ascribed to it in Section 9.19(c) .

Qualified Assignee ” means (a) any Lender, any Affiliate or any Related Fund of any Lender, and (b) any commercial bank, savings and loan association or savings bank or any other entity which is an “accredited investor” (as defined in Regulation D under the Securities Act of 1933) which extends credit or buys loans as one of its businesses, including insurance companies, mutual funds, lease financing companies, investment funds, and commercial finance companies (but in all cases excluding any Credit Party or any Affiliate of a Credit Party (including, but not limited to, Parent and Parent’s Affiliates)).

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

Qualified Plan ” means a Pension Plan that is intended to be tax-qualified under Section 401(a) of the IRC.

Qualified Rate Contract ” means any Rate Contract between a Borrower and the counterparty thereto, which (i) has been provided or arranged by Agent or an Affiliate of Agent, or (ii) Agent has acknowledged in writing constitutes a “Qualified Rate Contract” hereunder.

Qualified Swap Provider ” means (i) a Lender or an Affiliate of a Lender (or a Person who was a Lender or an Affiliate of a Lender at the time of execution and delivery of a Rate Contract) who has entered into a Qualified Rate Contract with a Borrower, or (ii) a Person with whom a Borrower has entered into a Qualified Rate Contract provided or arranged by Agent or an Affiliate of Agent, and any assignee thereof.

Rate Contracts ” means swap agreements (as such term is defined in Section 101 of the Bankruptcy Code) and any other agreements or arrangements designed to provide protection against fluctuations in interest or currency exchange rates.

Real Estate ” has the meaning ascribed to it in Section 5.12 .

Recipient ” means (a) Agent, (b) any Lender and (c) any L/C Issuer, as applicable.

Refinancing ” means the repayment in full by Borrowers of the Prior Lender Obligations and the termination and release of any liens securing the Prior Lender Obligations, in each case, on the Closing Date.

Register ” has the meaning ascribed to it in Section 8.1(d) .

Related Fund ” means (a) any fund, trust or similar entity that invests in commercial loans in the ordinary course of its business and is advised or managed by (i) a Lender, (ii) an Affiliate of a Lender, (iii) the same investment advisor that manages a Lender or (iv) an Affiliate of an investment advisor that manages a Lender, or (b) any finance company, insurance company or other financial institution which temporarily warehouses Loans for any Lender or any Person described in clause (a) above.

 

Annex A-29


Related Transactions ” means the initial borrowing under the Revolving Loan and the Term Loan on the Closing Date, the Refinancing, the Closing Date Acquisition, the Equity Contribution, the Management Services Agreement, the payment of all Fees, costs and expenses associated with all of the foregoing and the execution, delivery and performance by the Credit Parties of all of the Related Transactions Documents to which they are a party.

Related Transactions Documents ” means the Loan Documents, the Acquisition Agreements, the Management Services Agreement and all other agreements or instruments executed in connection with the Related Transactions.

Release ” means any release, threatened release, spill, emission, leaking, pumping, pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Material in the indoor or outdoor environment, including the movement of Hazardous Material through or in the air, soil, surface water, ground water or property.

Replacement Lender ” has the meaning ascribed to it in Section 9.19(a) .

Requirements of Law ” means, as to any Person, the Governing Documents of such Person, and any law, ordinance, policy, manual provision, guidance, principle of common law, statute, rule or regulation, or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its assets or to which such Person or any of its assets is subject including the Securities Act, the Exchange Act, Regulations T, U and X of the Federal Reserve Board, ERISA, the Fair Labor Standards Act, the Worker Adjustment and Retraining Notification Act, Americans with Disabilities Act of 1990, the Social Security Act, any Environmental Law, and any certificate of occupancy, zoning ordinance, building, environmental or land use requirement or Permit or environmental, labor, employment, occupational safety or health law, rule or regulation (including those applicable to the disposal of medical waste).

Requisite Lenders ” means Lenders having (a) more than fifty percent (50%) of the Revolving Loan Commitments of all Lenders, plus the unpaid principal balance of the Term Loan, or (b) if the Commitments have been terminated, more than fifty percent (50%) of the aggregate outstanding amount of the Loans, plus Letter of Credit Participation Liability; provided , to the extent there are two or more unaffiliated Lenders party to this Agreement, “Requisite Lenders” shall mean at least two unaffiliated Lenders. For purposes of this definition, a Lender and its Affiliates that are also Lenders shall be treated as a single Lender.

Requisite Revolving Lenders ” means Lenders having (a) more than 50% of the Revolving Loan Commitments of all Lenders, or (b) if the Revolving Loan Commitments have been terminated, more than 50% of the aggregate outstanding amount of the Revolving Loans plus Letter of Credit Participation Liability.

Responsible Officer ” means the chief executive officer, chief financial officer or the president of a Borrower or Borrower Representative, as applicable, or any other officer having substantially the same authority and responsibility; or, with respect to compliance with financial covenants or delivery of financial information, the treasurer of a Borrower or Borrower Representative, as applicable, or any other officer having substantially the same authority and responsibility.

 

Annex A-30


Restricted Payment ” means (a) the payment of any dividend or the incurrence of any liability to make any other payment or distribution of cash or other property or assets on account of any shares of any class of the Stock of any Credit Party or any Subsidiary thereof now or hereafter outstanding; (b) any payment on account of the purchase, redemption, defeasance, sinking fund or other retirement of any shares of any class of Stock of any Credit Party or any Subsidiary thereof now or hereafter outstanding or any other payment or distribution made in respect of such Stock; (c) any payment or prepayment of principal of, premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to, any Subordinated Debt (including in respect of any Seller Debt); (d) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of Stock of any Credit Party or any Subsidiary thereof now or hereafter outstanding; (e) any payment of management fees (or other fees of a similar nature) or out-of-pocket expenses in connection therewith by a Credit Party or any Subsidiary thereof to any Stockholder thereof or any of its Affiliates (including any payment of such fees or other amounts or expenses pursuant to the Management Services Agreement); and (f) any payment or prepayment of principal of, premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment of any Earnouts.

Retained ECF ” has the meaning ascribed to it in Section 3.5(r) .

Retiree Welfare Plan ” means, at any time, a Welfare Plan that provides for continuing coverage or benefits for any participant or any beneficiary of a participant after such participant’s termination of employment, other than continuation coverage provided pursuant to Section 4980B of the IRC and at the sole expense of the participant or the beneficiary of the participant.

Revolver Unused Line Fee ” has the meaning ascribed to it in Section 1.3(b)(i) .

Revolving Credit Advance ” has the meaning ascribed to it in Section 1.1(b) .

Revolving Lenders ” means those Lenders having a Revolving Loan Commitment.

Revolving Loan Commitment ” means (a) as to any Lender, the commitment of such Lender to make its Pro Rata Share of Revolving Credit Advances as set forth on Annex B or in the most recent Assignment Agreement, if any, executed by such Lender and (b) as to all Lenders, the aggregate commitment of all Lenders to make the Revolving Credit Advances, which aggregate commitment shall be FIFTEEN MILLION AND 0/100 ($15,000,000.00) on the Closing Date, as such amount may be adjusted, if at all, from time to time in accordance with the Agreement.

Revolving Loans ” means, at any time the aggregate amount of Revolving Credit Advances outstanding to Borrowers.

Revolving Notes ” has the meaning ascribed to it in Section 1.1(b)(i) .

S&P ” means Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc.

Scheduled Installments ” has the meaning ascribed to it in Section 1.1(a) .

SCI ” has the meaning ascribed to it in the preamble to the Agreement.

 

Annex A-31


Security Agreement ” means the Security Agreement of even date herewith entered into by and among Agent, on behalf of itself and Lenders, and each Credit Party that is a signatory thereto as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms and conditions of this Agreement.

Seller Debt ” has the meaning ascribed to it in Section 3.1(i) .

Settlement Date ” has the meaning ascribed to it in Section 8.5(a) .

Software ” means computer programs, applications, interfaces, operating systems or embedded software programs or applications, including source code, object code, firmware, development tools, test suites, files, records and data, processes, scripts, routines used to process data, web sites (including related computer code and content), media on which any of the foregoing is recorded, improvements, modifications, enhancements, versions and releases relating thereto, and all documentation related to any of the foregoing, irrespective of the media on which it is recorded.

Solvent ” means, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including subordinated and contingent liabilities, of such Person; (b) the present fair saleable value of the assets of such Person on a going concern basis is not less than the amount that will be required to pay the probable liability of such Person on its debts and liabilities, including subordinated and contingent liabilities 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 as such debts and liabilities mature; and (d) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person’s property would constitute an unreasonably small capital. The amount of contingent liabilities (such as Litigation, Guarantees and pension plan liabilities) at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that can be reasonably be expected to become an actual or matured liability.

Specified Equity Contribution ” has the meaning ascribed to it in Section 6.7 .

Specified Event of Default ” means an Event of Default arising under Section 6.1(a) , Section 6.1(f) or Section 6.1(g) of this Agreement.

Stated Amount ” means, with respect to (i) any Lender Letter of Credit at any date of determination, (a) the maximum aggregate amount available for drawing thereunder under any and all circumstances, plus (b) the aggregate amount of all unreimbursed payments and disbursements under such Lender Letter of Credit, plus (c) all related unpaid interest, fees and expenses, and (ii) any Letter of Credit Participation Agreement, (a) the maximum aggregate amount available for drawing under the underlying letter of credit under any and all circumstances, plus (b) the aggregate amount of all unreimbursed payments and disbursements under such Letter of Credit Participation Agreement and underlying letter of credit, plus (c) all related unpaid interest, fees and expenses.

Stock ” means all shares, options, warrants, general or limited partnership interests, membership interests or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or nonvoting, including common stock, preferred stock or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Exchange Act of 1934).

Stockholder ” means, with respect to any Person, each holder of Stock of such Person.

 

Annex A-32


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

Subordinated Debt ” means (i) Seller Debt, and (ii) any other unsecured Indebtedness of a Credit Party incurred in connection with any Permitted Acquisition (including promissory notes, consulting fees and any other amounts owing by Credit Parties and payable after the closing or effective date of such Permitted Acquisition), in each case, which has been subordinated to the payment and performance of the Obligations on terms and conditions acceptable to Agent and Requisite Lenders.

Subordination Agreements ” means each subordination and intercreditor agreement (or similar document) entered into by Agent, any Credit Party and a selling party or parties who have extended Subordinated Debt, in each case, which agreement is in form and substance and on terms and conditions acceptable to Agent and Requisite Lenders, as each of the same may be amended, restated or otherwise modified from time to time in accordance with the terms thereof.

Subsidiary ” means, with respect to any Person, (a) any corporation of which an aggregate of more than fifty percent (50%) of the outstanding Stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person or one or more Subsidiaries of such Person, or with respect to which any such Person has the right to vote or designate the vote of more than fifty percent (50%) of such Stock whether by proxy, agreement, operation of law or otherwise, and (b) any partnership or limited liability company in which such Person and/or one or more Subsidiaries of such Person shall have an interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%) or of which any such Person is a general partner or may exercise the powers of a general partner.

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

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 and penalties applicable thereto.

Term Loan ” has the meaning ascribed to it in Section 1.1(a) .

Term Loan Commitment ” means (a) as to any Lender, the commitment of such Lender to make its Pro Rata Share of the Term Loan (as set forth on Annex B ) in the maximum aggregate amount set forth in Section 1.1(a) or in the most recent Assignment Agreement, if any, executed by such Lender and (b) as to all Lenders, the aggregate commitment of all Lenders to make the Term Loan. The Term Loan Commitment shall reduce automatically by the amount prepaid or repaid in respect of the Term Loan (but solely by the amount of such prepayment or repayment allocable to a Lender, for purposes of clause (a) of this definition).

Term Loan Lenders ” means those Lenders having Term Loan Commitments.

Term Notes ” has the meaning ascribed to it in Section 1.1(a) .

 

Annex A-33


Termination Date ” means the date on which (a) the Loans have been repaid in full, (b) all other Obligations under the Agreement and the other Loan Documents have been completely discharged (other than contingent indemnification obligations to the extent no claim has been asserted), and (c) no Borrower shall have any further right to borrow any monies under the Agreement.

Testing Date ” has the meaning ascribed to it in Section 6.7(a) .

Threshold Amount ” has the meaning ascribed to it in Section 1.5(d)(i) .

Title IV Plan ” means a Pension Plan (other than a Multiemployer Plan), that is covered by Title IV of ERISA.

Total Net Leverage Ratio ” has the meaning ascribed to it in Section 4.2 of Schedule 1 to Annex F .

Trademark License ” means rights under any written agreement now owned or hereafter acquired by any Credit Party granting any right to use any Trademark.

Trademark Security Agreements ” means any trademark security agreements made in favor of Agent, on behalf of itself and Lenders, by any applicable Credit Party as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms and conditions of this Agreement.

Trademarks ” means all of the following now owned or hereafter adopted or acquired by any Credit Party in the United States, any state or territory thereof, or any other country or any political subdivision thereof: (a) all trademarks, trade names, corporate names, business names, trade styles, service marks, logos, internet domain names, other source or business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of like nature (whether registered or unregistered), including any common law rights; (b) all registrations and recordings thereof, and all applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state or territory thereof, or any other country or any political subdivision thereof; (c) all reissues, extensions or renewals thereof; (d) all goodwill associated with or symbolized by any of the foregoing; and (d) all rights in or to any of the foregoing.

Treasury Regulations ” means the Treasury regulations promulgated under the IRC.

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

U.S. Tax Compliance Certificate ” has the meaning assigned to such term in Section 1.9(f) .

Voting Stock ” means Stock of any Person having ordinary power to vote in the election of the members of the board of directors, managers, trustees or other controlling persons of such Person (irrespective of whether, at the time, Stock of any other class or classes of such Person shall have or might have voting power by reason of the occurrence of any contingency).

Withholding Agent ” means Borrower Representative or Agent, as applicable, or any other withholding agent as specified under applicable law.

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.

 

Annex A-34


Rules of construction with respect to accounting terms used in the Agreement or the other Loan Documents shall be as set forth or referred to in this Annex A . All other undefined terms contained in any of the Loan Documents shall, unless the context indicates otherwise, have the meanings provided for by the Code to the extent the same are used or defined therein; in the event that any term is defined differently in different Articles or Divisions of the Code, the definition contained in Article or Division 9 shall control. Unless otherwise specified, references in the Agreement or any of the Appendices to a Section, subsection or clause refer to such Section, subsection or clause as contained in the Agreement. The words “herein,” “hereof” and “hereunder” and other words of similar import refer to the Agreement as a whole, including all Annexes, Exhibits and Schedules, as the same may from time to time be amended, restated, modified or supplemented, and not to any particular section, subsection or clause contained in the Agreement or any such Annex, Exhibit or Schedule.

Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, feminine and neuter genders. The words “including”, “includes” and “include” shall be deemed to be followed by the words “without limitation”; the word “or” is not exclusive; references to Persons include their respective successors and assigns (to the extent and only to the extent permitted by the Loan Documents) or, in the case of governmental Persons, Persons succeeding to the relevant functions of such Persons; and, except as otherwise specified, all references to statutes and related regulations shall include any amendments of the same and any successor statutes and regulations. Whenever any provision in any Loan Document refers to the knowledge (or an analogous phrase) of any Credit Party, such words are intended to signify that such Credit Party has actual knowledge or awareness of a particular fact or circumstance or that such Credit Party, if it had exercised reasonable diligence, would have known or been aware of such fact or circumstance. Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein or in any Loan Document shall be construed as referring to such agreement, instrument or other document as may be from time to time amended, restated, amended and restated, supplemented or otherwise modified, extended, refinanced or replaced (subject to any restrictions or qualifications on such amendments, restatements, amendment and restatements, supplements or modifications, extensions, refinancings or replacements set forth herein or in any Loan Document) and (b) any reference to any law in any Loan Document shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such law.

When payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day, the date of such payment (unless expressly provided otherwise hereunder or in the other Loan Documents) or performance shall extend to the immediate succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.

 

Annex A-35

Exhibit 10.1(b)

TERM NOTE

 

$16,500,000.00    Chicago, Illinois                

October 3, 2016

FOR VALUE RECEIVED, each of the undersigned (each individually a “ Borrower ” and collectively, the “ Borrowers ”), HEREBY JOINTLY AND SEVERALLY PROMISES TO PAY to THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY (“ Lender ”) at the offices of MARANON CAPITAL, L.P., a Delaware limited partnership, as agent for Lenders (“ Agent ”), at its address set forth in Section   9.3 of the Credit Agreement, or at such other place as Agent may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the amount of SIXTEEN MILLION FIVE HUNDRED THOUSAND DOLLARS AND 00/100 CENTS ($16,500,000.00). All capitalized terms used but not otherwise defined herein have the meanings given to them in the “Credit Agreement” (as hereinafter defined) or in Annex   A thereto.

This Term Note is one of the Term Notes issued pursuant to that certain Credit Agreement dated as of October 3, 2016 by and among Borrowers, the other Persons named therein as Credit Parties, Agent, Lenders and the other Persons signatory thereto from time to time as Lenders (including all annexes, exhibits and schedules thereto and as from time to time amended, restated, amended and restated, supplemented or otherwise modified, the “ Credit Agreement ”), and is entitled to the benefit and security of the Credit Agreement, the Security Agreement and all of the other Loan Documents referred to therein. Reference is hereby made to the Credit Agreement for a statement of all of the terms and conditions under which the Loans evidenced hereby are made and are to be repaid. The principal balance of the Term Loan, the rates of interest applicable thereto and the date and amount of each payment made on account of the principal thereof, shall be recorded by Agent on its books; provided that the failure of Agent to make any such recordation shall not affect the obligations of Borrowers to make a payment when due of any amount owing under the Credit Agreement or this Term Note.

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

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

Upon and during the occurrence of any Event of Default, this Term Note may, in accordance with the terms and conditions set forth in Section 6.3 of the Credit Agreement, and without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other legal requirement of any kind (all of which are hereby expressly waived by Borrowers), be declared, and immediately shall become, due and payable in accordance with the terms of such Section.

Time is of the essence of this Term Note.

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


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

 

GREEN PLAINS II LLC

By:  

/s/ Todd Becker

Name:  

Todd Becker

Title:  

President and Chief Executive Officer


TERM NOTE

 

$19,000,000.00

   Chicago, Illinois                

October 3, 2016

FOR VALUE RECEIVED, each of the undersigned (each individually a “ Borrower ” and collectively, the “ Borrowers ”), HEREBY JOINTLY AND SEVERALLY PROMISES TO PAY to AXA EQUITABLE LIFE INSURANCE COMPANY (“ Lender ”) at the offices of MARANON CAPITAL, L.P., a Delaware limited partnership, as agent for Lenders (“ Agent ”), at its address set forth in Section   9.3 of the Credit Agreement, or at such other place as Agent may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the amount of NINETEEN MILLION DOLLARS AND 00/100 CENTS ($19,000,000.00). All capitalized terms used but not otherwise defined herein have the meanings given to them in the “Credit Agreement” (as hereinafter defined) or in Annex   A thereto.

This Term Note is one of the Term Notes issued pursuant to that certain Credit Agreement dated as of October 3, 2016 by and among Borrowers, the other Persons named therein as Credit Parties, Agent, Lenders and the other Persons signatory thereto from time to time as Lenders (including all annexes, exhibits and schedules thereto and as from time to time amended, restated, amended and restated, supplemented or otherwise modified, the “ Credit Agreement ”), and is entitled to the benefit and security of the Credit Agreement, the Security Agreement and all of the other Loan Documents referred to therein. Reference is hereby made to the Credit Agreement for a statement of all of the terms and conditions under which the Loans evidenced hereby are made and are to be repaid. The principal balance of the Term Loan, the rates of interest applicable thereto and the date and amount of each payment made on account of the principal thereof, shall be recorded by Agent on its books; provided that the failure of Agent to make any such recordation shall not affect the obligations of Borrowers to make a payment when due of any amount owing under the Credit Agreement or this Term Note.

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

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

Upon and during the occurrence of any Event of Default, this Term Note may, in accordance with the terms and conditions set forth in Section 6.3 of the Credit Agreement, and without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other legal requirement of any kind (all of which are hereby expressly waived by Borrowers), be declared, and immediately shall become, due and payable in accordance with the terms of such Section.

Time is of the essence of this Term Note.

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


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

 

GREEN PLAINS II LLC
By:  

/s/ Todd Becker

Name:  

Todd Becker

Title:  

President and Chief Executive Officer


TERM NOTE

 

$17,000,000.00    Chicago, Illinois                

October 3, 2016

FOR VALUE RECEIVED, each of the undersigned (each individually a “ Borrower ” and collectively, the “ Borrowers ”), HEREBY JOINTLY AND SEVERALLY PROMISES TO PAY to METROPOLITAN LIFE INSURANCE COMPANY (“ Lender ”) at the offices of MARANON CAPITAL, L.P., a Delaware limited partnership, as agent for Lenders (“ Agent ”), at its address set forth in Section 9.3 of the Credit Agreement, or at such other place as Agent may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the amount of SEVENTEEN MILLION DOLLARS AND 00/100 CENTS ($17,000,000.00). All capitalized terms used but not otherwise defined herein have the meanings given to them in the “Credit Agreement” (as hereinafter defined) or in Annex   A thereto.

This Term Note is one of the Term Notes issued pursuant to that certain Credit Agreement dated as of October 3, 2016 by and among Borrowers, the other Persons named therein as Credit Parties, Agent, Lenders and the other Persons signatory thereto from time to time as Lenders (including all annexes, exhibits and schedules thereto and as from time to time amended, restated, amended and restated, supplemented or otherwise modified, the “ Credit Agreement ”), and is entitled to the benefit and security of the Credit Agreement, the Security Agreement and all of the other Loan Documents referred to therein. Reference is hereby made to the Credit Agreement for a statement of all of the terms and conditions under which the Loans evidenced hereby are made and are to be repaid. The principal balance of the Term Loan, the rates of interest applicable thereto and the date and amount of each payment made on account of the principal thereof, shall be recorded by Agent on its books; provided that the failure of Agent to make any such recordation shall not affect the obligations of Borrowers to make a payment when due of any amount owing under the Credit Agreement or this Term Note.

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

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

Upon and during the occurrence of any Event of Default, this Term Note may, in accordance with the terms and conditions set forth in Section 6.3 of the Credit Agreement, and without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other legal requirement of any kind (all of which are hereby expressly waived by Borrowers), be declared, and immediately shall become, due and payable in accordance with the terms of such Section.

Time is of the essence of this Term Note.

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


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

 

GREEN PLAINS II LLC
By:  

/s/ Todd Becker

Name:  

Todd Becker

Title:  

President and Chief Executive Officer


TERM NOTE

 

$4,000,000.00    Chicago, Illinois                

October 3, 2016

FOR VALUE RECEIVED, each of the undersigned (each individually a “ Borrower ” and collectively, the “ Borrowers ”), HEREBY JOINTLY AND SEVERALLY PROMISES TO PAY to METLIFE INSURANCE COMPANY USA (“ Lender ”) at the offices of MARANON CAPITAL, L.P., a Delaware limited partnership, as agent for Lenders (“ Agent ”), at its address set forth in Section   9.3 of the Credit Agreement, or at such other place as Agent may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the amount of FOUR MILLION DOLLARS AND 00/100 CENTS ($4,000,000.00). All capitalized terms used but not otherwise defined herein have the meanings given to them in the “Credit Agreement” (as hereinafter defined) or in Annex   A thereto.

This Term Note is one of the Term Notes issued pursuant to that certain Credit Agreement dated as of October 3, 2016 by and among Borrowers, the other Persons named therein as Credit Parties, Agent, Lenders and the other Persons signatory thereto from time to time as Lenders (including all annexes, exhibits and schedules thereto and as from time to time amended, restated, amended and restated, supplemented or otherwise modified, the “ Credit Agreement ”), and is entitled to the benefit and security of the Credit Agreement, the Security Agreement and all of the other Loan Documents referred to therein. Reference is hereby made to the Credit Agreement for a statement of all of the terms and conditions under which the Loans evidenced hereby are made and are to be repaid. The principal balance of the Term Loan, the rates of interest applicable thereto and the date and amount of each payment made on account of the principal thereof, shall be recorded by Agent on its books; provided that the failure of Agent to make any such recordation shall not affect the obligations of Borrowers to make a payment when due of any amount owing under the Credit Agreement or this Term Note.

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

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

Upon and during the occurrence of any Event of Default, this Term Note may, in accordance with the terms and conditions set forth in Section 6.3 of the Credit Agreement, and without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other legal requirement of any kind (all of which are hereby expressly waived by Borrowers), be declared, and immediately shall become, due and payable in accordance with the terms of such Section.

Time is of the essence of this Term Note.

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


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

 

GREEN PLAINS II LLC
By:  

/s/ Todd Becker

Name:  

Todd Becker

Title:  

President and Chief Executive Officer

Exhibit 10.1(c)

REVOLVING NOTE

 

$2,062,500.00    Chicago, Illinois
   October 3, 2016

FOR VALUE RECEIVED, each of the undersigned (each individually a “ Borrower ” and collectively, the “ Borrowers ”), HEREBY JOINTLY AND SEVERALLY PROMISES TO PAY to THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY (“ Lender ”), at the offices of MARANON CAPITAL, L.P., a Delaware limited partnership, as Agent (“ Agent ”), at its address set forth in Section   9.3 of the “Credit Agreement” (as hereinafter defined), or at such other place as Agent may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the amount of TWO MILLION SIXTY-TWO THOUSAND FIVE HUNDRED DOLLARS AND 00/100 CENTS ($2,062,500/00) or, if less, the aggregate unpaid amount of all Revolving Credit Advances made by Lender to the undersigned under the Credit Agreement. All capitalized terms used but not otherwise defined herein have the meanings given to them in the Credit Agreement or in Annex A thereto.

This Revolving Note is one of the Revolving Notes issued pursuant to that certain Credit Agreement dated as of October 3, 2016 by and among Borrowers, the other Persons named therein as Credit Parties, Agent, Lenders and the other Persons signatory thereto from time to time as Lenders (including all annexes, exhibits and schedules thereto, and as from time to time amended, restated, amended and restated, supplemented or otherwise modified, the “ Credit Agreement ”), and is entitled to the benefit and security of the Credit Agreement, the Security Agreement and all of the other Loan Documents referred to therein. Reference is hereby made to the Credit Agreement for a statement of all of the terms and conditions under which the Loans evidenced hereby are made and are to be repaid. The date and amount of each Revolving Credit Advance made by Lenders to Borrowers, the rates of interest applicable thereto and each payment made on account of the principal thereof, shall be recorded by Agent on its books; provided that the failure of Agent to make any such recordation shall not affect the obligations of Borrowers to make a payment when due of any amount owing under the Credit Agreement or this Revolving Note in respect of the Revolving Credit Advances made by Lender to Borrowers.

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

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

Upon and during the occurrence of any Event of Default, this Revolving Note may, in accordance with Section 6.3 of the Credit Agreement, and without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other legal requirement of any kind (all of which are hereby expressly waived by Borrowers), be declared, and immediately shall become, due and payable in accordance with the terms of such Section.

Time is of the essence of this Revolving Note.


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

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

 

GREEN PLAINS II LLC
By:  

/s/ Todd Becker

Name:  

Todd Becker

Title:  

President and Chief Executive Officer


REVOLVING NOTE

 

$2,625,000.00.00   Chicago, Illinois
  October 3, 2016

FOR VALUE RECEIVED, each of the undersigned (each individually a “ Borrower ” and collectively, the “ Borrowers ”), HEREBY JOINTLY AND SEVERALLY PROMISES TO PAY to METROPOLITAN LIFE INSURANCE COMPANY (“ Lender ”), at the offices of MARANON CAPITAL, L.P., a Delaware limited partnership, as Agent (“ Agent ”), at its address set forth in Section   9.3 of the “Credit Agreement” (as hereinafter defined), or at such other place as Agent may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the amount of TWO MILLION SIXTY HUNDRED TWENTY-FIVE THOUSAND DOLLARS AND 00/100 CENTS ($2,625,000/00) or, if less, the aggregate unpaid amount of all Revolving Credit Advances made by Lender to the undersigned under the Credit Agreement. All capitalized terms used but not otherwise defined herein have the meanings given to them in the Credit Agreement or in Annex A thereto.

This Revolving Note is one of the Revolving Notes issued pursuant to that certain Credit Agreement dated as of October 3, 2016 by and among Borrowers, the other Persons named therein as Credit Parties, Agent, Lenders and the other Persons signatory thereto from time to time as Lenders (including all annexes, exhibits and schedules thereto, and as from time to time amended, restated, amended and restated, supplemented or otherwise modified, the “ Credit Agreement ”), and is entitled to the benefit and security of the Credit Agreement, the Security Agreement and all of the other Loan Documents referred to therein. Reference is hereby made to the Credit Agreement for a statement of all of the terms and conditions under which the Loans evidenced hereby are made and are to be repaid. The date and amount of each Revolving Credit Advance made by Lenders to Borrowers, the rates of interest applicable thereto and each payment made on account of the principal thereof, shall be recorded by Agent on its books; provided that the failure of Agent to make any such recordation shall not affect the obligations of Borrowers to make a payment when due of any amount owing under the Credit Agreement or this Revolving Note in respect of the Revolving Credit Advances made by Lender to Borrowers.

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

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

Upon and during the occurrence of any Event of Default, this Revolving Note may, in accordance with Section 6.3 of the Credit Agreement, and without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other legal requirement of any kind (all of which are hereby expressly waived by Borrowers), be declared, and immediately shall become, due and payable in accordance with the terms of such Section.

Time is of the essence of this Revolving Note.


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

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

 

GREEN PLAINS II LLC
By:  

/s/ Todd Becker

Name:  

Todd Becker

Title:  

President and Chief Executive Officer

Exhibit 10.1(d)

BORROWER JOINDER TO CREDIT AGREEMENT AND NOTES

This BORROWER JOINDER TO CREDIT AGREEMENT AND NOTES (this “ Agreement ”) dated as of this 3 rd day of October, 2016 is made by each of the parties appearing on the signature pages hereto (referred to herein collectively as “ New Borrowers ” and individually as a “ New Borrower ”), to and in favor of Maranon Capital, L.P., in its capacity as Agent under the Credit Agreement referred to below, and the Lenders (as defined in the Credit Agreement) party thereto.

WITNESSETH THAT:

WHEREAS, Green Plains II LLC, a Delaware limited liability company (the “ Existing Borrower Representative ”), the other Borrowers and Credit Parties party thereto (the “ Existing Credit Parties ”), Maranon Capital, L.P. (in its individual capacity, “Maranon”), as administrative agent (in such capacity, the “Agent”) for the lenders party thereto (collectively, the “Lenders”), and the Lenders entered into that certain Credit Agreement of even date herewith (the “ Credit Agreement ”; capitalized terms used herein and otherwise not defined shall have the meaning ascribed to such terms in the Credit Agreement)

WHEREAS, New Borrowers and Existing Credit Parties desire that each New Borrower be joined as a Borrower and a Credit Party to the Credit Agreement and all Notes, if any, executed by the Existing Borrower Representative;

NOW, THEREFORE, FOR VALUE RECEIVED, and in consideration of advances made or to be made, or credit accommodations given or to be given, to Borrowers by Lenders from time to time, each New Borrower and each Existing Credit Party hereby agree as follows:

1. Each New Borrower hereby joins in the execution of the Credit Agreement, the Notes, if any, and acknowledges and agrees that it is a “Borrower” and a “Credit Party” under the Credit Agreement and the Notes, if any, effective upon the date on which Agent shall have received a copy of this Agreement, duly executed by such New Borrower and Existing Credit Parties. All references in the Credit Agreement and the other Loan Documents to the terms “Borrower”, “Borrowers”, “Credit Party” or “Credit Parties” shall be deemed to include each New Borrower. Without limiting the generality of the foregoing, each New Borrower hereby (i) acknowledges that it is jointly and severally liable with each other Borrower for all of the Obligations and (ii) repeats and reaffirms all covenants, agreements, representations and warranties of Existing Credit Parties contained in the Credit Agreement including, but not limited to all schedules attached thereto, and the Notes, if any, and the other Loan Documents, to the extent applicable to such New Borrower.

2. Except as specifically modified hereby, all of the terms and conditions of the Credit Agreement and other Loan Documents shall remain unchanged and in full force and effect.

3. Each New Borrower agrees to execute and deliver such further instruments and documents and do such further acts and things as are required by any “Borrower” or “Credit Party” under the Credit Agreement.

4. No reference to this Agreement need be made in the Credit Agreement or in any other Loan Document or other document or instrument making reference to the same, any reference to Loan Documents in any of such to be deemed a reference to the Credit Agreement, or other Loan Documents, as applicable, as modified hereby.

 

1


5. The laws of the State of Illinois shall govern all matters arising out of, in connection with or relating to this Agreement, including, without limitation, its validity, interpretation, construction, performance and enforcement.

6. This Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart. Delivery of an executed signature page of this Agreement by facsimile transmission or Electronic Transmission shall be as effective as delivery of a manually executed counterpart hereof.

- Remainder of Page Intentionally Left Blank; Signature Page Follows -

 

2


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their duly authorized officers as of the day and year first above written.

 

NEW BORROWERS :
SCI INGREDIENTS HOLDINGS, INC.
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   Executive Chairman
FVC INTERMEDIATE HOLDINGS, INC.
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   Executive Chairman
FLEISCHMANN’S VINEGAR COMPANY, INC.
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   Executive Chairman
FVC HOUSTON, INC.
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   Executive Chairman

Borrower Joinder to Credit Agreement and Notes


ACKNOWLEDGED AND AGREED TO BY:
EXISTING CREDIT PARTIES :
GREEN PLAINS I LLC
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   President and Chief Executive Officer
GREEN PLAINS II LLC
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   President and Chief Executive Officer

Borrower Joinder to Credit Agreement and Notes


ACKNOWLEDGED AND AGREED TO BY:
AGENT :
MARANON CAPITAL, L.P
By:  

/s/ Gregory M. Long

Name:   Gregory M. Long
Title:   Managing Director

Borrower Joinder to Credit Agreement and Notes

Exhibit 10.1(e)

SECURITY AGREEMENT

This SECURITY AGREEMENT, dated as of October 3, 2016 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “ Security Agreement ”), by and among GREEN PLAINS I LLC, a Delaware limited liability company (“ Holdings ”), GREEN PLAINS II LLC, a Delaware limited liability company (“ GP II ”; together with Holdings and each other person who joins in the execution hereof as a “Grantor” are collectively referred to herein as “ Grantors ” and individually as a “ Grantor ”), and MARANON CAPITAL, L.P., a Delaware limited partnership, in its capacity as Agent for Lenders.

W I T N E S S T H :

WHEREAS, pursuant to that certain Credit Agreement dated as of the date hereof by and among Grantors, GP II, as Borrower Representative, Agent and Lenders (including all annexes, exhibits and schedules thereto, as from time to time amended, restated, amended and restated, supplemented or otherwise modified, the “ Credit Agreement ”), Lenders have agreed to make Loans and extend other financial accommodations to the Borrowers;

WHEREAS, in order to induce Agent and Lenders to enter into the Credit Agreement and other Loan Documents and to induce Lenders to make the Loans and extend other financial accommodations as provided for in the Credit Agreement, Grantors have agreed to grant a continuing Lien on the Collateral (as hereinafter defined) to secure the Obligations;

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

1. DEFINED TERMS .

(a) All capitalized terms used but not otherwise defined herein have the meanings given to them in the Credit Agreement or in Annex A thereto. All other terms contained in this Security Agreement, unless the context indicates otherwise, have the meanings provided for by the Code to the extent the same are used or defined therein.

(b) “Uniform Commercial Code jurisdiction” means any jurisdiction that has adopted all or substantially all of Article 9 as contained in the 2004 Official Text of the Uniform Commercial Code, as recommended by the National Conference of Commissioners on Uniform State Laws and the American Law Institute, together with any subsequent amendments or modifications to the Official Text.

2. GRANT OF LIEN .

(a) To secure the prompt and complete payment, performance and observance of all of the Obligations (specifically including, without limitation, each Grantor’s Obligations arising under the cross-guaranty provisions of Section 10 of the Credit Agreement), each Grantor hereby grants, assigns, conveys, pledges, hypothecates and collaterally transfers to Agent, for the benefit of Lenders and the other Persons to whom Obligations are owed (collectively, the “ Secured Parties ”), a Lien upon all of its right, title and interest in, to and under all of the following property, whether now owned by or owing to, or hereafter acquired by or arising in favor of such Grantor (including under any trade names, styles or derivations thereof), and whether owned or consigned by or to, or leased from or to, such Grantor, and regardless of where located (all of which being hereinafter collectively referred to as the “Collateral”):

(i) all Accounts;

 

1


(ii) all Chattel Paper;

(iii) all Documents;

(iv) all General Intangibles (including payment intangibles, Software, and all options, warrants and other rights to acquire additional shares of Stock of each Issuer, and the Stock underlying such rights);

(v) all Goods (including Inventory, Equipment and Fixtures);

(vi) all Instruments;

(vii) all Investment Property;

(viii) all Deposit Accounts, including the Disbursement Account, all lockboxes and lockbox accounts and all other bank accounts and all deposits therein;

(ix) all money, cash or cash equivalents;

(x) all Supporting Obligations and Letter of Credit Rights;

(xi) the Commercial Tort Claims set forth on Schedule V hereto; and

(xii) to the extent not otherwise included, all Proceeds, tort claims, insurance claims and other rights to payments not otherwise included in the foregoing and products of the foregoing and all accessions to, substitutions and replacements for, and rents and profits of, each of the foregoing.

(b) [Reserved]

(c) Notwithstanding the foregoing, the term “Collateral” shall exclude (i) pledges and security interests of third party joint ventures to the extent prohibited by law or prohibited by agreements containing anti-assignment clauses not overridden by the Uniform Commercial Code or other applicable law; (ii) any fee owned Real Estate with a fair market value of less than $500,000 and leasehold interests in Real; (iii) intent to use trademark applications; (iv) any lease, license or other agreement or any property subject to a purchase money security interest, capital lease obligation or similar arrangements, in each case, to the extent permitted under the Credit Documentation and to the extent that a grant of a security interest therein would violate or invalidate such lease, license or agreement, purchase money, capital lease or a similar arrangement or create a right of termination in favor of any other party thereto (other than a Borrower or a Guarantor or any Affiliate thereof) after giving effect to the applicable anti-assignment provisions of the Uniform Commercial Code or other applicable law, other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under applicable law notwithstanding such prohibition; (v) in the case of voting Stock issued by any Foreign Subsidiary or any Excluded Foreign Holding Company, the voting Stock in excess of 65% of such Stock; and (vi) those assets as to which Agent and the Borrowers mutually agree that the costs of obtaining such a security interest or perfection thereof are materially excessive in relation to the value to the Lenders of the security to be afforded thereby.

 

2


3. AGENT’S AND LENDERS’ RIGHTS: LIMITATIONS ON AGENT’S AND LENDERS’ OBLIGATIONS .

(a) It is expressly agreed by Grantors that, anything herein to the contrary notwithstanding, each Grantor shall remain liable under each of its contracts and each of its Licenses constituting Collateral to observe and perform all the conditions and obligations to be observed and performed by it thereunder. Neither Agent nor any Lender shall have any obligation or liability under any such contract or License by reason of or arising out of this Security Agreement or the granting herein of a Lien thereon or the receipt by Agent or any Lender of any payment relating to any contract or License pursuant hereto. Neither Agent nor any Lender shall be required or obligated in any manner to perform or fulfill any of the obligations of any Grantor under or pursuant to any such contract or License, or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any such contract or License, or to present or file any claims, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

(b) Agent may at any time after an Event of Default has occurred and is continuing, with notice to Borrower Representative provided concurrently or reasonably promptly thereafter (provided in no event shall such notice be a condition to Agent’s ability to exercise any such right or limit or nullify any such action taken by Agent in accordance with the following), notify Account Debtors and other Persons obligated on the Collateral that Agent has a security interest therein, and that payments shall be made directly to Agent. Once any such notice has been given to any Account Debtor or other Person obligated on the Collateral, so long as an Event of Default shall be continuing, the affected Grantor shall not give any contrary instructions to such Account Debtor or other Person without Agent’s prior written consent.

(c) Agent may (i) at any time after an Event of Default has occurred and is continuing, in Agent’s own name, in the name of a nominee of Agent or in the name of any Grantor or (ii) at any time, by engaging and in the name of an independent accounting firm (at Grantor’s expense), and, in each of the foregoing cases, with notice to Borrower Representative provided concurrently or reasonably promptly thereafter (provided in no event shall such notice be a condition to Agent’s ability to exercise any such right or limit or nullify any such action taken by Agent in accordance with the following), communicate (by mail, telephone, facsimile or otherwise) with Account Debtors, parties to contracts and obligors in respect of Instruments to verify with such Persons, to Agent’s satisfaction, the existence, amount, terms of, and any other matter relating to Accounts, Instruments, Chattel Paper and/or payment intangibles. To the extent that an Event of Default shall have occurred and be continuing, at Agent’s request, each Grantor, at its own expense, shall deliver to Agent the results of each physical verification, if any, which such Grantor may in its discretion have made, or caused any other Person to have made on its behalf, of all or any portion of its Inventory.

4. REPRESENTATIONS AND WARRANTIES . Each Grantor represents and warrants that:

(a) Each Grantor has rights in and the power to collaterally transfer each item of the Collateral upon which it purports to grant a Lien hereunder free and clear of any and all Liens other than Permitted Encumbrances.

 

3


(b) As of the Closing Date, no effective security agreement, financing statement, equivalent security or Lien instrument or continuation statement covering all or any part of the Collateral is on file or of record in any public office, except such as may have been filed (i) in favor of Agent pursuant to this Security Agreement or the other Loan Documents, and (ii) in connection with any other Permitted Encumbrances.

(c) This Security Agreement is effective to create a valid and continuing Lien on and, upon the filing of the appropriate financing statements listed on Schedule I hereto, a perfected Lien in favor of Agent, for the benefit of the Secured Parties, on the Collateral with respect to which a Lien may be perfected by filing of financing statements pursuant to the Code. Such Lien is prior to all other Liens, except Permitted Encumbrances that (i) would be prior to Liens in favor of Agent, for the benefit of the Secured Parties, as a matter of law or (ii) are otherwise permitted to be prior to Liens in favor of Agent for the benefit of the Secured Parties, pursuant to the terms of the Credit Agreement, and is enforceable as such as against any and all creditors of and purchasers from any Grantor (other than purchasers and lessees of Inventory in the ordinary course of business), subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and to general principles of equity, good faith and dealing.

(d) Schedule II hereto lists all Instruments, Letter of Credit Rights and Chattel Paper, in each case evidencing an amount in excess of $500,000, of each Grantor, as of the Closing Date. All action by any Grantor necessary to protect and perfect the Lien of Agent on each item set forth on Schedule II (including the delivery of all originals thereof to Agent and the legending of all Chattel Paper as required by Section 5(b) hereof) has been duly taken. The Lien of Agent, for the benefit of the Secured Parties, on the Collateral listed on Schedule II hereto is prior to all other Liens, except Permitted Encumbrances that (i) would be prior to the Liens in favor of Agent as a matter of law or (ii) are otherwise permitted to be prior to Liens in favor of Agent for the benefit of the Secured Parties, pursuant to the terms of the Credit Agreement, and is enforceable as such against any and all creditors of and purchasers from any Grantor, subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and to general principles of equity, good faith and dealing.

(e) Each Grantor’s name as it appears in official filings in the state of its incorporation or other organization, the type of entity of each Grantor (including corporation, partnership, limited partnership or limited liability company), organizational identification number issued by each Grantor’s state of incorporation or organization or a statement that no such number has been issued, each Grantor’s state of organization or incorporation, the location of each Grantor’s chief executive office, principal place of business, offices, all warehouses and premises where Collateral is stored or located, and the locations of its books and records concerning the Collateral, in each case as of the date hereof, are set forth on Schedule III hereto. Each Grantor has only one state of incorporation or organization.

(f) With respect to the Accounts, the amounts shown on all invoices and statements which may be delivered to the Agent are owing to such Grantor as indicated thereon and are not in any way contingent.

(g) As of the Closing Date, with respect to any Inventory owned by any Grantor (other than Inventory in transit, out for repair or out at trade shows or in possession of employees), such Inventory is located at one of the applicable Grantor’s locations set forth on Schedule III hereto.

(h) As of the Closing Date, no Grantor has any interest in, or title to, any Patent, Trademark or Copyright except as set forth in Schedule IV hereto. This Security Agreement is effective to create a valid and continuing Lien on and, upon filing of the Copyright Security Agreements with the United States Copyright Office and filing of the Patent Security Agreements and the Trademark Security

 

4


Agreements with the United State Patent and Trademark Office, perfected Liens in favor of Agent on each Grantor’s Patents, Trademarks and Copyrights and such perfected Liens are enforceable as such as against any and all creditors of and purchasers from any Grantor, subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and to general principles of equity, good faith and dealing. Upon filing of the Copyright Security Agreements with the United States Copyright Office and filing of the Patent Security Agreements and the Trademark Security Agreements with the United State Patent and Trademark Office and the filing of appropriate financing statements listed on Schedule I hereto, all action necessary to protect and perfect Agent’s Lien on each Grantor’s Patents, Trademarks or Copyrights shall have been duly taken, to the extent such Liens may be perfected by such filings.

5. COVENANTS . Each Grantor covenants and agrees with Agent, for the benefit of Lenders, that from and after the date of this Security Agreement and until the Termination Date:

(a) Further Assurances: Pledge of Instruments; Chattel Paper .

(i) At any time and from time to time, upon the written request of Agent and at the sole expense of Grantors, each Grantor shall promptly and duly execute and deliver any and all such further instruments and documents and take such further actions as Agent may deem reasonably necessary to obtain the full benefits of this Security Agreement and of the rights and powers herein granted, including filing any financing or continuation statements under the Code with respect to the Liens granted hereunder or under any other Loan Document as to those jurisdictions that are not Uniform Commercial Code jurisdictions.

(ii) Unless Agent shall otherwise consent in writing (which consent may be revoked), each Grantor shall deliver to Agent all Collateral consisting of negotiable Documents, certificated securities, Chattel Paper and Instruments, in each case evidencing an amount in excess of $500,000, (in each case, accompanied by stock powers, allonges or other instruments of transfer executed in blank) promptly after such Credit Party receives the same. If any Grantor retains possession of any Chattel Paper or Instruments, such Chattel Paper and Instruments shall be marked with the following legend: “This writing and the obligations evidenced or secured hereby are subject to the security interest of Maranon Capital, L.P., as Agent, for the benefit of Agent and certain Lenders.”

(iii) [Intentionally omitted.]

(iv) [Intentionally omitted.]

(v) [Intentionally omitted.]

(vi) Each Grantor that is or becomes the beneficiary of a letter of credit with a face amount in excess of $500,000 shall promptly, and in any event within two (2) Business Days after becoming a beneficiary, notify Agent thereof and, to the extent requested by Agent, shall use its commercially reasonable efforts to enter into a tri-party agreement with Agent and the issuer and/or confirmation bank with respect to such Letter-of-Credit Rights collaterally assigning such Letter-of-Credit Rights to Agent and directing all payments thereunder to an account designated by Agent, all in form and substance reasonably satisfactory to Agent.

(vii) Each Grantor shall take all steps necessary to grant the Agent control of any electronic chattel paper evidencing an amount in excess of $500,000 in accordance with the Code and all “transferable records” as defined in each of the Uniform Electronic Transactions Act and the Electronic Signatures in Global and National Commerce Act.

 

5


(viii) Each Grantor hereby irrevocably authorizes the Agent at any time and from time to time to file in any filing office in any Uniform Commercial Code jurisdiction any initial financing statements with respect to the Collateral and amendments thereto that (a) indicate the Collateral (i) as all assets of such Grantor whether now existing or hereafter arising or acquired, including all proceeds thereof or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Code or such jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail, and (b) contain any other information required by part 5 of Article 9 of the Code for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether such Grantor is an organization, the type of organization and any organization identification number issued to such Grantor, and (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates. Each Grantor agrees to furnish any such information to the Agent promptly upon request.

(ix) Each Grantor shall promptly, and in any event within five (5) Business Days after the same is acquired by it, notify Agent of any Commercial Tort Claim in excess of $500,000 acquired by it and, unless otherwise consented by Agent, such Grantor shall enter into a supplement to this Security Agreement, granting to Agent a Lien in such Commercial Tort Claim.

(b) Further Documentation . Such Grantor shall furnish to Agent from time to time statements and schedules further identifying and describing the Collateral and such other documents in connection with the Collateral as Agent may reasonably request, which requests shall be made no more frequently than once per Fiscal Quarter (with such statement to be delivered no earlier than concurrently with the Compliance Certificate for such quarter pursuant to Section 4.4(m) of the Credit Agreement).

(c) Covenants Regarding Patent, Trademark and Copyright Collateral .

(i) Grantors shall notify Agent promptly if they know or have reason to know that any application or registration relating to any Patent, Trademark or Copyright (now or hereafter existing) may become abandoned or dedicated, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court) regarding any Grantor’s ownership of any Patent, Trademark or Copyright, its right to register the same, or to keep and maintain the same, except, in each case, with respect to Intellectual Property disposition allowed pursuant to Section 3.7(g)(v) of the Credit Agreement.

(ii) In no event shall any Grantor, either itself or through any agent, employee, licensee or designee, file an application for the registration of any Patent, Trademark or Copyright with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency without giving Agent written notice thereof within thirty (30) days of such filing, and, upon request of Agent, Grantor shall execute and deliver any and all Patent Security Agreements, Copyright Security Agreements or Trademark Security Agreements as Agent may request to evidence Agent’s Lien on such Patent, Trademark or Copyright, and the General Intangibles of such Grantor relating thereto or represented thereby.

(iii) Grantors shall take all actions reasonably necessary or reasonably requested by Agent to maintain and pursue each application, to obtain the relevant registration

 

6


and to maintain the registration of each of the Patents, Trademarks and Copyrights (now or hereafter existing), including the filing of applications for renewal, affidavits of use, affidavits of noncontestability and opposition and interference and cancellation proceedings, unless such Grantor shall reasonably determine that such Patent, Trademark or Copyright is in no way material to the conduct of its business or operations, except, in each case, with respect to Intellectual Property disposition allowed pursuant to Section 3.7(g)(v) of the Credit Agreement.

(iv) In the event that a Grantor becomes aware that any of the Collateral consisting of Patents, Trademarks or Copyrights is infringed upon, or misappropriated or diluted by a third party, such Grantor shall comply with Section 5(a)(ix) of this Security Agreement. Such Grantor shall, unless such Grantor shall reasonably determine that such Collateral consisting of Patents, Trademarks or Copyrights is in no way material to the conduct of its business or operations, take such action as it reasonably deems appropriate under the circumstances in response thereto, including bringing suit or taking other actions to recover all damages thereof, and shall take such other actions as Agent shall deem appropriate under the circumstances to protect such Collateral consisting of Patents, Trademarks or Copyrights.

(d) [Reserved]

(e) [Reserved]

(f) [Reserved]

(g) [Reserved]

(h) [Reserved]

(i) [Reserved]

(j) [Reserved]

(k) [Reserved]

(l) Terminations; Amendments Not Authorized . Each Grantor acknowledges that, prior to the Termination Date, it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement filed to perfect Agent’s security interest in the Collateral to secure the Obligations as provided in this Agreement without the prior written consent of Agent and agrees that it will not do so without the prior written consent of Agent, subject to such Grantor’s rights under Section 9-509(d)(2) of the Code.

(m) Authorized Terminations . Agent will promptly deliver to each Grantor for filing or authorize each Grantor to prepare and file termination statements and releases in accordance with Section 9 of the Credit Agreement.

(n) Release of Collateral . If, at any time, any Grantor sells or otherwise disposes of any of its Collateral pursuant to and in accordance with the terms of the Credit Agreement, the Lien provided for hereunder with respect to such Collateral shall be automatically released and terminated, without delivery of any instrument or performance of any act by any party. Upon the Borrower Representative’s request and expense, Agent shall execute and deliver to the Borrower Representative such documentation as the Borrower Representative shall reasonably request to evidence such termination and release.

(o) Additional Grantors . Joinder . When required pursuant to Section 2.7 of the Credit Agreement, a Grantor shall cause any applicable wholly-owned Domestic Subsidiary that is not a Grantor to become a Grantor hereunder by executing and delivering to Agent a Joinder Agreement substantially in the form of Annex 1 hereto, whereupon such Subsidiary shall for all purposes be a party hereto and have the same rights, benefits and obligations as a Grantor party hereto on the Closing Date.

 

7


6. AGENT’S APPOINTMENT AS ATTORNEY-IN-FACT .

On the Closing Date, each Grantor shall execute and deliver to Agent a power of attorney (the “ Power of Attorney ”) substantially in the form attached hereto as Exhibit A . The power of attorney granted pursuant to the Power of Attorney is a power coupled with an interest and shall be irrevocable until the Termination Date. The powers conferred on Agent, for the benefit of the Secured Parties, under the Power of Attorney are solely to protect Agent’s interests (for the benefit of the Secured Parties) in the Collateral and shall not impose any duty upon Agent or any Lender to exercise any such powers. Agent agrees that (a) except for the powers granted in clause (h) of the Power of Attorney, it shall not exercise any power or authority granted under the Power of Attorney unless an Event of Default has occurred and is continuing, and (b) Agent shall account for any moneys or other property received by Agent in respect of any foreclosure on or disposition of Collateral pursuant to the Power of Attorney; provided that none of Agent or any Lender shall have any duty as to any Collateral, and Agent and Lenders shall be accountable only for amounts that they actually receive as a result of the exercise of such powers. NONE OF AGENT, LENDERS OR THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, MEMBERS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO ANY GRANTOR FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

7. REMEDIES:   RIGHTS UPON DEFAULT .

(a) In addition to all other rights and remedies granted to it under this Security Agreement, the Credit Agreement, the other Loan Documents, and under any other instrument or agreement securing, evidencing or relating to any of the Obligations, if any Event of Default shall have occurred and be continuing, Agent may, and, in any event, Agent at the direction of the Requisite Lenders shall, exercise all rights and remedies of a secured party under the Code. Without limiting the generality of the foregoing, each Grantor expressly agrees that in any such event Agent, without demand of performance or other demand, advertisement or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon such Grantor or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the Code and other applicable law), may forthwith enter upon the premises of such Grantor where any Collateral is located through self-help, without judicial process, without first obtaining a final judgment or giving such Grantor or any other Person notice and opportunity for a hearing on Agent’s claim or action and may collect, receive, assemble, process, appropriate and realize upon the Collateral, or any part thereof, and may forthwith sell, lease, license, assign, give an option or options to purchase, or sell or otherwise dispose of and deliver said Collateral (or contract to do so), or any part thereof, in one or more parcels at a public or private sale or sales, at any exchange at such prices as it may deem acceptable, for cash or on credit or for future delivery without assumption of any credit risk. Agent or any Lender shall have the right upon any such public sale or sales and, to the extent permitted by law, upon any such

 

8


private sale or sales, to purchase for the benefit of Agent and Lenders, the whole or any part of said Collateral so sold, free of any right or equity of redemption, which equity of redemption each Grantor hereby releases. Such sales may be adjourned and continued from time to time with or without notice. Agent shall have the right to conduct such sales on any Grantor’s premises or elsewhere and shall have the right to use any Grantor’s premises without charge for such time or times as Agent deems necessary or advisable.

If any Event of Default shall have occurred and be continuing, each Grantor further agrees, at Agent’s request and at the direction of the Requisite Lenders shall assemble the Collateral and make it available to Agent at a place or places designated by Agent which are reasonably convenient to Agent and such Grantor, whether at such Grantor’s premises or elsewhere. If an Event of Default is continuing, until Agent is able to effect a sale, lease, or other disposition of Collateral, Agent shall have the right to hold or use Collateral, or any part thereof, to the extent that it deems appropriate for the purpose of preserving Collateral or its value or for any other purpose deemed reasonably appropriate by Agent. Agent shall have no obligation to any Grantor to maintain or preserve the rights of such Grantor as against third parties with respect to Collateral while Collateral is in the possession of Agent. Maranon Agent may, when an Event of Default is continuing, if it so elects or if Agent is so directed by the Requisite Lenders, seek the appointment of a receiver or keeper to take possession of Collateral and to enforce any of Agent’s remedies (for the benefit of the Secured Parties), with respect to such appointment without prior notice or hearing as to such appointment. Agent shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale to the Obligations as provided in the Credit Agreement, and only after so paying over such net proceeds, and after the payment by Agent of any other amount required by any provision of law, need Agent account for the surplus, if any, to any Grantor. To the maximum extent permitted by applicable law, each Grantor waives all claims, damages, and demands against Agent or any Lender arising out of the repossession, retention or sale of the Collateral except such as arise solely out of the gross negligence or willful misconduct of Agent or such Lender as finally determined by a court of competent jurisdiction. Each Grantor agrees that ten (10) days prior notice by Agent of the time and place of any public sale or of the time after which a private sale may take place is reasonable notification of such matters. Grantors shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all outstanding Obligations, including any attorneys’ fees and other expenses incurred by Agent or any Lender to collect such deficiency.

(b) Except as otherwise specifically provided herein, to the maximum extent permitted by applicable law, each Grantor hereby waives presentment, demand, protest or any notice of the exercise by Agent of any of its rights and remedies with respect to the Collateral in accordance with the terms of this Security Agreement.

(c) To the extent that applicable law imposes duties on the Agent to exercise remedies in a commercially reasonable manner, each Grantor acknowledges and agrees that it is not commercially unreasonable for the Agent (i) to fail to incur expenses reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (ii) unless required by applicable law or agreement, to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Account Debtors or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against Account Debtors and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as the Grantor, for expressions of interest in acquiring all or any portion of such Collateral, (vii)

 

9


to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection or disposition of Collateral or to provide to the Agent a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by the Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Agent in the collection or disposition of any of the Collateral. Each Grantor acknowledges that the purpose of this Section 7(c) is to provide non-exhaustive indications of what actions or omissions by the Agent would not be commercially unreasonable in the Agent’s exercise of remedies against the Collateral and that other actions or omissions by the Agent shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 7(c). Without limitation upon the foregoing, nothing contained in this Section 7(c) shall be construed to grant any rights to any Grantor or to impose any duties on Agent that would not have been granted or imposed by this Security Agreement or by applicable law in the absence of this Section 7(c).

(d) Neither the Agent nor the Lenders shall be required to make any demand upon, or pursue or exhaust any of their rights or remedies against, any Grantor, any other obligor, guarantor, pledgor or any other Person with respect to the payment of the Obligations or to pursue or exhaust any of their rights or remedies with respect to any Collateral therefor or any direct or indirect guarantee thereof. Neither the Agent nor the Lenders shall be required to marshal the Collateral or any guarantee of the Obligations or to resort to the Collateral or any such guarantee in any particular order, and all of its and their rights hereunder or under any other Loan Document shall be cumulative. To the extent it may lawfully do so, each Grantor absolutely and irrevocably waives and relinquishes the benefit and advantage of, and covenants not to assert against the Agent or any Lender, any valuation, stay, appraisement, extension, redemption or similar laws and any and all rights or defenses it may have as a surety now or hereafter existing which, but for this provision, might be applicable to the sale of any Collateral made under the judgment, order or decree of any court, or privately under the power of sale conferred by this Security Agreement, or otherwise.

8. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY COLLATERAL . For the purpose of enabling Agent to exercise rights and remedies under Section 7 hereof (including, without limiting the terms of Section 7 hereof, in order to take possession of, hold, preserve, process, assemble, prepare for sale, market for sale, sell or otherwise dispose of Collateral) at such time as Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to Agent, for the benefit of the Secured Parties, an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to such Grantor) to use, license or sublicense any Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof.

9. LIMITATION ON AGENT’S AND LENDERS’ DUTY IN RESPECT OF COLLATERAL . Agent and each Lender shall use reasonable care with respect to the Collateral in its possession or under its control. Neither Agent nor any Lender shall have any other duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of Agent or such Lender, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto.

10. REINSTATEMENT . Until the Termination Date, this Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against any

 

10


Grantor for liquidation or reorganization, should any Grantor become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of any Grantor’s assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made. In the event that any payment on the account of the Obligations, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

11. NOTICES . Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other party, or whenever any of the parties desires to give and serve upon any other party any communication with respect to this Security Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and shall be given in the manner, and deemed received, as provided for in the Credit Agreement.

12. SEVERABILITY . Whenever possible, each provision of this Security Agreement shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision of this Security Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Security Agreement. This Security Agreement is to be read, construed and applied together with the Credit Agreement and the other Loan Documents which, taken together, set forth the complete understanding and agreement of Agent, Lenders and Grantors with respect to the matters referred to herein and therein.

13. NO WAIVER; CUMULATIVE REMEDIES . Neither Agent nor any Lender shall by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies hereunder, and no waiver shall be valid unless in writing, signed by Agent and then only to the extent therein set forth. A waiver by Agent of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which Agent would otherwise have had on any future occasion. No failure to exercise nor any delay in exercising on the part of Agent or any Lender, any right, power or privilege hereunder, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or future exercise thereof or the exercise of any other right, power or privilege. The rights and remedies hereunder provided are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided by law. None of the terms or provisions of this Security Agreement may be waived, altered, modified or amended except by an instrument in writing, duly executed by Agent, the Borrower Representative and the applicable Grantors.

14. LIMITATION BY LAW . Notwithstanding anything to the contrary herein, all rights, remedies and powers provided in this Security Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Security Agreement are intended to be subject to all applicable mandatory provisions of law that may be controlling and to be limited to the extent necessary so that they shall not be taken in violation of such applicable law or render this Security Agreement invalid, unenforceable, in whole or in part, or not entitled to be recorded, registered or filed under the provisions of any applicable law.

15. TERMINATION OF THIS SECURITY AGREEMENT . Subject to Section 10 hereof, this Security Agreement shall terminate upon the Termination Date.

 

11


16. SUCCESSORS AND ASSIGNS . This Security Agreement and all obligations of Grantors hereunder shall be binding upon the successors and assigns of each Grantor (including any debtor-in-possession on behalf of such Grantor) and shall, together with the rights and remedies of Agent, for the benefit of Agent and Lenders, hereunder, inure to the benefit of Agent and Lenders, all future holders of any instrument evidencing any of the Obligations and their respective successors and assigns. No sales of participations, other sales, assignments, transfers or other dispositions of any agreement governing or instrument evidencing the Obligations or any portion thereof or interest therein in accordance with the terms of the Credit Agreement shall in any manner impair the Lien granted to Agent, for the benefit of Agent and Lenders, hereunder. No Grantor may assign, sell, hypothecate or otherwise transfer any interest in or obligation under this Security Agreement.

17. COUNTERPARTS . This Security Agreement may be authenticated in any number of separate counterparts, each of which shall collectively and separately constitute one agreement. This Security Agreement may be authenticated by manual signature, facsimile or electronic means, all of which shall be equally valid.

18. GOVERNING LAW . THE LAWS OF THE STATE OF ILLINOIS SHALL GOVERN ALL MATTERS ARISING OUT OF, IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, INCLUDING ITS VALIDITY, INTERPRETATION, CONSTRUCTION, PERFORMANCE AND ENFORCEMENT (INCLUDING ANY CLAIMS SOUNDING IN CONTRACT OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF AND ANY DETERMINATIONS WITH RESPECT TO POST-JUDGMENT INTEREST). GRANTORS AND AGENT HEREBY CONSENT TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS LOCATED IN THE CITY OF CHICAGO, COOK COUNTY, OR OF THE UNITED STATES OF AMERICA SITTING IN THE NORTHERN DISTRICT OF ILLINOIS AND IRREVOCABLY AGREE THAT, SUBJECT TO AGENT’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS; PROVIDED, THAT AGENT AND GRANTORS ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF COOK COUNTY, AND, PROVIDED, FURTHER , NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH GRANTOR EXPRESSLY SUBMITS AND CONSENT TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH GRANTOR BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER REPRESENTATIVE, AT THE ADDRESS SET FORTH IN THE CREDIT AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.

19. WAIVER OF JURY TRIAL . EACH GRANTOR AND AGENT HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. EACH GRANTOR AND AGENT ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH GRANTOR AND AGENT WARRANT AND REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

 

12


20. SECTION TITLES . The Section titles contained in this Security Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

21. NO STRICT CONSTRUCTION . The parties hereto have participated jointly in the negotiation and drafting of this Security Agreement. In the event an ambiguity or question of intent or interpretation arises, this Security Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Security Agreement.

22. ADVICE OF COUNSEL . Each of the parties represents to each other party hereto that it has discussed this Security Agreement and, specifically, the provisions of Section 18 and Section 19 , with its counsel.

23. BENEFIT OF LENDERS . All Liens granted or contemplated hereby shall be for the benefit of the Secured Parties and all proceeds or payments realized from Collateral in accordance herewith shall be applied to the Obligations in accordance with the terms of the Credit Agreement.

24. JOINT AND SEVERAL . The obligations of the Grantors hereunder are the joint and several obligations of each Grantor.

[Remainder of Page Intentionally Left Blank; Signature Pages Follow]

 

13


IN WITNESS WHEREOF, each of the parties hereto has caused this Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

 

GRANTORS :
GREEN PLAINS I LLC
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   President and Chief Executive Officer
GREEN PLAINS II LLC
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   President and Chief Executive Officer

Security Agreement


MARANON CAPITAL, L.P. ,
as Agent
By:  

/s/ Gregory M. Long

Name:   Gregory M. Long
Title:   Managing Director

Security Agreement

Exhibit 10.1(f)

JOINDER AGREEMENT

This JOINDER AGREEMENT, dated as of October 3, 2016, is delivered pursuant to Section   5(o) of the Security Agreement, dated as of October 3, 2016 by and among GREEN PLAINS I LLC, a Delaware limited liability company, GREEN PLAINS II LLC, a Delaware limited liability company, and each other person who joined thereto as a Grantor, in favor of Maranon Capital, L.P., as Agent (as such agreement may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Security Agreement ”). Capitalized terms used herein without definition are used as defined in the Security Agreement.

By executing and delivering this Joinder Agreement, the undersigned, as provided in Section   5(n) of the Security Agreement, hereby becomes a party to the Security Agreement as a Grantor thereunder with the same force and effect as if originally named as a Grantor therein and, without limiting the generality of the foregoing, as collateral security for the prompt and complete payment, performance and observance when due (whether at stated maturity, by acceleration or otherwise) of all of the Obligations (specifically including, without limitation, all Obligations of the undersigned), hereby grants, conveys, pledges, hypothecates and collaterally transfers to Agent, for the benefit of the Secured Parties, a Lien on and security interest in, all of its right, title and interest in, to and under the Collateral of the undersigned and expressly assumes all obligations and liabilities of a Grantor thereunder. The undersigned hereby agrees to be bound as a Grantor for the purposes of the Security Agreement.

The information set forth in Annex 1-A is hereby added to the information set forth in and made part of Schedule I {Filing Jurisdictions}, Schedule II {Instruments, Chattel Paper and Letter of Credit Rights}, Schedule III {Schedule of Offices, etc.}, Schedule IV {Patents, Trademarks and Copyrights} and Schedule V {Commercial Tort Claims} to the Security Agreement. By acknowledging and agreeing to this Joinder Agreement, the undersigned hereby agrees that this Joinder Agreement may be attached to the Security Agreement and that the Collateral listed on Annex 1-A to this Joinder Amendment shall be and become part of the Collateral referred to in the Security Agreement and shall secure all of the Obligations (specifically including, without limitation, all Obligations of the undersigned).

The undersigned hereby represents and warrants that each of the representations and warranties contained in Section   4 of the Security Agreement applicable to it is true and correct on and as of the date hereof as if made on and as of such date.

The undersigned hereby also agrees to execute and deliver to Agent in conjunction with this Joinder a Power of Attorney in the form attached as Exhibit   A to the Security Agreement and any other documents required pursuant to Section   5(c) of the Security Agreement.

- Remainder of Page Intentionally Left Blank; Signature Page Follows -


IN WITNESS WHEREOF, the undersigned has caused this Joinder Agreement to be duly executed and delivered as of the date first above written.

 

SCI INGREDIENTS HOLDINGS, INC.
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   Executive Chairman
FVC INTERMEDIATE HOLDINGS, INC.
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   Executive Chairman
FLEISCHMANN’S VINEGAR COMPANY, INC.
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   Executive Chairman
FVC HOUSTON, INC.
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   Executive Chairman

Joinder Agreement


ACKNOWLEDGED AND AGREED
as of the date first above written:
MARANON CAPITAL, L.P. ,
as Agent
By:  

/s/ Gregory M. Long

Name:   Gregory M. Long
Title:   Managing Director

Joinder Agreement

Exhibit 10.1(g)

PLEDGE AGREEMENT

This PLEDGE AGREEMENT (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “ Agreement ”) is dated as of October 3, 2016 by and among GREEN PLAINS I LLC, a Delaware limited liability company (“ Holdings ”) and GREEN PLAINS II LLC, a Delaware limited liability company (“ GP II ”; GP II, together with Holdings and each other person who joins in the execution hereof as a “Pledgor”, collectively the “ Pledgors ” and each individually a “ Pledgor ”) and MARANON CAPITAL, L.P., as administrative agent under the Credit Agreement described below (in such capacity, “ Agent ”).

W I T N E S S E T H

WHEREAS, pursuant to that certain Credit Agreement (as the same may be amended, restated, amended and restated, modified or supplemented and in effect from time to time, the “ Credit Agreement ”) dated as of the date hereof among GP II, as the initial “Borrower” (and each other Person that becomes a party thereto as a “Borrower”, including, upon the consummation of the Closing Date Acquisition, SCI Ingredients Holdings, Inc., a Delaware corporation, FVC Intermediate Holdings, Inc., a Delaware corporation, Fleischmann’s Vinegar Company, Inc., a Delaware corporation, and FVC Houston, Inc., a Delaware corporation, collectively “ Borrowers ”), GP II, as Borrower Representative, Holdings and the other persons designated as “Credit Parties” on the signature pages thereof, Agent (as defined therein) and the financial institutions, funds and other investors who are or hereafter become parties thereto as lenders (collectively, the “ Lenders ”; Lenders, together with Agent and other holders of Obligations are hereinafter referred to collectively as the “ Secured Parties ”), the Secured Parties have agreed, subject to the satisfaction of certain conditions precedent, to make Loans and other financial accommodations available to the Borrowers;

WHEREAS, each Pledgor will derive substantial benefit and advantage from the Loans and other financial accommodations made and to be available to the Borrowers as set forth in the Credit Agreement and it will be to each Pledgor’s direct interest and economic benefit to assist Borrowers in procuring said Loans and other financial accommodations from the Secured Parties; and

WHEREAS, it is a condition precedent to the availability of such Loans and other financial accommodations under the Credit Agreement that each Pledgor shall have made the pledges and granted the security interests contemplated by this Agreement in order to secure the payment and performance of the Obligations.

NOW, THEREFORE, in consideration of the foregoing, and in order to induce the Secured Parties to make the Loans and other financial accommodations available to the Borrowers under the Credit Agreement, each Pledgor hereby agrees with Agent, for its benefit and the benefit of the other Secured Parties, as follows:

1. Definitions . Capitalized terms defined in the Credit Agreement and not otherwise defined herein shall have the respective meanings provided for in the Credit Agreement. References to “Sections” shall be to Sections of this Agreement unless otherwise specifically provided. For purposes hereof, “including” is not limiting and “or” is not exclusive. All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations.


2. Pledge . To secure the payment and performance of the Obligations, each Pledgor hereby pledges to Agent, for the benefit of the Secured Parties, and grants to Agent, for the benefit of the Secured Parties, a security interest in, any and all right, title and interest in and to the following (the “ Pledged Collateral ”):

(a) (i) all of the shares of Stock of each corporation, limited liability company, limited partnership or other legal entity (collectively, the “ Issuers ”) identified on Exhibit A attached hereto held by such Pledgor (the collateral referred to in clause (i) hereof together with such other additional shares of Stock pledged to Agent pursuant to the terms hereof are referred to collectively as, the “ Pledged Securities ”; provided that the Pledged Securities shall exclude (x) pledges and security interests of third party joint ventures to the extent prohibited by law or prohibited by agreements containing anti-assignment clauses not overridden by the Code or other applicable law; and (y) those assets as to which the Administrative Agent and the Borrowers mutually agree that the costs of obtaining such a security interest or perfection thereof are materially excessive in relation to the value to the Lenders of the security to be afforded thereby (collectively, the “ Excluded Securities ”)) and (ii) the certificates representing the Pledged Securities, if any, and all distributions, dividends (in the form of cash, securities or otherwise), in respect of or in exchange for any or all of the Pledged Securities;

(b) Subject to Section 2.7 of the Credit Agreement, all additional shares of the Stock of each Issuer at any time acquired by such Pledgor in any manner, and the certificates (if any) representing such additional Stock (and any such additional Stock, with respect to which such Pledgor shall execute and deliver to Agent a pledge supplement in the form of Exhibit B attached hereto (a “ Pledge Supplement ”), shall constitute part of the Pledged Securities under this Agreement), together with all distributions, dividends (in the form of cash, securities or otherwise), or otherwise distributed in respect of or in exchange for any or all of such additional shares, membership interests, partnership interests and other equity interests; and

(c) all proceeds of any of the foregoing.

3. Delivery of Pledged Collateral; UCC Financing Statements .

(a) All certificates or instruments (if any) representing or evidencing any Pledged Collateral shall be delivered to and held by or on behalf of Agent pursuant hereto and shall either be in suitable form for transfer by delivery, or shall be accompanied by duly executed undated customary instruments of transfer or assignment in blank.

(b) Unless represented by a certificate and such entity shall have opted-in to Article 8 of the Code and deemed such interest a “Security”, in each case, as of the Closing Date, no partnership interest or limited liability company interest of any Pledgor shall be represented by a certificate, shall have opted-into Article 8 of the Code and deemed such interest a “Security” and such Pledgor shall not permit any Issuer of such partnership interests or limited liability company interests to, at any time prior to the Termination Date (A) enter into any agreement with any Person, other than Agent, whereby such Issuer effectively delivers “control” of such partnership interests or limited liability company interests (as applicable) under the Code to such Person, or (B) allow such partnership interests or limited liability company interests (as applicable) to be evidenced by a certificate or such partnership or limited liability company to opt-into Article 8 of the Code and deemed such interest “Security”.

(c) Each Pledgor hereby authorizes Agent to file one or more financing or continuation statements pursuant to the Code, and amendments thereto (or similar documents required by any laws of any applicable jurisdiction), relating to all or any part of the Pledged Collateral without the signature of such Pledgor (to the extent such signature is required under the laws of any applicable jurisdiction).

 

2


4. Representations and Warranties . Each Pledgor represents and warrants to Agent (on behalf of the Secured Parties) as follows:

(a) Exhibit A attached hereto completely and accurately identifies, as of the Closing Date, (i) the issued and outstanding Stock of each Issuer held by such Pledgor and (ii) the percentage of such Pledgor’s ownership of the aggregate issued and outstanding Stock of each Issuer. Each Pledged Security has been duly and validly authorized and issued to such Pledgor and, if applicable, is fully paid and non-assessable.

(b) The delivery of the Pledged Securities to Agent pursuant to this Agreement (and, with respect to Pledged Securities consisting of membership interests or partnership interests, the filing in the appropriate filing office of a financing statement pursuant to the Code describing the same as collateral) is effective to create a valid and perfected first priority security interest, other than Permitted Encumbrances that have priority by operation of law, in the Pledged Collateral, free of any adverse claim, securing the payment of the Obligations. Subject only to the consummation of the delivery described in the immediately preceding sentence (and, if applicable, the filing of a financing statement described in such sentence, to the extent that such security interest can be perfected by the filing of such a financing statement), Agent has a valid and perfected first priority security interest, other than Permitted Encumbrances that have priority by operation of law, in the Pledged Collateral, securing the payment of the Obligations, and such security interest is entitled to all of the rights, priorities and benefits afforded by the Code or other applicable law as enacted in any relevant jurisdiction which relates to perfected security interests.

(c) This Agreement constitutes a valid and binding obligation of such Pledgor, enforceable against such Pledgor in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, or similar laws relating to the enforcement of creditors’ rights generally and by general equitable principles.

(d) No authorization, approval or other action by, and no notice to or filing with, any domestic or foreign governmental authority or regulatory body or consent of any other Person is required for (i) the pledge and grant of a security interest by such Pledgor pursuant to this Agreement or (ii) the execution, delivery or performance of this Agreement by Pledgor or (except, in each case, as may have been obtained or taken by or at the direction of such Pledgor or Agent and except as may be required in connection with any disposition of the Pledged Collateral by laws affecting the offering and sale of securities generally). Except for the filing of a financing statement pursuant to the Code in the case of any Pledged Securities consisting of membership interests or partnership interests, no authorization, approval or other action by, and no notice to or filing with, any domestic or foreign governmental authority or regulatory body or consent of any other Person is required for the perfection of Agent’s security interest in the Pledged Collateral (except as may have been obtained or taken by or at the direction of such Pledgor or Agent).

(e) None of the Pledged Securities constitutes margin stock, as defined in Regulation U of the Board of Governors of the Federal Reserve System, other than with respect to assets that constitute margin stock solely to the extent received by a Pledgor in connection with the final settlement or compromise of amounts owed by Account Debtors pursuant to the final order of a bankruptcy court or similar proceeding.

(f) [Reserved]

 

3


(g) Such Pledgor has caused each respective Issuer of uncertificated interests to record on its books and records that the Pledged Securities are subject to the pledge and security interest created hereby.

(h) [Reserved]

5. Covenants; Further Assurances .

(a) Each Pledgor shall, from time to time, at its expense, promptly execute and deliver all further instruments, documents and notices and take all further action that may be necessary, or that Agent may reasonably request, in order to create, perfect and protect any security interest granted or purported to be granted by this Agreement or, at anytime when an Event of Default is continuing, for Agent to exercise and enforce its rights and remedies hereunder.

(b) Each Pledgor shall furnish to Agent, from time to time upon Agent’s reasonable request, statements and schedules further identifying, updating, and describing the Pledged Collateral and such other information, reports and evidence concerning the Pledged Collateral as Agent may reasonably request, all in reasonable detail.

(c) Each Pledgor shall provide notice to Agent not later than five (5) Business Days’ after a change of its name, type of organization or jurisdiction of organization; provided, in no event shall any Pledgor change its jurisdiction of organization to any jurisdiction other than that of a state of the United States.

(d) [Reserved]

(e) [Reserved]

(f) If, while this Agreement is in effect, any Pledgor shall receive any shares of Stock of any Issuer, such Pledgor agrees, in each case, to accept the same as Agent’s agent and to hold the same in trust for Agent, and to deliver the same forthwith to Agent in the exact form received, with the endorsement of such Pledgor where necessary and/or with duly executed undated customary instruments of transfer or assignment, in blank, to be held by Agent, subject to the terms hereof, as part of the Pledged Securities. Pledgors shall promptly deliver to Agent a Pledge Supplement, duly executed by such Pledgor, with respect to such additional Stock. Pledgors hereby authorize Agent to attach each Pledge Supplement to this Agreement.

6. Voting Rights; Dividends; Etc .

(a) So long as no Event of Default has occurred and is then continuing:

Each Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the applicable Pledged Collateral, or any part thereof, for any purpose not inconsistent with the terms of this Agreement or the Credit Agreement; and

To the extent permitted under the Credit Agreement, each Pledgor shall be entitled to receive all distributions, dividends (in the form of cash, securities or otherwise), cash, instruments, chattel paper and other rights, property or proceeds and products from time to time received, receivable or otherwise distributed in respect of the Pledged Collateral.

 

4


(b) At any time that an Event of Default has occurred and is then continuing:

Agent shall have the right, at any time in its discretion and with notice to Borrower Representative provided concurrently or reasonably promptly thereafter (provided in no event shall such notice be a condition to Agent’s ability to exercise any such right or limit or nullify any such action taken by Agent in accordance with the following), to (i) transfer to Agent or Agent’s nominee, or to register in Agent’s name or in the name of such nominee, any Pledged Collateral and (ii) exchange any certificate or instrument representing or evidencing any Pledged Collateral for certificates or instruments of smaller or larger denominations.

All rights of Pledgors to exercise voting and other consensual rights in respect of the Pledged Collateral shall, upon delivery of notice to Borrower Representative provided concurrently or reasonably promptly thereafter (provided in no event shall such notice be a condition to Agent’s ability to exercise any such right or limit or nullify any such action taken by Agent in accordance with the following), immediately cease to be effective and all such voting and other consensual rights shall become vested in Agent or, as directed and appointed by Agent, Agent’s nominee, and Agent or such nominee shall thereupon have the sole right to exercise such voting and other consensual rights (including, without limitation, the right to vote in favor of, and to exchange any or all of the Pledged Collateral upon, the consolidation, recapitalization, merger or other reorganization with respect to an Issuer). In order to effect the foregoing, each Pledgor hereby grants to Agent, on behalf of Agent and any nominee of Agent, an irrevocable proxy to vote the Pledged Collateral; and

All rights of the Pledgors to receive and retain any distributions, dividends (in the form of cash, securities or otherwise), instruments, chattel paper or other property paid or payable with respect to any of the Pledged Collateral shall, with notice to Borrower Representative provided concurrently or reasonably promptly thereafter (provided in no event shall such notice be a condition to Agent’s ability to exercise any such right or limit or nullify any such action taken by Agent in accordance with the following), immediately cease and any such distributions, dividends (in the form of cash, securities or otherwise), instruments, chattel paper or other property paid or payable with respect to any of the Pledged Collateral shall, at the request of Agent, be paid to Agent (for application to the outstanding Obligations as set forth in the Credit Agreement). Any distributions, dividends (in the form of cash, securities or otherwise), instruments, chattel paper or other property paid or payable with respect to any of the Pledged Collateral and received by any Pledgor contrary to the provisions of this Agreement shall be received in trust for the benefit of Agent, shall be segregated from other assets (including, in the case of cash or cash equivalents, other funds) of such Pledgor and shall be forthwith paid to Agent (for application to the outstanding Obligations as set forth in the Credit Agreement, with respect to any cash or cash equivalents, or to be held by Agent as additional security for the Obligations, with respect to any other type of property).

7. Agent Appointed Attorney -in -Fact . Each Pledgor hereby irrevocably, until the Termination Date, appoints Agent, its nominee, and any other Person whom Agent may designate, as such Pledgor’s attorney-in-fact, with full power during the existence of any Event of Default, subject to any applicable law, to take any action (including the completion and presentation of any proxy) and to execute any instrument that is necessary for Agent to exercise its rights and remedies with respect to the Pledged Collateral in accordance with the terms of this Agreement, including, without limitation, to (i) receive, endorse and collect all instruments (or other property, as applicable) made payable to any Pledgor representing any distribution in respect of the Pledged Collateral or any part thereof; (ii) exercise the voting and other consensual rights pertaining to the Pledged Collateral; and (iii) sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Pledged Collateral as fully and

 

5


completely as though such attorney-in-fact was the absolute owner thereof for all purposes, and to do, at such attorney-in-fact’s option and such Pledgor’s expense, at any time or from time to time, all acts and things that such attorney-in-fact deems necessary to protect, preserve or realize upon the Pledged Collateral. Each Pledgor hereby ratifies and approves all acts of any such attorney-in-fact made or taken pursuant to this Section 7 and agrees that neither Agent nor any other Person designated as an attorney-in-fact by Agent shall be liable for any acts, omissions, errors of judgment or mistakes of fact or law (other than, and only to the extent of, such Person’s gross negligence or willful misconduct). The foregoing powers of attorney, being coupled with an interest, are irrevocable until the Termination Date.

8. Agent May Perform . If an Event of Default shall be continuing or result from any Pledgor’s failure to perform any agreement contained herein, Agent may itself perform, or cause performance of, such agreement, and any expenses of Agent incurred in connection therewith shall be payable in accordance with Section 1.3(e) of the Credit Agreement.

9. Limitation on Duty of Agent with Respect to the Pledged Collateral . Beyond the safe custody thereof, each Pledgor agrees that Agent shall have no duties concerning the custody and preservation of any Pledged Collateral in its possession (or in the possession of any agent of Agent) or with respect to any income thereon or the preservation of rights against prior parties or any other rights pertaining thereto. Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if the Pledged Collateral is accorded treatment substantially equal to that which it accords its own property. Agent shall not be liable or responsible for any loss or damage to any of the Pledged Collateral, or for any diminution in the value thereof, by reason of the act or omission of any agent selected by Agent in good faith, except to the extent such loss or damage is attributable solely to the gross negligence or willful misconduct of Agent or such agent of Agent as finally determined by a court of competent jurisdiction. It is expressly agreed that Agent shall have no responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Collateral, whether or not Agent has or is deemed to have knowledge of such matters, or (ii) taking any necessary steps to preserve rights against any parties with respect to any Pledged Collateral, but Agent may do so and all expenses incurred in connection therewith shall be payable by and for the sole account of the Pledgor.

10. Remedial Provisions .

(a) Upon the occurrence and during the continuance of an Event of Default, Maranon Agent and its attorneys may, and, in any event, Agent at the direction of the Requisite Lenders shall exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise available to it under any applicable law or any Loan Document, all the rights and remedies of a secured party under the Code (whether or not the Code applies to the affected Pledged Collateral), and Agent may also, without demand, advertisement or notice of any kind (other than the notice specified below relating to a public or private sale), sell the Pledged Collateral or any part thereof in one or more portions at one or more public or private sales or dispositions, at any exchange, broker’s board or at any of Agent’s offices (or those of Agent’s attorneys) or elsewhere, for cash, on credit, or for future delivery, at such price or prices and upon such other terms as Agent deems advisable. Each Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days’ notice to such Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification of such matters; provided , that no notification need be given to such Pledgor if it has authenticated after default a statement renouncing or modifying any right to notification of sale or other intended disposition. At any sale of the Pledged Collateral, if permitted by law, Agent may bid (which bid may be, in whole or in part, in the form of cancellation of indebtedness) for the purchase of the Pledged Collateral or any portion thereof

 

6


free of any right or equity of redemption in any Pledgor. Agent shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

(b) Each Pledgor recognizes that Agent may be unable to effect a public sale of all or part of the Pledged Collateral and may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obligated to agree, among other things, to acquire such Pledged Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Pledgors acknowledge that any such private sales may be at prices and on terms less favorable to the seller than if sold at public sales and agrees that such private sales shall be deemed to have been made in a commercially reasonable manner, and that Agent shall be under no obligation to delay a sale of any of the Pledged Collateral for the period of time necessary to permit the Issuer of such Pledged Collateral to register such securities for public sale under the Securities Act of 1933, or under any other applicable requirement of law, even if such Issuer would agree to do so. To the extent permitted by law, each Pledgor hereby specifically waives (and, as applicable, releases) any right or equity of redemption, and any right of stay or appraisal, which such Pledgor has or may have under any law now existing or hereafter enacted.

(c) Pledgors acknowledge that neither Agent nor any of the Lenders shall be liable for any failure or delay in realizing upon or collecting the Obligations, or any guaranty thereof or collateral security therefore; and Pledgors further acknowledge that neither Agent nor any Lender shall have any duty to take any action with respect thereto.

11. Remedies Cumulative . No failure on the part of Agent to exercise, and no delay in exercising and no course of dealing with respect to, any power, privilege or right under this Agreement or any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise by Agent of any power, privilege or right under this Agreement or any other Loan Document preclude any other or further exercise thereof or the exercise of any other such power, privilege or right. The powers, privileges and rights in this Agreement and the other Loan Documents are cumulative and are not exclusive of any other remedies provided by law.

12. Application of Proceeds . Upon the occurrence and during the continuance of an Event of Default, the proceeds of any sale or disposition of, or other realization upon, all or any part of the Pledged Collateral shall be applied in a manner consistent with the provisions of the Credit Agreement.

13. Termination of Lien; Release of Pledged Collateral . Agent agrees that upon the Termination Date or upon the effectiveness of any disposition of any Pledged Collateral pursuant to and in accordance with the terms of the Credit Agreement, the Lien provided for hereunder shall be automatically released and terminated and all rights to the Pledged Collateral shall revert and be returned to the Pledgor. Agent further agrees that upon the Termination Date or upon the effectiveness of any disposition of any Pledged Collateral pursuant to and in accordance with the terms of the Credit Agreement, Agent shall, at the expense of the Borrowers, execute and deliver to the Borrower Representative and the applicable Pledgors such documents as the Borrower Representative shall reasonably request to evidence such termination and release of Pledged Collateral, or any portion thereof, as applicable.

14. Changes in Writing . No amendment, modification, termination or waiver of any provision of this Agreement shall be effective unless the same shall be in writing and signed by Agent.

 

7


15. Notices . All notices, approvals, requests, demands and other communications hereunder shall be given in accordance with the notice provision of the Credit Agreement.

16. Limitation By Law . Notwithstanding anything to the contrary herein, all rights, remedies and powers provided in this Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Agreement are intended to be subject to all applicable mandatory provisions of law that may be controlling and to be limited to the extent necessary so that they shall not be taken in violation of such applicable law or render this Agreement invalid, unenforceable, in whole or in part, or not entitled to be recorded, registered or filed under the provisions of any applicable law.

17. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns, except that Pledgors may not assign their respective rights or obligations hereunder without the prior written consent of Agent. No sales of participations, other sales, assignments, transfers or other dispositions of any agreement governing or instrument evidencing the Obligations or any portion thereof or interest therein in accordance with the terms of the Credit Agreement shall in any manner impair the Lien granted to Agent, for the benefit of the Secured Parties, hereunder.

18. Waivers . In addition to, and not in lieu of, any other waivers herein, each Pledgor waives to the greatest extent it may lawfully do so, and agrees that it shall not at any time insist upon, plead or in any manner whatever claim or take the benefit or advantage of, any appraisal, valuation, stay, extension, marshalling of assets, redemption or similar law, or exemption, whether now or at any time hereafter in force, which may delay, prevent or otherwise affect the performance by such Pledgor of its obligations under, or the enforcement by Agent of, this Agreement. Each Pledgor hereby waives, to the maximum extent permitted by applicable law, diligence, presentment and demand (whether for nonpayment or protest or of acceptance, maturity, extension of time, change in nature or form of the Obligations, acceptance of further security, release of further security, composition or agreement arrived at as to the amount of, or the terms of the Obligations, notice of adverse change in any Person’s financial condition or any other fact which might materially increase the risk to such Pledgor) with respect to the exercise by Agent of any of its rights and remedies with respect to the Pledged Collateral in accordance with the terms of this Agreement.

19. GOVERNING LAW . THE LAWS OF THE STATE OF ILLINOIS SHALL GOVERN ALL MATTERS ARISING OUT OF, IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, INCLUDING ITS VALIDITY, INTERPRETATION, CONSTRUCTION, PERFORMANCE AND ENFORCEMENT (INCLUDING ANY CLAIMS SOUNDING IN CONTRACT OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF AND ANY DETERMINATIONS WITH RESPECT TO POST-JUDGMENT INTEREST). PLEDGORS AND AGENT HEREBY CONSENT TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS LOCATED IN THE CITY OF CHICAGO, COOK COUNTY, OR OF THE UNITED STATES OF AMERICA SITTING IN THE NORTHERN DISTRICT OF ILLINOIS AND IRREVOCABLY AGREE THAT, SUBJECT TO AGENT’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS; PROVIDED, THAT AGENT, PLEDGORS AND THE SECURED PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF COOK COUNTY, AND, PROVIDED, FURTHER , NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH

 

8


PLEDGOR EXPRESSLY SUBMITS AND CONSENT TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH PLEDGOR BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER REPRESENTATIVE, AT THE ADDRESS SET FORTH IN THE CREDIT AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.

20. WAIVER OF JURY TRIAL . EACH PLEDGOR AND AGENT HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. EACH PLEDGOR AND AGENT ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PLEDGOR AND AGENT WARRANTS AND REPRESENTS THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

21. Counterparts; Integration . This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Delivery of an executed signature page of this Agreement by facsimile transmission or electronic transmission shall be as effective as delivery of a manually executed counterpart hereof. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof.

22. Headings . Headings and captions used in this Agreement are included for convenience of reference and shall not be given any substantive effect.

25. Joint and Several . The obligations, covenants and agreements of each Pledgor hereunder shall be the joint and several obligations, covenants and agreements of such Pledgor.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

9


IN WITNESS HEREOF , each of the undersigned has executed this Agreement as of the date first written above.

 

PLEDGORS :
GREEN PLAINS I LLC , a Delaware limited liability company
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   President and Chief Executive Officer
GREEN PLAINS II LLC , a Delaware limited liability company
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   President and Chief Executive Officer

Pledge Agreement


AGENT :
MARANON CAPITAL, L.P.
By:  

/s/ Gregory M. Long

Name:   Gregory M. Long
Title:   Managing Director

Pledge Agreement


Exhibit A to Pledge Agreement

Identification of Pledged Securities

 

Issuer

  

Pledgor

   Class or
Other
Description
of Pledged
Securities
   Certificate
Number
(if
applicable)
  

Number of Pledged
Securities

  

Total Outstanding
Securities

   Percentage
of Total
Outstanding
Securities
Pledged
 

Green Plains II LLC

   Green Plains I LLC    Membership
Interests
   N/A    100% of Membership Interests    100% of Membership Interests      100

Exhibit 10.1(h)

PLEDGE SUPPLEMENT

This Pledge Supplement is dated as of October 3, 2016 and is provided in accordance with the terms of the Pledge Agreement referenced below. The undersigned directs that this Pledge Supplement be attached to the Pledge Agreement, dated as of October 3, 2016 by and among GREEN PLAINS I LLC, a Delaware limited liability company, GREEN PLAINS II LLC, a Delaware limited liability company, and each other person who joined thereto as a Pledgor, and Maranon Capital, L.P., in its capacity as Agent (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Pledge Agreement ”; capitalized terms used and not defined herein having the meanings assigned thereto in the Pledge Agreement) and that the equity interests listed below shall be deemed to be part of the Pledged Collateral.

The undersigned hereby certifies that the representations and warranties in Section 4 of the Pledge Agreement are true and correct, as to the shares and other property pledged pursuant to this Pledge Supplement. The undersigned further agrees that this Pledge Supplement may be attached to the Pledge Agreement and that the Pledged Securities listed on this Pledge Supplement are a part of the Pledged Securities referred to in the Pledge Agreement and shall secure all Obligations referred to in the Pledge Agreement.

 

Issuer

  

Class or
Other
Description of
Pledged
Securities

   Certificate
Number (if
applicable)
   Number of
Pledged
Securities
   Total
Outstanding
Securities
   Percentage of
Total
Outstanding
Securities
Pledged
 

SCI Ingredients Holdings, Inc.

   Common Stock    C-2    100    100      100

- REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS -


GREEN PLAINS II LLC

By

 

/s/ Todd Becker

Name:  

Todd Becker

Title:  

President and Chief Executive Officer

Exhibit 10.1(i)

JOINDER TO PLEDGE AGREEMENT

This JOINDER TO PLEDGE AGREEMENT (this “Agreement”) dated as of this 3 rd day of October, 2016 is made by the undersigned (individually, the “New Pledgor” and collectively, the “ New Pledgors ”), to and in favor of Maranon Capital, L.P., as Agent.

WITNESSETH THAT :

WHEREAS, Green Plains I LLC, a Delaware limited liability company (“ Holdings ”) and Green Plains II LLC, a Delaware limited liability company (“ GP II ”; GP II together with Holdings and each other person who joined in execution thereof as “ Pledgors ” and individually as a “ Pledgor ”), has entered into that certain Pledge Agreement dated as of October 3, 2016 (such Pledge Agreement, as the same may from time to time be amended, restated, amended and restated, supplemented or otherwise modified, including without limitation, pursuant to joinders thereto which add additional parties as “Pledgors” thereunder, being hereinafter referred to as the “ Pledge Agreement ”; capitalized terms used in this Agreement and not defined in this Agreement shall have the meanings ascribed to such terms in the Pledge Agreement) with Agent; and

WHEREAS, it is a condition to the continuing extension of Loans and other financial accommodations by the Lenders under the Credit Agreement that the New Pledgors be joined as party to the Pledge Agreement; and

WHEREAS, it is to the direct economic benefit of New Pledgors to execute and deliver this Agreement and be joined as party to the Pledge Agreement;

NOW, THEREFORE, FOR VALUE RECEIVED, and in consideration of advances made or to be made, or financial accommodations given or to be given, to the New Pledgors by Lenders from time to time, each New Pledgor hereby agrees as follows:

1. Each New Pledgor acknowledges and agrees that it is a “Pledgor” under the Pledge Agreement effective upon the date of such New Pledgor’s execution and delivery to Agent of this Agreement. Effective upon such delivery, all references in the Pledge Agreement and the other Loan Documents (with respect to the Loan Documents, to the extent the applicable reference relates to the Pledge Agreement) to the term “Pledgor” or “Pledgors” shall be deemed to include each New Pledgor. Without limiting the generality of the foregoing, each New Pledgor (i) hereby repeats and reaffirms all covenants, agreements, representations and warranties contained in the Pledge Agreement attributable to Pledgors and (ii) agrees to be bound by all of the terms and provisions of the Pledge Agreement as Pledgor thereunder.

2. Each New Pledgor hereby acknowledges and agrees that it is jointly and severally liable with all other Pledgors under the Pledge Agreement to the same extent and with the same force and effect as if such New Pledgor had originally been signatory to the Pledge Agreement as “Pledgor” thereunder and had originally executed the same in such capacity. Except as specifically modified hereby, all of the terms and conditions of the Pledge Agreement shall remain unchanged and in full force and effect.

3. Each New Pledgor agrees to execute and deliver such further instruments and documents and do such further acts and things as required by the terms of the Loan Documents in accordance with the terms thereof.

 

1


4. Each New Pledgor hereby consents to and affirms the grant of liens and security interests to and in favor of Agent pursuant to Section 2 of the Pledge Agreement and, in connection therewith, by its signature hereto, hereby pledges, assigns, hypothecates, collaterally transfers, delivers and grants to Agent, as Pledgee under the Pledge Agreement and for the benefit of the Secured Parties, subject to all terms and provisions of the Pledge Agreement, a lien on and security interest in and to all of such New Pledgor’s right, title and interest in and to all Pledged Collateral of such New Pledgor, including, without limitation, all Pledged Collateral described on Annex A attached hereto. The parties hereto hereby agree that Exhibit A to the Pledge Agreement shall be deemed supplemented to include the information set forth on Annex A attached hereto.

5. No reference to this Agreement need be made in the Pledge Agreement or other document or instrument (including any other Loan Document) making reference to the same, any reference to the Pledge Agreement in any of such to be deemed a reference to the Pledge Agreement as modified hereby. Either an original or a copy of this Agreement may be attached to the Pledge Agreement as an allonge thereto to evidence each New Pledgor’s acknowledgment of the full force and effect of this Agreement to bind such New Pledgor to the terms of the Pledge Agreement as “Pledgor” thereunder; provided failure to so affix this Agreement as an allonge to the Pledge Agreement shall in no way limit such New Pledgor’s agreement hereunder to be bound by all of the terms and provisions of the Pledge Agreement as “Pledgor” thereunder.

6. THE LAWS OF THE STATE OF ILLINOIS SHALL GOVERN ALL MATTERS ARISING OUT OF, IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, INCLUDING ITS VALIDITY, INTERPRETATION, CONSTRUCTION, PERFORMANCE AND ENFORCEMENT (INCLUDING ANY CLAIMS SOUNDING IN CONTRACT OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF AND ANY DETERMINATIONS WITH RESPECT TO POST-JUDGMENT INTEREST).

7. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Delivery of an executed signature page of this Agreement by facsimile transmission or electronic transmission shall be as effective as delivery of a manually executed counterpart hereof.

- REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS-

 

2


Witness the due execution hereof by the respective duly authorized officers of the undersigned as of the date first written above.

 

NEW PLEDGORS :
SCI INGREDIENTS HOLDINGS, INC.
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   Executive Chairman
FVC INTERMEDIATE HOLDINGS, INC.
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   Executive Chairman
FLEISCHMANN’S VINEGAR COMPANY, INC.
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   Executive Chairman
FVC HOUSTON, INC.
By:  

/s/ Todd Becker

Name:   Todd Becker
Title:   Executive Chairman

Joinder to Pledge Agreement (FVC)


Acknowledged and Agreed to:
MARANON CAPITAL, L.P. ,
as Agent
By:  

/s/ Gregory M. Long

Name:   Gregory M. Long
Title:   Managing Director

Joinder to Pledge Agreement (FVC)


ANNEX A

Identification of Pledged Securities

 

Issuer

  

Pledgor

   Class or
Other
Description
of Pledged
Securities
   Certificate
Number
(if
applicable)
   Number
of
Pledged
Securities
   Total
Outstanding
Securities
   Percentage
of Total
Outstanding
Securities
Pledged
 

FVC Intermediate Holdings, Inc.

   SCI Ingredients Holdings, Inc.    Common
Stock
   C-B-13    100    100      100

Fleischmann’s Vinegar Company, Inc.

   FVC Intermediate Holdings, Inc.    Common
Stock
   C-A-2    100    100      100

FVC Houston, Inc.

   Fleischmann’s Vinegar Company, Inc.    Common
Stock
   C-1    100    100      100

Exhibit 99.1

 

LOGO   FOR IMMEDIATE RELEASE

Green Plains Acquires Fleischmann’s Vinegar Company

Strategic Acquisition Broadens Company’s Position in Food & Feed Ingredients

 

    $250 million acquisition of the world’s largest manufacturer and marketer of food-grade industrial vinegar

 

    Adjacent business addition with significant growth opportunities

 

    Acquisition is immediately accretive to earnings and will leverage Green Plains’ supply chain and production platform

 

    Transaction closed October 3, 2016

OMAHA, Neb., Oct. 3, 2016 (GLOBE NEWSWIRE) — Green Plains Inc. (NASDAQ:GPRE) today announced that it has acquired SCI Ingredients Holdings, Inc. (SCI) and its wholly owned operating subsidiary Fleischmann’s Vinegar Company, Inc., the world’s largest manufacturer and marketer of food-grade industrial vinegar for $250 million, subject to certain post-closing adjustments. Green Plains entered into a definitive stock purchase agreement with the selling shareholders of SCI and is financing the transaction with $135 million of debt with the balance paid from cash on hand. A group of lenders led by Maranon Capital, L.P. provided a $130 million term loan and a $15 million revolving line of credit for this business unit.

“This strategic acquisition of Fleischmann’s Vinegar Company brings a new adjacent business that adds a consistent, growing earnings stream and expands our focus on the food and feed ingredients industry,” said Todd Becker, president and chief executive officer of Green Plains. “Our long term strategy is centered around growing our company to take advantage of the rising global demand for energy and food products. The Fleischmann’s Vinegar portfolio of products is well positioned beyond food ingredients, ranging from antimicrobials, animal feeds, herbicides and disinfectants to name a few.”

“As we approach scale as one of the largest ethanol producers in the world, we have the engine of a significant commodity-processing entity that can generate substantial cash flow, allowing us to enhance the food and feed ingredients side of our business,” added Becker. “The Fleischmann’s Vinegar acquisition will lead to further supply chain opportunities within Green Plains, as its largest production cost is food-grade ethanol. We will use our commodity and risk management expertise to expand our opportunities into consumer and industrial-based ethanol products.”

Fleischmann’s Vinegar is an all-natural specialty ingredients company serving a range of markets and end-use applications, including: food and beverage ingredients, antimicrobials, bio-herbicides and cleaning products across the food, beverage, agricultural, industrial and wholesale markets. Fleischmann’s Vinegar offers a broad portfolio of products that serve to embed the company as a critical component of its customers’ end products. Fleischmann’s Vinegar is the world’s largest manufacturer and marketer of food-grade industrial vinegar. Headquartered in Cerritos, California, the company has 112 employees and operates seven manufacturing facilities located in Alabama, California, Illinois, Maryland, Missouri, New York and Washington. The company also utilizes four distribution warehouses located in Oregon, California, Texas and Quebec, Canada.

“I am pleased to welcome Ken Simril, president and CEO of Fleischmann’s Vinegar Company, the management group and all of the employees to the Green Plains team,” continued Becker. “Under Ken’s leadership, Fleischmann’s Vinegar has achieved incredible innovation and growth over the last 10 years, focused on adapting its production capabilities to current on-trend consumer needs such as organic, non-GMO, beverages and varietals. Ken will lead our overall global food ingredient growth strategy as we continue to develop areas adjacent to our supply chain. The current management team will continue operating Fleischmann’s Vinegar as a standalone business, utilizing their many years of industry and management experience.”

—MORE—


XMS Capital Partners acted as financial advisor and Husch Blackwell LLP acted as legal advisor to Green Plains Inc. BMO Capital Markets acted as financial advisor and Goodwin Procter LLP acted as legal advisor to Stone Canyon Industries, LLC and the selling shareholders of SCI.

Investor Call

Green Plains will host a conference call and audio webcast today, Oct. 3, 2016, at 5 p.m. Eastern time (4 p.m. Central time). A slide presentation will be available to download prior to the call.

To listen to the call via the internet or download the slide presentation, go to http://investor.gpreinc.com/events.cfm . To listen by telephone, dial (888) 240-9352 in the U.S. or (913) 312-1453 if calling from outside the U.S. The access code is 7657575. The replay will also be available online at http://investor.gpreinc.com/events.cfm .

About Green Plains

Green Plains Inc. (NASDAQ: GPRE) is a diversified commodity-processing business with operations related to ethanol, distillers grains and corn oil production; grain handling and storage; a cattle feedlot; and commodity marketing and distribution services. The company is the second largest consolidated owner of ethanol production facilities in the world, with 17 dry mill plants, producing nearly 1.5 billion gallons of ethanol at full capacity. Green Plains, through its wholly owned subsidiary Fleischmann’s Vinegar Company, provides specialized ingredient solutions for leading food and feed manufacturers. Green Plains owns a 62.5% limited partner interest and a 2.0% general partner interest in Green Plains Partners LP (NASDAQ: GPP), a fee-based Delaware limited partnership that provides fuel storage and transportation services by owning, operating, developing and acquiring ethanol and fuel storage tanks, terminals, transportation assets and other related assets and businesses.

Forward-Looking Statements

This news release includes forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such statements are based on management’s current expectations, which are subject to various factors, risks and uncertainties that may cause actual results, outcomes, timing and performance to differ materially from those expressed or implied. As a result of these risks, uncertainties and other factors, actual results could differ materially from those referred to in the forward-looking statements. Factors that may cause actual results to differ from the forward-looking statements contained in this release include, but are not limited to, risks relating to Green Plains’ ability to realize the anticipated benefits of the Fleischmann’s Vinegar Company acquisition. Additional information concerning factors that could cause actual results to differ materially is contained in the company’s filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2015, and subsequent filings. The reader is cautioned not to rely on these forward-looking statements. All forward-looking statements are based on information currently available to Green Plains, and Green Plains assumes no obligation to update any such forward-looking statements, except as required by law.

Contact: Jim Stark, Vice President — Investor and Media Relations, Green Plains Inc. (402) 884-8700

###

SLIDE 1

Acquisition of Fleischmann’s Vinegar Company October 3, 2016 Exhibit 99.2


SLIDE 2

This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Statements that do not relate strictly to historical or current facts are forward-looking, and include words such as “anticipates,” “believes,” “estimates,” “expects,” “goal,” “intends,” “plans,” “potential,” “predicts,” “should,” “will,” and other words with similar meanings in connection with future operating or financial performance of Green Plains Inc. (NASDAQ: GPRE) and its subsidiaries, including Green Plains Partners LP (NASDAQ: GPP). Such statements are based on the management's current expectations, which are subject to various factors, risks and uncertainties that may cause actual results, outcomes, timing and performance to differ materially from those expressed or implied. Green Plains may experience significant fluctuations in future operating results due to a number of economic conditions, including competition in the industries in which Green Plains operates; commodity market risks, including those resulting from current weather conditions; financial market risks; counterparty risks; risks associated with changes to federal policy or regulation. As a result of these risks, uncertainties and other factors, actual results could differ materially from those referred to in the forward-looking statements. Factors that may cause actual results to differ from the forward-looking statements contained in this presentation include, but are not limited to, risks relating to Green Plains’ ability to realize the anticipated benefits of the Fleischmann’s Vinegar Company acquisition and other risks detailed in Green Plains' reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2015, and subsequent filings with the SEC. Forward-looking statements do not guarantee future performance or results nor are they necessarily accurate indicators that such performance or results will be achieved. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Green Plains is not obligated to update, and does not intend to update, its forward-looking statements at any time unless it is required by applicable securities laws. Forward-Looking Statements


SLIDE 3

Purchase price of $250 million, including working capital, subject to certain post closing adjustments Transaction closed October 3, 2016 Management team will continue to run the business Acquired on a forward sub-10x EBITDA multiple before any synergies Acquisition will be immediately accretive to earnings Financed with $135 million of debt with the balance paid from cash on hand A group of lenders led by Maranon Capital L.P. provided a $130 million term loan and a $15 million revolving line of credit for this business unit Summary of Fleischmann’s Vinegar Transaction Fleischmann’s Vinegar Company (FVC)


SLIDE 4

Summary of Fleischmann’s Vinegar Acquisition STRATEGIC RATIONALE Takes advantage of our platform and expertise – the primary raw material in vinegar production is food-grade ethanol Consistent with our strategy for moving into adjacencies that leverage our capabilities Broadens our reach into food ingredient markets, building higher-margin production capabilities, adding value to our end products Opportunity for ongoing consolidation of a relatively fragmented vinegar market Support expansion into developing markets outside of food; pharma, food preservation, agriculture etc. VALUE PROPOSITION Stable and predictable earnings stream Non-cyclical end markets allow the Company to maintain stable margins in volatile commodity markets Above average growth capability for highly valued on-trend “clean-label” products (organic, non-GMO all natural, etc.) Nationwide supplier of concentrated and specialty vinegars Consistent earnings growth rate, well above industry average due to scale and scope of operation


SLIDE 5

FVC pioneered the development of concentrated, acetic acid-based liquid ingredients, which provide significant benefits to its customers: Unique specialty applications beyond food Reduced freight costs and increased storage capacity for customers Increased customer loyalty due to the need to recalibrate production processes Typically provide a higher contribution margin Requires less on-site storage capacity Fleischmann’s Markets and Products Concentrated Production Capabilities Specialty Ingredients Solutions Product Development, Innovation, and Broad Manufacturing Footprint position Fleischmann's as an ideal Natural Ingredients Platform FVC provides specialized ingredient solutions that help forge strong, long-term relationships with leading food manufacturers Matching customers’ flavor and color profile often creates exclusive and long-lasting customer relationships Customers are reluctant to switch suppliers due to fear of changing the taste profile of their food products FVC has significantly expanded its specialty product portfolio since 2009 FVC offers the industry’s most comprehensive selection of vinegar ingredient products Full range of vinegar ingredient products, including white distilled vinegar in a variety of grain strengths and numerous specialty vinegars FVC offers USDA-certified, all-natural organic products and a growing non-GMO portfolio, well-positioned to meet the demands of emerging consumer preferences Products range from traditional use of vinegars, including condiments, sauces, and dressings, to pet food and care products, meats, soups, and frozen entrees and non-food cleaning applications


SLIDE 6

Product Portfolio Overview White Distilled Vinegar Varietals & Other Vinegars Applications Types < 200 Grain 200 Grain 300 Grain Balsamic White wine Other Red Wine Cider White Distilled Vinegar (“WDV”) WDV WDV Balsamic Kosher Balsamic Honey Balsamic White Balsamic Fig Balsamic Red Wine Kosher Red Wine Organic Red Wine White Wine Kosher White Wine Cider Organic Cider Organic Apple Cider Rice Wine Malt Special Blends Cooking Wines Crystal Select Corn Sugar Champagne Tea Non-GMO Concentrated All Other Food Uses Dressing / Sauces Agriculture Agriculture Organic Organic Organic Antimicrobial Varietals & Cooking Wines Custom Food Ingredients Beverage


SLIDE 7

Corporate Offices Economic Service Radius Distribution Warehouse Extensive National Footprint with Unique Competitive Advantage Service Advantages Ability to serve large and small customers Seamless service throughout North America Operational Advantages Large volume concentrated production Manufacturing efficiency Technical production expertise Efficiency Advantages Broad-based sourcing capabilities Sophisticated and in-depth knowledge of commodity markets Utilizes modern financial tools to hedge volatility and risk


SLIDE 8

Fleischmann’s Vinegar Customer Base FVC has built a reputation for product quality and excellence for nearly 100 years Company benefits from a customer base comprised of major food industry participants Leading branded food companies Private label food manufacturers Companies serving the foodservice channel Longstanding relationships with a diverse, blue-chip base of approximately 1,000 customers Average relationship with its top ten customers exceeds 25 years Numerous relationships extend 40+ years Top tier customers continue to grow brands and thus vinegar consumption. FVC’s national production and sourcing capabilities allow it to meet demand, even for large customers of organic products Dedicated R&D team, with extensive experience in food science and agriculture FVC can develop innovative products and technology to meet the needs of customers for this specialized end-market


SLIDE 9

Varietal Innovation Antimicrobial Applications Health and Wellness Agriculture Products FVC has unique capabilities to meet the exacting demands of vinegar customers’ evolving markets and flavor profiles FVC seeing growing interest, demand and adoption of antimicrobial technology, shelf-life extensions without usage of chemical preservatives Increasing health conscious consumers wanting organic, non–GMO, and natural ingredients driven by rising consumer awareness Increased technical sophistication within agricultural industry with rising environmental awareness by farmers, producers, industrials and households Green Plains has an extensive network of relationships with food and ingredients companies to help FVC expand its potential reach to new customers and markets The ability to produce industrial ethanol will help FVC address this market; relationships with packers and protein producers that need non-chemical solutions for the market As a supplier, we can provide quality, consistency, reliability and traceability of supply to meet a growing demand market; EHS experience can assist FVC in meeting the rigors of increasing food regulations Our extensive knowledge of Ag markets, including key relationships with some of the largest seed, meat protein and technology providers. Helps FVC drive demand for an expanded line of Ag focused products Addressing Emerging Market Trends As part of a core strategic theme in food and food ingredients, we see Fleishmann’s as an expandable platform with a number of significant growth opportunities with a growing set of customers in evolving global markets Green Plains Value Add Fleischmann’s Vinegar Position Market Opportunities


SLIDE 10

Defining New Growth Markets – Selected Case Studies Antimicrobials Agriculture (Bio-Feed / Herbicides) FVC worked with an existing customer in 2006 to help develop an all-natural antimicrobial liquid ingredient for the ready-to-eat meat and poultry market All-natural designation required by the USDA to accomplish clean-label requirement FVC’s long-standing relationships and experience working with regulatory agencies resulted in the Company’s approval as an all-natural product in 2008 Sales of the Company’s antimicrobial product have expanded beyond the initial customer to several other industry clients FVC’s liquid additives were observed by farmers as aiding in digestion of cattle feed in 2010 Simultaneously, FVCs concentrated products were reported by the USDA as being a cost effective bio-herbicide compared to traditional chemical-based herbicides FVC received EPA approval for its bio-herbicide product, Vinagreen, after two years of development Distribution and awareness have increased as consumers seek to buy more foods that are free from harmful pesticides and hormones Export Distributor Export distributor approached Fleischmann’s Vinegar to supply concentrated product internationally Increased production capacity at its Baltimore plant to meet increased volume Developed specialized “tote stacking” for sea freight vessels In process of expanding the export relationship in other regions Continue to be the exclusive supplier of concentrate for the export distributor


SLIDE 11

Long Term Strategic Vision Remains on Track Asset & Supply Management Rail Fleet Development Trucking Dry Hauling Terminal Operations Energy Agriculture Natural Gas Food & Feed Ingredients Feed Ingredients Supply Logistics Gas Transportation Midstream Trucking Liquid Hauling Blending & Distribution Food Additives Bulk Grain Storage/Service Grain Supply & Marketing Corn/Flour Milling Container Export Fuels and Fuel Services Value Added Refining Potential Expansion Vegetable Oils Protein Development Cattle Feedlots Meat Proteins Vegetable Meal Proteins Value Chain Opportunities Soy Processing Other Proteins Value Added Processing Fuels Marketing and Blending We are investing in business adjacencies where we have a “core competency,” can gain competitive advantage, and have natural synergies to what we do Food Ingredients Doing Currently Developing Gas Storage In a very measured way, we continue to move into key areas that leverage our supply chain, production platform and expertise to serve our food and fuel customers on a global footprint Natural Gas Procurement Ethanol Production Corn Oil Production DDGs Production Downstream Marketing Strategic Themes Leverage core competencies into adjacencies and downstream to value-added markets, products and services with more attractive margins Reduce cyclical risks through vertical integration; de-risk the platform by managing margin structure shifts up and down the value chain Reduce inherent volatility by integrating complimentary but more predictable revenue streams into the platform (e.g., MLP, value-added milling, food ingredients, soy crushing, etc.)


SLIDE 12

FLEISCHAMANN’S VINEGAR PLATFORM GROWH OPPORTUNITIES (1) Soy Processing Multiple Partners working with us to develop a facility; leveraging processing capabilities and supply network for lower cost production Industrial B-grade Alcohol With York, our B-grade capability brings new market opportunity with pharmaceuticals, detergents, household cleaners, toiletries and cosmetics, etc. Food-Grade Ethanol Potential to supply Fleischmann’s and other customers with reliable, predictable and traceable supply of food-grade ethanol Vegetable Oils We are making 340 million pounds of corn oil; beyond feed, we are refining for human consumption Co-location Opportunities Leverage supply chain, infrastructure, protein production and nutrient rich waste streams Meat, Poultry & Seafood Preservatives Market Size: $694mm Breads Preservatives Market Size: $549mm Beverage Preservatives Market Size: $634mm Household Disinfectants Market Size: $1.3bn Industrial Disinfectants Market Size: $1.1bn FVC’s growth opportunity spawns from its innovation and customers relationships across a number of on-trend markets U.S. Organic Vinegar, Organic Beverages and Condiments Market Size ~$7.2bn Developing innovative ways of extracting additional value from the capital we’ve deployed consistent with our capabilities and strategy LEVERAGING SCOPE AND SCALE FOR FOOD AND FEED DDG Protein Production We produce 4.1 million tons of livestock feed of which 15% is exported out of the U.S. Expanding Our Presence in Food & Feed Ingredients (1) Source: Industry research reports, IRI data for the food, drug, and mass channels for the 52 weeks ended 08-May-16 and market data per IRI.


SLIDE 13

Transaction Highlights Attractive Industry Dynamics ü Value-Added Ingredients Provider ü Proven Track Record of Innovation ü Significant Scale ü Attractive and Recession Resistant Financial Profile ü Tangible Growth Opportunities ü Longstanding, Diverse, Blue-Chip Customer Base ü Fleischmann’s is a food ingredients company with a focus on natural, good-for-you products in the Food & Agriculture sector


SLIDE 14

Green Plains Inc. | NASDAQ: GPRE | www.gpreinc.com Green Plains Partners LP | NASDAQ: GPP | www.greenplainspartners.com Questions & Answers