Beacon Roofing Supply, Inc.
BEACON ROOFING SUPPLY INC (Form: 8-K, Received: 08/24/2017 06:28:52)

 

 

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): August 24, 2017

 

 

BEACON ROOFING SUPPLY, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Delaware   000-50924   36-4173371

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

505 Huntmar Park Drive, Suite 300  
Herndon, VA   20170
(Address of Principal Executive Offices)   (Zip Code)

(571) 323-3939

(Registrant’s telephone number, including area code)

 

 

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

 

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

 

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

 

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

 

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

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

Emerging growth company ☐

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

 

 

 


Item 1.01 Entry Into a Material Definitive Agreement

Stock Purchase Agreement

On August 24, 2017, Beacon Roofing Supply, Inc. (“Beacon” or the “Company”) entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Oldcastle, Inc., as parent (the “Parent”), and Oldcastle Distribution, Inc., as seller (the “Seller”), pursuant to which the Company will acquire for approximately $2.625 billion in cash (subject to a working capital and certain other adjustments as set forth in the Stock Purchase Agreement) (the “Purchase Price”) all of the issued and outstanding shares of capital stock (collectively, the “Shares”) of Allied Building Products Corp., a New Jersey corporation, and Kapalama Kilgos Acquisition Corp., a Delaware corporation (together, “Allied”), on the terms and subject to the conditions set forth in the Stock Purchase Agreement (the “Allied Acquisition”). Allied is engaged in the distribution of roofing materials, drywall and ceiling tile and related accessories in the United States and is a wholly-owned subsidiary of CRH plc, a public limited company organized under the laws of the Republic of Ireland.

The Stock Purchase Agreement contains customary representations and warranties, covenants, agreements and indemnities. The closing of the Allied Acquisition, which is currently expected to occur on January 2, 2018, is subject to customary closing conditions, including (i) the expiration or early termination of the waiting period applicable to the consummation of the Allied Acquisition under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), (ii) the absence of any law restraining, enjoining or prohibiting the Allied Acquisition, (iii) the accuracy of the other party’s representations and warranties (subject to customary materiality qualifiers) and (iv) the other party’s compliance with its covenants and agreements contained in the Stock Purchase Agreement (subject to customary materiality qualifiers). The closing of the Allied Acquisition is not subject to any financing contingency.

The Stock Purchase Agreement contains certain termination rights of the parties, including if (i) the closing of the Allied Acquisition has not occurred on or prior to February 28, 2018 (subject to extension to August 31, 2018 in the event all closing conditions in the Stock Purchase Agreement have been satisfied or waived as of February 28, 2018 (or, with respect to those conditions which, by their nature can only be satisfied at the closing of the Allied Acquisition, would reasonably be capable of satisfaction as of such date), other than the expiration or termination of the waiting period under the HSR Act) and (ii) the other party has breached its representations, warranties or covenants, subject to certain negotiated materiality qualifications and cure periods as set forth in the Stock Purchase Agreement. Upon termination of the Stock Purchase Agreement under specified circumstances, the Company will be required to pay Allied a termination fee of $85 million in cash.

Under the terms of the Stock Purchase Agreement, the Purchase Price will be reduced by the aggregate amount of certain financing fees, costs and accrued interest incurred by the Company in connection with its debt financing for the period beginning on November 1, 2017 and continuing through the earlier of the closing of the Allied Acquisition and February 28, 2018 (provided that such date will be extended until such time as certain required financial information has been delivered to the Company).

Pursuant to the terms of a restrictive covenant agreement to be entered into at closing of the Allied Acquisition by and among Parent, Seller and Beacon, Parent and Seller have each agreed that neither Parent nor Seller nor any of their respective affiliates will (i) engage in the distribution of roofing materials, certain interior building materials, and other building products, or own, manage, operate, control, or participate in the ownership, management, operation, or control of any business that distributes such products, in each case in the United States or Canada for a period of four years following the closing of the Allied Acquisition or (ii) solicit Beacon employees for a period of five years following the closing of the Allied Acquisition, each subject to certain exceptions.

This summary of the Stock Purchase Agreement is qualified in its entirety by reference to the full text of the Stock Purchase Agreement, a copy of which is attached as Exhibit 2.1 to this Current Report on Form 8-K and incorporated into this Item 1.01 by reference.

The Stock Purchase Agreement has been included in this report to provide investors with information regarding its terms and conditions. It is not intended to provide any other factual information about Beacon, the Seller or Allied or any of their respective subsidiaries. The representations, warranties and covenants contained in the Stock Purchase Agreement were made only for purposes of that agreement and as of specific dates, were solely for the benefit of the parties to the Stock Purchase Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Stock Purchase Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Stock Purchase Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Beacon, the Seller or Allied or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Stock Purchase Agreement, which subsequent information may or may not be fully reflected in Beacon’s public disclosures.


Investment Agreement and Preferred Stock Terms

On August 24, 2017, in connection with the execution of the Stock Purchase Agreement, the Company entered into an investment agreement (the “Investment Agreement”) with CD&R Boulder Holdings, L.P. (the “CD&R Stockholder” and, together with its affiliated funds, the “CD&R Investors”) and Clayton, Dubilier & Rice Fund IX, L.P. (“CD&R Fund”) (solely for the purpose of limited provisions therein) for the purchase of shares of Series A Cumulative Convertible Participating Preferred Stock, par value $0.01 per share (the “Preferred Stock”) in order to partially finance the aggregate Purchase Price (the “Investment”). The Preferred Stock will be convertible perpetual participating preferred stock of the Company, with an initial conversion price of $41.26 per share, and accrue dividends at a rate of 6.0% per annum (payable in cash or in-kind, as described further below). Pursuant to the Investment Agreement, the CD&R Stockholder agrees that it will purchase such number of shares of Preferred Stock (at the Company’s election) with an aggregate liquidation preference of between $400 million and $498 million, at a purchase price of $1,000 per share. The aggregate number of shares of common stock into which the Preferred Stock may be converted will be limited to 12,071,937 shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), which represents 19.99% of the total number of shares of Common Stock issued and outstanding immediately prior to the execution of the Investment Agreement (the “Conversion Cap”) unless and until such time, if any, that a Stockholder Approval (defined below) is obtained. CD&R Stockholder and CD&R Fund are entities affiliated with the investment firm Clayton, Dubilier & Rice LLC.

The consummation of the transactions contemplated by the Investment Agreement is conditioned upon the substantially concurrent closing of the Allied Acquisition and upon certain customary closing conditions, including (i) the expiration or termination of all applicable waiting periods under the HSR Act, (ii) the absence of any law or governmental authority restraining, enjoining or prohibiting the transactions contemplated by the Investment Agreement, (iii) the accuracy of the other party’s representations and warranties (subject to customary materiality qualifiers), (iv) the other party’s compliance with its covenants and agreements contained in the Investment Agreement (subject to customary materiality qualifiers) and (v) there not having occurred a “Company Material Adverse Effect” (as defined in the Investment Agreement) since the date of the Investment Agreement, each subject to certain exceptions. The issuance of the Preferred Stock to the CD&R Stockholder pursuant to the Investment Agreement is not subject to approval by Beacon stockholders.

The Preferred Stock will rank senior to the shares of Common Stock with respect to dividend rights and with respect to rights on liquidation, winding-up and dissolution. Holders of shares of Preferred Stock will be entitled to cumulative dividends which are payable quarterly in arrears, will accrue and accumulate on a daily basis from the issuance date of such shares and are payable at Beacon’s option in cash or in additional shares of Preferred Stock, at an annual rate of 6.00%  per annum , subject to adjustment as described below and as set forth in the Preferred Certificate of Designations, Preferences and Rights of Cumulative Convertible Participating Preferred Stock, a form of which is attached as Exhibit A to the Investment Agreement (the “Certificate of Designations”). Holders of Preferred Stock are also entitled to receive certain dividends declared or paid on the Common Stock on an as-converted basis. No dividends will be payable to holders of shares of Common Stock unless the full dividends are paid at the same time to the holders of the Preferred Stock.

Upon the occurrence of a “Triggering Event” (which shall include, but is not limited to, (i) Beacon’s failure to pay dividends when required, (ii) Beacon’s failure to comply with its obligations under the Certificate of Designations to reserve and keep available for issuance the requisite number of shares of Preferred Stock, (iii) Beacon taking specified restricted actions without the consent of a majority of the holders of the Preferred Stock, (iv) Beacon’s failure to repurchase Preferred Stock following a change of control when required pursuant to the Certificate of Designations, (v) Beacon’s violation of certain restrictions set forth in the Certificate of Designations with respect to the payment of dividends declared or paid on the Common Stock, (vi) Beacon’s failure to maintain the listing of the Common Stock on the Nasdaq Stock Market or another national securities exchange, or (vii) Beacon paying the requisite dividends in additional shares of Preferred Stock in excess of an amount that would cause the aggregate number of shares of Common Stock issued or issuable upon conversion of all shares of outstanding and previously converted Preferred Stock (disregarding the Conversion Cap limitation described below) to exceed the Conversion Cap unless and until Stockholder Approval (defined below) is obtained), the dividend rate shall become 9.00%  per annum for so long as the Triggering Event remains in effect. At any time during which a Triggering Event is occurring, without the consent of the holders representing at least a majority of the then-issued and outstanding shares of Preferred Stock, no dividends will be declared or paid or set apart for payment, or other distributions declared or made, upon any junior equity securities, including the Common Stock.

Holders of the Preferred Stock will have the right, at any time and from time to time, at their option, to convert any or all of its the Preferred Stock, in whole or in part (subject to the Conversion Cap limitation described below), into fully paid and non-assessable shares of Common Stock at the then-effective conversion price, initially equal to $41.26 and subject to adjustment as set forth in the Certificate of Designations and described below. The number of shares of Common Stock into which a share of Preferred Stock will be convertible will be determined by dividing the sum of $1,000 plus accrued and unpaid dividends on such share of Preferred Stock (the “Liquidation Value”) in effect at the time of conversion, by the conversion price in effect at the time of conversion. Beacon may, at its option, require conversion of all (but not less than all) of the outstanding shares of Preferred Stock to Common Stock if at any time the Common Stock trading price exceeds 200% of the then-effective conversion price for at least 75 out of 90 trailing trading days.


The conversion price is subject to customary anti-dilution adjustments, including in the event of any stock split, stock dividend, recapitalization or similar event. Subject to certain limitations, the Company has the option to redeem the outstanding shares of Preferred Stock, in whole or in part, for an aggregate redemption price equal to two times the Liquidation Value of the shares being redeemed (except that dividends accrued since the most recent preferred dividend payment date will instead be calculated at one times the amount of such current period accrued dividends), provided that any redemption in part must be for no less than one-third of the total number of shares of Preferred Stock initially issued to the CD&R Stockholder upon closing of the Investment and must not result in the CD&R Stockholder’s beneficial ownership of the Common Stock (on an as-converted basis) falling below 5% of the Common Stock outstanding as of such redemption date (on an as-converted basis). In the event of a change of control of Beacon (as defined in the Certificate of Designations), each holder of shares of Preferred Stock will have the option, pursuant to the terms of the Certificate of Designations, to require Beacon to purchase all or any portion of its shares of Preferred Stock at a price per share equal to the Liquidation Value of such shares.

Pursuant to the terms of the Certificate of Designations, unless and until approval of the Company’s stockholders is obtained for the issuance of securities convertible into Common Stock in excess of the Conversion Cap (a “Stockholder Approval”), the Preferred Stock beneficially owned by the holders of Preferred Stock and their respective affiliates may not be converted to the extent that, after giving effect to such conversion, the shares of Common Stock issued upon such conversion (when taken together with shares of Common Stock previously issued upon conversion of shares of Preferred Stock) would represent, in the aggregate, shares of Common Stock in excess of the Conversion Cap.

Holders of the Preferred Stock generally will be entitled to vote with the holders of the shares of Common Stock on all matters submitted for a vote of holders of shares of Common Stock (voting together with the holders of shares of Common Stock as one class) and will be entitled to a number of votes equal to the number of votes to which shares of Common Stock issuable upon conversion of such shares of Preferred Stock would have been entitled (without any limitations based on the Company’s authorized but unissued shares of Common Stock) if such shares of Common Stock had been outstanding at the time of the applicable vote and related record date. For purposes of such calculation, the Conversion Cap limitation described above will be taken into account such that the aggregate votes of the Preferred Stock (taken together with the votes of shares of Common Stock previously issued upon conversion of the Preferred Stock) will not exceed 19.99% of the aggregate voting power of the Common Stock outstanding immediately prior to the execution of the Investment Agreement (unless and until Stockholder Approval is obtained).

Additionally, certain matters will require the approval of the holders of a majority of the outstanding Preferred Stock, voting as a separate class, including (1) amendments or modifications to the Company’s charter, by-laws or the Certificate of Designations that would adversely affect the Preferred Stock, (2) authorization, creation, increase in the authorized amount of, or issuance of any class or series of senior or parity equity securities or any security convertible into, or exchangeable or exercisable for, shares of senior or parity equity securities, (3) any increase or decrease in the authorized number of preferred shares or the issuance of additional preferred shares, (4) amendments to the Company’s debt agreements that would, among other things, adversely affect the Company’s ability to pay dividends on the Preferred Stock, subject to certain exceptions, and (5) adoption of any plan of liquidation, dissolution, or winding up of the Company or filing of any voluntary petition for bankruptcy, receivership or any similar proceeding.

The Investment Agreement provides that, upon closing of the Investment, the CD&R Investors (i) may designate two Beacon directors, for so long as the CD&R Investors hold Preferred Stock (or shares of Common Stock issued upon conversion of the Preferred Stock) representing at least 50% of the shares of Preferred Stock initially issued to the CD&R Stockholder at closing, and (ii) may designate one Beacon director, for so long as the CD&R Investors hold Preferred Stock (or shares of Common Stock issued upon conversion of the Preferred Stock) representing less than 50%, but at least 25%, of such Beacon shares so received by the CD&R Stockholder.

For so long as the CD&R Investors hold Preferred Stock (or shares of Common Stock issued upon conversion of the Preferred Stock) representing at least 25% of the shares of Preferred Stock initially issued to the CD&R Stockholder at closing of the Investment, the CD&R Investors will have customary preemptive rights to participate in future equity and equity-linked issuances by the Company up to the extent necessary to maintain its pro rata ownership percentage in the Company, subject to customary exceptions.

The Investment Agreement further provides that, for the longer of 24 months post-closing and six months after date on which the CD&R Investors no longer have a designee on the Beacon board of directors (the “Standstill Period”), subject to customary exceptions and an exception for additional Common Stock to the extent acquired solely from cash dividends received on the Preferred Stock, the CD&R Investors will be subject to customary standstill restrictions. In addition, during the Standstill Period, neither the CD&R Investors nor any of their affiliated funds or any of its or their respective affiliates will solicit senior management-level employees or engage in a business primarily engaged in the distribution of roofing materials, drywall or ceiling tile and related accessories in the United States, in each case, subject to certain exceptions.

The CD&R Stockholder is restricted from transferring to a non-affiliate the Preferred Stock or any shares of Common Stock received upon conversion thereof until the 18-month anniversary of the closing of the Investment. Upon transfer of any Preferred Stock to a person


not affiliated with the CD&R Investors, such Preferred Stock must be converted into shares of Common Stock at the time of transfer. The CD&R Investors are also restricted at any time from transferring the shares of Preferred Stock initially issued to the CD&R Stockholder or any shares of Common Stock received upon conversion thereof to certain prohibited transferees, including persons who beneficially own five percent (5%) or more of any class or series of equity investors of the Company, certain specified competitors and certain potential activist investors, subject to specified exceptions.

The foregoing description of the Investment Agreement (and the form of Certificate of Designations included as Exhibit A thereto) and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Investment Agreement (and the form of Certificate of Designations included as Exhibit A thereto) attached hereto as Exhibit 10.1 and the exhibits thereto, which is incorporated herein by reference.

Registration Rights Agreement

In connection with the Investment Agreement, upon consummation of the Allied Acquisition, Beacon will enter into a registration rights agreement, a form of which is attached as Exhibit B to the Investment Agreement (the “Registration Rights Agreement”) with the CD&R Stockholder, pursuant to which Beacon will agree to file a resale shelf registration statement for the benefit of the CD&R Stockholder and its permitted transferees (collectively, the “CD&R Stockholders”) promptly upon the expiration of the 18-month post-closing lock-up period, and pursuant to which the CD&R Stockholders may make up to four requests (only two of which may require a customary “road show” or other substantial marketing efforts) that Beacon conduct an underwritten offering of, or register, shares of Common Stock received upon conversion of Preferred Stock held by the CD&R Stockholders and eligible for registration thereunder (“registrable securities”). The CD&R Stockholders also have customary piggyback registration rights and may request that Beacon include their registrable securities in certain future registration statements or offerings of Common Stock by Beacon. These registration rights will terminate when the CD&R Stockholders no longer own any registrable securities or shares of Preferred Stock.

The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the form of Registration Rights Agreement, a copy of which is attached as Exhibit B to the Investment Agreement attached hereto as Exhibit 10.1, and is incorporated herein by reference.

Debt Commitment Letter

On August 24, 2017, in connection with the execution of the Stock Purchase Agreement, Beacon entered into a commitment letter (the “Debt Commitment Letter”) with Wells Fargo Bank, National Association, WF Investment Holdings, LLC, Wells Fargo Securities, LLC and Citigroup Global Markets Inc. (collectively, the “Commitment Parties”).

The Debt Commitment Letter provides that the Commitment Parties have agreed to provide Beacon with debt financing in connection with the Allied Acquisition comprised of the following sources:

 

    a seven-year senior secured term loan “B” facility in an aggregate principal amount of up to $970.0 million;

 

    a senior secured asset-based revolving credit facility in an aggregate principal amount of $1.3 billion; and

 

    a senior unsecured bridge facility in an aggregate principal amount of up to $1.3 billion, which $1.3 billion amount will be reduced by the amount of certain securities offerings consummated on or prior to the closing of the Allied Acquisition in accordance with the terms of the Commitment Letter.

The funding of the debt financing pursuant to the Debt Commitment Letter is contingent on the satisfaction of certain conditions set forth therein, including Allied not having suffered a Material Adverse Effect (as defined in the Stock Purchase Agreement) since December 31, 2016 and there not being any effect, development, event, change, state of facts, circumstance or occurrence in existence that has had or is reasonably expected to have a Material Adverse Effect, negotiation and execution of the definitive debt financing agreements contemplated by the Debt Commitment Letter, the Allied Acquisition being consummated substantially contemporaneously with the initial funding of the debt financing and the Company having received gross proceeds from certain securities offerings in an amount not less than $498 million. The proceeds from the debt financing, together with the proceeds from the issuance of shares of Preferred Stock and any other equity offerings consummated on or prior to the closing date of the Allied Acquisition, will be used by Beacon to finance the Purchase Price, to refinance certain existing indebtedness of Beacon and repay existing Allied indebtedness and to pay related fees and expenses. Citigroup Global Markets Inc. is providing certain advisory and other services to Beacon in connection with the Allied Acquisition.

The foregoing description of the Debt Commitment Letter does not purport to be complete and is qualified in its entirety by reference to the Debt Commitment Letter, a copy of which is filed as Exhibit 10.2 hereto and is incorporated herein by reference.


Item 3.02 Unregistered Sales of Equity Securities

The information contained in Item 1.01 under the heading “Investment Agreement and Preferred Stock Terms” is incorporated herein by reference.

As described in Item 1.01, under the terms of the Investment Agreement, Beacon has agreed to issue up to 498,000 shares of Preferred Stock upon closing of the Allied Acquisition and the Investment in a private placement of such securities to the CD&R Stockholder in order to partially finance the Purchase Price. This issuance and sale will be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act. CD&R Stockholder has represented that it is an “accredited investor” as defined in Rule 501 under the Securities Act and that the Preferred Stock is being acquired for investment purposes and not with a view to or for sale in connection with any distribution thereof, and appropriate legends will be affixed to the securities.

 

Item 7.01 Regulation FD Disclosure

A copy of the press release announcing, among other things, Beacon’s execution of the Stock Purchase Agreement is attached hereto as Exhibit 99.1 and is incorporated herein by reference. A copy of the investor presentation that will be used by Beacon in making presentations to certain existing and potential stockholders of the Company with respect to the Allied Acquisition is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

The forward-looking statements contained in this Form 8-K (including the exhibits thereto) are qualified by the information contained under the heading “Forward-Looking Statements” in the press release furnished as Exhibit 99.1 hereto.

The information in this Item 7.01 (including the exhibits hereto) is being furnished under “Item 7.01. Regulation FD Disclosure.” Such information (including the exhibits hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

The following exhibits are filed herewith:

Exhibit Index

 

Exhibit #

  

Description

2.1    Stock Purchase Agreement, dated as of August 24, 2017, by and among Beacon Roofing Supply, Inc., as Buyer, Oldcastle, Inc., as Parent, and Oldcastle Distribution, Inc., as Seller.
10.1    Investment Agreement, dated as of August 24, 2017, by and among Beacon Roofing Supply, Inc., CD&R Boulder Holdings, L.P. and Clayton, Dubilier & Rice Fund IX, L.P. (solely for purposes of Sections 4.13 and 4.14 thereof), including the form of Certificate of Designations and Registration Rights Agreement attached as Exhibits A and B thereto, respectively.
10.2    Debt Commitment Letter, dated as of August 24, 2017, by and among Wells Fargo Bank, National Association, WF Investment Holdings, LLC, Wells Fargo Securities, LLC, Citigroup Global Markets Inc. and Beacon Roofing Supply, Inc.
99.1    Press Release of Beacon Roofing Supply, Inc., dated August 24, 2017.
99.2    Investor Presentation of Beacon Roofing Supply, Inc. relating to the Allied Acquisition.

 

  The schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The registrant agrees to furnish supplementally a copy of all omitted schedules to the Securities and Exchange Commission upon its request.


SIGNATURES

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

 

    BEACON ROOFING SUPPLY, INC.
Date: August 24, 2017     By:   /s/ JOSEPH M. NOWICKI
      JOSEPH M. NOWICKI
      Executive Vice President & Chief Financial Officer

EXHIBIT 2.1

EXECUTION VERSION

STOCK PURCHASE AGREEMENT

BY AND AMONG

BEACON ROOFING SUPPLY, INC.

(as Buyer)

OLDCASTLE, INC.

(as Parent)

AND

OLDCASTLE DISTRIBUTION, INC.

(as Seller)

DATED AS OF August 24, 2017


TABLE OF CONTENTS

 

             PAGE  

ARTICLE 1 CERTAIN DEFINITIONS

     1  
 

Section 1.1

  Certain Definitions      1  
 

Section 1.2

  Construction; Interpretation      18  

ARTICLE 2 PURCHASE AND SALE OF THE SHARES

     19  
 

Section 2.1

  Purchase and Sale      19  
 

Section 2.2

  Purchase Price      19  
 

Section 2.3

  Closing      19  
 

Section 2.4

  Final Calculation of Purchase Price      21  

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER

     23  
 

Section 3.1

  Organization and Qualification      23  
 

Section 3.2

  Authority      23  
 

Section 3.3

  Enforceability      23  
 

Section 3.4

  No Conflicts; Consents and Approvals      23  
 

Section 3.5

  Capitalization of the Group Companies      24  
 

Section 3.6

  Financial Statements      24  
 

Section 3.7

  Absence of Undisclosed Liabilities      25  
 

Section 3.8

  Real Property; Assets      25  
 

Section 3.9

  Sufficiency of Assets      26  
 

Section 3.10

  Contracts      26  
 

Section 3.11

  Employee Benefit Plans      28  
 

Section 3.12

  Intellectual Property      31  
 

Section 3.13

  Permits; Compliance with Law      32  
 

Section 3.14

  Litigation      32  
 

Section 3.15

  Taxes      33  
 

Section 3.16

  Absence of Changes      34  
 

Section 3.17

  Environmental Matters      35  
 

Section 3.18

  Affiliate Transactions      36  
 

Section 3.19

  Insurance      36  
 

Section 3.20

  Employees      37  
 

Section 3.21

  Bank Accounts      38  
 

Section 3.22

  No Other Representations or Warranties; Disclaimer      38  
 

Section 3.23

  Brokers      39  
 

Section 3.24

  Certain Payments      39  
 

Section 3.25

  Significant Suppliers and Customers      39  

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER

     39  
 

Section 4.1

  Organization      40  
 

Section 4.2

  Authority      40  
 

Section 4.3

  Enforceability      40  

 

i


 

Section 4.4

  No Conflicts; Consents and Approvals      40  
 

Section 4.5

  Purchase for Investment      40  

 

 

Section 4.6

  Litigation      41  
 

Section 4.7

  No Other Representation or Warranties; Disclaimer      41  
 

Section 4.8

  Brokers      41  
 

Section 4.9

  Financing      41  
 

Section 4.10

  Solvency      43  

ARTICLE 5 COVENANTS

     43  
 

Section 5.1

  Conduct of Business of the Parties      43  
 

Section 5.2

  Payment of Transfer Taxes      47  
 

Section 5.3

  Access to Information      47  
 

Section 5.4

  Delivery of Title Documents      48  
 

Section 5.5

  Transfer of Certain Assets, Books and Records      48  
 

Section 5.6

  Efforts to Consummate      50  
 

Section 5.7

  Directors and Officers      53  
 

Section 5.8

  Exclusive Dealing      54  
 

Section 5.9

  Employee Benefits Matters      54  
 

Section 5.10

  Public Announcements      57  
 

Section 5.11

  Tax Matters      57  
 

Section 5.12

  Notification      57  
 

Section 5.13

  Related Party Agreements      58  
 

Section 5.14

  Financing      58  
 

Section 5.15

  Financing Cooperation      60  
 

Section 5.16

  Release      64  
 

Section 5.17

  Further Assurances      65  
 

Section 5.18

  Continuing Insurance Coverage      65  
ARTICLE 6 CONDITIONS TO CLOSING      65  
 

Section 6.1

  Conditions to the Obligations of the Parties      65  
 

Section 6.2

  Other Conditions to the Obligations of Buyer      66  
 

Section 6.3

  Other Conditions to the Obligations of Seller      66  
ARTICLE 7 TERMINATION      67  
 

Section 7.1

  Termination      67  
 

Section 7.2

  Effect of Termination      68  
 

Section 7.3

  Termination Fee      68  
ARTICLE 8 TAX MATTERS      70  
 

Section 8.1

  Liability and Indemnification for Taxes      70  
 

Section 8.2

  Tax Returns of the Group Companies      70  
 

Section 8.3

  Tax Proceedings      71  
 

Section 8.4

  Activities After the Closing      72  
 

Section 8.5

  Cooperation      72  
 

Section 8.6

  Election Under Section 338(h)(10)      73  
 

Section 8.7

  Survival of Obligations      74  

 

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ARTICLE 9 INDEMNIFICATION

     75  
   

Section 9.1

  Indemnification of Buyer Indemnitees      75  
   

Section 9.2

  Indemnification of Seller Indemnitees      75  
   

Section 9.3

  Indemnification Adjustments to Purchase Price      76  
   

Section 9.4

  Cooperation      76  
   

Section 9.5

  Limitations on Indemnification; Exclusive Remedies      76  
  ARTICLE 10 MISCELLANEOUS      77  
   

Section 10.1

  Nonsurvival of Representations, Warranties and Covenants      77  
   

Section 10.2

  Entire Agreement; Assignment      77  
   

Section 10.3

  Notices      78  
   

Section 10.4

  Governing Law      79  
   

Section 10.5

  Fees and Expenses      79  
   

Section 10.6

  Exhibits and Schedules      79  
   

Section 10.7

  Parties in Interest      79  
   

Section 10.8

  Severability      80  
   

Section 10.9

  Amendment      80  
   

Section 10.10

  Extension; Waiver      80  
   

Section 10.11

  Counterparts; Facsimile Signatures      80  
   

Section 10.12

  Waiver of Jury Trial      81  
   

Section 10.13

  Jurisdiction and Venue      81  
   

Section 10.14

  Remedies      82  
   

Section 10.15

  Conflicts; Privilege      83  
   

Section 10.16

  Waiver of Claims against Financing Sources      83  

 

Exhibit A: Form of Title Documents

Exhibit B: Form of Restrictive Covenant Agreement

 

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STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “ Agreement ”), dated as of August 24, 2017, is made by and among Beacon Roofing Supply, Inc., a Delaware corporation (“ Buyer ”), Oldcastle, Inc., a Delaware corporation (“ Parent ”), and Oldcastle Distribution, Inc., a Delaware corporation (“ Seller ”). Capitalized terms used but not otherwise defined herein have the meanings ascribed to such terms in ARTICLE 1 .

WHEREAS , Seller owns all of the issued and outstanding shares (collectively, the “ Shares ”) of Allied Building Products Corp., a New Jersey corporation (“ Allied ”), and Kapalama Kilgos Acquisition Corp., a Delaware corporation (collectively, the “ Companies ”);

WHEREAS , Parent indirectly owns all of the issued and outstanding shares of Seller; and

WHEREAS , Buyer wishes to purchase from Seller, and Seller wishes to sell to Buyer, the Shares, subject to the terms and conditions set forth herein.

NOW, THEREFORE , in consideration of the premises and the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller hereby agree as follows:

ARTICLE 1

CERTAIN DEFINITIONS

Section 1.1 Certain Definitions . As used in this Agreement, the following terms have the respective meanings set forth below.

Accounting Principles ” means the accounting principles, policies, procedures, categorizations, assets recognition bases, definitions, methods, practices and techniques (including in respect of the exercise of management judgment and the same level of prudence) as applied in the Audited Financials and in accordance with GAAP, provided that the treatment of leases shall be as reflected in the Audited Financials.

Accrued Bonus ” means bonuses and other incentive compensation in respect of the period through and including the Closing Date, which have not been paid prior to or on the Closing Date, and all employer-related withholding taxes applicable thereto; provided , however, that, “Accrued Bonus” does not include any amounts payable under the Retention Bonus Agreements, or Incremental Retention Bonus Agreements, or any Loyalty Bonus.

Action ” means an action, arbitration, audit, examination, hearing, investigation, mediation, litigation or suit (whether civil, criminal or administrative), pending, commenced, brought, conducted or heard by or before, any Governmental Entity, mediator or arbitrator.

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

 

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Affiliate Transaction ” has the meaning set forth in Section 3.18(a) .

Agreement ” has the meaning set forth in the introductory paragraph to this Agreement.

Alternative Financing ” has the meaning set forth in Section 5.14(c) .

Allied ” has the meaning set forth in the recitals.

Allied Consolidated Group ” means the group of affiliated corporations filing a consolidated federal income tax return of which Oldcastle, Inc. is the common parent.

Ancillary Documents ” has the meaning set forth in Section 3.2 .

Antitrust Laws ” shall mean the Sherman Act, 15 U.S.C. §§ 1-7, as amended; the Clayton Act, 15 U.S.C. §§ 12-27, 29 U.S.C. §§ 52-53, as amended; the HSR Act; the Federal Trade Commission Act, 15 U.S.C. § 41-58, as amended; and all other federal, state and foreign statutes, rules, regulations, orders, decrees, administrative and judicial doctrines, and other Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade.

Audited Financials ” has the meaning set forth in Section 3.6 .

Balance Sheet Date ” means July 1, 2017.

Business Day ” means a day, other than a Saturday or Sunday, on which commercial banks in New York City are open for the general transaction of business.

Buyer ” has the meaning set forth in the introductory paragraph to this Agreement.

Buyer 401(k) Plan ” has the meaning set forth in Section 5.9(a) .

Buyer Companies ” means, collectively, Buyer and each of its Subsidiaries (direct or indirect), which immediately after the occurrence of the Closing, shall include the Group Companies.

Buyer Fundamental Representations ” has the meaning set forth in Section 9.2 .

Buyer Indemnitee ” has the meaning set forth in Section 9.1 .

Buyer Material Adverse Effect ” means any effect, state of facts, development, event, change, occurrence or circumstance that (x) has had, or is reasonably likely to have, individually or in the aggregate, a material adverse effect upon the financial condition, business, or results of operations of the Buyer Companies, taken as a whole; provided , however , that any adverse effect, state of facts, development, event, change, occurrence or circumstance arising from or related to (i) conditions generally affecting the economy, credit or financial or capital markets in the United States or elsewhere in the world, including any changes in interest or exchange rates,

 

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(ii) any national or international political or social conditions, including acts of war (whether or not declared), sabotage or terrorism, or any escalation or worsening of any such acts of war (whether or not declared), sabotage or terrorism, (iii) changes in GAAP, (iv) changes in any laws, rules, regulations, orders, or other binding directives issued by any Governmental Entity, (v) any change that is generally applicable to the industries or markets in which the Buyer Companies operate, (vi) the public announcement of the transactions contemplated by this Agreement, (vii) any failure by the Buyer to meet any projections, forecasts or revenue or earnings predictions ( provided that, unless subject to another exclusion set forth in this definition, the underlying cause of any such failure may be taken into account in determining whether there has been a Buyer Material Adverse Effect), (viii) any action required or contemplated by this Agreement and/or the Ancillary Documents, including the completion of the transactions contemplated hereby and thereby, (ix) any action taken by any of the Buyer Companies at Seller’s written request, or (x) any change resulting from the consummation of the transactions contemplated by this Agreement or the Ancillary Documents, including any such change relating to the identity of, or facts and circumstances relating to, Buyer and including any actions taken by the Buyer Companies’ customers, suppliers or personnel, shall not be taken into account in determining whether a “Buyer Material Adverse Effect” has occurred; provided , however, that any change or effect referred to in clauses (i), (ii), (iii), (iv) and (v) immediately above may be taken into account in determining whether a Buyer Material Adverse Effect has occurred to the extent that such change or effect has a materially disproportionate effect on the Buyer Companies relative to other companies in the industries or markets in which the Buyer Companies operate or (y) would reasonably be expected to prevent the consummation of the transactions contemplated hereby (including the Financing).

Buyer Related Parties ” has the meaning set forth in Section 7.3(d) .

Buyer Releasing Parties ” has the meaning set forth in Section 5.16(a) .

Company Insurance Policies ” has the meaning set forth in Section 3.19(a) .

Chosen Firm ” has the meaning set forth in Section 2.4(e) .

Clean Team Confidentiality Agreement ” means the Clean Team Confidentiality Agreement, dated June 23, 2017, by and among Parent, Allied, Buyer and Bain & Company, Inc.

Closing ” has the meaning set forth in Section 2.3(a) .

Closing Date ” has the meaning set forth in Section 2.3(a) .

Closing Net Cash ” means, with respect to Group Companies as of the close of business on the Closing Date: (a) Company Cash minus (b) Indebtedness of the Group Companies. For the avoidance of doubt, Closing Net Cash may be a positive or negative number.

Closing Payment ” has the meaning set forth in Section 2.3(d)(i) .

Closing Statement ” has the meaning set forth in Section 2.4(a) .

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

 

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Collective Bargaining Benefit Plan ” means each Employee Benefit Plan that is not sponsored by a Group Company, Seller or an Affiliate of Seller, to which contributions are required under a collective bargaining or similar agreement.

Commitment Letters ” means the Debt Commitment Letter and the Equity Commitment Letter.

Companies ” has the meaning set forth in the recitals.

Company Benefit Plan ” means each Employee Benefit Plan sponsored by a Group Company.

Company Cash ” means, with respect to the Group Companies, as of the close of business on the Closing Date, the aggregate book cash balance of the Group Companies, including all cash, commercial paper, certificates of deposit and other bank deposits, treasury bills, short term investments and all other cash equivalents in its accounts, and third party checks deposited or held in its accounts that have not yet cleared; provided that the respective amounts of such checks are not counted as accounts receivable or other current assets in the calculation of Net Working Capital. Company Cash shall not include the sum of all outstanding checks or drafts of the Group Companies that are issued or outstanding as of the Closing Date as this amount will be counted as a current liability in the calculation of Net Working Capital.

Company Employees ” has the meaning set forth in Section 5.9(a) .

Company Material Adverse Effect ” means any effect, state of facts, development, event, change, occurrence or circumstance that (x) has had, or is reasonably likely to have, individually or in the aggregate, a material adverse effect upon the financial condition, business, or results of operations of the Group Companies, taken as a whole; provided , however , that any adverse effect, state of facts, development, event, change, occurrence or circumstance arising from or related to (i) conditions generally affecting the economy, credit or financial or capital markets in the United States or elsewhere in the world, including any changes in interest or exchange rates, (ii) any national or international political or social conditions, including acts of war (whether or not declared), sabotage or terrorism, or any escalation or worsening of any such acts of war (whether or not declared), sabotage or terrorism, (iii) changes in GAAP, (iv) changes in any laws, rules, regulations, orders, or other binding directives issued by any Governmental Entity, (v) any change that is generally applicable to the industries or markets in which the Group Companies operate, (vi) the public announcement of the transactions contemplated by this Agreement, (vii) any failure by Seller to meet any projections, forecasts or revenue or earnings predictions ( provided that, unless subject to another exclusion set forth in this definition, the underlying cause of any such change may be taken into account in determining whether there has been a Company Material Adverse Effect), (viii) any action required or contemplated by this Agreement and/or the Ancillary Documents, including the completion of the transactions contemplated hereby and thereby, (ix) any action taken by Seller or any of the Group Companies at Buyer’s written request, or (x) any change resulting from the consummation of the transactions contemplated by this Agreement or the Ancillary Documents, including any such change relating to the identity of, or facts and circumstances relating to, Seller and including any actions taken by the Group Companies’ customers, suppliers or personnel, shall not be taken into

 

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account in determining whether a “Company Material Adverse Effect” has occurred; provided , however , that any change or effect referred to in clauses (i), (ii), (iii), (iv) and (v) immediately above may be taken into account in determining whether a Company Material Adverse Effect has occurred to the extent that such change or effect has a materially disproportionate effect on the Group Companies relative to other companies in the industries or markets in which the Group Companies operate or (y) would reasonably be expected to prevent the consummation of the transactions contemplated hereby.

Company Multiemployer Pan ” has the meaning set forth in Section 3.11(e) .

Compliant ” means, with respect to the Required Information, that (a) the financial statements and other financial information included in such Required Information on the first day of the Marketing Period is, and remains throughout the Marketing Period, compliant in all material respects with all applicable requirements of Regulation S-K and Regulation S-X for a registered public offering of debt or equity securities under the Securities Act (in each case subject to customary exceptions, including consolidating financial statements, “segment reporting”, separate subsidiary financial statements and other financial statements and data that would be required by Sections 3-09, 3-10 and 3-16 of Regulation S-X) and sufficient to permit a registration statement of a non-accelerated filer using such financial statements and financial information to be declared effective by the SEC on the last day of the Marketing Period, and (b) such Required Information does not contain any untrue statement of a material fact regarding the Group Companies or omit to state a material fact regarding the Group Companies necessary in order to make the information contained in such Required Information, in light of the circumstances under which such information is disclosed, not misleading under the circumstances.

Confidentiality Agreements ” means the (i) Confidentiality and Non-Disclosure Agreement, dated as of June 12, 2017, by and between Buyer and Parent, (ii) the Clean Team Confidentiality Agreement, (iii) the HR Clean Team Confidentiality Agreement and (iv) that certain Joint Defense Agreement, dated July 19, 2017, between the parties’ respective legal counsel.

Consolidated Group ” means an affiliated group filing a consolidated or combined Tax Returns.

Contract ” means any legally binding, written or verbal agreement, contract, understanding, arrangement, instrument, note, guaranty, lease, license, or undertaking of any nature.

Data Breach ” means the confirmed unauthorized access or acquisition of Personal Data or User Data by any Person.

Debt Commitment Letter ” has the meaning set forth in Section 4.9(a) .

Debt Documents ” has the meaning set forth in Section 5.14(a) .

 

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Debt Financing ” means the arrangement and borrowing of any credit facilities and the offering of debt securities contemplated by the Debt Commitment Letter (including any Alternative Financing contemplated by Section 5.14(c) ).

Debt Financing Sources ” means the Persons that have entered or will enter into agreements with Buyer in connection with the Debt Financing, and any joinder agreements or definitive agreements entered into pursuant thereto, including the agents, arrangers, lenders and other entities that are part of the Debt Financing, together with their respective Affiliates, officers, directors, employees, agents, representatives and advisors. For the avoidance of doubt, neither Buyer nor any of its Affiliates shall be Debt Financing Sources.

Divestiture ” has the meaning set forth in Section 5.6(b)(i) .

Effective Date ” has the meaning set forth in the introductory paragraph to this Agreement.

Effective Time ” has the meaning set forth in Section 2.3(a) .

Employee Benefit Plan ” means a plan, fund, contract, agreement, program or arrangement (whether written or not), regardless of the number of individuals covered, that is maintained or contributed to by any Group Company, to which any Group Company is a party (including any employment, retention, severance, change in control or similar agreement with an individual) and with respect to which any Group Company would reasonably be expected to incur liability or in which employees, officers or directors of a Group Company participate, including those intended to provide: (i) medical, surgical, health care, hospitalization, dental, vision, retiree, health care reimbursement, life insurance, death, disability, severance or termination pay or benefits, sickness or accident, legal services, dependent care, dependent care reimbursement, on-site day care facilities, sick child care, cafeteria, flexible spending account, adoption assistance, tuition assistance, or transportation or similar benefits (whether or not such arrangement constitutes an “employee welfare benefit plan” as defined in Section 3(1) of ERISA); (ii) pension, profit-sharing, stock bonus, retirement, deferred compensation or similar benefits (whether or not such arrangement is tax qualified and whether or not such arrangement constitutes an “employee pension benefit plan” as defined in Section 3(2) of ERISA); (iii) bonus, incentive, stock option, stock appreciation right, phantom stock or stock purchase benefits; or (iv) salary continuation, supplemental unemployment, vacation or holiday benefits (whether or not such arrangement constitutes an “employee benefit plan” as defined in Section 3(3) of ERISA); provided , however , that an Employee Benefit Plan shall not include (a) workers’ compensation insurance and (b) directors’, officers’ and employees’ liability insurance.

Encumbrance ” means any lease, pledge, option, easement, deed of trust, right of way, encroachment, conditional sales agreement, security interest, mortgage, adverse claim of interest, encumbrance, charge or restriction of any kind (except for restrictions on transfer under the Securities Act and applicable state securities laws), including, with respect to equity securities only, any restriction on the voting, transfer, receipt of income or other exercise of any attributes of ownership of such securities, in each case whether voluntarily incurred or arising by operation of Law, and further including, with respect to Real Property only, any recorded restrictive covenant or condition, and includes any agreement to give any of the foregoing in the future.

 

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Environmental Laws ” means all applicable Laws relating to pollution, protection or preservation of the environment, natural resources or human health and safety, and to the generation, use, handling, transport, disposal, Release, or threatened Release of any Hazardous Substances, including any applicable provisions of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq ., the Hazardous Materials Transportation Act, 49 U.S.C. § 5101 et seq . (“ CERCLA ”), the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq ., the Clean Water Act, 33 U.S.C. § 1251 et seq ., the Clean Air Act, 42 U.S.C. § 7401 et seq ., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. § 136 et seq ., and the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq ., together with all rules and regulations thereunder, and all applicable and analogous state or local statutes and regulations.

Environmental Permits ” has the meaning set forth in Section 3.17(a)(i) .

Equity Commitment Letter ” has the meaning set forth in Section 4.9(b) .

Equity Documents ” has the meaning set forth in Section 5.14(a) .

Equity Financing ” means the offering of equity securities of Buyer to third party investors for cash consideration contemplated by the Equity Commitment Letter.

Equity Financing Sources ” means the Persons that have entered or will enter into agreements with Buyer in connection with the Equity Financing, and any joinder agreements or definitive agreements entered into pursuant thereto, including the underwriters, bookrunning managers, initial purchasers, placement agents and other entities that are part of the Equity Financing, together with their respective Affiliates, officers, directors, employees, agents, representatives and advisors. For the avoidance of doubt, neither of Buyer nor any of its Affiliates shall be Equity Financing Sources.

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

ERISA Affiliate ” means any trade or business (whether or not incorporated) which together with any Group Company would be treated as a single employer under Section 414 of the Code or Section 4001 of ERISA.

Estimated Closing Net Cash ” has the meaning set forth in Section 2.3(b) .

Estimated Closing Statement ” has the meaning set forth in Section 2.3(b) .

Estimated Financing Adjustment ” has the meaning set forth in Section 2.3(b) .

Estimated Net Working Capital ” has the meaning set forth in Section 2.3(b) .

Exhibits ” has the meaning set forth in Section 1.2 .

Financial Statements ” has the meaning set forth in Section 3.6 .

 

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Financing ” means the Debt Financing and the Equity Financing (including any Alternative Financing contemplated by Section 5.14(c) ).

Financing Adjustment ” has the meaning set forth on Schedule 1.1(a) .

Financing Sources ” means the Debt Financing Sources, the Equity Financing Sources and the Pre-Closing Equity Financing Sources.

Form I-9 ” has the meaning set forth in Section 3.20(h) .

Fundamental Representation ” has the meaning set forth in Section 9.1 .

GAAP ” means United States generally accepted accounting principles.

Governing Documents ” means the legal document(s) by which any Person (other than an individual) establishes its legal existence or which govern its internal affairs. For example, the “Governing Documents” of a corporation are its certificate of incorporation and by-laws, the “Governing Documents” of a limited partnership are its limited partnership agreement and certificate of limited partnership and the “Governing Documents” of a limited liability company are its operating agreement and certificate of formation.

Governmental Entity ” means any (i) federal, state, local, municipal, foreign or other government, (ii) governmental or quasi-governmental entity of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal) or (iii) federal, state, local, municipal, foreign or other body exercising, or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature, including any arbitral tribunal.

Group Companies ” means, collectively, the Companies and each of their respective Subsidiaries (direct or indirect).

Hazardous Substances ” means any contaminant, pollutant, materials, substances or wastes, identified, listed, defined, or regulated as hazardous or toxic under Environmental Laws, including any asbestos or asbestos-containing materials, petroleum or petroleum product or derivative thereof, polychlorinated biphenyls, or radioactive materials and any other material, substance or waste regulated by or for which liability or standards of conduct are imposed under any Environmental Law.

HR Clean Team Confidentiality Agreement ” means the HR Clean Team Confidentiality Agreement, dated August 1, 2017, by and among Parent, Allied, Buyer and Sidley Austin LLP.

HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

IFRS ” means International Financial Reporting Standards and interpretations thereof as established by the International Accounting Standards Board, as in effect at the time any applicable financial statements were prepared.

 

8


Incremental Retention Bonus Agreements ” has the meaning set forth in Section 5.1(b)(v) .

Indebtedness ” means, with respect to any Person, all obligations (including all obligations in respect of principal, interest, penalties, fees and premiums and all fees, expenses, payments and costs associated with prepayment, termination, redemption, breakage or unwinding) of such Person (a) for borrowed money, (b) evidenced by notes, bonds, debentures or similar instruments, (c) in respect of reimbursement obligations under letters of credit, bankers’ acceptances, bank overdrafts, surety or performance bonds and similar instruments, (d) for the deferred purchase price of goods or services but excluding trade payables or other current liabilities incurred in the ordinary course of business and taken into account in the calculation of Net Working Capital, (e) for the deferred purchase price of a business, including earn-outs, promissory notes and other deferred payment obligations, (f) the net present value of the future lease obligations for the closed Lakeville branch, (g) the provision on the Company’s books in respect of the one-time boom driver training required under OHSA regulation 1926.1400(c), (h) under leases classified as capital leases in the Financial Statements, (i) under hedging or swap obligations or similar arrangements, (j) that are secured by an Encumbrance (other than a Permitted Encumbrance) on any assets or properties of such Person and (k) guarantees of, or assurances to a creditor against, a loss with respect to the obligations described in clauses (a) through (j) above of any other Person. Notwithstanding the foregoing, “Indebtedness” shall not include any intercompany obligations among the Group Companies or any accounts payable or accrued expenses arising in the ordinary course of business, or obligations under leases that are classified as operating leases in the Financial Statements. “Indebtedness” shall also not include the sum of all outstanding checks or drafts of the Group Companies that are issued or outstanding as of the Closing Date as this amount will be counted as a current liability in the calculation of Net Working Capital.

Indemnitees ” has the meaning set forth in Section 9.2 .

Insurance Policies ” has the meaning set forth in Section 3.19(b) .

Intellectual Property ” means all intellectual property rights (whether registered or unregistered) protected, created or arising under the Laws of the United States or any other jurisdiction or under any international convention, including all: (i) patents and patent applications, (ii) trademarks, service marks, trade names, logos, trade dress and other source indicators, and all goodwill associated therewith, (iii) copyrights and works of authorship (both published and unpublished), (iv) internet domain names, (v) Software and databases, (vi) trade secrets, confidential business information (including inventions, ideas, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals) and know how, and (vii) all registrations, applications, renewals and common law rights associated with any of the foregoing.

Internal Counsel ” has the meaning set forth in Section 10.15 .

IRS ” means the Internal Revenue Service.

 

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Knowledge ” means (a) with respect to Seller, the actual knowledge, without independent investigation (and shall in no event encompass constructively imputed or similar concepts of knowledge), of the following individuals: Bob Feury, Jr., Frank Furia, Ike Ofodile, Keith Haas, Michael O’Driscoll, Gary Hickman, Philip Wheatley, John McLaughlin, and Ron Pilla, and (b) with respect to Buyer, the actual knowledge, without independent investigation (and shall in no event encompass constructively imputed or similar concepts of knowledge), of the following individuals: Paul Isabella and Joe Nowicki.

Law ” means any constitution, statute, law, ordinance, rule, regulation, order, writ, injunction, directive, judgment, decree of any Governmental Entity.

Leased Real Property ” has the meaning set forth in Section 3.8(b) .

Leases ” has the meaning set forth in Section 3.8(b) .

Legacy Company Retirement Plans ” has the meaning set forth in Section 3.11(g) .

Legal Department Database ” means the internal database of current disputes being handled by the Oldcastle Law Group.

Licenses ” has the meaning set forth in Section 3.12(a) .

Loss ” or “ Losses ” means any and all losses, liabilities, damages, assessments, levies, fines, costs, penalties, Taxes, fees and expenses (including reasonable attorneys’, accountants’, investigators’, and experts’ fees and expenses) except that “Losses” shall not include nor shall Seller have any liability or obligation to any Buyer Indemnitee hereunder or arising out of or in respect of this Agreement or the transactions contemplated hereby for any punitive, exemplary, special, incidental, consequential or indirect damages (including for loss of profit or business opportunity), or damages calculated based on a multiple of revenues or earnings, except to the extent such Losses are payable to a Person other than a Buyer Indemnitee pursuant to a final, non-appealable judgment by a court of competent jurisdiction.

Loyalty Bonuses ” means bonuses or other incentive compensation payable to certain Company Employees in the amounts disclosed in writing to Buyer prior to the date hereof, contingent on the occurrence of the Closing, in an aggregate pre-tax amount not to exceed $5,000,000.

Marketing Period ” means the first period of fifteen (15) consecutive Business Days throughout and at the end of which Buyer shall have received the Required Information and such Required Information is Compliant; provided , (a) that (x) such fifteen (15) consecutive Business Day period shall commence no earlier than the later of (A) November 30, 2017 (or such earlier date as Buyer shall specify to Seller upon three (3) Business Days’ written notice) and (B) three (3) Business Days following the date on which Buyer shall have the Required Information and such Required Information is Compliant, and (y) the Marketing Period shall end on any earlier date prior to the expiration of the 15 consecutive Business Day period described above if the Financing is consummated on such earlier date and (b) if Seller shall in good faith reasonably believe it has provided the Required Information and that the Marketing Period has commenced, it may deliver to Buyer a written notice to that effect (stating when it believes it completed such

 

10


delivery), in which case the Marketing Period will be deemed to have commenced on the date of such notice unless Buyer, in good faith, reasonably believes the Marketing Period has not commenced and within three (3) Business Days after the delivery of such notice by Seller, delivers a written notice to Seller to that effect (setting forth with specificity why Buyer believes the Marketing Period has not commenced, including such additional Required Information, if any, that has been requested and has not yet been delivered to commence the Marketing Period). Notwithstanding anything in this definition to the contrary, the Marketing Period shall not commence or be deemed to have commenced if, after the date hereof and prior to the completion of such fifteen (15) consecutive Business Day period, Seller’s or the Group Companies’ independent accountant shall have withdrawn its audit opinion with respect to any financial statements of the Seller or the Group Companies or the applicable auditors have determined to undertake any restatement of any financial statements in the Required Information, in which case the Marketing Period shall be deemed not to commence unless and until, at the earliest, a new unqualified audit opinion is issued with respect to the consolidated financial statements of the Seller or the Group Companies for the applicable periods by such independent accountant or another independent public accounting firm reasonably acceptable to Buyer or such restatement has been completed and the applicable Required Information has been amended or Seller or the Group Companies have indicated that they or their auditors has concluded that no restatement shall be required, and the requirements in the preceding sentence would be satisfied throughout and on the last day of such new fifteen (15) consecutive Business Day period.

Material Contracts ” has the meaning set forth in Section 3.10(a) .

Multiemployer Plan ” means a “multiemployer plan” within the meaning of section 4001(a)(3) of ERISA.

Multiemployer Welfare Plan ” means a Collective Bargaining Benefit Plan that is a “welfare benefit plan” within the meaning of Section 3(1) of ERISA.

Net Working Capital ” means the aggregate of (i) inventories, (ii) trade receivables and (iii) other current receivables, minus the aggregate of (iv) trade payables and (v) other current liabilities, each calculated in accordance with the Accounting Principles, and subject to such adjustments as are set forth in Schedule 1.1(c) . For illustrative purposes only, a sample net working capital calculation is set forth in Schedule 1.1(c) . Notwithstanding the foregoing, Net Working Capital shall not take into account any income Tax assets or liabilities, Company Cash, Indebtedness or non-trading amounts owed by or to any Group Company to or by Seller or any Affiliate of Seller other than a Group Company. For purposes of determining “Net Working Capital”, trade payables will include the sum of all outstanding checks or drafts of the Group Companies that are issued or outstanding as of the Closing Date.

New Benefit Plans ” has the meaning set forth in Section 5.9(b) .

Nonextracted Information ” has the meaning set forth in Section 5.5(b) .

Objection Notice ” has the meaning set forth in Section 2.4(d) .

 

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Off-the-Shelf Software ” means non-exclusive licenses for Software that (i) is licensed under “shrink-wrap” or “click-through” contracts and (ii) is generally commercially available on reasonable terms through commercial distributors or in a retail store.

Old Benefit Plans ” has the meaning set forth in Section 5.9(b) .

Owned Real Property ” has the meaning set forth in Section 3.8(a) .

Parent ” has the meaning set forth in the introductory paragraph to this Agreement.

PCBs ” has the meaning set forth in Section 3.17(a)(vi) .

Permits ” has the meaning set forth in Section 3.13 .

Permitted Encumbrances ” means (i) Encumbrances disclosed on or securing amounts reflected in the Reference Balance Sheet or the notes thereto; (ii) statutory Encumbrances for Taxes or assessments not yet delinquent or the validity of which is being contested in good faith by appropriate proceedings and for which adequate accruals or reserves have been established on the Reference Balance Sheet; (iii) mechanics’, carriers’, workers’, repairmen’s and other similar Encumbrances arising or incurred in the ordinary course of business with respect to charges not yet due and payable; (iv) Encumbrances listed on Schedule 1.1(b) ; (v) deposits or pledges made in connection with, or to secure payment of, workers’ compensation, unemployment insurance or similar programs mandated by applicable Law; (vi) pledges and deposits to secure the performance of bids, trade contracts, leases, surety and appeal bonds, performance bonds, and other obligations of a similar nature, in each case in the ordinary course of business; (vii) liens in favor of depository banks and financial institutions constituting statutory, common law or contractual rights of set off or securing treasury or cash management obligations arising in the ordinary course of business; (viii) restrictions on transfer of securities imposed by applicable securities Laws, (ix) non-exclusive licenses of Intellectual Property entered into in the ordinary course of business and which do not materially interfere with the business of any Group Company; (x) equipment leases that are classified as operating leases in the Financial Statements and that do not impair the present use of the property subject thereto by the Group Companies in the ordinary course of business, (xi) laws and other legal restrictions on use that do not impair the present use of the property subject thereto by the Group Companies in the ordinary course of business, (xii) purchase money security interests for inventory and supplies purchased by a Group Company in the ordinary course of business with respect to amounts not yet due and payable, (xiii) interests of customers in any goods identified to a contract of sale in the ordinary course of business but not yet delivered, or (xiv) with respect to Real Property, (1) easements, rights of way, covenants, restrictions, reservations, exceptions, encroachments and imperfections of title, if any, none of which impairs the use by the Group Companies of the property subject thereto or impairs the operations of the Group Companies or materially detracts from the value of the property subject thereto, (2) zoning laws and other land use restrictions that do not impair the present use of the property subject thereto by the Group Companies, (3) statutory Encumbrances in favor of lessors arising in connection with any Leased Real Property and the rights of the lessors under the corresponding leases, or (4) with respect to Leased Real Property, Encumbrances securing Indebtedness of the landlord or other fee owner.

 

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Person ” means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust, joint venture, association or other similar entity, whether or not a legal entity.

Personal Data ” means any data that, if it were subject to a Data Breach, would require notification under Privacy and Data Security Laws.

Personal Property ” means any property or assets other than Real Property owned by the Group Companies.

Pre-Closing Equity Financing Sources ” means the Persons that have entered or will enter into agreements with Buyer in connection with the Pre-Closing Equity Offering, and any joinder agreements or definitive agreements entered into pursuant thereto, including the underwriters, bookrunning managers, initial purchasers, placement agents and other entities that are part of the Pre-Closing Equity Offering, together with their respective Affiliates, officers, directors, employees, agents, representatives and advisors. For the avoidance of doubt, neither of Buyer nor any of its Affiliates shall be Pre-Closing Equity Financing Sources.

Pre-Closing Equity Offering ” has the meaning set forth in Section 5.15 .

Pre-Closing Period ” means any taxable period that begins before the Closing Date and ends on or before the Closing Date.

Preliminary Section 338(h)(10) Gross-Up Amount ” means a preliminary estimate of the Section 338(h)(10) Gross-Up Amount based on the Preliminary Section 338(h)(10) Gross-Up Schedule.

Preliminary Section 338(h)(10) Gross-Up Schedule ” has the meaning set forth in Section 8.6(b) .

Privacy and Data Security Laws ” means the Federal Trade Commission Act, 15 U.S.C. § 45; the CAN-SPAM Act of 2003, 15 U.S.C. §§ 7701 et seq.; the Telephone Consumer Protection Act, 47 U.S.C. § 227; California Online Privacy Protection Act, Cal. Bus. & Prof. Code § 22575, et seq.; regulations promulgated by federal and state agencies; laws or regulations governing notification to consumers and regulatory authorities following data security incidents, including without limitation Cal. Civ. Code § 1798.82, N.Y. Gen. Bus. Law § 899-aa, and Mass. Gen. Law 93H; state and local laws and regulations governing data security, including without limitation Massachusetts Gen. Law Ch. 93H, 201 C.M.R. 17.00, and Nev. Rev. Stat. 603A; Cal Civ. Code § 1798.83; and other analogous local, state, and federal, and privacy, data protection, information security, or related laws or regulations.

Purchase Price ” has the meaning set forth in Section 2.2 .

Qualified Plan ” means an Employee Benefit Plan that is not a Collective Bargaining Benefit Plan and that is intended to be a “qualified plan” (within the meaning of Section 401(a) of the Code).

Real Property ” means the Leased Real Property and the Owned Real Property.

 

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Reference Balance Sheet ” means the reviewed, combined balance sheet of the Group Companies as of the Balance Sheet Date.

Related Party Agreements ” has the meaning set forth in Section 3.10(a)(xiv) .

Release ” means any discharge, emission, spilling, leaking, pumping, pouring, injecting, dumping, burying, leaching, migrating, abandoning or disposing into the environment of any Hazardous Substance, including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Substance.

Released Claim ” has the meaning set forth in Section 5.16(a) .

Releasees ” has the meaning set forth in Section 5.16(a) .

Releasing Parties ” has the meaning set forth in Section 5.16(a) .

Replacement Contract ” has the meaning set forth in Section 5.6(g) .

Retention Bonus Agreements ” has the meaning set forth in Section 3.10(a)(i) .

Retention Bonuses ” means all amounts due to any employees of the Group Companies pursuant to the Retention Bonus Agreements set forth on Schedule 3.10 .

Required Information ” means (i) (A) the Audited Financials and the audited combined balance sheets of the Group Companies and the related combined statements of operations, shareholder’s equity, and cash flows for any subsequent completed fiscal year ended at least 90 days prior to the Closing Date (which shall have been at Buyer’s expense audited by the Group Companies’ independent accountants) (B) the unaudited financial statements for the six-month periods ended July 1, 2017 and July 2, 2016 included in the Financial Statements (which shall have been at Buyer’s expense reviewed by the Group Companies’ independent accountants as provided in SAS 100), and unaudited combined balance sheets and related statements of operations, shareholders’ equity and cash flows of the Group Companies (which shall have been at Buyer’s expense reviewed by the Group Companies’ independent accountants as provided in SAS 100) for each subsequent fiscal quarter (or year-to-date period through the end of a fiscal quarter) (and the corresponding period in the prior fiscal year) ended at least forty-five (45) days before the Closing Date (which shall have been at Buyer’s expense reviewed by the Group Companies’ independent accountants as provided in SAS 100), and (C) the unaudited financial statements for the nine-month period ended July 1, 2017 included in the Financial Statements (which shall have been at Buyer’s expense reviewed by the Group Companies’ independent accountants as provided in SAS 100), (ii) all financial information relating to the Group Companies reasonably necessary to permit Buyer to prepare a pro forma consolidated balance sheet and related pro forma statements of operations of Buyer as of and for the twelve (12) month period ending on the last day of the most recently completed four (4) quarter period and ended at least forty-five (45) days prior to the Closing Date and the interim nine-month period ending on the last day of the most recently completed fiscal quarter and ended at least 45 days prior to the Closing Date (it being understood that Buyer shall be responsible for, and Required Information shall not include, (x) the information relating to the proposed debt and equity capitalization of Buyer and its Subsidiaries after the Closing Date or (y) any information

 

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concerning the assumptions underlying the pro forma adjustments to be made in such pro forma financial statements, which assumptions shall be the responsibility of Buyer, or pro forma cost savings or other pro forma adjustments desired by Buyer to be made in such pro forma financial statements), (iii) all other financial statements, financial data, and other information of the Group Companies, as reasonably requested by Buyer, of the type required to be included in or incorporated by reference in registration statements on Form S-3 by Regulation S-X and Regulation S-K under the Securities Act and of a type and form customarily included in marketing documents used to syndicate credit facilities of the type contemplated in the Debt Commitment Letter or in an offering memorandum to issue and sell high yield debt securities in an exempt offering pursuant to Rule 144A under the Securities Act or in a prospectus to issue and sell equity securities in a registered public offering under the Securities Act or otherwise necessary to receive from the Group Companies’ independent accountants customary “comfort” (including “negative assurance” comfort) with respect to the financial information included in or derived from the financial statements referred to in this definition to be included in such marketing documents offering memorandum or prospectus (subject to customary exceptions, including consolidating financial statements, “segment reporting”, separate subsidiary financial statements and other financial statements and data that would be required by Sections 3-09, 3-10 and 3-16 of Regulation S-X, information that would be required by Item 402 of Regulation S-K and information regarding executive compensation and related party disclosure related to SEC Release Nos. 33-8732A, 34-54302A and IC-27444A), and (iv) a draft of a customary comfort letter with respect to the foregoing financial information by the independent accountants of the Group Companies, including as to customary negative assurances, which such accountants have confirmed they are prepared to issue upon request throughout the Marketing Period (including at the date of the pricing of any securities issued at the Closing), subject to completion by such auditors of customary procedures relating thereto, including the receipt of customary representation letters; provided that Required Information shall not include pro forma financial information except to the extent provided in clause (iii) above.

Revised Section 338(h)(10) Gross-Up Amount ” means the Section 338(h)(10) Gross-Up Amount as determined based on the Revised Section 338(h)(10) Schedule.

Revised Section 338(h)(10) Gross-Up Schedule ” has the meaning set forth in Section 8.6(c) .

Schedules ” has the meaning set forth in Section 1.2 .

SEC ” means the Securities and Exchange Commission.

Section 338 Audit ” means any Tax proceeding relating to a Tax item that may reasonably be expected to affect the computation of the Section 338(h)(10) Gross-Up Amount.

Section 338(h)(10) Elections ” has the meaning set forth in Section 8.6(a) .

Section 338(h)(10) Gross-Up Amount ” means the excess, if any, of (x) the Taxes payable by the Seller as a result of the Section 338(h)(10) Elections (including any Taxes payable as a result of the receipt of the Section 338(h)(10) Gross-Up Amount) over (y) the Taxes that would have been payable by Seller in the absence of the Section 338(h)(10) Elections, which

 

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amount shall be determined on a basis consistent with the Preliminary Section 338(h)(10) Gross-Up Schedule and Revised Section 338(h)(10) Gross-Up Schedule described in Section 8.6 and the calculations set forth in Schedule 8.6 . For purposes of determining the Section 338(h)(10) Gross-Up Amount, the Taxes payable by Seller shall include income Taxes payable by any member of a consolidated, unitary or combined group that includes Seller.

Section 338(h)(10) Request ” has the meaning set forth in Section 8.6(a) .

Section 338 Taxes ” means any Taxes that would not have been imposed but for the Section 338(h)(10) Elections or any elections under state, local or other Tax law that are required to be made or deemed to have been made as a result of any Section 338(h)(10) Election.

Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.

Seller ” has the meaning set forth in the introductory paragraph to this Agreement.

Seller Benefit Plan ” means each Employee Benefit Plan sponsored by Seller or an Affiliate of Seller other than a Group Company.

Seller Group Insurance Policies ” has the meaning set forth in Section 3.19(b) .

Seller Indemnitees ” has the meaning set forth in Section 9.2 .

Seller Prepared Returns ” has the meaning set forth in Section 8.2(a) .

Seller Releasing Parties ” has the meaning set forth in Section 5.16(a) .

Severance Pay Plan ” has the meaning set forth in Section 5.9(c) .

Shares ” has the meaning set forth in the recitals.

Shared Contract ” has the meaning set forth in Section 5.6(g) .

Significant Customers ” has the meaning set forth in Section 3.25 .

Significant Suppliers ” has the meaning set forth in Section 3.25 .

Software ” means computer software programs and software systems, including any and all software implementation of algorithms, models and methodologies, data files, source application programming interfaces, databases, compilations, tool sets, compilers, higher level or “proprietary” languages and related specifications, documentation and materials, whether in source code, object code or human readable form.

Straddle Period ” means any taxable period that begins before and ends after the Closing Date.

Straddle Returns ” has the meaning set forth in Section 8.2(b) .

 

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Subsidiary ” means, with respect to any Person, any corporation, limited liability company, partnership, association, or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof or (ii) if a limited liability company, partnership, association, or other business entity (other than a corporation), a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person or a combination thereof and for this purpose, a Person or Persons own a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be a, or control any, managing director or general partner of such business entity (other than a corporation). The term “ Subsidiary ” shall include all Subsidiaries of such Subsidiary.

Target Net Working Capital ” means $362,803,000.

Tax ” means all taxes, charges, fees, duties, levies or other assessments, including income, gross receipts, capital stock, net proceeds, ad valorem, turnover, real, personal and other property (tangible and intangible), sales, use, franchise, excise, value added, stamp, escheat payment, leasing, lease, user, transfer, fuel, excess profits, occupational, interest equalization, windfall profits, unitary, severance and employees’ income withholding, unemployment and Social Security taxes, duties, assessments and charges (including the recapture of any tax items such as investment tax credits), which are imposed by any Governmental Entity, including any interest, penalties or additions to tax related thereto imposed by any Governmental Entity.

Tax Return ” means any return, report or form required to be filed with respect to Taxes.

Termination Date ” has the meaning set forth in Section 7.1(b) .

Termination Fee ” has the meaning set forth in Section 7.3 .

Third Party Claim ” means any Action based upon, related to, arising out of, or involving an Action made by any Person other than a party hereto against the Buyer Indemnitees,

Title Company ” means Chicago Title Insurance Company.

Title Documents ” means “Owner’s Affidavit” and “GAP Indemnity”, “No Change to Survey Affidavit” and financial information and information regarding on-going construction, in the respective forms attached hereto as Exhibit A .

Title Policies ” means the following: for each parcel of Owned Real Property, an ALTA 2006 form owner’s and lender’s title insurance policy covering such Owned Real Property issued to the applicable Group Company or lender, as applicable by the Title Company, in each case (i) having an effective date as of the Closing Date or recording date of the mortgages as applicable, (ii) in amount, form and substance satisfactory to Buyer and lender in their commercially reasonable discretion, (iii) insuring that the applicable Group Company has good and marketable fee simple title to the Owned Real Property, free and clear of all Encumbrances except Permitted

 

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Encumbrances, and (iv) including such commercially reasonable endorsements as Buyer and lender may request, provided that , except for undertakings set forth in the Title Documents, neither Seller nor any Affiliate or representative will be required to incur any obligation or liability (including contingent liability) to the Title Company or any other Person in connection with any such Title Policy or endorsement.

Treasury Regulations ” means the regulations promulgated under the Code by the United States Department of the Treasury.

United States ” means the United States of America.

User Data ” means any Personal Data or other data or information collected by or on behalf of the Group Companies from end users of any Group Companies product, service, or website.

Written Information Security Program ” means any written information security program required by applicable Privacy and Data Security Laws.

Section 1.2 Construction; Interpretation . The term “this Agreement” means this Stock Purchase Agreement together with all schedules (the “ Schedules ”) and exhibits (the “ Exhibits ”) hereto, as the same may from time to time be amended, modified, supplemented or restated in accordance with the terms hereof. The headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. References to Articles, Sections and Exhibits are to Articles, Sections and Exhibits of this Agreement unless otherwise specified. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized term used in any Exhibit or Schedule but not otherwise defined therein shall have the meaning given to such term in this Agreement. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any Person include the successors and permitted assigns of such Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. Any reference to “days” means calendar days unless Business Days are expressly specified. If any action under this Agreement is required to be done or taken on a day that is not a Business Day, then such action shall be required to be done or taken not on such day but on the first succeeding Business Day thereafter. No party hereto, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions hereof, and all provisions of this Agreement shall be construed according to their fair meaning and not strictly for or against any party. Unless otherwise indicated to the contrary herein by the context or use thereof: (i) the words, “herein,” “hereto,” “hereby,” “hereof” and words of similar import refer to this Agreement as a whole, including the Schedules and Exhibits, and not to any particular section, subsection paragraph, subparagraph or clause contained in this Agreement; (ii) masculine gender shall also include the feminine and neutral genders, and vice versa; (iii) words importing the singular shall also include the plural, and vice versa; (iv) the words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation”; (v) the words “party” or “parties” shall refer to parties to this Agreement, (vi) any reference to “books and records” shall include files and any other documents whether in paper or electronic form and (vii) the phrase “made

 

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available” in this Agreement shall mean that the information referred to has been posted to the Merrill data site that is accessible by Buyer or a representative thereof or such requested information has been emailed or otherwise sent in writing to Buyer or a representative thereof prior to 5:00 p.m. Eastern Time on the date immediately preceding the date hereof.

ARTICLE 2

PURCHASE AND SALE OF THE SHARES

Section 2.1 Purchase and Sale . Subject to the terms and conditions set forth herein, at the Closing, Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Shares, for the Purchase Price, free and clear of any and all Encumbrances (other than Encumbrances arising under securities laws or Encumbrances created by Buyer).

Section 2.2 Purchase Price . The aggregate “ Purchase Price ” for the Shares shall be equal to the sum of:

(a) Two Billion Six Hundred Twenty-Five Million Dollars ($2,625,000,000);

(b) plus the amount by which the Net Working Capital at Closing exceeds the Target Net Working Capital, if any;

(c) minus the amount by which the Target Net Working Capital exceeds the Net Working Capital at Closing, if any;

(d) plus the Closing Net Cash; and

(e) minus the Financing Adjustment.

Section 2.3 Closing.

(a) Subject to the terms and conditions of this Agreement, the closing (“ Closing ”) of the purchase and sale of the Shares shall take place on the later of (i) January 2, 2018, and (ii) the third (3 rd ) Business Day after the last of the conditions to Closing set forth in ARTICLE 6 have been satisfied or waived in accordance therewith (except for such conditions which by their nature can only be satisfied at the Closing and subject to the satisfaction or waiver of such conditions as provided herein), at the offices of the offices of Kilpatrick Townsend & Stockton LLP, 1100 Peachtree Street, N.E., Suite 2800, Atlanta, Georgia 30309-4530, provided that , except in the case, if any, where an original Closing document is specifically called for as a Closing delivery, the parties may exchange all Closing documents by email, facsimile or other electronic communications form, and with respect to required original Closing documents, such originals may be exchanged on the Closing Date by overnight courier or personal delivery either on the Closing Date or prior thereto in escrow (the date on which the Closing actually occurs is referred to herein as the “ Closing Date” ); provided , however , that if the Marketing Period has not ended at the time of the satisfaction or waiver of the conditions set forth in ARTICLE 6 (other than a condition that by its nature cannot be satisfied until the Closing, but subject to satisfaction or waiver of any such condition), the Closing shall occur on the earlier of (a) a date during the Marketing Period specified by Buyer on no less than seven (7) Business Days’ notice to Seller and (b) the third (3rd) Business Day immediately following the final day of the Marketing Period (subject in each case to the satisfaction or waiver of all of the conditions set forth in ARTICLE 6 for the Closing as of the Closing Date). The Closing shall be deemed effective for all purposes as of the close of business on the Closing Date (the “ Effective Time ”).

 

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(b) Not later than five (5) Business Days prior to the anticipated Closing Date, Seller shall prepare and deliver, or cause to be prepared and delivered, to Buyer a statement setting forth (i) Seller’s good faith estimate of Net Working Capital and Closing Net Cash, in each case as of the Effective Time based on the books and records of the Group Companies and (ii) Seller’s calculation of the Purchase Price based thereon. Such statement shall be subject to Buyer’s prompt review and approval (not to be unreasonably withheld, conditioned or delayed) and Seller will timely provide to Buyer such supporting documentation as Buyer may reasonably request in connection with Buyer’s review of such statement. Such statement as so approved by Buyer (or as modified by agreement of Seller and Buyer) referred to herein as the “ Estimated Closing Statement ”, such reflected Net Working Capital estimate being referred to herein as the “ Estimated Net Working Capital ”, and such reflected Closing Net Cash estimate being referred to herein as the “ Estimated Closing Net Cash ”. The amounts reflected in the Estimated Closing Statement, including the Estimated Net Working Capital and the Estimated Closing Net Cash, are without prejudice to the ultimate determination of the Purchase Price, and its various components (including the Net Working Capital and Closing Net Cash). An illustrative Closing Statement based on the June 30, 2017 financial information is attached as Schedule 2.3(b) . Not later than three (3) Business Days prior to the anticipated Closing Date, Buyer will prepare and deliver to Seller a certificate, signed by the Chief Financial Officer of Buyer, setting forth Buyer’s good faith calculation of the Financing Adjustment, for Seller’s prompt review and approval (not to be unreasonably withheld, conditioned or delayed). Such statement as so approved by Seller (or as modified by agreement of Seller and Buyer) referred to herein as the “ Estimated Financing Adjustment ”. Buyer will provide Seller with such supporting documentation relating thereto as Seller may reasonably request in connection with Seller’s review of such certificate.

(c) At Closing, Seller shall deliver or cause to be delivered to Buyer all instruments, duly executed, or other items which are required by the terms hereof to be delivered at the Closing, including:

(i) original stock certificates representing the Seller’s ownership of the Shares, duly endorsed in blank or accompanied by stock transfer powers;

(ii) resignations of those officers and directors of any Group Company that are employees of Seller or an Affiliate of Seller other than a Group Company;

(iii) a certificate as required by Section 5.11 ;

(iv) a certificate signed by an executive officer of Seller as required by Section 6.2(c) ; and

(v) a restrictive covenant agreement in the Form of Exhibit B .

 

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(d) At Closing, Buyer shall:

(i) pay an amount equal to the Purchase Price (calculated for this purpose using the Estimated Net Working Capital, Estimated Closing Net Cash and Estimated Financing Adjustment), by wire transfer of immediately available funds to the bank account designated by Seller (such amount, the “ Closing Payment ”); and

(ii) prepare and deliver to Seller a certificate signed by an executive officer of Buyer as required by Section 6.3(c) .

Section 2.4 Final Calculation of Purchase Price .

(a) Within ninety (90) days after the Closing Date, Buyer will cause to be prepared and delivered to Seller a statement (the “ Closing Statement ”) setting forth (i) Buyer’s good faith calculation of the Net Working Capital, Closing Net Cash and Financing Adjustment, in each case as of the Effective Time, and (ii) Buyer’s calculation of the Purchase Price based thereon. The Closing Statement shall be prepared in accordance with the Accounting Principles and in the same form as the Estimated Closing Statement.

(b) No account shall be taken of events taking place after the close of business on the Closing Date or of information received after the delivery of the draft Closing Statement by Buyer to Seller if attributable to any post-Closing decision or action of Buyer.

(c) The Closing Statement shall be prepared so as to exclude any and all effects of this Agreement and the transactions contemplated herein, including the effect of the change of control and ownership of the Group Companies. Any charges, provisions, reserves or write-offs in respect of any costs, liabilities or charges to be incurred after the Closing Date as a consequence of any change in the management strategy, direction or priority or possible closure of any part of the business of any Group Company after the Closing Date, resulting from the change in ownership shall be excluded from the Closing Statements.

(d) During the thirty (30) day period following delivery of the Closing Statement to Seller, Buyer will provide Seller and its representatives with reasonable access during normal business hours and upon reasonable notice to the books and records and personnel of Buyer and the Group Companies to enable Seller to evaluate the accuracy of the Closing Statement. If Seller disagrees with the determination of any component of the Closing Statement calculations, then Seller will notify Buyer in writing (an “ Objection Notice ”) of such disagreement within thirty (30) days after delivery of the Closing Statement, which Objection Notice will describe the nature and extent of any such disagreement in reasonable detail. If Seller does not deliver an Objection Notice to Buyer within such thirty (30)-day period, then the Closing Statement and the calculations of Net Working Capital, Closing Net Cash and Purchase Price set forth therein will be conclusive and binding upon the parties.

(e) If Buyer and Seller mutually agree upon the Net Working Capital and Closing Net Cash within thirty (30) days after Buyer’s receipt of the Objection Notice, such agreement and the resulting calculations of Net Working Capital, Closing Net Cash and the Purchase Price shall be binding upon the parties. If Buyer and Seller are unable to resolve any disagreement reflected in the Objection Notice within thirty (30)-days after Buyer’s receipt of the Objection Notice, Buyer or Seller may refer the accounting matters remaining in dispute for

 

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final determination to Deloitte LLP (the “ Chosen Firm ”); provided that , if Deloitte LLP is not willing to serve as the Chosen Firm, such other reputable, national independent accounting firm as Buyer and Seller may designate by mutual agreement, or failing such agreement, the national independent accounting firm determined pursuant to the dispute resolution procedures set forth in Section 10.13 . The Chosen Firm shall only have authority to resolve those accounting matters specifically referred to it for resolution; provided that the Chosen Firm may not assign a value to any item greater than the greatest value, or less than the smallest value, for such item claimed by either Buyer or Seller. The Chosen Firm shall apply the provisions of Section 2.2 and this Section 2.4 in resolving any dispute pursuant hereto. The parties shall use their reasonable commercial efforts to cause the Chosen Firm to resolve any such disputed accounting matters within thirty (30) days after such referral and, in any case, as promptly as practicable after such referral. The decision of the Chosen Firm as to any accounting matters in dispute shall be in writing and shall be final and binding upon all parties hereto for all purposes. Any disagreements among the parties with respect to any matters of law or the interpretation of this Agreement (not including any disagreement related to the appropriateness and applicability of the Accounting Principles, which disagreement shall be decided by the Chosen Firm) remain subject to the dispute resolution provisions set forth in Section 10.13 , and the Chosen Firm shall have no authority to decide such matters unless specifically agreed by Buyer and Seller at the time, and any dispute as to whether a matter is an accounting matter or a matter of law or interpretation of this Agreement will, unless otherwise agreed by Buyer and Seller at the time, be resolved pursuant to the dispute resolution procedures set forth in Section 10.13 . The fees and disbursements of the Chosen Firm shall be shared equally by Buyer, on the one hand, and Seller, on the other.

(f) If the sum of the Net Working Capital and Closing Net Cash minus the Financing Adjustment, as finally determined pursuant to this Section 2.4 exceeds the sum of the Estimated Net Working Capital and the Estimated Closing Net Cash minus the Estimated Financing Adjustment used to calculate the Closing Payment, then Buyer shall pay the amount of such excess to Seller. If the sum of the Net Working Capital and Closing Net Cash minus the Financing Adjustment, as finally determined pursuant to this Section 2.4 is less than the sum of the Estimated Net Working Capital and Estimated Closing Net Cash minus the Estimated Financing Adjustment used to calculate the Closing Payment, then Seller shall refund to Buyer an aggregate amount equal to such shortfall. Any interim amounts previously paid pursuant to Section 2.4(g) below (other than any interest on such amounts under Section 2.4(h) ) shall be credited against any subsequent payment due under this Section.

(g) Notwithstanding any other provision hereof, if, pursuant to Section 2.4(e) there is a dispute as to the Net Working Capital, Closing Net Cash or Financing Adjustment, Seller, on the one hand, or Buyer, on the other, shall promptly pay to Buyer or Seller, as appropriate, such overall net amounts as are not in dispute, pending final determination of any disputed matters pursuant to Section 2.4(e) .

(h) Any amount payable pursuant to Section 2.4(f) or Section 2.4(g) , shall be due and payable no later than five (5) Business Days after the final determination of the corresponding amounts by wire transfer of immediately available funds to such account(s) as may be directed by Buyer or Seller, as the case may be, together with an amount calculated like interest thereon from and after the Closing Date to and including the date of payment, at a rate per annum equal to four and one-quarter percent (4.25%) per annum, and calculated daily on the basis of a three hundred sixty (360)-day year and the actual number of days elapsed, without compounding.

 

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth on the Schedules (it being understood and agreed that each disclosure set forth in the Schedules shall qualify or modify each of the representations and warranties set forth in this ARTICLE 3 to the extent the applicability of the disclosure to such representation and warranty is reasonably apparent from the text of the disclosure made), Seller hereby represents and warrants to Buyer as follows:

Section 3.1 Organization and Qualification . Each Group Company is duly incorporated or formed, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation. Schedule 3.1 sets forth, with respect to each Group Company, its full legal name, jurisdiction of incorporation or formation and, with respect to each Group Company whose jurisdiction of incorporation or formation is in the United States, each jurisdiction in which such Group Company is qualified to transact business. Each Group Company is duly qualified to do business in each jurisdiction where such qualification is required, except to the extent the failure to be so qualified would not be material. Seller has made available to Buyer the Governing Documents of each Group Company as currently in effect, and no Group Company is in violation of any provision of its Governing Documents.

Section 3.2 Authority . Each Group Company has all requisite power and authority to own its properties and assets and to carry on its business as currently conducted. Seller has all requisite power and authority to (a) execute and deliver this Agreement and perform its obligations hereunder and (b) execute and deliver all other agreements, documents, instruments and/or certificate (the “ Ancillary Documents ”) to be executed and delivered pursuant to this Agreement and perform its obligations thereunder.

Section 3.3 Enforceability . This Agreement has been executed and, at the Closing, each Ancillary Document will be executed, by a duly authorized officer or representative of Seller and Parent, and this Agreement constitutes, and when so executed and delivered at the Closing, each Ancillary Document will constitute, a valid and binding obligation of Seller and Parent, respectively, enforceable against it in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights generally and by general principles of equity. The boards of directors of Seller and Parent, and the sole stockholder of Seller, have approved this Agreement.

Section 3.4 No Conflicts; Consents and Approvals .

(a) Except as set forth on Schedule 3.4(a) , the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not (i) breach, violate or result in a default under any applicable Law, Permit or other authorization of a Governmental Entity applicable to a Group Company or its respective assets, (ii) conflict with

 

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any provision of the Governing Documents of any Group Company, (iii) breach, violate or result, with or without notice or lapse of time or both, in a default under, terminate or give rise to any right on the part of any Person to terminate, or require any Group Company to make a payment under, or require any consent by, or notice to, any Person under any Material Contract, or (iv) create or impose any Encumbrance on any asset of a Group Company, except with respect to each of (i), (iii) and (iv) as would not be material.

(b) Except as set forth on Schedule 3.4(b) , no consent, approval or authorization of or filing with any Governmental Entity is required on the part of a Group Company in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

Section 3.5 Capitalization of the Group Companies .

(a) The authorized capital stock or equity interests of each Group Company, the number and class of all outstanding equity interests and the record holder thereof is set forth on Schedule 3.5(a) . All outstanding shares or equity interests in each Group Company have been duly authorized and validly issued and are fully paid and nonassessable. Except as set forth on Schedule 3.5(a) , the capital stock or equity interests of each Group Company that is owned directly or indirectly by Seller is owned, free and clear of any Encumbrance. Except as set forth on Schedule 3.5(a) , no Group Company has any Subsidiary and no Group Company owns any capital stock or other equity interest of any other Person.

(b) Except as set forth in the Governing Documents of a Group Company, complete and correct copies of all of which have been made available to Buyer, or except as set forth in Schedule 3.5(b) , there are no (i) preemptive or similar rights on the part of any holder of any class of securities of a Group Company, (ii) subscriptions, options, warrants, conversion, exchange or other rights, agreements or commitments of any kind obligating a Group Company to issue, sell or purchase, or cause to be issued and sold, any shares of capital stock or equity interests of a Group Company or any securities convertible into or exchangeable for any such shares, (iii) stockholder agreements, voting trusts or other agreements or understandings to which any Group Company is a party, relating to the voting, purchase, redemption or other acquisition of any shares of the capital stock or equity interests of a Group Company or (iv) unpaid dividends, whether current or accumulated, due or payable on any of the capital stock or equity interests of a Group Company.

Section 3.6 Financial Statements . Seller has made available to Buyer complete and correct copies of audited combined balance sheets of the Group Companies as of December 31, 2016, January 2, 2016, and December 27, 2014, and the related consolidated statements of operations, statements of equity and statements of cash flows for each of the years then ended together with the report of the Group Companies’ auditor thereon (the “ Audited Financials ”), and the balance sheets, and the related consolidated statements of operations, statements of equity and statements of cash flows for the six (6) month periods ended July 1, 2017 and July 2, 2016 (together with the Audited Financials, the “ Financial Statements ”). Except as set forth on Schedule 3.6 , the Financial Statements fairly present in all material respects the consolidated financial condition and results of operations and cash flows of the Group Companies as of the dates and for the periods indicated and have been prepared in accordance with GAAP.

 

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Section 3.7 Absence of Undisclosed Liabilities . The Group Companies have no liabilities or obligations, whether known, unknown, absolute, accrued, contingent or otherwise and whether due or to become due, other than for liabilities and obligations (i) that would not be required to be reflected on a consolidated balance sheet of the Group Companies (including the notes thereto) in accordance with GAAP, (ii) reflected on or disclosed on the Reference Balance Sheet or specifically disclosed in the notes thereto, (iii) incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date, or (iv) that, individually and in the aggregate, are not and would not reasonably be expected to be, materially adverse to the Group Companies, taken as a whole.

Section 3.8 Real Property; Assets .

(a) Schedule 3.8(a) is a complete and correct list of all real property owned by any Group Company (the “ Owned Real Property ”). Except as set forth on Schedule 3.8(a) , the applicable Group Company holds good, marketable and valid fee simple title to the Owned Real Property, in each case, free and clear of Encumbrances, except for any Permitted Encumbrances. No Group Company is obligated or bound by any options, obligations or rights of first refusal or contractual rights to sell, lease or acquire any real property. Neither the whole nor any part of the Owned Real Property is subject to any pending suit for condemnation or other taking by any Governmental Entity and, to the Knowledge of Seller, no such condemnation or other taking is threatened or contemplated. To the Knowledge of Seller, all buildings, structures, facilities and improvements located on the Owned Real Property comply in all material respects with valid and current certificates of occupancy or similar Permits to the extent required by Law for the use thereof, and are in all material respects in good operating condition and repair (ordinary wear and tear excepted).

(b) Schedule 3.8(b) is a complete and correct list of all real property leased, subleased, licensed or occupied by a Group Company (the “ Leased Real Property ”) and each lease, sublease, license agreement or occupancy agreement pursuant to which a Group Company leases, subleases, licenses or occupies any Leased Real Property (the “ Leases ”) (showing the parties thereto and the location). Except as set forth on Schedule 3.8(b), the Group Companies have valid leasehold interests in the Leased Real Property, in each case, free and clear of Encumbrances, except for any Permitted Encumbrances.

(c) Each of the Leases is in full force and effect as to the applicable Group Company party thereto and, to the Knowledge of Seller, as to the landlord, sublandlord, licensor or owner that is party thereto, in accordance with its terms. To the Knowledge of Seller, except as set forth on Schedule 3.8(c) , the Leases are not subject to any ground leases, mortgages, deeds of trust or other superior Encumbrances or interests that would entitle the holder thereof to interfere with or disturb the applicable Group Company’s use and enjoyment of the Leased Real Property or the exercise of the applicable Group Company’s rights under the Leases so long as the applicable Group Company is not in default. There exists no default or event of default under any Lease on the part of a Group Company, or, to the Knowledge of Seller, any other party under any Lease, except for any default that would not be material. Seller has made available to Buyer complete and correct copies of all Leases, including all amendments thereto. No Group Company has assigned, transferred or pledged any interest in any of the Leases.

 

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(d) Except as set forth on Schedule 3.8(d) , there are no leases, subleases, licenses or other occupancy agreements relating to the Real Property with respect to which a Group Company is lessor, sublessor, licensor or the like, and no third Person is in possession of any of the Real Property.

(e) No Group Company is party to any lease pursuant to which a Group Company leases any fixtures, furniture, equipment or any other Personal Property under which a Group Company is required to make payments in excess of $500,000 in the aggregate over its remaining term.

(f) Each Group Company has legal and beneficial ownership of all of its respective tangible Personal Property and assets included in the most recent Financial Statements, except for properties and assets disposed of in the ordinary course of business since the Balance Sheet Date, free and clear of Encumbrances, other than Permitted Encumbrances.

(g) Other than in the ordinary course of business consistent with past practice, all inventory of the Group Companies, including finished goods, raw materials and work-in-process, and all service parts and supplies, is located on the Real Property.

Section 3.9 Sufficiency of Assets . Except for those assets identified on Schedule 3.9 , and subject to replenishment of consumables and maintenance of the assets in the ordinary course, the assets owned, leased or licensed by the Group Companies are, in the aggregate, sufficient, in all material respects, for the operation of the business immediately after the Closing as currently conducted by the Group Companies. No assets primarily used in the operation of the business conducted by the Group Companies are owned by Seller or any of its Affiliates (other than the Group Companies).

Section 3.10 Contracts .

(a) Schedule 3.10 sets forth a complete and correct list, as of the date of this Agreement, of all Material Contracts. The term “Material Contracts” means all of the following types of Contracts to which a Group Company is a party or by which it is bound as of the date of this Agreement:

(i) all (A) employment Contracts with officers or other employees of a Group Company, other than arrangements that are terminable on not more than thirty (30) days’ notice without penalty or payment in connection with termination (other than amounts accrued prior to termination), and that do not provide for employee benefits not available to similarly situated employees of the Group Companies, (B) Contracts with consultants, in each case pursuant to which a Group Company is or could become obligated to make payments exceeding $150,000 annually, other than such Contracts that are terminable on less than sixty (60) days’ notice without penalty or payment in connection with termination, (C) retention, stay bonuses, change in control, transaction bonuses, and similar agreements (the agreements described in this clause (C), collectively the “ Retention Bonus Agreements ”) and (D) employee leasing agreements with a Group Company other than agreements that are terminable on not more than thirty (30) days’ notice without penalty or payment in connection with termination;

 

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(ii) all collective bargaining agreements (including any material memorandums of understanding), works council or similar labor Contracts;

(iii) all (A) credit agreements, notes, mortgages, indentures, security agreements, letters of credit and other Contracts relating to Indebtedness and any other indebtedness, whether drawn or undrawn, (B) guarantees of the obligations of any other Person and (C) agreements under which any Person has guaranteed directly or indirectly, any liabilities or obligations of a Group Company;

(iv) joint venture, partnership and limited liability company or other similar agreements, including any agreement or commitment to make any loan or capital contribution to any other joint venture or partnership;

(v) (A) Contracts for the purchase by a Group Company of materials, supplies, products, goods or services, and (B) Contracts for the sale or provision by a Group Company of materials, supplies, products, goods or services, in each case under which the amount that would reasonably be expected to be paid or received by a Group Company exceeds $500,000 in the aggregate over the remaining term of such Contract other than any purchase orders, sales orders or other verbal notices or orders entered into, issued or received in the ordinary course of business;

(vi) Contracts prohibiting or restricting the ability of a Group Company to compete with any Person, engage in any business or operate in any geographical area;

(vii) Contracts containing “requirements” provisions or other provisions obligating a Group Company to purchase or obtain a minimum or specified amount of any product or service from any Person or that provide for “most favored nations” terms or establish exclusive sale or purchase obligations with respect to any product or service, other than any such Contract that is terminable on less than sixty (60) days’ notice without penalty or that can be terminated by the Group Companies at an aggregate cost of less than $500,000;

(viii) Contracts relating to the acquisition or disposition by a Group Company of any business or line of business (whether by acquisition or disposition of equity interests, assets or otherwise) that has been consummated since January 1, 2014, or pursuant to which such Group Company has any remaining obligation or potential liability;

(ix) any distribution, dealer, representative, agency or similar Contract other than any such Contract that is terminable on less than 60 days’ notice without penalty or payment in connection with termination, other than amounts accrued prior to such termination;

(x) any Contract involving a remaining commitment by a Group Company to pay capital expenditures in excess of $500,000;

(xi) any Contracts to sell or otherwise dispose of any capital assets having a fair market value in excess of $500,000;

(xii) any noncompetition or similar Contracts running in favor of a Group Company;

 

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(xiii) any payment or performance bond or surety agreement;

(xiv) any Contract between the Group Companies, on the one hand, and any officer or director of any Group Company or Seller or any Seller Affiliate other than the Group Companies, on the other hand, other than any Employee Benefit Plan (the “ Related Party Agreements ”);

(xv) any Contract concerning Intellectual Property material to the business of the Group Companies, including any covenant not to sue or settlement agreement relating to Intellectual Property material to the business of the Group Companies, but excluding any license in respect of non-exclusive licenses granted to customers or suppliers in the ordinary course of business in connection with the sale or provision of goods or services with license, maintenance, support, and other fees less than $50,000 per year or Off-the-Shelf Software; and

(xvi) any other Contract that is material to the Group Companies, taken as a whole.

(b) Seller has made available to Buyer complete and correct copies of the written Material Contracts (including all amendments and other modifications thereto) as in effect on the date hereof. No Group Company, and, to the Knowledge of Seller, no other party thereto, is in default under any Material Contract, except for any default that would not be material. Each Material Contract is in full force and effect as to the applicable Group Company, and to the Knowledge of Seller, as to each other party thereto.

Section 3.11 Employee Benefit Plans .

(a) Schedule 3.11(a) sets forth all material Employee Benefit Plans by name, including all amendments thereto, and identifies whether each Employee Benefit Plan is a Company Benefit Plan, a Seller Benefit Plan, or a Collective Bargaining Benefit Plan. No Company Benefit Plan is subject to the laws of a country other than the United States. Seller has made available to Buyer complete and correct copies of: (i) the most recent determination letter or opinion letter, if any, received by a Group Company from the IRS regarding each Qualified Plan, (ii) all pending applications for rulings, determinations or opinions with respect to any Company Benefit Plan or Qualified Plan, if any, filed with any Governmental Entity (including the Department of Labor and the IRS), (iii) all material correspondence to or from any Governmental Entity with respect to any Company Benefit Plan; (iv) the financial statements (if any) for each Company Benefit Plan for the two (2) most recent fiscal or Company Benefit Plan years for which such financial statements are available (in audited form if required by ERISA) and, where applicable, Annual Report/Returns (Forms 5500) with disclosure schedules, if any, and attachments for each Company Benefit Plan for the two (2) most recent fiscal or Company Benefit Plan years for which such Annual Report/Return (Form 5500) is available, (v) the most recently prepared actuarial valuation report for each Company Benefit Plan (including reports prepared for funding, deduction and financial accounting purposes), if applicable, (vi) all material Company Benefit Plan documents, trust agreements, insurance contracts, service agreements and related material contracts and documents, with respect to each Company Benefit Plan (and, with respect to any material unwritten Company Benefit Plan, a written summary of the material terms and conditions thereof), (vii) collective bargaining agreements (including

 

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memorandums of understanding and other side letter agreements), if any, relating to the establishment, maintenance, funding and operation of any Company Benefit Plan, and (viii) summaries of each material Seller Benefit Plan. No Company Benefit Plan provides benefits for any employee of Seller or an Affiliate of Seller (other than a Group Company). No Seller Benefit Plan provides benefits solely to employees of the Group Companies.

(b) All Qualified Plans and the trusts (if any) forming a part thereof, are so tax-qualified and have received or are subject to a favorable determination or opinion letter from the IRS as to their qualification under the Code and to the effect that each such trust is exempt from taxation under Section 501(a) of the Code. No Company Benefit Plan is a Qualified Plan. To the extent required by Law, all Company Benefit Plans and Seller Benefit Plans comply with the requirements of ERISA and the Code and all other applicable Law in all material respects. No Company Benefit Plan is subject to ERISA. All Company Benefit Plans and Seller Benefit Plans have been administered and maintained at all times in all material respects in accordance with the documents and instruments governing them. Except as set forth on Schedule 3.11(b) , all reports (including Form 5500) and filings with Governmental Entities (including the Department of Labor and the IRS) required in connection with each Company Benefit Plan have been timely made and all material disclosures required by applicable Law to be distributed to any Company Benefit Plan participant have been timely made. No Group Company has any material liability with respect to a Tax under Chapter 43 of the Code.

(c) All contributions, premium payments and other payments required to be in connection with the Company Benefit Plans as of the date of this Agreement have been made. All contributions, premium payments and other payments required to be made by any Group Company in connection with the Seller Benefit Plans and the Collective Bargaining Benefit Plans as of the date of this Agreement have been made. Except as set forth on Schedule 3.11(c) , no material unfunded liabilities exist with respect to any Company Benefit Plan other than those accrued on the Financial Statements in accordance with GAAP or arising since the Balance Sheet Date and required to be recorded as a current liability in accordance with GAAP.

(d) No Action or claim is pending or to the Knowledge of Seller, threatened with regard to any Company Benefit Plan other than routine claims for benefits. No material Action or claim involving any current or former employee of any Group Company is pending or, to the Knowledge of Seller, threatened with regard to any Seller Benefit Plan, other than routine claims for benefits. Except as otherwise expressly provided in this Agreement or as set forth on Schedule 3.11(d)(i) , the consummation of the transactions contemplated by this Agreement will not cause any Company Benefit Plan to increase benefits payable to any participant or beneficiary. Except as otherwise expressly provided in this Agreement or as set forth on Schedule 3.11(d)(ii) , neither the execution of this Agreement nor the consummation of the transactions contemplated by this Agreement will (whether or not some other subsequent action or event would be required to cause the receipt of such amount or benefit to occur): (i) entitle any current or former employee of any Group Company to severance pay, unemployment compensation or to any other payment, benefit or award under any Company Benefit Plan or Seller Benefit Plan, (ii) accelerate or modify the time of payment or vesting, or increase the amount of any benefit, award or compensation due any such employee under any Company Benefit Plan or Seller Benefit Plan, or (iii) result in any forgiveness of indebtedness, trigger any funding obligation under any Company Benefit Plan or impose any restrictions or limitations on

 

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any Group Company’s rights to administer, amend or terminate any Company Benefit Plan. No amount or benefit that could be received (whether in cash, property or the vesting in cash or property) under any Company Benefit Plan, Seller Benefit Plan or otherwise as a result of or in connection with the transactions contemplated by this Agreement (whether or not some other subsequent action or event would be required to cause the receipt of such amount or benefit to occur) by any employee, officer or director of any Group Company who is a “disqualified individual” (as such term is defined in Section 280G(c) of the Code) will, either individually or in combination with any other amount or benefit, fail to be deductible for United States federal income tax purposes by virtue of Section 280G of the Code. Except as set forth on Schedule 3.11(d)(iii) , each Company Benefit Plan, and, with respect to current and former employees and service providers of any Group Company, each Seller Benefit Plan, in either case that is subject to Section 409A of the Code, has at all times while subject to Section 409A of the Code complied in all material respects with Section 409A of the Code. No person is entitled to receive any additional payment (including any tax gross-up or other payment) from Seller or any of its Subsidiaries as a result of the imposition of the excise taxes required by Section 4999 of the Code or any taxes required by Section 409A of the Code. To the Knowledge of Seller, no Company Benefit Plan is currently under examination or audit by any Governmental Entity, including the Department of Labor or the IRS.

(e) Schedule 3.11(e)(i) lists each Multiemployer Plan to which a Group Company contributes, is required to contribute, or within the last six (6) years, has contributed or been required to contribute (each a “ Company Multiemployer Plan ”). No Group Company could reasonably be expected to have any liability with respect to a Multiemployer Plan that is not a Company Multiemployer Plan. Except as set forth on Schedule 3.11(e)(ii) , none of Seller or any of its Affiliates (other than the Group Companies) contributes to or is required to contribute to any Company Multiemployer Plan. Except as set forth on Schedule 3.11(e)(iii) , within the last six (6) years, no Group Company nor any of their ERISA Affiliates has maintained or established, contributed or been required to contribute to, participated in or required to participate in, or otherwise has been liable to any Employee Benefit Plan (including any Multiemployer Plan) which is subject to Title IV or Section 302 of ERISA or Section 412 of the Code. No employee of a Group Company is currently accruing, or is entitled to accrue, a benefit under any Employee Benefit Plan that is not a Collective Bargaining Benefit Plan and is subject to Title IV or Section 302 of ERISA or Section 412 of the Code. No Company Benefit Plan or Seller Benefit Plan is a multiple employer welfare arrangement (as defined in Section 3(40)(A) of ERISA) or a multiple employer plan within the meaning of Section 413(c) of the Code.

(f) No Group Company or ERISA Affiliate has received notice that a Company Multiemployer Plan is assessing a withdrawal liability with respect to a Group Company. With respect to each Company Multiemployer Plan, the Company (or another Group Company) will, within ten (10) Business Days following the date hereof, request the most recent estimate of withdrawal liability available and will promptly provide each such estimate to Buyer upon receipt. All material communications during the preceding three (3) years between any Group Company or any ERISA Affiliate and any Company Multiemployer Plan pertaining to the Group Companies or matters that could reasonably be expected to affect the Group Companies’ potential liability have been delivered to Buyer. With respect to each Company Multiemployer Plan, no Group Company has experienced a reduction in contribution base units in the three (3) consecutive years prior to the date of this Agreement that would, if continued,

 

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reasonably be expected to result in a partial withdrawal assessment that could result in any liability to any Group Company, whether such liability is contingent or otherwise.  Schedule 3.11(f) identifies each Company Multiemployer Plan that has notified the Company or any ERISA Affiliate of any failure to satisfy minimum funding standards, or of its status as a critical or endangered plan.

(g) Except as set forth on Schedule 3.11(g) , (i) no Group Company has any outstanding liability (contingent or otherwise) with respect to the Allied Local 470 Retirement Plan, the Allied Local 911 Retirement Plan or the Allied Local 592 Retirement Plan (the “ Legacy Company Retirement Plans ”), and (ii) each of the Legacy Company Retirement Plans have been terminated and liquidated in accordance with their terms and applicable Law, including ERISA and the Code.

(h) Except as set forth on Schedule 3.11(h)(i) , no Group Company or Company Benefit Plan provides or has any obligation to provide post-employment life insurance, death, medical or other welfare benefits other than health care continuation benefits described in Section 4980B of the Code or any other similar Law. Except as set forth on Schedule 3.11(h)(ii) , no Seller Benefit Plan provides or has any obligation to provide post-employment life insurance, death, medical or other welfare benefits other than health care continuation described in Section 4980B of the Code or any similar Law to any employee or former employee of a Group Company.

(i) To Seller’s knowledge, there are no Multiemployer Welfare Plans not referenced in the applicable collective bargaining agreement. None of the Multiemployer Welfare Plans require maintenance-of-benefit contributions in excess of the contribution rates set forth in the applicable collective bargaining agreement.

Section 3.12 Intellectual Property .

(a) The Group Companies own all right, title and interest to, or have valid licenses or other rights to use, free and clear of all Encumbrances, other than Permitted Encumbrances, all of the Intellectual Property used in the operation of the business as currently conducted. Schedule 3.12 lists all registered and material unregistered trademarks, trade names, service marks, logos, registered and material unregistered copyrights, material Software, domain names, social media accounts, and patents, including pending applications to register or renew any of the foregoing with any Governmental Entity, that are owned or registered by any Group Company and which have not expired or been abandoned, other than Intellectual Property where the failure to register or maintain registration would not be material. To the Knowledge of Seller, (i) no Group Company is infringing the Intellectual Property rights of any other Person in any manner that is or would be material, and (ii) no Person is infringing any Intellectual Property rights of any Group Company. Schedule 3.12 lists all material written licenses to which any Group Company is a party, pursuant to which (a) any Group Company permits any Person to use any of its Intellectual Property or grants a covenant not to use or (b) any Person permits any Group Company to use any Software or Intellectual Property not owned by any Group Company, except for Off-the-Shelf Software (collectively, “ Licenses ”). Seller has made available to Buyer complete and correct copies of the Licenses listed on Schedule 3.12 . No Group Company and, to the Knowledge of Seller, no other party thereto, is in default, in any material respect, under any License, and each License is in full force and effect.

 

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(b) Within the past three (3) years, to Seller’s Knowledge, (i) none of the Group Companies has suffered a material Data Breach, (ii) no material breach or violation of the Written Information Security Program has occurred and (iii) except as set forth in Schedule 3.12(b) , none of the Group Companies has notified or been required to notify any Person of any material Data Breach suffered by its service providers, Seller or any of its Affiliates (including Group Companies). No representation or warranty is made in this Agreement with respect to Data Breaches suffered by third parties other than Seller or any of its Affiliates (including Group Companies).

Section 3.13 Permits; Compliance with Law . Schedule 3.13 lists all licenses, permits and other governmental authorizations (other than individual vehicle licenses or registrations or certificates of occupancy) issued by any Governmental Entity exercising jurisdiction over any Group Company (the “ Permits ”) maintained by a Group Company in connection with the conduct of its business as currently conducted, other than any Permit the absence of which would not be material. Except as set forth on Schedule 3.13 , no Group Company has received during the past three (3) years any written notice of any violation of any Permit or any applicable Law, or any written notice of a proposal by any Governmental Entity to revoke, cancel, rescind, modify or refuse to renew any such Permit and to the Knowledge of Seller, no Group Company is under investigation by any Governmental Entity with respect to any material violation of any applicable Law. Except as set forth on Schedule 3.13 , each of the Group Companies is and has been in material compliance with applicable Law and the Permits. Except as set forth on Schedule 3.13 , the Group Companies have all Permits necessary for the conduct of their business, other than any Permit the absence of which would not be material.

Section 3.14 Litigation . Except as set forth on Schedule 3.14 , there are no Actions or unresolved material disputes with respect to which any Group Company has been served or given written notice, pending, or to the Knowledge of Seller threatened, against any Group Company or with respect to any of its respective properties, with respect to requests for payment or other performance, other than (a) Actions or unresolved disputes with respect to requests for performance that do not seek injunctive or declarative relief against any Group Company and for which the amount in controversy (as reasonably determined by the Group Companies in their good faith business judgment) does not exceed $250,000, and (b) Actions or unresolved disputes with respect to requests for payment or other performance that are covered by an Insurance Policy, whether or not subject to a reservation of rights. No Group Company is a party to or subject to any settlement or similar agreement with any Governmental Entity or any material judgment, order, injunction or decree of any Governmental Entity under which any Group Company has any ongoing obligation. Seller has provided Buyer with an extract of Seller’s Legal Department Database as of August 22, 2017 setting forth all disputes involving a Group Company that are being handled by the Oldcastle Law Group and for which the amount in controversy (as reasonably determined by the Group Companies in their good faith business judgment) is in excess of $50,000.

 

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Section 3.15 Taxes . Except as set forth on Schedule 3.15 :

(a) All Tax Returns required to have been filed by any Group Company have been duly filed on a timely basis. Each such Tax Return has been prepared in compliance with all applicable Laws, and is true, complete and correct in all material respects.

(b) No Group Company that is an eligible entity for purposes of Treasury Regulation § 301.7701-3(a) has elected under Treasury Regulation § 301.7701-3 to be treated as a corporation.

(c) All Taxes payable by any Group Company or for which a Group Company may be liable (whether or not shown on any Tax Return) have been timely paid, except such Taxes, if any, as are being contested in good faith, in which case, adequate reserves for such Taxes have been made on the Financial Statements. All assessments for Taxes due and owning by any Group Company with respect to completed and settled examinations or concluded litigation have been paid. There are no Tax liens on any assets, properties, or rights of any Group Company except liens for current Taxes not yet due.

(d) All employment and withholding Taxes required to be paid or withheld by or on behalf of the Group Companies have been paid or properly set aside in accounts for such purpose.

(e) No agreement or other document extending or having the effect of extending the period of assessment or collection of any Taxes payable by any Group Company, and no power of attorney with respect to any such Taxes, has been entered into, executed or filed with the IRS or any other Governmental Entity that is currently in effect. No Group Company is the beneficiary of any extension of time (other than an automatic extension of time not requiring the consent of the IRS or any other taxing authority) within which to file any Tax Return not previously filed.

(f) There is no suit, audit, examination, or, to the Knowledge of Seller, investigation or other Action pending, proposed or threatened in respect of Taxes payable by any Group Company. No Tax deficiency has been asserted in writing against any Group Company for additional Taxes that has not yet been resolved. No written claim has been made during the six (6) year period ending on the date hereof by a Governmental Entity in any jurisdiction in a given Group Company does not file Tax Returns asserting that such a Group Company is or may be subject to taxation in that jurisdiction.

(g) No Group Company is or has been a member of a Consolidated Group filing consolidated or combined Tax Returns other than the Allied Consolidated Group or any subset thereof. No Group Company has or has had during the period that it has been an Affiliate of Seller any direct or indirect ownership interest in any corporation, partnership, joint venture or other entity (other than the other Group Companies). No Group Company is a party to any Tax allocation or sharing agreement (other than an agreement entered into in the ordinary course of business the primary purpose of which is not the allocation or sharing of Taxes), or has any liability for Taxes of any other person or entity (other than another member of the Allied Consolidated Group) under Treasury Regulation Section 1.1502-6 or any analogous state, local or foreign Law.

 

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(h) No Group Company has participated in any transactions that are or would be part of any “listed transaction” within the meaning of Treasury Regulations 1.6011-4(b)(2) (or any similar provision under any state or local Law), and, with respect to each transaction in which a Group Company has participated that is a “reportable transaction” within the meaning of Treasury Regulation § 1.6011-4(b)(1), such participation has been properly disclosed on IRS Form 8886 (Reportable Transaction Disclosure Statement) and on any corresponding form required under state, local or other law.

(i) During the last three (3) years, no Group Company has been a party to any transaction treated by the parties thereto as one to which Section 355 of the Code (or any similar provision of state, local or foreign law) applied. The sale of the Shares pursuant to this Agreement is not subject to the rules of Treasury Regulation § 1.1502-36. No election under Section 336(e) of the Code or the Treasury Regulations thereunder will affect any item of income, gain, loss or deduction of any Group Company after the Closing.

(j) No Group Company is, or during the past twelve (12) month period has been, a United States shareholder (within the meaning of Section 951(b) of the Code) of a controlled foreign corporation (within the meaning of Section 957 of the Code). There are no Tax credits, grants or similar amounts that are or could be subject to clawback or recapture as a result of (i) the transactions contemplated by this Agreement or (ii) a failure by a Group Company to satisfy one or more requirements on which the credit, grant or similar amount is or was conditioned. No Group Company has established or has been required to establish a Subpart F income recapture account within the meaning of Treasury Regulation § 1.952-1(f).

(k) No Group Company currently is, or has to Seller’s Knowledge ever been, subject to Tax in any jurisdiction outside the United States.

(l) No Group Company will be required to include or accelerate the recognition of any item of income in, or exclude or defer any item of deduction or other tax benefit 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 for a taxable period ending on or prior to the Closing Date under Section 481 of the Code (or any corresponding provision of state, local or foreign income Tax Law), closing agreement or intercompany transaction, (ii) installment sale or open transaction disposition made on or prior to the Closing Date, (iii) prepaid amount received on or prior to the Closing Date or (iv) any election pursuant to Section 108(i) of the Code (or any similar provision of state, local or foreign Law) made on or prior to the Closing Date.

Section 3.16 Absence of Changes . Except as set forth on Schedule 3.16 , (i) since December 31, 2016, the business of the Group Companies has been conducted in all material respects in the ordinary course of business consistent with past practice, (ii) since June 30, 2017, no Group Company has taken any action which, if taken after the date of this Agreement, would require the consent of Buyer pursuant to Section 5.1 and (iii) since December 31, 2016, no Group Company has suffered a Company Material Adverse Effect and no effect, development, event, change, state of facts, circumstance or occurrence exists that has had or is reasonably expected to have a Company Material Adverse Effect.

 

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Section 3.17 Environmental Matters .

(a) Except for any matter disclosed on Schedule 3.17 or which would not be material:

(i) each Group Company and its respective business is and has for the past five (5) years been in compliance with all applicable Environmental Laws and has obtained, maintained and complied with the terms of all permits, licenses, consents, authorizations, exemptions and approvals required under all applicable Environmental Laws to entitle the Group Companies to own and operate their respective assets and to carry on and conduct their business (“ Environmental Permits ”), with each such Environmental Permit being listed on Schedule 3.17(a) ;

(ii) there are no pending or, to the Knowledge of Seller, threatened Actions, claims or demands arising under any Environmental Laws with respect to any Group Company or any of the respective businesses or assets, and there is no judicial or administrative judgment, order, decree, or settlement pursuant to any Environmental Law relating to any Group Companies, their respective assets or businesses that remains unresolved in any respect;

(iii) no Group Company or, to Seller’s Knowledge, any legal predecessor thereto has disposed of, sent or arranged for the transportation of Hazardous Substances at or to a site, or owned, leased or operated a site, that (a) pursuant to CERCLA or any similar Law, has been placed or is proposed to be placed by the United States Environmental Protection Agency or similar state authority on the National Priorities List or similar state list or (b) has been or is involved in any government-sponsored voluntary cleanup program;

(iv) no Release or threatened Release is occurring or has occurred at, on, under or from, and no Hazardous Substances are present at, under, or on any Owned Real Property or, to the Knowledge of Seller, any Leased Real Property or any real property formerly owned, leased or operated by any Group Company or any legal predecessor thereto, in each case that would reasonably be expected to result in liability to any Group Company or for which applicable Environmental Law requires any Group Company to (i) provide notice to any Person, (ii) perform further investigation, or (iii) undertake any form of response or remedial action;

(v) no Group Company has assumed by contract or, to the Knowledge of Seller, by operation of Law, any liability of any Person pursuant to any Environmental Law;

(vi) there are no underground storage tanks, no polychlorinated biphenyls (“ PCBs ”) or PCB-containing equipment located on any Owned Real Property or, to the Knowledge of Seller, any Leased Real Property in violation of Environmental Law;

(vii) there are no asbestos or asbestos containing materials present in any of the Owned Real Property or, to the Knowledge of Seller, any Leased Real Property in a condition requiring corrective action on the part of any Group Company under Environmental Laws, and no Group Company or any legal predecessor thereto manufactures, distributes or sells, or ever has manufactured, distributed or sold, products containing asbestos containing material; and

 

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(viii) Seller has made available to Buyer copies of (i) any material environmental site assessments, compliance audits, investigation or remediation studies performed by or on behalf of Seller or a Group Company on or after January 1, 2015, and (ii) any release reports and copies of any notices of violation or documents initiating or submitted by any Group Company in connection with, any unresolved regulatory or judicial or other Actions, that are in the possession of any Group Company (or, in the case of such assessments, audits, studies or reports, were prepared on behalf of any Group Company) that relate to the current or former business of the Group Companies or the Real Property; provided, that such reports and documents are provided as-is, and Seller makes no representation or warranty as to the accuracy of any facts asserted, statements made, or conclusions reached in any such reports or documents.

(b) The representations and warranties of Seller under Section 3.16 and this Section 3.17 shall be the sole representations and warranties of Seller with regard to Environmental Laws, Environmental Permits, Hazardous Substances and Releases.

Section 3.18 Affiliate Transactions .

(a) Except as set forth on Schedule 3.18 and except for employment arrangements, none of the Group Companies is a party to any agreement or transaction with any Affiliate or any stockholder of a Group Company (other than any other Group Company) or Affiliate of such stockholder, including any portfolio company of such stockholder or Affiliate (other than any other Group Company) (each, an “ Affiliate Transaction ”).

(b) Except as set forth on Schedule 3.18 , to the Knowledge of Seller, no stockholder, officer, director or employee of any Group Company, or any Affiliate of any such stockholder, officer, director or employee, (i) owns, directly or indirectly (other than by virtue of owning shares or other equity of a Group Company), any material interest in (A) any of the assets of the Group Companies or (B) any Person that is a supplier, customer or competitor of a Group Company (other than any investment in stock or other securities of an entity listed on a national securities exchange or quotation system or actively traded in the over-the-counter market), (ii) serves as an officer, director or employee of any Person that is a supplier, customer or competitor of a Group Company or (iii) is a debtor or creditor of a Group Company.

(c) Except as set forth on Schedule 3.18 , none of Seller or the Affiliates of Seller (other than a Group Company) have any interest in any material property (real or personal, tangible or intangible) used by any of the Group Companies. Except as set forth on Schedule 3.18 , none of Seller or Affiliates of Seller (other than a Group Company) provide material services to the Group Companies.

Section 3.19 Insurance.

(a) Schedule 3.19(a) lists and briefly describes each material insurance policy maintained exclusively by and for the benefit of the Group Companies (other than those in respect of Employee Benefit Plans listed on Schedule 3.11(a) ) (collectively, the “ Company Insurance Policies ”) and sets forth the date of expiration of each such Company Insurance Policy.

 

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(b) Schedule 3.19(b) lists and briefly describes each material insurance policy maintained by Seller or any of its Affiliates, other than Company Insurance Policies, under which any Group Company is entitled to any benefit (collectively, the “ Seller Group Insurance Policies ”, and together with the Company Insurance Policies, the “ Insurance Policies ”) and sets forth the date of expiration of each such Seller Group Insurance Policy (it being understood that, except as expressly set forth in Section 5.18, the coverage of the Group Companies under such Seller Group Insurance Policies shall terminate as of the Effective Time). Schedule 3.19(b) identifies, for each of the Seller Group Insurance Policies, the deductible effectively borne by the Group Companies after giving effect to the benefits of the Seller Group Insurance Policies.

(c) All insurance policies covering pending Actions or pending, material unresolved disputes that have been asserted by service of process or written notice to a Group Company will continue in full force and effect through and after Closing, subject to Section 5.18 , in accordance with their respective terms such that all such insurance policies will continue to apply to the applicable Actions and material unresolved disputes through and after Closing, subject to the terms of such policies, provided that , in all cases, after the Closing the Group Companies shall be solely responsible for any applicable deductibles or other self-insured retentions under any such policies (but in each case such applicable deductibles or other self-insured retentions shall be superseded by and subject to the effective deductibles set forth in Schedule 3.19(b) ), and neither Seller nor any Affiliate of Seller will have any obligation to reimburse or otherwise satisfy any such deductible or self-insured retention.

(d) Seller has made available to Buyer complete and correct copies of the Company Insurance Policies. To the Knowledge of Seller, no Group Company has received any written notice of pending or threatened termination of any Insurance Policy, and each Group Company is in compliance in all material respects with all terms and conditions contained therein.

Section 3.20 Employees .

(a) A correct and complete list of all of the directors, officers, managers and employees of the Group Companies as of the Balance Sheet Date, specifying their position, their recognized seniority date, hourly wage rate or annual base salary and bonus, commission and other incentive compensation opportunity, if any, has been made available to Buyer. No employee of a Group Company provides services primarily for the benefit of Seller or an Affiliate of Seller (other than a Group Company). Except as set forth on Schedule 3.20(a), no employee of Seller or an Affiliate of Seller (other than a Group Company) provides services primarily for the benefit of a Group Company.

(b) Except as set forth on Schedule 3.20(b) , to Seller’s Knowledge, no formal charge or complaint of employment discrimination, harassment or retaliation has been filed against any Group Company since January 1, 2015, or is pending or, to Seller’s Knowledge, threatened.

(c) Schedule 3.20(c) lists all of the current collective bargaining agreements, works council agreements or other collective labor agreements with any labor organization, union, works council, employee association, trade union or other similar employee representative

 

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body to which any of the Group Companies is a party. There are no (i) strikes, work stoppages, work slowdowns or lockouts pending or, to Seller’s Knowledge, threatened against or involving any of the Group Companies, or (ii) unfair labor practice charges or grievances pending or, to Seller’s Knowledge, threatened by or on behalf of any current or former employee of any of the Group Companies. To Seller’s Knowledge, there are no current organizing activities among the employees of any of the Group Companies.

(d) Since January 1, 2014, each Group Company has complied in all material respects with all applicable Law relating to labor, labor relations or employment in all material respects, including all provisions thereof related to immigration, fair employment practices, terms and conditions of employment, workers’ compensation, occupational safety and health, wages and hours, overtime, meal periods and rest periods, employee classification and exemption status, classification of contingent workers or independent contractors, non-competition, and background check processes.

(e) Except for any non-material noncompliance, all individuals who are (i) performing consulting or other services for any Group Company are correctly classified under all applicable Law by the respective Group Company as either “independent contractors” or “employees” as the case may be, and (ii) classified as “employees” of any Group Company are correctly classified under all applicable Law by the respective Group Company as exempt or non-exempt, as the case may be.

(f) Since January 1, 2015, none of the Group Companies has triggered any liability under the federal WARN Act or similar state or local law that has not been satisfied in full.

(g) Except as set forth in Schedule 3.20(g) , all employees of the Group Companies are employed on an at-will basis.

(h) Except for any non-material non-compliance, (i) each Company Employee has completed an Employment Eligibility Verification Form (“ Form I-9 ”) and the Group Companies have retained each such Form I-9 and supporting documentation in accordance with applicable Law, and (ii) none of the Group Companies has been audited, inspected, penalized, warned, or sanctioned by any Governmental Entity in connection with compliance with or violation of any applicable Law regarding employment eligibility, work authorization, Form I-9 procedures, or other immigration or employment authorization requirement nor is any such Action or penalty pending or, to Seller’s Knowledge, threatened.

Section 3.21 Bank Accounts . Schedule 3.21 sets forth the names and locations of all banks and other financial institutions and depositories at which any Group Company maintains accounts of any type or safe deposit boxes, and also lists the account number of each such account, and the number of each such safe deposit box.

Section 3.22 No Other Representations or Warranties; Disclaimer . Seller acknowledges and agrees that (a) the representations and warranties of Buyer contained in ARTICLE 4 are the sole and exclusive representations and warranties of Buyer in connection with the transactions contemplated by this Agreement, (b) Buyer has not made any

 

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representation or warranty, express or implied, of any nature whatsoever except as specifically set forth in ARTICLE 4 , and no other statement, document or communication made or provided by Buyer or any of its representatives, has been relied upon by Seller, and no such statement, document or communication shall be deemed to be a representation or warranty of Buyer for any purpose and (c) all representations and warranties, express or implied, of any nature whatsoever, other than those specifically set forth in ARTICLE 4 are specifically disclaimed.

Section 3.23 Brokers . Except as set forth on Schedule 3.23 , all negotiations relating to this Agreement and the transactions contemplated hereby have been carried out without the services of any Person acting on behalf of the Group Companies in such manner as to give rise to any valid claim against Buyer or the Group Companies for any brokerage or finder’s commission or similar compensation.

Section 3.24 Certain Payments . To the Knowledge of the Company, no employee or agent of a Group Company acting on its behalf has directly or indirectly, given or agreed to give, to any customer, supplier, governmental employee or any actual or purported agent of any of the foregoing who is or may be in a position to help or hinder the Group Companies (or assist such party in connection with any actual or proposed transaction relating to the Group Companies) (i) any illegal gift or benefit or (ii) any gift or similar benefit which if not continued or repeated in the future, would have a material and adverse effect on the relationship of a Group Company with such Person.

Section 3.25 Significant Suppliers and Customers . Except as set forth on Schedule 3.25 , since December 31, 2016, the Group Companies have not received written notice that any of the Significant Customers or Significant Suppliers intends to (A) cease or materially decrease purchasing from, contracting with, selling to or dealing with the Group Companies (taken as a whole), as such Significant Customer or Significant Supplier has purchased from, contracted with, sold to or dealt with the Group Companies (taken as a whole) in the past; (B) materially adversely modify its relationship with the Group Companies (taken as a whole); or (C) materially alter its purchases, contracts, sales or dealings with the Group Companies (taken as a whole) in the event of the consummation of the transactions contemplated hereunder. “ Significant Customers ” means each of the twenty (20) largest customers of the Group Companies, based upon sales to such customers during the fiscal year ended December 31, 2016 and the six (6)- month period ended June 30, 2017. “ Significant Suppliers ” means each of the ten (10) largest suppliers of the Group Companies, based upon purchases from such suppliers during for the fiscal years ended December 31, 2016 and the six (6)-month period ended June 30, 2017.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF BUYER

Except as set forth on the Schedules (it being understood and agreed that each disclosure set forth in the Schedules shall qualify or modify each of the representations and warranties set forth in this ARTICLE 4 to the extent the applicability of the disclosure to such representation and warranty is reasonably apparent from the text of the disclosure made), Buyer hereby represents and warrants to Seller as follows:

 

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Section 4.1 Organization . Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of its state of incorporation.

Section 4.2 Authority . Buyer has all requisite power and authority to (a) execute and deliver this Agreement and perform its obligations hereunder and (b) execute and deliver all other agreements and instruments to be executed and delivered pursuant to this Agreement and perform its obligations thereunder, including the Ancillary Documents.

Section 4.3 Enforceability . This Agreement has been executed, and at the Closing, each Ancillary Document will be executed, by a duly authorized officer of Buyer and this Agreement constitutes, and when so executed and delivered, each Ancillary Document will constitute, a valid and binding obligation of each such party, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights generally and by general principles of equity. The board of directors of Buyer has approved this Agreement and the transactions contemplated hereby, and no other corporate approvals on the part of Buyer are required in connection with the consummation of the transactions contemplated hereby (including the consummation of the Financing).

Section 4.4 No Conflicts; Consents and Approvals .

(a) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby by Buyer will not (i) breach or violate or result in a default under any applicable Law, permit held by the Buyer Companies or other authorization of a Governmental Entity applicable to the Buyer Companies or their respective assets, (ii) conflict with the Governing Documents of the Buyer Companies, or (iii) breach, violate or result in a default under, terminate or give rise to any right on the part of any Person to terminate, any mortgage, lease, agreement, deed of trust, indenture or any other instrument to which any of the Buyer Companies is a party or by which any of the Buyer Companies or any of their properties or assets are bound except, with respect to each of the foregoing clauses (i) and (iii) as would not result in a Buyer Material Adverse Effect.

(b) With the exception of the expiration of the waiting period under the HSR Act, no consent, approval or authorization of or filing with any third party or Governmental Entity is required on the part of Buyer in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

Section 4.5 Purchase for Investment . Buyer is acquiring the Shares for investment for its own account and not with a view to, or for sale in connection with, any distribution thereof. Buyer (either alone or together with its advisors) has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Companies and their securities and is capable of bearing the economic risks of such investment. Buyer acknowledges that the securities it will acquire in the transactions contemplated by this Agreement have not been registered under any securities Laws, and agrees that such securities may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of without registration under the Securities Act, except pursuant to an exemption from such registration available under the Securities Act, and without compliance with foreign securities Laws, in each case, to the extent applicable.

 

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Section 4.6 Litigation . There are no Actions pending against, or, to the Knowledge of Buyer, threatened against or affecting, the Buyer Companies before any court or arbitrator or any Governmental Entity which in any manner challenge or seek to prevent, enjoin, alter or materially delay the transactions contemplated by this Agreement or that are likely to result in a Buyer Material Adverse Effect.

Section 4.7 No Other Representation or Warranties; Disclaimer . Buyer acknowledges and agrees that (a) the representations and warranties of Seller contained in ARTICLE 3 are the sole and exclusive representations and warranties of Seller or Parent in connection with the transactions contemplated by this Agreement, (b) no Group Company has made any representation or warranty, express or implied, of any nature whatsoever, and no other statement, document or communication made or provided by Seller, Parent, any Group Company or any of their respective representatives has been relied upon by Buyer, and no such statement, document or communication shall be deemed to be a representation or warranty of Seller, Parent or any Group Company for any purpose, (c) all representations and warranties, express or implied, of any nature whatsoever, other than those specifically set forth in ARTICLE 3 are specifically disclaimed, and (d) any estimates, projections, predictions, data, financial information, memoranda, presentations or any other materials or information provided or addressed to Buyer or its representatives are not and shall not be deemed to be or to include representations or warranties, including any representations or warranties relating to the reasonableness of the assumptions underlying such estimates, projections and related information.

Section 4.8 Brokers . Except as set forth on Schedule 4.8 , all negotiations relating to this Agreement and the transactions contemplated hereby have been carried out without the services of any Person acting on behalf of Buyer or any Affiliate of Buyer in such manner as to give rise to any valid claim against Seller or Parent for any brokerage or finder’s commission or similar compensation.

Section 4.9 Financing .

(a) A true, complete and correct copy of the debt commitment letter, dated August 24, 2017 (as may be amended or replaced, in each case subject to the terms of Section 5.14(a) , the “ Debt Commitment Letter ”) as in effect on the date hereof has been provided to Seller.

(b) A true, complete and correct copy of the investment agreement between Buyer, CD&R Boulder Holdings, L.P. and Clayton, Dubilier & Rice Fund IX, L.P., dated August 24, 2017 (as may be amended or replaced, in each case subject to the terms of Section 5.14(a) , the “ Equity Commitment Letter ”) as in effect on the date hereof has been provided to Seller.

(c) A true and complete copy of each fee letter related to the Commitment Letters as in effect on the date hereof has been provided to Seller, except for customary redactions solely in respect of the amounts, percentages and basis points of compensation and other similar economics set forth therein, the pricing and other terms of the “flex” provisions and the “securities demand” provisions set forth therein (none of which would impact the conditionality, enforceability or availability of the aggregate amount of the Financing).

 

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(d) Buyer has fully paid any and all commitment fees or other fees required by the Commitment Letters to be paid on or before the date hereof. As of the date hereof, each Commitment Letter is a legal, valid and binding obligation of each of the Buyer Companies party thereto and, to the Knowledge of Buyer, each other party thereto, and in full force and effect, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights generally and by general principles of equity. As of the date hereof, (i) neither Commitment Letter has been amended or modified in any respect and has not been withdrawn, terminated or rescinded (or the commitments therein otherwise reduced) in any respect and, to the Knowledge of Buyer, no withdrawal, termination or rescission or reduction is contemplated, and (ii) no Buyer Company is in default under the terms and conditions of any Commitment Letter and no event has occurred which (with or without notice, lapse of time or both) would reasonably be expected to constitute a breach thereunder on the part of a Buyer Company party or, to the Knowledge of Buyer, any other party thereto and no Buyer Company has received any written notice of such default or event. As of the date hereof, no amendment or modification of any Commitment Letter is contemplated (other than joinder documentation or an amendment and restatement of a Commitment Letter, in each case relating to addition of additional equity investors in respect of the Equity Financing or the appointment of additional agents, co-agents, arrangers, bookrunners, managers or other roles in respect of the Debt Financing or modifications thereto to implement the flex provisions set forth in any fee letter related thereto, none of which would impact the conditionality, enforceability or availability of the aggregate amount of the Financing).

(e) Assuming the satisfaction of the conditions set forth in Section 6.1 and Section 6.2 , the aggregate proceeds contemplated to be provided by the Commitment Letters, together with available cash of the Buyer Companies, will be sufficient for Buyer to make all required payments in connection with the transactions contemplated hereby, including payment of the Purchase Price, and all other amounts to be paid pursuant to this Agreement and associated fees, costs and expenses of the transactions contemplated hereby, including the Financing, on the Closing Date.

(f) Except for the Commitment Letters and fee letters referred to in the Commitment Letters (copies of which have been provided to Seller in accordance with the foregoing), as of the date hereof, (i) there are no side letters or other agreements relating to the conditions of the funding or investing, as applicable, of the financing contemplated by the Commitment Letters other than any engagement letter and fee credit letters, and (ii) there are no conditions precedent or other contingencies (including pursuant to any “market flex” provisions in the related fee letters or otherwise) related to the funding of the full amount of the Financing or any provisions that could reduce the aggregate amount of the Financing set forth in the Commitment Letters or the aggregate proceeds contemplated by the Commitment Letters. Assuming the satisfaction of the conditions precedent in Section 6.1 and Section 6.2 , as of the date hereof, to the Knowledge of Buyer, there are no facts or circumstances that would reasonably be expected to result in any of the conditions to the Financing not being satisfied on a timely basis or that would cause the full amount of the Financing to not be available to the Buyer Companies on the date on which the Closing should occur pursuant to Section 2.3 .

 

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Section 4.10 Solvency . Immediately after giving effect to the transactions contemplated hereby (including the Financing), and assuming (1) the representations and warranties in ARTICLE 3 are true and correct, (2) the satisfaction by the Seller of the conditions contained in this Agreement, (3) the performance by Seller of the terms of this Agreement prior to, at and immediately after the Closing, and (4) that the Required Information is true and correct, (a) the “present fair saleable value” of the assets of the Buyer and the Buyer Companies, including the Group Companies (determined on a going concern basis), taken as a whole, will exceed the amount of all “liabilities of the Buyer and the Buyer Companies, including the Group Companies, taken as a whole, contingent or otherwise (at a fair valuation)” as such quoted terms (after substituting “Buyer and the Buyer Companies, including the Group Companies” with “Persons”) are generally determined in accordance with federal Laws governing the determinations of the insolvency of debtors, and (b) and Buyer does not believe that Buyer and the Buyer Companies, including the Group Companies immediately following the Closing, taken as a whole, will incur debts in the ordinary course of business consistent with past practice that will be beyond their ability to pay such debts. No transfer of property is being made and no obligation is being incurred in connection with the transactions contemplated hereby with the intent by Buyer to hinder, delay or defraud either present or future creditors of Buyer, any Buyer Company or any Group Company.

ARTICLE 5

COVENANTS

Section 5.1 Conduct of Business of the Parties .

(a) Except as otherwise contemplated by this Agreement or with the prior consent of Buyer (which consent shall not be unreasonably withheld, delayed or conditioned), during the period from the date hereof to and through the Closing or earlier termination hereof, Seller shall cause the Group Companies to use reasonable best efforts to (i) conduct their respective businesses in the ordinary course of business consistent with past practice, (ii) preserve in all material respects the present business operations, assets, organization and goodwill of the Group Companies and the relationships of the Group Companies with customers, suppliers and others having business dealings with them, (iii) keep available in all material respects the services of the present officers and significant employees of the Group Companies (excluding any officer that is an employee of Seller or any Seller Affiliate other than a Group Company) and (iv) maintain, renew or replace (with a substantially similar policy) each Insurance Policy.

(b) Except as otherwise contemplated or permitted by this Agreement or as set forth on Schedule 5.1(b) , without the prior written consent of Buyer (which consent shall not be unreasonably withheld, delayed or conditioned), prior to the Closing or earlier termination hereof, Seller shall not and shall not permit any Group Company to (as applicable):

(i) transfer, issue, sell or dispose of or create any Encumbrance on any shares of capital stock or other securities of any Group Company or grant options, warrants, calls or other rights to purchase or otherwise acquire shares of the capital stock or other securities of any Group Company (other than any changes to the capitalization of any Company Subsidiary that do not involve any issuances of capital to a party other than Seller or another Company Subsidiary);

 

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(ii) effect any merger, consolidation, recapitalization, reclassification, stock split or like change in the capitalization of any Group Company;

(iii) other than in the ordinary course of business consistent with past practice, acquire (by merger, consolidation, acquisition of securities or assets or otherwise) any Person, business or division;

(iv) amend the Governing Documents of any Group Company or take or authorize any action to wind up the affairs of, dissolve, liquidate, restructure or recapitalize any Group Company;

(v) other than (1) as required by Law or the terms of an Employee Benefit Plan or collective bargaining agreement as in effect on the date hereof or, (2) with respect to employees of the Group Companies who are not corporate officers or directors, in the ordinary course of business consistent with past practice, (A) increase the salary, wage rate or consulting fee of any employee, director or consultant of any Group Company, (B) grant any bonus or other benefit to any employee, director or consultant of the Group Companies other than (1) cash or other benefits due under the Employee Benefit Plans as in effect on the date hereof, (2) severance or termination pay in the ordinary course of business consistent with past practice and (3) the enrollment of employees in Employee Benefit Plans (other than incentive plans or individual agreements) in the ordinary course of business consistent with past practices and the terms of the Employee Benefit Plans as in effect on the date hereof, (C) increase the coverage or benefits available to employees, directors or consultants of any Group Company under any Employee Benefit Plan or otherwise materially modify or provide discretionary benefits under any Employee Benefit Plan, or (D) establish, become a party to, amend or terminate any Company Benefit Plan (or any arrangement which would be a Company Benefit Plan if in effect on the date hereof), provided that, none of the foregoing shall be construed to restrict or prohibit changes in any Seller Benefit Plan that are made in the ordinary course of business and are applicable to participating employees of Seller and its Affiliates (including the Group Companies) or that do not apply to employees of the Group Companies, and further provided that the Group Companies may enter into retention bonus agreements with the Company Employees listed on Schedule 5.1(b)(v) in the form and for the respective gross amounts set forth on such schedule (the “ Incremental Retention Bonus Agreements ”);

(vi) (A) transfer or permit to be transferred the employment of any individual employed by (x) a Group Company to Seller or any of its Affiliates (other than a Group Company) or (y) Seller or any of its Affiliates (other than a Group Company) to a Group Company, (B) cause or permit any individual who provides services primarily for the benefit of any Group Company to instead provide services primarily for the benefit of Seller or any of its Affiliates (other than a Group Company), or (C) cause or permit any individual who provides services primarily for the benefit of Seller or any of its Affiliates (other than a Group Company) to instead provide services primarily for the benefit of a Group Company;

 

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(vii) except for Indebtedness payable to Seller or its Affiliates in the ordinary course, capital leases (other than a capital lease with respect to an enterprise resource planning system) entered into in the ordinary course of business consistent with or permitted by the current capital expenditure budget as approved by the board of directors of Allied, and trade accounts payable, operating leases or performance bonds, in each case in the ordinary course of business consistent with past practice, incur or enter into any agreement relating to Indebtedness, including by becoming guarantor, surety, endorser or otherwise liable for any debt, obligation or liability of any other Person;

(viii) permit any inventory of the Group Companies, including finished goods, raw materials and work-in-process, and all service parts and supplies, to be located anywhere other than on the Real Property other than in the ordinary course of business consistent with past practice;

(ix) cancel or modify any Insurance Policy except where replaced with a substantially similar policy in the ordinary course of business consistent with past practice;

(x) subject any of the properties or assets (whether tangible or intangible) of any Group Company to any Encumbrance, except for Permitted Encumbrances;

(xi) sell, assign, transfer, convey, lease or otherwise dispose of any Real Property or Personal Property of any Group Company, other than (i) with respect to Personal Property only, any sale, assignment, transfer, conveyance or disposal in the ordinary course of business consistent with past practice, or (ii) the renewal or non-renewal of leases in respect of any Leased Real Property in the ordinary course of business consistent with past practice that would otherwise terminate (or with respect to which the date by which a renewal option must be exercised would occur) prior to the date that is sixty (60) days after the Termination Date as in effect hereunder from time to time, but in any event such renewal term shall not exceed the expiring term under such lease or any renewal term provided for on the face of the applicable lease; provided , however, that Seller shall notify Buyer not less than ten (10) days prior to any proposed renewal or non-renewal of leases in respect of any such Leased Real Property and confer with Buyer with respect to such proposed renewal or non-renewal and the terms thereof provided further that notwithstanding the foregoing, Seller’s obligation to confer with Buyer shall not include disclosure of any competitively sensitive information;

(xii) acquire any ownership interest in any real property or, other than in the ordinary course of business consistent with past practice, acquire any leasehold interest in any real property;

(xiii) sell, assign, transfer, license (except for Permitted Encumbrances), allow to lapse or abandon any material Intellectual Property owned or licensed to any Group Company;

(xiv) enter into commitments to make capital expenditures, other than to the extent consistent with or permitted by the current capital expenditure budget as approved by the board of directors of Allied; provided , however that expenditures with respect to an enterprise resource planning system shall require such written consent of Buyer;

 

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(xv) enter into, amend, extend or renew, in any material respect, any Affiliate Transaction or any labor or collective bargaining agreement or, through negotiation or otherwise, make any commitment to any labor organization with respect to any Group Company; provided , however that this clause (xv) shall not apply to an extension or renewal of a labor or collective bargaining agreement that (A) is strictly in accordance with its current terms and (B) if such extension or renewal occurs within ten (10) days before the expiration of such contract, and the Closing has not occurred by such extension or renewal date; provided further , that prior to permitting any Group Company to so extend or renew, Seller shall notify Buyer not less than ten (10) days prior to such proposed extension or renewal date and confer with Buyer with respect to such proposed extension or renewal provided still further that notwithstanding the foregoing, Seller’s obligation to confer with Buyer shall not include disclosure of any competitively sensitive information;

(xvi) enter into, assume or amend in any material respect or terminate any Material Contract, License or Personal Property lease other than (A) in the ordinary course of business consistent with past practice or (B) as permitted by an exception to any other provision of this Section 5.1(b) (it being understood and agreed that this clause (xvi) shall not apply to renewals of Material Contracts, Licenses or Personal Property leases in connection with their expiration, provided that their expiration occurs (or any date by which a renewal option must be exercised occurs)) prior to the date that is sixty (60) days after the Termination Date as in effect on the date of such renewal; provided , however, that Seller shall notify Buyer not less than ten (10) days prior to any proposed renewal of Material Contracts, Licenses and/or Personal Property leases and confer with Buyer with respect to such proposed renewal provided further that notwithstanding the foregoing, Seller’s obligation to confer with Buyer shall not include disclosure of any competitively sensitive information;

(xvii) make, change or rescind any Tax election, file any amendment to any Tax Return with respect to any material Taxes, settle or compromise any material Tax liability, audit or other Action, agree to any extension or waiver of the statute of limitations with respect to the assessment or determination of a material amount of Taxes, file any material voluntary Tax disclosure, amnesty or similar filing, enter into any closing agreement, or take any action to surrender any right to claim a material Tax refund, offset or other reduction in Tax liability, except to the extent that any such action would not reasonably be expected to materially increase any liability of the Group Companies for Taxes or decrease any Tax attributes of any Group Company in respect of any period ending after the Closing;

(xviii) make any change to the accounting methods, principles, classifications, internal account controls or practices currently used by the Group Companies, except as may be required by GAAP, IFRS or applicable Law;

(xix) forgive, cancel or compromise any debtor claim, or waive or release any right of material value other than in the ordinary course of business consistent with past practice;

(xx) commence, settle or compromise any Action material to the Group Companies taken as a whole (which, for the avoidance of doubt, does not include any collections Action by any Group Company arising in the ordinary course of business consistent with past practice); or

 

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(xxi) agree or commit to do any of the foregoing.

Section 5.2 Payment of Transfer Taxes . All transfer Taxes, recording fees and other similar Taxes that are imposed on any of the parties hereto or any Group Company by any Governmental Entity in connection with the sale of the Shares from Seller to Buyer shall be borne by Buyer, and Buyer will, at its own expense, file all necessary Tax Returns and other documentation with respect to all such Taxes and fees.

Section 5.3 Access to Information . From and after the date hereof until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms, upon reasonable notice, and subject to restrictions contained in the confidentiality agreements to which the Group Companies are subject, Seller shall provide to Buyer and its authorized representatives and the Financing Sources, during normal business hours reasonable access to the books and records of the Group Companies (in a manner so as to not interfere with the normal business operations of any Group Company); provided that Seller may withhold any document (or portions thereof) or information (i) that is subject to the terms of a non-disclosure agreement with a third party, provided that Seller shall use its reasonable best efforts to obtain the consent of such third party to permit such disclosure, (ii) that may constitute privileged attorney-client communications or attorney work product and the transfer of which, or the provision of access to which, as reasonably determined by outside counsel, constitutes a waiver of any such privilege or (iii) if the provision of access to such document (or portion thereof) or information, as reasonably determined by outside counsel, would reasonably be expected to conflict with applicable Laws. In addition, from and after the date hereof until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms, Seller shall promptly provide Buyer and its authorized representatives and the Financing Sources via email or shared data site with true and complete copies of all financial statements, documents and other information reasonably requested by Buyer and available to Seller to the extent relating to the Group Companies. All of such information shall be treated as confidential information pursuant to the terms of the applicable Confidentiality Agreement, the provisions of which are by this reference hereby incorporated herein. To the extent Seller has not made available to Buyer complete and correct copies of any written Contracts (including any Leases) (as identified in the Schedules as of the date hereof), Seller shall provide to Buyer complete and correct copies of such written Contracts (including any Leases) within twenty (20) calendar days of the date hereof. Nothing herein shall be construed to require Seller to provide access to any underlying data communicated to Buyer’s consultant, Bain & Company, Inc., pursuant to the Clean Team Confidentiality Agreement, or any commercially sensitive information exchanged by the parties’ respective legal counsel pursuant to that certain Joint Defense Agreement, dated July 19, 2017, or any personnel information made available to Buyer’s legal counsel pursuant to that certain HR Clean Team Confidentiality Agreement, which limitation of access obligations shall survive termination of this Agreement. Seller shall deliver or cause to be delivered to Buyer as promptly as practical following the date hereof (and in any event not more than three (3) Business Days following the date hereof) five copies of one or more CDs, DVDs or USB flash drives containing copies of all documents (in a readable format) that were uploaded to the Merrill data site in connection with the purchase and sale of the Shares as of 5:00 p.m. Eastern Time on the date immediately

 

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preceding the date hereof. Seller shall deliver or cause to be delivered to Buyer as promptly as practical following the Closing (and in any event not more than three (3) Business Day following the Closing) five copies of one or more CDs, DVDs or USB flash drives containing copies of all documents (in a readable format) that were uploaded for review by Bain & Company, Inc. in connection with the purchase and sale of the Shares as of the Closing.

Section 5.4 Delivery of Title Documents . At least five (5) Business Days prior to the Closing, Seller shall deliver to the Title Company the Title Documents.

Section 5.5 Transfer of Certain Assets, Books and Records .

(a) To the extent Seller or its Affiliates (other than a Group Company) owns or has in its possession or control (as applicable) any assets (other than books and records, which are the subject of the further provisions of this Section 5.5 ) primarily used in the operation of the business conducted by the Group Companies (other than inventory or supplies ordered and awaiting delivery in the ordinary course), Seller shall, prior to the Closing Date, transfer all such assets to the ownership of, as well as, the possession and control of, the Group Companies.

(b) To the extent Seller or its Affiliates (other than the Group Companies) has any books and records of and exclusively relating to the Group Companies not in the possession or control of the Group Companies, Seller shall, as soon as reasonably practicable following the Closing Date, subject to the provisions of Section 10.15 , transfer or provide copies of all such books and records to the possession or control of the Group Companies, including all Contracts, leases, Title Documents, Tax records, litigation materials and files (including litigation strategy, attorney work-product, litigation correspondence, responses, summons, complaints or other pleadings which may have been served and any written claim, demand, invoice, billing or other document evidencing or asserting the same); provided that this sentence shall not apply to any information relating to the Group Companies maintained by Seller or its Affiliates and that incorporates data or proprietary information of or relating to Seller or its Affiliates other than the Group Companies or that cannot readily be isolated from Seller’s or its Affiliates’ files or information systems (“ Nonextracted Information ”). Subject to the provisions of Section 10.15 , following the Closing Date, Seller or its Affiliates shall use commercially reasonable efforts to obtain and provide Buyer with any Nonextracted Information specifically and reasonably requested by Buyer for a proper purpose relating to the post-Closing ownership or operation of Group Companies and that is maintained by Seller or its Affiliates, subject in each case to appropriate redactions by Seller or its Affiliates to protect information not related to the Group Companies; provided that Buyer and the Group Companies, and their respective representatives shall also have the right to access such data and information pursuant to Section 5.5(e) and Section 5.5(f) below. Notwithstanding any provision hereof, Seller and its Affiliates shall be entitled to retain copies of all books and records relating to the Group Companies to the extent reasonably needed by the Seller or its Affiliates to perform their obligations hereunder, under applicable Law, stock exchange regulations or financial reporting requirements, including to prepare any necessary Tax Return or to enable Seller or its Affiliates to respond, defend or prosecute any Action to which Seller or any of its Affiliates are or hereafter may be a party.

(c) To the extent that any of the obligations set forth in Section 5.5(a) or Section 5.5(b)are not complied with prior to Closing, the obligations shall continue hereunder following the Closing and this provision shall survive the Closing.

 

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(d) For a period of six (6) years after the Closing Date, to the extent requested by Seller or its Affiliates, Seller and its Affiliates and their representatives shall have reasonable access to all of the books and records relating to the ownership or operations of the Group Companies prior to the Closing Date (including the right to make copies or extracts therefrom at Seller’s expense) to the extent that such information may reasonably be required by Seller or its Affiliates in order for Seller or its Affiliates to comply with any legal obligation affected by the ownership or operations of the Group Companies prior to the Closing Date. Such access shall be afforded by Buyer upon receipt of reasonable advance notice and during normal business hours; provided that such request does not unreasonably interfere with the Buyer’s and Group Companies’ operation of their business. If Buyer or any of its Affiliates (including the Group Companies) shall desire to dispose of any of such books and records prior to the expiration of such six-year period other than in accordance with the Group Companies’ regular document retention policies, Buyer shall, prior to such disposition, give Seller a reasonable opportunity to obtain, at Seller’s expense, copies or extracts of such books and records as Seller may select, provided that any data or information contained in any such books or records that relates primarily to Buyer or its Affiliates (other than the Group Companies) can be excised therefrom without undue cost or effort.

(e) For a period of six (6) years after the Closing Date, subject to the provisions of Section 10.15 , Buyer and its representatives shall have reasonable access to all of the books and records to the extent relating to the Group Companies which Seller or any of its Affiliates may retain after the Closing Date, including all Contracts, leases, Title Documents, Tax records, litigation materials and files (including litigation strategy, attorney work-product, litigation correspondence, responses, summons, complaints or other pleadings which may have been served and any written claim, demand, invoice, billing or other document evidencing or asserting the same) and emails, it being agreed that such materials are provided or made available on an “AS IS” basis and without any representation or warranty of any kind, express or implied. Buyer and the Group Companies assume all risks with respect to the disclosure of such information to Buyer, the Group Companies or their respective representatives, including any risk that such disclosure constitutes a waiver of any privilege otherwise attaching to such information. Such access shall be afforded by Seller and its Affiliates upon receipt of reasonable advance notice and during normal business hours; provided that such request does not unreasonably interfere with the Seller’s or its Affiliates’ operation of their business. If Seller or any of its Affiliates shall desire to dispose of any of such books and records prior to the expiration of such six-year period other than in accordance with Seller’s regular document retention policies, Seller shall, prior to such disposition, give Buyer a reasonable opportunity to obtain, at Buyer’s expense, copies or extracts of such books and records as Buyer may select, provided that any data or information contained in any such books or records that relates primarily to Seller or its Affiliates (other than the Group Companies) can be excised therefrom without undue cost or effort.

(f) The parties shall, at the expense of the requesting party, cooperate with each other with respect to the defense of any Action related to the operation of the Group Companies on or prior to the Closing. Subject to the provisions of Section 10.15 , each party shall, and shall cause its Affiliates to, make their respective then current officers or employees and consultants available for interviews, consultations, discussions and/or testimony by or with the other party and/or its representatives, for reasonable business and legal purposes at all

 

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reasonable times during business hours, while any Action related to the operation of the Group Companies on or prior to the Closing remains open and unresolved, provided that such cooperation does not unreasonably interfere with such party’s or its Affiliates’ operation of their business. Seller shall furnish Buyer with such information as it may have with respect to any Action related to the operation of the Group Companies on or prior to the Closing (including litigation strategy, attorney work-product, litigation correspondence (including emails), responses, summons, complaints or other pleadings which may have been served and any written claim, demand, invoice, billing or other document evidencing or asserting the same), it being agreed that such materials are provided or made available on an “AS IS” basis and without any representation or warranty of any kind, express or implied. Buyer and the Group Companies assume all risks with respect to the disclosure of such information to Buyer, the Group Companies or their respective representatives, including any risk that such disclosure constitutes a waiver of any privilege otherwise attaching to such information.

Section 5.6 Efforts to Consummate.

(a) Subject to the terms and conditions herein provided, each of Buyer and Seller shall use reasonable best efforts to take or cause to be taken all actions necessary or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement (including the satisfaction, but not waiver, of the Closing conditions set forth in ARTICLE 6 ). Each of Buyer and Seller shall use best efforts to obtain consents of all Governmental Entities necessary to consummate the transactions contemplated by this Agreement. Each party hereto shall, or shall cause its relevant ultimate parent entity to, make an appropriate filing, if necessary, pursuant to the HSR Act with respect to the transactions contemplated by this Agreement promptly (and in any event, within five (5) Business Days) after the date of this Agreement and shall supply as promptly as practicable to the appropriate Governmental Entities any additional information and documentary material that may be reasonably requested pursuant to the HSR Act. Without limiting the foregoing, Seller, Buyer and their respective Affiliates shall not extend any waiting period or comparable period under the HSR Act or enter into any agreement with any Governmental Entity not to consummate the transactions contemplated hereby, except with the prior written consent of the other parties hereto. All filing fees payable under the HSR Act shall be borne by Buyer.

(b) Buyer shall, and shall cause its Affiliates to, take all actions necessary to resolve any objections that may be asserted by any Governmental Entity to expeditiously consummate the transactions contemplated by this Agreement. Without limiting the generality of the foregoing, Buyer shall:

(i) at Buyer’s sole cost, comply with all restrictions and conditions, if any, required by any Governmental Entity with respect to Antitrust Laws in connection with granting any necessary clearance, terminating any applicable waiting period or otherwise not opposing consummation of the transactions contemplated hereby including (1) agreeing to sell, divest, hold separate, license, cause a third party to acquire, or otherwise dispose of, any Subsidiary, operations, divisions, businesses, product lines, customers or assets of Buyer, its Affiliates or any Group Company contemporaneously with or after the Closing and regardless of whether a third party purchaser has been identified or approved prior to the Closing (a “ Divestiture ”), (2) taking or committing to take such other actions that may limit Buyer, its

 

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Affiliates, or (after the Closing) any Group Company’s freedom of action with respect to, or its ability to retain, one or more of its operations, divisions, businesses, products lines, customers or assets, and (3) entering into any order, consent decree or other agreement to effectuate any of the foregoing;

(ii) amend, assign or terminate existing, or enter into any new, licenses, contracts or other agreements or other business relationship insofar as required to obtain any necessary clearance of any Governmental Entity, obtain termination of any applicable waiting period under any Antitrust Laws or otherwise cause any Governmental Entity not to oppose the consummation of the transactions contemplated hereby; and

(iii) use reasonable best efforts to oppose any request for or the entry of, and to seek to have vacated or terminated, any order, judgment, decree, injunction or ruling of any Governmental Entity that could restrain, prevent or delay the Closing, including by defending through litigation, any action asserted by any Person in any court or before any Governmental Entity and by appealing properly any adverse decision or order by any Governmental Entity.

(c) In furtherance of the foregoing, Buyer shall negotiate in good faith with all Governmental Entities and, to the extent necessary, third parties in connection with a Divestiture or any other matter referred to in Section 5.6(b) in order to enter into all necessary definitive agreements with all such Persons as promptly as practicable after receipt by Buyer or Seller of any formal request for the submission of additional information or documentary material by either the United States Federal Trade Commission or the Antitrust Division of the United States Department of Justice pursuant to 15 U.S.C. § 18a(e)(1)(A) or the commencement of a formal second phase investigation by any other Governmental Entity, and in any event a sufficient time prior to the Termination Date to permit the Closing to occur prior to such date.

(d) Each of Buyer and Seller will promptly notify the other parties hereto of any written communication made to or received by either Buyer and/or Seller, as the case may be, from any Governmental Entity regarding any of the transactions contemplated hereby, and, subject to applicable Law, if practicable, permit the other parties hereto to review in advance any proposed written communication to any such Governmental Entity and incorporate the other parties’ reasonable comments, not agree to participate in any substantive meeting or discussion with any such Governmental Entity in respect of any filing, investigation or inquiry concerning this Agreement or the transactions contemplated hereby unless, to the extent reasonably practicable, it consults with the other parties hereto in advance and, to the extent permitted by such Governmental Entity, gives the other parties the opportunity to attend, and furnish the other parties with copies of all correspondence, filings and written communications between them and their Affiliates and their respective representatives on one hand and any such Governmental Entity or its respective staff on the other hand, with respect to this Agreement and the transactions contemplated hereby, provided that this Agreement shall not obligate any party to disclose to any other party such portions of any proposed or final correspondence, filing, or other written communication with a Governmental Entity or its staff as the party to such correspondence, filing, or communication may reasonably deem confidential vis-à-vis the other party.

 

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(e) Notwithstanding anything to the contrary contained in this Agreement, but subject to Buyer’s obligations set forth in this Section 5.6 , Buyer shall have the right to direct all matters with respect to any Governmental Entity consistent with its obligations hereunder, shall have the principal responsibility for devising and implementing the strategy for obtaining any necessary antitrust or competition clearances, in all events a sufficient time on or prior to August 31, 2018 to permit the Closing to occur prior to such date, and shall take the lead in all meetings and communications with any Governmental Entity in connection with obtaining any necessary antitrust or competition clearances.

(f) Each party to this Agreement agrees to cooperate and use commercially reasonably efforts in obtaining any other consents and approvals that may be required in connection with the transactions contemplated by this Agreement.

(g) Each party to this Agreement acknowledges that the Group Companies currently benefit from certain Contracts to which Parent and/or certain Affiliates of Parent are parties and that relate to the operations or conduct of the business of Parent and/or one or more of the Affiliates of Seller and the Group Companies, but will remain with the Parent and/or one or more of the Affiliates of Parent after the Closing. In the case of those Contracts set forth on Schedule 5.6(g) (the “ Shared Contracts ”), the parties shall cooperate with each other and use their respective reasonable best efforts to (i) obtain the agreement of the third party that is the counterparty to each Shared Contract to enter into a new contract effective as of the Closing Date pursuant to which the Group Companies will receive substantially the same goods and services provided by the Shared Contract to the Group Companies prior to the Closing on terms and conditions substantially similar to those contained in the Shared Contract as of the Closing Date (each, a “ Replacement Contract ”) and (ii) to the extent a Group Company is a party to a Shared Contract, obtain the release from the counterparty of the Group Companies’ obligations arising after the Closing Date under the Shared Contract effective as of the Closing Date and a release of Parent, Seller and their respective Affiliates from any obligations in respect of the Group Companies in connection with such Shared Contract from and after the Closing Date . Notwithstanding the foregoing, neither Parent, Seller, nor any Group Company shall have any obligation to (x) pay any consideration or give anything of value to any Person for the purpose of obtaining any Replacement Contract or (y) pay any costs and expenses of any Person resulting from the process of obtaining or seeking any Replacement Contract. Buyer acknowledges that receipt of any Replacement Contract shall in no event be a condition to the consummation of the transactions contemplated hereby. If one or more Replacement Contracts are not obtained prior to or on the Closing Date, unless the parties otherwise agree in writing, during the remainder of the current term of the applicable Shared Contract (but not including any renewals or extensions), the parties shall use their respective reasonable best efforts to allow the Group Companies, to the extent permitted by applicable Law and to the extent reasonably within the contractual or other ability or control of Parent or Buyer, as the case may be, to continue to benefit from the terms of the Shared Contract as applicable to Parent and its other Affiliates from time to time. Nothing herein shall require Parent or any of its Affiliates to obtain the consent of Buyer or the Group Companies in connection with any amendment or waiver to be given under any such Shared Contract in the ordinary course of business, provided that Parent shall give Buyer reasonable prior notice of any such amendment or waiver that would reasonably be expected to have a material impact on the benefits available to the Group Companies under such Shared Contract. To the extent any Group Company continues to receive benefits under any

 

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Shared Contract following the Closing pursuant to this Section 5.6(e) : (1) Parent and Seller shall indemnify, defend and hold harmless the Buyer Indemnitees from any Losses based upon, related to or arising out of the Shared Contracts to the extent attributable to any obligations or liabilities incurred by Parent, Seller or their respective Affiliates (other than any Group Company) in connection with their receipt of benefits under any such Shared Contract, and (2) Buyer shall indemnify, defend and hold harmless the Seller Indemnitees from any Losses based upon, related to or arising out of the Shared Contracts to the extent attributable to any obligation or liability of or incurred in connection with the Group Companies’ receipt of benefits under any such Shared Contract. Any amounts payable under a Shared Contract that are not directly attributable to either Parent, Seller and their respective Affiliates (other than the Group Companies), on the one hand, or the Group Companies, on the other, will be allocated among them on a fair and equitable basis consistent with the applicable practices prior to the Closing. This Section 5.6(g) does not apply to the Seller Group Insurance Policies, which are addressed in Section 5.18 .

Section 5.7 Directors and Officers .

(a) Buyer agrees that all rights to exculpation, indemnification and advancement of expenses now existing in favor of the current or former directors or officers, as the case may be, of any of the Group Companies as provided in their respective Governing Documents or in any agreement shall survive the Closing Date and shall continue in full force and effect. For a period of six (6) years from the Effective Time, Buyer shall maintain in effect the exculpation, indemnification and advancement provisions of any Group Company’s Governing Documents as in effect immediately prior to the Effective Time, and shall not amend, repeal or otherwise modify any such provisions in any manner that would adversely affect the rights thereunder of any individuals who at the Effective Time were current or former directors or officers of any of the Group Companies; provided that all rights to indemnification in respect of any claim pending or asserted or any claim made within such period shall continue until the disposition of such claim or resolution of such claim.

(b) In the event Buyer or any of its 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 either such case, proper provision shall be made so that the successors and assigns of Buyer shall assume the obligations set forth in this Section 5.7 .

(c) The officers and directors of the Group Companies serving at or prior to the Effective Time shall remain covered for not less than six (6) years after the Closing under the Seller Group Insurance Policies providing directors’ and officers’ liability insurance and fiduciary liability insurance with respect to matters arising on or before the Effective Time, including without limitation covering the transactions contemplated herein.

(d) Notwithstanding anything contained herein to the contrary, without duplication of any amount, Seller and Parent shall, jointly and severally, indemnify, defend and hold harmless Buyer and the Group Companies from and against all liability, loss, damages, claims, costs, expenses, awards, judgments and penalties of any kind suffered or incurred by

 

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Buyer or the Group Companies from and after the Closing to the extent and in such amount as Buyer and the Group Companies are required to pay to indemnify any officers or directors of any Group Company that were serving at or prior to the Effective Time to the extent in respect to matters arising on or before the Effective Time, in each case in excess of the proceeds of any applicable Seller Group Insurance Policies , provided that such obligation shall not apply to liability, loss, damages, claims, costs, expenses, awards, judgments or penalties incurred in connection with any Action or proceeding by Buyer or any of Buyer’s Affiliates (including any Group Company) against any such officers and directors.

Section 5.8 Exclusive Dealing . During the period from the date of this Agreement through the earlier of the Effective Time or the termination of this Agreement in accordance with its terms, Seller shall not, nor shall it permit any of its Affiliates to, engage in any discussions or negotiations with, provide any information to, or enter into any contract with, any Person (other than Buyer and Buyer’s representatives) concerning any sale, transfer or other disposition of the equity securities of any Group Company, any merger involving any Group Company, any sale of a material portion of the business or assets of any Group Company, any recapitalization of any Group Company or other similar transaction involving any Group Company (other than sales of inventory sold in the ordinary course of business consistent with past practice).

Section 5.9 Employee Benefits Matters .

(a) All employees of the Group Companies as of immediately prior to the Effective Time shall continue as employees of the Group Companies as of the Effective Time (each, a “ Company Employee ”). Seller shall take all action necessary to cause the Company Employees to cease participating as active employees in each Seller Benefit Plan effective as of the Closing. Other than with respect to Company Employees who provide services pursuant to a collective bargaining agreement, for a period beginning on the Closing Date and continuing thereafter for twelve (12) months, Buyer shall provide, or shall cause its Subsidiaries to provide, Company Employees with (i) employee benefits that in the aggregate are substantially comparable to the employee benefits provided to similarly situated employees of Buyer and its Affiliates, and (ii) base salary or wage rates and other compensation (including an annual cash bonus opportunity, opportunities for commissions and other incentive compensation) that in the aggregate are substantially comparable to such compensation provided to each such Company Employee by the Group Companies, Seller or an Affiliate of Seller immediately prior to the Closing Date; provided , however , that for purposes of the foregoing, equity and equity-based compensation provided by any Group Company to any Company Employee shall not be taken into account and Buyer shall have no obligation to provide equity or equity-based compensation to any Company Employee. Notwithstanding the foregoing or any other provision of this Agreement, nothing in this Agreement or any Ancillary Document shall be deemed to amend any Company Benefit Plan or limit, in any respect, the right of Buyer or any of its Subsidiaries (including the Group Companies) to (A) terminate the employment of any Company Employee at any time for any or no reason, (B) change or modify the terms or conditions of employment for any Company Employee (including location of performance) or (C) change or modify any Employee Benefit Plan or arrangement in accordance with its terms. Buyer shall permit each Company Employee who was a participant in or eligible to participate in a 401(k) Plan of Seller or an Affiliate of Seller prior to the Closing to be eligible to participate in a defined contribution retirement plan that is intended to be tax qualified and that is established or designated by Buyer

 

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(the “ Buyer 401(k) Plan ”) in accordance with the terms of the Buyer 401(k) Plan, and subject to the approval of the applicable plan fiduciaries (which Buyer shall seek), Buyer shall take any and all actions as may be required to permit each such employee to make rollover contributions of “eligible rollover distributions” (within the meaning of Section 401(a)(31) of the Code, and including plan loans) to the Buyer 401(k) Plan in an amount equal to the eligible rollover distribution portion of the account balance distributed to such employee from the Company 401(k) Plan (including plan loans).

(b) For all purposes under the employee benefit plans, programs and arrangements established or maintained by Buyer or its Affiliates in which Company Employees may be eligible to participate after the Closing (the “ New Benefit Plans ”), each Company Employee shall be credited with the same amount of service as was credited by the Group Companies as of the Closing under similar or comparable Employee Benefit Plans (including for purposes of eligibility to participate, vesting, benefit accrual (other than for purposes of defined benefit plans or retiree welfare arrangements) and eligibility to receive benefits); provided that such crediting of service shall not operate to duplicate any benefit or the funding of any benefit. In addition, and without limiting the generality of the foregoing, (i) with respect to any New Benefit Plans in which the Company Employees may be eligible to participate following the Closing, each Company Employee will immediately be eligible to participate in such New Benefit Plans, without any waiting time, to the extent coverage under such New Benefit Plans replaces coverage under a similar or comparable Employee Benefit Plan in which such Company Employee was eligible to participate immediately before such commencement of participation (such plans, collectively, the “ Old Benefit Plans ”) and (ii) for purposes of each New Benefit Plan providing medical, dental, pharmaceutical and/or vision benefits to any Company Employee, Buyer and its Subsidiaries shall use commercially reasonable efforts to cause all pre-existing condition exclusions and actively-at-work requirements of such New Benefit Plan to be waived for such Company Employee and his or her covered dependents, to the extent any such exclusions or requirements were waived or were inapplicable under any similar or comparable Employee Benefit Plan. Buyer and its Subsidiaries shall use commercially reasonable efforts to cause any eligible expenses incurred by such Company Employee and his or her covered dependents during the portion of the plan year of the Old Benefit Plan ending on the date such Company Employee’s participation in the corresponding New Benefit Plan begins to be taken into account under such New Benefit Plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such Company Employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such New Benefit Plan. Subject to applicable Law, Seller agrees that it will, and will cause its Affiliates and their respective service providers to, provide Buyer, its Affiliates and their respective service providers with access, on a schedule to be mutually agreed in good faith, to (i) all information reasonably requested by Buyer and its service providers to allow Buyer to comply with the provisions of this Section 5.9 and (ii) the employees of the Group Companies for purposes of communicating with such employees regarding the New Benefit Plans and facilitating enrollment therein.

(c) Other than with respect to Company Employees who provide services pursuant to a collective bargaining agreement, for a period of one year from and after the Closing, Buyer shall cause the Group Companies to comply with a severance pay plan for Company Employees in the form attached hereto as Schedule 5.9(c) (the “ Severance Pay Plan ”),

 

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subject only to such amendments as may from time to time be required to comply with applicable Law. Buyer shall cause the Group Companies to implement and administer the Severance Pay Plan in compliance with its terms and applicable Law. If any Company Employee is transferred to the employ of Buyer or an Affiliate of Buyer (other than the Group Companies) during such one year period, then Buyer shall, or shall cause its relevant Affiliate to, comply with the Severance Pay Plan in the event of a termination of employment of any such Company Employee during such one year period. For purposes of the Severance Pay Plan, Company Employees shall be eligible for severance pay based on the job title they held on the day preceding the Closing Date.

(d) Prior to the Closing, Seller shall cause the Company to pay all (i) Loyalty Bonuses which become payable, and (ii) Retention Bonuses in accordance with the Retention Bonus Agreements set forth on Schedule 3.10 , all of which payments shall be subject to applicable withholdings.

(e) Following the Closing, Buyer shall cause the Group Companies to pay all amounts due to any employees of the Group Companies pursuant to any Incremental Retention Bonus Agreements entered into pursuant to Section 5.1(b)(v) , if, as and when due under such Incremental Retention Bonus Agreements. Upon presentation of reasonable documentation of such post-Closing payments, Seller agrees to reimburse Buyer or the applicable Group Company for two-thirds of the amount of such bonuses (including any employer-side employment Taxes), calculated on an after Tax basis.

(f) Buyer agrees to cause the Group Companies to pay the Accrued Bonuses to the applicable Group Company employees, to the extent such Accrued Bonuses have not been paid prior to the Closing and are taken into account in the determination of the Net Working Capital as of the Closing Date. Such bonuses will be paid on or before December 31, 2017. Buyer’s covenant under this Section 5.9(f) is without prejudice to Buyer’s obligations under Section 5.9(a)(ii) with respect to the period from and after the Effective Time.

(g) Buyer shall use commercially reasonable efforts to cause the Group Companies to notify Seller within thirty (30) days after any of the Company Employees listed on Schedule 5.9(g) leaves the employ of Buyer or any Group Company for any reason.

(h) This Section 5.9 shall be binding upon and inure solely to the benefit of the parties to this Agreement and nothing in this Section 5.9 , expressed or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Section 5.9 . Without limiting the foregoing, no provision of this Section 5.9 will create any third party beneficiary rights in any current or former employee, director or consultant of any Group Company in respect of continued employment (or resumed employment) or any other matter.

(i) Prior to the Closing Date, Seller shall cooperate with Buyer and take or cause to be taken all actions necessary to provide notice to, and to offer to and, if acceptable to the relevant collective bargaining representatives, bargain in good faith with, the collective bargaining representatives of Company Employees who are covered by a collective bargaining agreement concerning any anticipated changes to their participation in an Employee Benefit Plan

 

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currently sponsored by a Group Company, Seller or an Affiliate of Seller that will result from Closing. In addition, to the extent the terms of a collective bargaining agreement will automatically renew unless written notice of intent to terminate or modify the collective bargaining agreement is provided to the applicable collective bargaining representative prior to the date of Closing, Seller agrees to provide or not so provide such notice in a timely manner as requested by Buyer and shall confer with Buyer with regard to any negotiations with respect to such collective bargaining agreements.

(j) Prior to the Closing Date, Seller shall transfer the sponsorship of, and all liabilities related to, the Keystone/Dolomite Supplemental Executive Retirement Plan to an Affiliate of Seller (other than a Group Company). Nothing in this Agreement shall be construed to prevent Seller from amending or terminating such plan without the consent of Buyer.

Section 5.10 Public Announcements . No party hereto, and none of their respective Affiliates, shall issue or cause the publication of any press release or other announcement with respect to this Agreement, the Ancillary Documents or the transactions contemplated hereby or thereby without the prior consent of the other parties, unless such party determines in good faith, after consultation with legal counsel, that it is required by applicable Law to issue or cause the publication of any press release or other announcement with respect to this Agreement, the Ancillary Documents or the transactions contemplated hereby, in which event such party shall use its reasonable best efforts to provide a meaningful opportunity to the other party to review and comment upon such press release or other announcement prior to making any such press release or other announcement; provided that (a) each party hereto and their respective Affiliates may make statements that are substantially similar to (i) the joint press release issued by the parties hereto in connection with the execution of this Agreement or (ii) previous press releases, public disclosures or public statements made by any party hereto in compliance with this Section 5.10 and (b) notwithstanding the foregoing, Buyer and the Financing Sources may issue customary announcements and make other customary communications, including preparation and distribution of marketing materials, in connection with the Financing contemplated by the Commitment Letters.

Section 5.11 Tax Matters . Seller shall, on or prior to the Closing Date, furnish to Buyer a certificate meeting the requirements of Treasury Regulation Section 1.1445-2(b)(2) to the effect that Seller is not a foreign person within the meaning of Section 897 of the Code.

Section 5.12 Notification . Prior to the Closing, Seller shall promptly notify Buyer in writing of any event, condition, fact or circumstance that would make the timely satisfaction of any of the conditions set forth in ARTICLE 6 impossible or unlikely. No such notification shall be deemed to supplement or amend the Schedules in any respect for the purpose of: (i) determining the accuracy of any of the representations and warranties made by Seller in this Agreement; or (ii) determining whether any of the conditions set forth in ARTICLE 6 has been satisfied. Notwithstanding anything in this Section 5.12 or elsewhere in this Agreement to the contrary, in no event will Seller’s requirements set forth in this Section 5.12 be used by Buyer as a basis for a claim of breach by Seller or a failure to comply with a Closing condition of Buyer unless Seller acts in bad faith and willfully fails to comply in a material respect with its obligations pursuant to this Section 5.12 , which failure has not been cured within ten (10) days from receipt of a written notice from Buyer specifying in reasonable detail such failure.

 

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Section 5.13 Related Party Agreements . On or before the Closing Date, Seller shall, and shall cause each Group Company to take all actions necessary to terminate all rights and obligations under the Related Party Agreements set forth on Schedule 5.13 and, following the Closing, no party to such Related Party Agreements, including the Group Companies and their Affiliates (including Buyer and its Affiliates), shall have any liability or obligation to the other with respect thereto, other than with respect to indemnification obligations for losses during the period prior to the Closing.

Section 5.14 Financing .

(a) Buyer shall use its reasonable best efforts to take, or cause to be taken, all actions and do, or cause to be done, as promptly as possible, all things reasonably necessary, proper or advisable to arrange and obtain the Financing on the terms and conditions described in the Commitment Letters, provided , however , that Buyer shall have the right to replace or amend the Commitment Letters from time to time between the date hereof and Closing (A) to add lenders, lead arrangers, bookrunners, syndication agents or any person with similar roles or titles that have not executed the Debt Commitment Letter as of the date hereof or to add investors that have not executed the Equity Commitment Letter or (B) in any other manner, in each case to the extent such amendment, modification or waiver would not, taken as a whole, have the effect of (i) reducing the aggregate amount of the Financing under any Debt Document or Equity Document (except to the extent any other Financing contemplated by the Commitment Letters is increased by a like amount), or (ii) imposing new or additional conditions to the receipt of the Financing or otherwise amending, modifying or expanding any of the conditions to the receipt of the Financing, in each case in a manner that would reasonably be expected to (x) materially delay or prevent the Closing or (y) materially or adversely impact the ability of Buyer to satisfy the conditions to obtaining the Financing. Without limiting the generality of the foregoing, Buyer shall use reasonable best efforts to (w) maintain in full force and effect each Commitment Letter and comply with its obligations thereunder, (x) satisfy, or cause to be satisfied (or, if deemed advisable by Buyer taking into account the expected timing of Closing, seek the waiver of), on a timely basis and in a manner that will not impede the ability of the parties to consummate the transactions contemplated hereby in advance of the Termination Date, all conditions to Buyer obtaining the Financing that are required to be satisfied by Buyer and its Subsidiaries and that are within the control of Buyer (including, after commencement of the Marketing Period and the “marketing period” described in the Debt Commitment Letter), (y) negotiate and enter into definitive agreements with respect to (1) the Debt Financing on the terms and conditions contemplated by the Debt Commitment Letter (including any related flex provisions) and otherwise on terms that are acceptable to Buyer and the Debt Financing Sources (such definitive agreements related to the Debt Financing, collectively, with the Debt Commitment Letter, the “ Debt Documents ”) and (2) the Equity Financing on the terms and conditions contemplated by the Equity Commitment Letter and otherwise on terms that are acceptable to Buyer and the Equity Financing Sources (such definitive agreements related to the Equity Financing, collectively, with the Equity Commitment Letter, the “ Equity Documents ”), and (z) assuming that all conditions contained in the Commitment Letters have been satisfied, consummate the Financing at or prior to the Closing. Buyer shall use its reasonable best efforts to cause the Financing Sources and the other Persons providing or committing to provide such Financing to comply with their obligations under the Commitment Letters and the Debt Documents or the Equity Documents, as applicable, and to fund no later than the Closing Date the Financing required to consummate the transactions contemplated by this Agreement, including using reasonable best efforts to enforce its rights under the Commitment Letters, the Debt Documents and the Equity Documents.

 

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(b) Buyer shall keep Seller reasonably informed of the status of its efforts to arrange the Financing and to satisfy the conditions thereof, and shall give Seller prompt notice (i) of any material breach or material default by any party to the Commitment Letters or other Debt Document or Equity Document, as applicable, of which Buyer becomes aware, (ii) of the receipt by Buyer or any of its Affiliates of any written notice or other written communication from any Financing Source with respect to (x) any actual, threatened or alleged breach, default, termination or repudiation by any party to the Commitment Letters or other Debt Document or Equity Document (including any event or circumstance that, with or without notice, lapse of time or both, would reasonably be expected to give rise to such breach, default, termination or repudiation, and including any proposal by any lender or other Person to withdraw from or terminate any Commitment Letter) or (y) any material dispute or disagreement relating to the Financing between or among any parties to any Commitment Letter or any Debt Document or Equity Document, as applicable, entered into in connection with the Financing and (iii) if for any reason Buyer believes in good faith that it will not be able to obtain any portion of the Financing on the terms, in the manner or from the sources contemplated by the Commitment Letters, the Debt Documents or the Equity Documents, as applicable.

(c) If any portion of the Financing becomes unavailable on the terms and conditions contemplated in any Commitment Letter (after taking into account flex terms), Buyer shall promptly notify Seller thereof and, if such portion is necessary to consummate the Closing, use its reasonable best efforts to arrange to obtain alternative debt or equity financing on terms and conditions not less favorable, taken as a whole, to Buyer and its Subsidiaries than those in the applicable Commitment Letter in an amount sufficient (taken as a whole with other available Financing) for Buyer to make all required payments in connection with the transactions contemplated hereby, including payment of the Purchase Price and all other amounts to be paid pursuant to this Agreement and associated fees, costs and expenses of the transactions contemplated hereby, including the Financing, on the Closing Date (“ Alternative Financing ”) as promptly as practicable following the occurrence of such event, and the provisions of this Section 5.14 , Section 5.15 , Section 10.2 , Section 10.7 , Section 10.12 , Section 10.13(b) and Section 10.16 shall be applicable to the Alternative Financing, and, for the purposes of this Agreement, all references to the Financing shall be deemed to include such Alternative Financing, if with respect to the Debt Financing, all references to Debt Documents shall include the applicable documents for the Alternative Financing, if with respect to the Equity Financing, all references to Equity Documents shall include the applicable documents for the Alternative Financing, and all references to the Financing Sources shall include the Persons providing or arranging the Alternative Financing. True, complete and correct copies of each commitment letter and other agreement relating to the Alternative Financing will be promptly provided to Seller. Notwithstanding anything to the contrary contained in this Agreement, nothing contained in this Section 5.14 will require, and in no event will the reasonable best efforts of Buyer be deemed or construed to require, Buyer to enter into an Alternative Financing on terms or conditions less favorable, taken as a whole, to Buyer and its Subsidiaries than those in the Commitment Letters.

 

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(d) Buyer acknowledges and agrees that the obtaining of the Financing, or any Alternative Financing, is not a condition to Closing.

(e) For the avoidance of doubt, the obligations contained in this Section 5.14 shall terminate upon the occurrence of the Closing.

Section 5.15 Financing Cooperation .

(a) Prior to the Closing, Seller shall, shall cause its Subsidiaries, and shall cause its and their respective directors, officers, employees, advisors and other representatives to, at the sole expense of Buyer, use reasonable best efforts to cooperate with Buyer to the extent necessary and customary for Debt Financing contemplated by the Debt Commitment Letter, equity financing contemplated by the Equity Commitment Letter or any offering of the Buyer’s common stock prior to the Closing which proceeds are to be used as a portion of the Purchase Price as a reduction to the aggregate proceeds of the Financing (the “ Pre-Closing Equity Offering ”) as reasonably requested by Buyer in connection with the arrangement of the Financing (including for purposes of this Section 5.15 , any Alternative Financing) or the Pre-Closing Equity Offering and the termination and payment in full of the existing Indebtedness of the Companies and their respective Subsidiaries, including using reasonable best efforts to (provided that the delivery of the items referred to in clauses (vi)(x)(A), (vi)(x)(B) and (vi)(y) below shall not be subject to such reasonable best efforts qualifiers):

(i) assist in the preparation for and upon reasonable advance notice participate (but only together with the executive officers of Buyer and other members of senior management and representatives of Buyer) at reasonable times in a reasonable number of meetings, drafting sessions, presentations, road shows, and rating agency and due diligence sessions (including accounting due diligence sessions), including making available management and the members of the finance department of Seller and the Group Companies to participate in such meetings, sessions, presentations and road shows;

(ii) (A) provide reasonable assistance to Buyer and its Financing Sources in the preparation of (x) customary offering documents, private placement memoranda, road show presentations, bank information memoranda, prospectuses and similar documents reasonably necessary for any portion of the Financing or the Pre-Closing Equity Offering (including, where appropriate, a “public” version and a “private” version), including reviewing and commenting on Buyer’s draft of a business description and “Management’s Discussion and Analysis” of the Group Companies’ financial statements to be included in offering documents contemplated by the Financing or the Pre-Closing Equity Offering and (y) customary materials for rating agency presentations, in each case including using reasonable best efforts to make available management and the members of the finance department of Seller and the Group Companies to provide reasonable assistance to Buyer in Buyer’s preparation of any of the foregoing documents, memoranda, prospectuses or similar documents and/or materials relating to the Group Companies (it being understood that Seller will have no obligation to provide pro forma financial information (except to assist in the preparation thereof to the extent provided in clause (ii) of the definition of “Required Information”) or post-Closing financial information), (B) furnish Buyer and the Financing Sources with the Required Information as promptly as reasonably practicable, and (C) inform Buyer if Seller shall have Knowledge of any facts that would likely require the restatement of any financial statements included in the Required Information for such financial statements to comply with GAAP;

 

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(iii) cooperate with the marketing efforts of Buyer and its Financing Sources for any portion of the Financing or the Pre-Closing Equity Offering (including by providing in connection therewith one or more customary authorization letters authorizing the distribution of the offering materials, customary representation letters with respect to the presence or absence of material non-public information and/or customary representation letters as may be requested by the independent accountants of the Group Companies to provide their comfort letters and consents) as reasonably requested by Buyer or the Financing Sources;

(iv) assist Buyer in obtaining waivers, consents, estoppels and approvals from other parties to material leases, Encumbrances and agreements relating to the Group Companies, and appraisals, surveys and title insurance, and releases and other evidence of satisfaction of Encumbrances (other than Permitted Encumbrances), in each case as reasonably requested by Buyer or the Financing Sources;

(v) cause the independent auditors of the Companies and their respective Subsidiaries to provide, consistent with customary practice, (A) reasonable assistance and cooperation to Buyer, including attending accounting due diligence sessions and (B) accountant’s comfort letters and consents, including as to customary negative assurances, requested by the Buyer or the Financing Sources and customary for financings similar to the Financing or the Pre-Closing Equity Offering;

(vi) (x) with respect to the Indebtedness of the Group Companies set forth on Schedule 3.10(a)(iii) , (A) obtain the delivery of customary payoff letters, releases and/or terminations executed by the applicable creditor or each agent therefor and (B) cause the delivery of notices of prepayment within the time periods required by the relevant agreements governing such Indebtedness (which notices may be conditioned on the occurrence of the Closing on the Closing Date); and (y) obtain all other documents and instruments and take all such other actions as may be necessary to evidence the termination, discharge, release and/or repayment in full of all Indebtedness of the Group Companies set forth on Schedule 3.10(a)(iii) and the release of all guarantees and Encumbrances securing the foregoing, including the delivery of lien and guarantee terminations and releases, UCC-3 termination statements and mortgage releases, in each case in form and substance reasonably acceptable to the Buyer and the Financing Sources; provided that, in the case of each of clauses (x) and (y) above, (I) Buyer shall provide all funds required to effect the repayment of all such Indebtedness and the cash collateralization of all letters of credit, and Seller shall have no obligation to effect any such alternative arrangement for letters of credit, and (II) in no event shall this Section 5.15(a)(vi) require Seller or any of its Subsidiaries to cause any termination or release prior to the occurrence of the Closing;

(vii) assist with the preparation and execution of any pledge and security documents, other definitive financing documents (including any schedules or exhibits thereto) or other certificates or documents customary for the Financing or the Pre-Closing Equity Offering or as may be reasonably requested by Buyer or the Financing Sources (it being understood that none Seller or any of its Affiliates or any of their representatives will be required to provide any certificate with respect to solvency matters) and otherwise facilitate the pledging of collateral, in each case as may be reasonably requested by Buyer and in form and substance reasonably acceptable to Buyer and the Financing Sources;

 

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(viii) cooperate with the due diligence investigation of the Financing Sources, including, subject to Section 5.3 , providing reasonable access, during normal working hours and upon reasonable advance notice, as necessary for completion of field exams and audits in connection with the borrowing base for the asset-based loan component of the Financing, asset appraisals and engineering/property condition reports and the evaluation of the current assets, cash management and accounting systems, policies and procedures of the Group Companies relating thereto for the purpose of establishing collateral arrangements;

(ix) reasonably assist Buyer to satisfy on a timely basis all conditions to funding that are applicable solely to the Group Companies with respect to the Financing under the Commitment Letters;

(x) take all corporate or similar actions reasonably requested by Buyer that are necessary or customary to permit the consummation of the Financing (it being understood that none of Group Companies will be required to take any corporate or similar action that is effective prior to the occurrence of the Effective Time or that would be effective if the Effective Time does not occur); and

(xi) provide at least five (5) Business Days prior to the Closing Date all customary documentation and other information as is required by applicable “know your customer” and anti-money laundering rules and regulations including the USA PATRIOT Act and FATCA to the extent requested at least ten (10) Business Days prior to the Closing Date.

(b) Seller hereby consents to the use of all of the Group Companies’ corporate logos in connection with the initial syndication or marketing of the Financing or the Pre-Closing Equity Offering; provided , that such logos are used solely in a manner that is not intended to or reasonably likely to harm or disparage the Group Companies or the reputation or goodwill of the Group Companies or their marks.

(c) Notwithstanding the foregoing or anything else contained herein to the contrary, (i) none of Seller or any of its Subsidiaries shall be required to incur any expenses or pay any commitment or other fee or other payment that is not promptly reimbursed by Buyer in connection with the Financing prior to the Closing or otherwise incur any liability in connection with the Financing and/or redemption and/or discharge of the Indebtedness of the Group Companies prior to the Closing, (ii) other than customary authorization and representation letters (authorizing the distribution of the offering materials and with respect to the presence or absence of material non-public information and as may be requested by the independent accountants of the Group Companies to provide their comfort letters and consents) and any customary documents required to be executed or delivered in connection with the closing of a debt offering into escrow, no obligation of the Group Companies under any certificate, document or instrument executed or delivered in connection with the foregoing shall be effective until the Closing Date and none of Group Companies or any of their respective directors or officers shall be required to execute, deliver enter into or take any action under any such certificate, document or instrument that is not contingent upon the Closing or adopt any resolutions approving the

 

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agreements, documents and instruments pursuant to which the Financing is obtained, or be required to deliver, or cause to be delivered, any legal opinion by its counsel, and (iii) nothing in this Section 5.15 shall require cooperation to the extent that it would unreasonably interfere with the business or the ongoing operations of Seller and its Subsidiaries (it being agreed that the matters described in clauses (i) through (ix) and (xi) of Section 5.15(a) do not so unreasonably interfere), and (iv) nothing in this Section 5.15 shall require cooperation to the extent that it would reasonably be expected to conflict with or violate any Group Company’s organizational documents or any applicable Law. Buyer shall, promptly upon request, reimburse Seller for all reasonable and documented out-of-pocket costs and expenses (including reasonable attorneys’ fees) incurred by Seller and the Group Companies in connection with fulfilling its obligations pursuant to this Section 5.15 , which reimbursement obligation shall survive termination of this Agreement. Buyer shall indemnify, defend and hold harmless Seller and its Affiliates, and their respective pre-Closing directors, officers, employees, agents, representatives and professional advisors, from and against any liability, loss, damages, claims, costs, expenses, awards, judgments and penalties of any type suffered or incurred by them in connection with the arrangement of the Financing, any information provided in connection therewith (other than arising from historical information relating to the Group Companies provided by Seller in writing specifically for use in the Financing offering documents) and any misuse of the logos or marks of Group Companies except in the event such liabilities or losses arose out of or result from the bad faith, gross negligence, material breach or willful misconduct of Seller, any of its Subsidiaries or any of their respective representatives, which indemnification obligation shall survive termination of this Agreement.

(d) The Required Information (taken as a whole), when delivered by Seller to Buyer, will not contain any untrue statement of a material fact regarding the Group Companies or omit to state a material fact regarding the Group Companies necessary in order to make such information contained in such Required Information, in light of the circumstances in which such information is disclosed, not misleading. If Seller becomes aware that the Required Information, when taken as a whole, contains any untrue statement of a material fact regarding the Group Companies or omits to state a material fact regarding the Group Companies necessary in order to make such information contained in such Required Information, in light of the circumstances in which such information is disclosed, not misleading, Seller will use reasonable best efforts to update or supplement such information such that, after giving effect to such updates and supplements, such information, when taken as a whole along with any other written information or data provided by or on behalf of Seller, does not contain as of the time provided any untrue statement of material fact regarding the Group Companies or omit to state any material fact regarding the Group Companies necessary in order to make such information contained in such Required Information, in light of the circumstances in which such information is disclosed, not misleading.

(e) For the avoidance of doubt, Buyer may, to most effectively access the financing markets, require the reasonable cooperation of Seller and its Subsidiaries under, and subject to, this Section 5.15 at any time, and from time to time and on multiple occasions, between the date hereof and the Closing.

(f) Buyer acknowledges and agrees that the obtaining of the Financing, or any Alternative Financing, is not a condition to the Closing.

 

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Section 5.16 Release .

(a) Seller, on behalf of itself and its Affiliates (collectively, for purposes of this Section 5.16(a) , the “ Seller Releasing Parties ”), and Buyer, on behalf of itself and its Affiliates (including at the Effective Time, the Group Companies and collectively, for purposes of this Section 5.16(a) , the “ Buyer Releasing Parties ” and, together with the Seller Releasing Parties, the “ Releasing Parties ”), in exchange for the consideration set forth herein, hereby consents to the transactions contemplated under this Agreement and each other agreement, document or instrument referred to in or contemplated by this Agreement. Effective as of the Closing, each of the Releasing Parties hereby irrevocably, unconditionally and completely releases, acquits and forever discharges each of the Releasees (as defined below) from and against any and all Released Claims, whether at law or in equity, that such Releasing Party may have had in the past or may have at any time up to and including the Closing Date against any of the Releasees, directly or indirectly relating to or arising out of any events, matters, causes, things, acts, omissions or conduct occurring or existing at any time up to and including the Closing Date; provided, however, that such Releasing Party is not releasing (i) any rights available to it under this Agreement, any Ancillary Document or any agreement entered into by such Releasing Party in connection with the Closing, (ii) any rights available to it under any Related Party Agreement to the extent such agreement is not terminated pursuant to Section 5.13 or (iii) any rights available to it under any Contract between a Seller Releasing Party (other than a Group Company) and a Buyer Releasing Party (other than a Group Company) in each case entered into prior to or on the Closing Date. For purposes of this Agreement, (a) “ Releasees ” means, (x) with respect to any Seller Releasing Party, each Group Company, Buyer and all of Buyer’s Affiliates, and each of their respective officers, directors, employees, stockholders, members, Affiliates, agents, representatives, successors and assigns and (y) with respect to any Buyer Releasing Party, Seller, its Affiliates and each of their respective officers, directors, employees, stockholders, members, Affiliates, agents, representatives, successors and assigns and (b) “ Released Claim ” means and includes all past and present as of the Closing Date disputes, claims, controversies, demands, rights, obligations, liabilities, actions and causes of action of every kind and nature, including: (i) any unknown, inchoate, unsuspected or undisclosed claim; and (ii) any claim, right or cause of action based upon any breach of any express, implied, oral or written contract or agreement.

(b) To the extent any guarantees or similar assurances provided by Seller or any Affiliate of Seller (other than a Group Company) in respect of obligations or liabilities of any Group Company have not been discharged and released at or before Closing, Buyer shall indemnify, defend and hold harmless Seller and its Affiliates, and their respective directors, officers, employees, agents, representatives and professional advisors, from and against any liability, loss, damages, claims, costs, expenses, awards, judgments and penalties of any type suffered or incurred by them from and after Closing pursuant to any such guarantee or assurances, provided that Seller or such Affiliate shall give Buyer prompt notice of any communication received from the beneficiary of any such guarantee or similar assurance asserting any claim thereunder, so as to enable the relevant Group Company to exercise any defenses available in respect of the underlying obligation, and further provided that such indemnity shall not extend to any obligation or liability of Seller or such Affiliate to the extent such obligation or liability results from any waivers in the applicable guarantee or similar assurance that effectively preclude assertion of defenses available to the Group Company in respect of the underlying obligation.

 

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Section 5.17 Further Assurances . As and when required by any party hereto, each party hereto shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and will take, or cause to be taken all such further or other actions, as such other party may reasonably deem necessary or desirable to transfer and convey the Shares to Buyer, on the terms herein contained, and to otherwise comply with the terms of this Agreement (including Section 5.5 ) and consummate the transactions contemplated hereby.

Section 5.18 Continuing Insurance Coverage .

(a) From and after the Closing, Parent and Seller agrees (i) to cause the Group Companies to be afforded continuing coverage under, and subject to the terms of, the Seller Group Insurance Policies, but solely for exposures, claims, losses, occurrences, or other covered perils taking place or alleged to have taken place prior to the Closing (whether reported prior to, on or after the Closing but subject to the terms and conditions of the applicable Seller Group Insurance Policy), and (ii) to provide reasonable assistance to the Group Companies to notify the insurers under such Seller Group Insurance Policies of any claims related to any occurrences prior to the Closing and to use commercially reasonable efforts to assist, and to cause any third party claims administrator retained by Seller from time to time to assist, the Group Companies in administering such claims and obtaining (at the Group Companies’ expense) the proceeds related to such claims.

(b) From and after the Closing Date, Buyer shall, and shall cause the Group Companies and any counsel representing them or insurance administrator to, keep Internal Counsel reasonably informed of the status of all claims asserted or reasonably expected to be asserted against the Seller Group Insurance Policies from time to time, and, subject to the execution of a customary joint defense agreement, shall consult with Internal Counsel regarding the defense or settlement of any such claim and allow Seller, through Internal Counsel, to have the right to participate, at its own expense, in the defense thereof and to be present at and participate in any meeting or Action with respect to any such claim. It is understood and agreed that, at all times, Internal Counsel will be representing solely Seller and its Affiliates, and no attorney-client relationship shall be deemed to exist or be created between Buyer or any Group Company, on the one hand, and Internal Counsel, on the other, as a result of any participation of Internal Counsel in connection with any such insured claim or Action as contemplated hereby.

ARTICLE 6

CONDITIONS TO CLOSING

Section 6.1 Conditions to the Obligations of the Parties . The obligations of Buyer and Seller to consummate the transactions contemplated by this Agreement are subject to the satisfaction (or, if permitted by applicable Law, waiver by the party for whose benefit such condition exists) of the following conditions:

(a) any applicable waiting period under the HSR Act relating to the transactions contemplated by this Agreement shall have expired or been terminated; and

 

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(b) no statute, rule, regulation, executive order, decree, temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other Governmental Entity or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement shall be in effect.

Section 6.2 Other Conditions to the Obligations of Buyer . The obligations of Buyer to consummate the transactions contemplated by this Agreement are subject to the satisfaction or, if permitted by applicable Law, waiver by Buyer of the following further conditions:

(a) the representations and warranties of Seller set forth in (i)  Section 3.2 and Section 3.5 , shall be true and correct in all respects, except for de minimis inaccuracies, as of the date of this Agreement and as of the Closing Date, as if made as of such time (except to the extent expressly made as of a specified date, in which case as of such date), (ii)  Section 3.16(iii) and Section 3.23 , shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date, as if made as of such time (except to the extent expressly made as of a specified date, in which case as of such date), and (iii)  ARTICLE 3 , other than those specified in the foregoing clauses (i) and (ii), shall be true and correct as of the date of this Agreement and as of the Closing Date, as if made as of such time (except to the extent expressly made as of a specified date, in which case as of such date), except where the failure of such representations and warranties to be so true and correct (without giving effect to any limitations as to “materiality” or “Company Material Adverse Effect” set forth therein), does not constitute, individually or in the aggregate, a Company Material Adverse Effect;

(b) Seller shall have performed and complied in all material respects with all covenants required to be performed or complied with by Seller under this Agreement on or prior to the Closing Date; and

(c) Seller shall have delivered to Buyer a certificate, dated as of the Closing Date and signed by an executive officer of Seller, certifying to the effect that the conditions set forth in paragraphs (a) and (b) of this Section 6.2 have been satisfied.

Section 6.3 Other Conditions to the Obligations of Seller . The obligations of Seller to consummate the transactions contemplated hereby are subject to the satisfaction or, if permitted by applicable Law, waiver by Seller of the following further conditions:

(a) the representations and warranties of Buyer set forth in (i)  Section 4.2 shall be true and correct in all respects, except for de minimis inaccuracies, as of the date of this Agreement and as of the Closing Date, as if made as of such time (except to the extent expressly made as of a specified date, in which case as of such date), (ii)  Section 4.8 shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date, as if made as of such time (except to the extent expressly made as of a specified date, in which case as of such date), and (iii)  ARTICLE 4 , other than those specified in the foregoing clauses (i) and (ii), shall be true and correct as of the date of this Agreement and as of the Closing Date, as if made as of such time (except to the extent expressly made as of a specified date, in which case as of such date), except where the failure of such representations and warranties to be so true and correct (without giving effect to any limitations as to “materiality” or “Buyer Material Adverse Effect” set forth therein), does not constitute, individually or in the aggregate, a Buyer Material Adverse Effect;

 

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(b) Buyer shall have performed and complied in all material respects with all covenants required to be performed or complied with by it under this Agreement on or prior to the Closing Date; and

(c) Buyer shall have delivered to Seller a certificate, dated as of the Closing Date and signed by an executive officer of Buyer, certifying to the effect that the conditions set forth in paragraphs (a) and (b) of this Section 6.3 have been satisfied.

ARTICLE 7

TERMINATION

Section 7.1 Termination . This Agreement may be terminated at any time prior to the Closing:

(a) by mutual written consent of Buyer and Seller;

(b) by Buyer or Seller by written notice to the other, if the Closing shall not have occurred on or prior to February 28, 2018 (the “ Termination Date ”); provided that the right to terminate pursuant to this Section 7.1(b) shall not be available to any party whose breach of any provision of this Agreement results in the failure of any of the conditions specified in ARTICLE 6 from being satisfied, and further provided that, if all of the conditions specified in ARTICLE 6 have been satisfied or waived as of such date (or, with respect to those conditions which, by their nature can only be satisfied at the Closing, would reasonably be capable of satisfaction as of such date), other than the conditions specified in Section 6.1 with respect to the HSR Act or Antitrust Laws, then the Termination Date shall automatically be extended to August 31, 2018;

(c) by Buyer by written notice to Seller, if a breach of any representation or warranty or failure to perform any covenant or agreement on the part the Seller set forth in this Agreement shall have occurred that would cause a condition set forth in Section 6.2(a) or Section 6.2(b) not to be satisfied, Buyer has notified Seller of such breach and such breach is not cured by the earlier of (1) the Termination Date and (2) the date that is sixty (60) days from the date that Seller is notified in writing by Buyer of such breach or failure to perform; provided that Buyer shall not have the right to terminate this Agreement pursuant to this Section 7.1(c) if Buyer is then in material breach or violation of its representations, warranties or covenants contained in this Agreement; and

(d) by Seller by written notice to Buyer, if a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Buyer set forth in this Agreement shall have occurred that would cause a condition set forth in Section 6.3(a) or Section 6.3(b) not to be satisfied, Seller has notified Buyer of such breach and such breach is not cured by the earlier of (1) the Termination Date and (2) the date that is sixty (60) days from the date that Buyer is notified in writing by Seller of such breach or failure to perform; provided that Seller shall not have the right to terminate this Agreement pursuant to this Section 7.1(d) if Seller is then in material breach or violation of its representations, warranties or covenants contained in this Agreement.

 

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Section 7.2 Effect of Termination . Any termination of this Agreement pursuant to Section 7.1 by written notice must specify in such written notice whether such termination is pursuant to Section 7.1(b) , (c) , or (d) . In the event of the termination of this Agreement pursuant to Section 7.1 , this entire Agreement shall forthwith become void and there shall be no liability or obligation on the part of Buyer or Seller or their respective officers, directors or equityholders with the exception of (a) the obligations which by their express terms survive termination under the last sentence of Section 5.3 , under Section 5.15(c) with respect to Buyer’s reimbursement and indemnity obligations, this Section 7.2 and Section 7.3 , as well as the provisions of ARTICLE 1 and ARTICLE 10 solely as they relate to such surviving obligations and (b) any liability of any party hereto for actual fraud or any willful breach of this Agreement prior to such termination (which willful breach, for the avoidance of doubt, shall be deemed to include any failure by Buyer to consummate the Closing if it is obligated to do so hereunder). In the event of any termination of this Agreement for such a willful breach by Buyer, Seller’s sole remedy is set forth in Section 7.3 . For the sake of clarity, in the event this Agreement is terminated pursuant to Section 7.1(a) or (b) , then no Termination Fee shall be due and no party shall be deemed to have committed actual fraud or willful breach.

Section 7.3 Termination Fee .

(a) Notwithstanding Section 7.2 , in the event that the conditions set forth in Section 6.1 were not satisfied and Seller terminated this Agreement pursuant to Section 7.1(d) as a result of a breach by Buyer of Section 5.6 that resulted in the failure to satisfy the conditions specified in Section 6.1 with respect to the HSR Act or Antitrust Laws, then Buyer shall pay, or cause to be paid, a termination fee of $85,000,000.00 (the “ Termination Fee ”) to Seller within five (5) Business Days following such termination, by wire transfer of immediately available funds to an account specified by Seller in writing to Buyer.

(b) In the event (i) the conditions set forth in Sections 6.1 and 6.2 were satisfied or waived in accordance therewith, except for such conditions which by their nature can only be satisfied at the Closing, (ii) the conditions set forth in Section 6.3 were not satisfied or waived in accordance therewith, except for such conditions which by their nature can only be satisfied at the Closing, (iii) Seller delivered to Buyer prior to termination pursuant to Section 7.1(d) an irrevocable written notice certifying (A) the conditions to Closing set forth in Section 6.1 and Section 6.2 are satisfied or waived, except for such conditions which by their nature can only be satisfied at the Closing, (B) Seller is ready, willing and able to Close and (C) Seller will waive, effective upon consummation of the Closing within five (5) Business Days of receipt of such written notice, such conditions in Section 6.3 which have not been satisfied, (iv) Buyer failed to consummate the Closing within five (5) Business Days following receipt of such written notice and (v) Seller terminated this Agreement pursuant to Section 7.1(d) as a result of a willful breach by Buyer (which, for the avoidance of doubt, shall be deemed to include any failure by Buyer to consummate the Closing if it is obligated to do so hereunder), then after such termination Buyer shall pay, or cause to be paid, the Termination Fee to Seller within five (5) Business Days following such termination, by wire transfer of immediately available funds to an account specified by Seller in writing to Buyer.

 

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(c) Notwithstanding anything to the contrary contained herein, (i) in no event shall Buyer be required to pay the Termination Fee on more than one occasion, whether or not the Termination Fee may be payable under more than one provision of this Agreement at the same or at different times or upon the occurrence of different events; (ii) while Seller may pursue specific performance to the extent permitted in accordance with Section 10.14 , under no circumstances shall the Seller be permitted or entitled to receive both specific performance of the type contemplated by Section 10.14 and the Termination Fee; and (iii) in the event Seller terminates this Agreement pursuant to Section 7.1(d) and the Termination Fee is payable pursuant to Section 7.3(a) or (b) , the remedies under Section 7.3(a) , (b)  or (c) , as applicable, shall be the sole and exclusive remedies of Seller. Solely for purposes of establishing the basis for the amount of the Termination Fee, and without in any way increasing the amount of the Termination Fee or expanding the circumstances in which the Termination Fee is to be paid, each party confirms that (i) each event or circumstance giving rise to the obligation to pay the Termination Fee would cause significant damage to Seller and its Affiliates, (ii) the Termination Fee provided for hereunder is intended to provide fair compensation in response to that damage, is not intended to be punitive, and is reasonable in amount in relation to the circumstances under which it would become payable, and (iii) the Termination Fee is a liquidated damage, and not a penalty.

(d) Notwithstanding anything to the contrary in this Agreement, prior to the occurrence of the Closing, the Seller’s right to (i) specific performance pursuant to Section 10.14 , (ii) terminate this Agreement pursuant to Section 7.1 and (iii) if applicable, receive payment from Buyer of the Termination Fee and if applicable, any additional amount, pursuant to Section 7.3(e) in respect thereof shall be the sole and exclusive remedy of Seller, the Group Companies and each of their respective Affiliates or any other Person against Buyer and any of its former, current or future direct or indirect equityholders, stockholders, controlling persons, managers, members, directors, officers, employees, Affiliates, subsidiaries, attorneys and other representatives of any of the foregoing, and their successors, assignees and agents (collectively, the “ Buyer Related Parties ”) for any losses, damages or other injury suffered or alleged to be suffered as a result of the failure of the transactions contemplated hereby to be consummated or for a breach or failure to perform hereunder, under any other agreement contemplated herein or the transactions contemplated herein or otherwise, and upon payment of the Termination Fee (and if applicable, any additional amount required under this Section 7.3(e) ) none of Buyer Related Parties shall have any further liability or obligation relating to or arising out of this Agreement, the other agreements contemplated herein or the transactions contemplated hereby or thereby. Prior to the Closing, under no circumstances will Seller, the Group Companies and each of their respective Affiliates or any other Person be entitled in the aggregate to monetary damages in excess of the Termination Fee (and if applicable, any additional amount required under Section 7.3(e) ) or to seek or obtain any other damages of any kind against Buyer or any of the other Buyer Related Parties, including consequential, special, indirect or punitive damages, for, or with respect to, this Agreement or the related transactions.

(e) The parties acknowledge that the agreements contained in this Section 7.3 are an integral part of the transactions contemplated hereby and that, without these agreements, the parties would not enter into this Agreement. Without limiting any other rights of Seller hereunder, if Buyer fails to pay the Termination Fee when due, and, in order to obtain such payment, Seller commences any legal action or proceeding that results in a final, binding and non-appealable judgment against Buyer for the Termination Fee, Buyer shall pay to Seller, together with the Termination Fee, interest on the Termination Fee from the date of termination of this Agreement at a rate per annum equal to eight percent (8.0%).

 

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ARTICLE 8

TAX MATTERS

Section 8.1 Liability and Indemnification for Taxes . From and after the Closing, Seller and Parent shall, jointly and severally, indemnify the Buyer Indemnitees against and hold the Buyer Indemnitees harmless from any Losses based upon, related to, arising out of, or in connection with (i) Taxes imposed on a Group Company, or for which a Group Company may otherwise be liable, for any Pre-Closing Period (including any Taxes attributable to any Section 338(h)(10) Elections, subject to Buyer’s obligation to pay the Section 338(h)(10) Gross-Up Amount), and, with respect to any Straddle Period, the portion of such Straddle Period ending on and including the Closing Date, and (ii) Taxes imposed on a Group Company, or for which for which a Group Company may otherwise be liable, as a result of having been a member of a Consolidated Group (including Taxes for which the Group Company may be liable pursuant to Treasury Regulation 1.1502-6 or similar provisions of state, local or foreign Law as a result of having been a member of a Consolidated Group and any Taxes resulting from the Group Company ceasing to be a member of any Consolidated Group), provided , however , that Seller and Parent shall not be liable for any Tax liability to the extent such Tax liability is reflected as a liability in the computation of the Net Working Capital at Closing pursuant to the other terms of this Agreement.

Section 8.2 Tax Returns of the Group Companies .

(a) Seller, at its sole cost and expense, will prepare and timely file, or cause to be prepared and timely filed, all Tax Returns of the Group Companies due prior to or on the Closing Date and all income Tax Returns of, or with respect to, any Group Company for any Pre-Closing Period (whether due on, before, or after the Closing Date) (collectively, “ Seller Prepared Returns ”). All Seller Prepared Returns will be prepared on a basis consistent with current practices, procedures, and accounting methods of Seller and the Group Companies. To the extent a Group Company is required to file any Seller Prepared Returns after the Closing Date, Seller will submit such Tax Return to Buyer as early as practicable prior to the due date (after applicable extensions) of such Tax Return for Buyer’s review and comment, and, to the extent that Buyer makes any timely comments, Seller will make appropriate changes to the Seller Prepared Return to reflect Buyer’s reasonable requests. Buyer will cause the applicable Group Company to file such Seller prepared Tax Return as amended without further change or modification. Notwithstanding the foregoing, Seller shall not be required to submit any information to Buyer with respect to Seller or any of Seller’s Affiliates that is not also a Group Company including but not limited, to any consolidated, combined or unitary returns that include companies other than the Group Companies.

(b) Buyer, at its sole cost and expense, will prepare and timely file, or cause to be prepared and timely filed, all income Tax Returns of, or with respect to, any Group Company for any Straddle Period (collectively, “ Straddle Returns ”). All Straddle Returns will be prepared on a basis consistent with current practices, procedures, and accounting methods of Seller and

 

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the Group Companies, except to the extent required by applicable Law. Buyer will submit each Straddle Return to Seller as early as practicable prior to the due date (after applicable extensions) of such Straddle Return for Seller’s review and comment, and, to the extent that Seller makes any timely comments, Buyer will make appropriate changes to the Straddle Return to reflect Seller’s reasonable requests. Buyer will cause the applicable Group Company to file such Straddle Return as amended without further change or modification. Seller shall pay to Buyer, Seller’s share of any Taxes payable in respect of any Straddle Period within five (5) Business Days of the filing of such Straddle Return.

(c) For purposes of allocating any Taxes in respect of any Straddle Period between Seller and Buyer pursuant to this Section, (x) in the case of income Taxes or Taxes based upon or related to employment, sales and use, value added and other non-periodic Taxes, the Taxes payable by Seller in respect of the pre-Closing portion thereof shall be deemed equal to the amount which would be payable if the relevant Straddle Period ended with the Closing Date, and any exemptions, allowances or deductions that are calculated on an annual basis (including, but not limited to, depreciation, first year bonus depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period after the Closing Date in proportion to the number of days in each such period, and (y) in the case of any Taxes imposed on a periodic basis and Taxes other than Taxes described in clause (x) above, the Taxes payable by Seller in respect of the pre-Closing portion thereof shall be deemed equal to the amount of such Tax for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days in the Straddle Period up to and including the Closing Date, and the denominator of which is the number of days in the entire Straddle Period. All determinations necessary to give effect to the foregoing allocations shall be made in a manner consistent with reasonable prior practice of Seller and the Group Companies. Notwithstanding anything herein to the contrary, if a Section 338(h)(10) Election is made, all Section 338 Taxes shall be allocable to the portion of the Straddle Period ending on and including the Closing Date.

Section 8.3 Tax Proceedings .

(a) Buyer shall notify Seller of the commencement of any Tax proceeding for which Seller could have an indemnification liability pursuant to Section 8.1 ; provided , that failure to comply with this provision shall not affect Buyer’s right to indemnification under this Agreement except to the extent such failure materially impairs Seller’s ability to contest any such Tax liabilities.

(b) Seller shall have the sole right to represent each Group Company’s interests in any Tax audit or administrative or court proceeding relating to a Tax liability for which Seller would be required to indemnify Buyer Indemnitees pursuant to Section 8.1 and that relates solely to a Pre-Closing Period, and to employ counsel of Seller’s choice at Seller’s expense; provided , however , that Seller shall have no right to represent a Group Company’s interests in any Tax audit or administrative or court proceeding unless (i) Seller shall have first notified Buyer in writing of Seller’s intention to do so and of the identity of counsel, if any, chosen by Seller in connection therewith, and (ii) Seller shall have agreed with Buyer that, as between Buyer and Seller, Seller shall be liable for any Losses relating to Taxes that result from such audit or proceeding; provided , further , that Buyer and its representatives shall be permitted, at Buyer’s expense, to be present at, and participate in, any such audit or proceeding.

 

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Notwithstanding the foregoing, Seller shall not be entitled to settle, either administratively or after the commencement of litigation, any claim for Taxes which could adversely affect the liability for Taxes of any Buyer Indemnitee or any Group Company for any period after the Closing Date to any extent unless Seller has indemnified each Buyer Indemnitee against the effects of any such settlement (including the imposition of income Tax deficiencies, the reduction of asset basis or cost adjustments, the lengthening of any amortization or depreciation periods, the denial of amortization or depreciation deductions, or the reduction of loss or credit carryforwards) without the prior written consent of Buyer.

(c) Buyer shall have the sole right to represent each Group Company’s interests in any Tax audit or administrative or court proceeding relating to Tax liabilities other than those for which Seller has exercised such right pursuant to Section 8.3(b) and to employ counsel of Buyer’s choice at Buyer’s expense, provided that Seller and its representatives shall be permitted, at Seller’s expense, to be present at, and participate in, any such audit or proceeding that relates to a Straddle Period. Buyer shall have the sole right to defend each Group Company with respect to any issue, and settle or compromise any issue, arising in connection with any Tax audit or administrative or court proceeding to the extent Buyer shall have agreed in writing to forego any indemnification under this Agreement with respect to such issue.

(d) Nothing herein shall be construed to impose on Buyer any obligation to defend a Group Company in any Tax audit or administrative or court proceeding. Any proceeding with respect to which Seller does not assume control in accordance with this Section 8.3 may be settled or compromised in the discretion of Buyer, and any such settlement or compromise shall not affect any Buyer Indemnitee’s right to indemnification under this Agreement.

Section 8.4 Activities After the Closing . Following the Closing, Buyer will not, and will not allow any of its Affiliates (including any Group Company) to take any of the following actions without the prior written consent of Seller (not to be unreasonably withheld, conditioned or delayed) except as required by applicable Law: (a) file an amended Tax Return for any Group Company with respect to a Pre-Closing Period or Straddle Period; (b) file for, or otherwise request from any Governmental Entity, any administrative ruling (including a private letter ruling or change of method of accounting) regarding the Taxes or Tax Returns of any Group Company with respect to a Pre-Closing Period or Straddle Period; (c) make, revoke, or change any material Tax election of any Group Company with respect to a Pre-Closing Period or Straddle Period; or (d) agree to extend, waive, or toll any statute of limitations with respect to the assessment or collection of any Tax of any Group Company in a Pre-Closing Period or Straddle Period (other than customary automatic extensions to file Tax Returns obtained in the ordinary course).

Section 8.5 Cooperation . The parties shall cooperate fully, as and to the extent reasonably requested by another party, in connection with the preparation and filing of Tax Returns pursuant to this ARTICLE 8 and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include signing any Tax Returns, amended Tax Returns, claims or other documents necessary to settle any Tax controversy, the retention and (upon the other party’s request) the provision of records and information which are reasonably relevant to any such audit, litigation or other Action and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereby.

 

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Section 8.6 Election Under Section 338(h)(10) .

(a) At the request of Buyer, Seller and Buyer shall make a joint election for one or more of the Group Companies (as designated by Buyer) under Section 338(h)(10) of the Code and under similar provisions of state or local law with respect to the purchase of the Shares (collectively, the “ Section 338(h)(10) Elections ”). Buyer shall make any such request (the “ Section 338(h)(10) Request ”) by formal written notice to Seller at least fifteen (15) days prior to the date that the related IRS Form 8023 is required to be filed with the IRS. Seller shall deliver a completed and executed copy of IRS Form 8023, required schedules thereto, and any similar state and foreign forms within five (5) days of receipt of the Section 338(h)(10) Request from Buyer. Buyer shall pay to Seller the Preliminary Section 338(h)(10) Gross-Up Amount (as determined below) immediately upon receipt of the applicable executed IRS Forms 8023 from Seller; provided that if the Preliminary Section 338(h)(10) Gross-Up Schedule is not final and binding at such time, Buyer shall pay to Seller the Preliminary Section 338(h)(10) Gross-Up Amount (as determined pursuant to the calculation delivered by Buyer) immediately upon receipt of the applicable executed IRS Forms 8023 from Seller.

(b) Prior to making any Section 338(h)(10) Request but no later than thirty (30) days prior to the date that the related IRS Form 8023 is required to be filed with the IRS, Buyer shall deliver to Seller a calculation of the Preliminary Section 338(h)(10) Gross-Up Amount, which shall be prepared in accordance with Schedule 8.6 (the “ Preliminary Section 338(h)(10) Gross-Up Schedule ”). The Preliminary Gross-Up Schedule shall include an allocation of the aggregate deemed sale price (as such term is defined in Treasury Regulation § 1.338-4, without regard to any selling costs incurred by Seller) among the assets of the applicable Group Companies and shall be based on reasonable estimates of Seller’s anticipated Tax for the taxable year that includes the Closing. If, within ten (10) days following delivery of the Preliminary Gross-Up Schedule, Seller does not notify Buyer in writing of its disagreement, the Preliminary Section 338(h)(10) Gross-Up Schedule (including the purchase price allocation contained therein) shall be final and binding (subject to the other adjustments permitted by this Section 8.6 ). If within such 10-day period Seller notifies Buyer of its disagreement, Seller and Buyer shall endeavor to resolve such disagreement, and if they are able to do so, shall make such revisions to the Preliminary Gross-Up Schedule to reflect such resolution, which shall be final and binding (subject to Section 8.6(c) ). If, within thirty (30) days following delivery of the Preliminary Section 338(h)(10) Gross-Up Schedule to Seller, the parties are unable to resolve such disagreement, Buyer and Seller may refer the items remaining in dispute for resolution to the Chosen Firm using principles similar to those described in Section 2.4(e) , which resolution shall be final and binding (subject to Section 8.6(c) ). Within five (5) days following finalization of the Preliminary Section 338(h)(10) Gross-Up Schedule, Buyer shall pay to Seller (or Seller shall pay to Buyer) an amount that when added to (or netted against) the Preliminary Section 338(h)(10) Gross-Up Amount results in Seller receiving an aggregate (or net) amount equal to the final and binding Preliminary Section 338(h)(10) Gross-Up Amount.

 

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(c) Promptly following the filing of the consolidated federal income Tax Return of Seller’s consolidated group for the taxable year that includes the Closing, Seller shall deliver to Buyer a calculation of the Revised Section 338(h)(10) Gross-Up Schedule, which shall be prepared in accordance with Schedule 8.6 (the “ Revised Section 338(h)(10) Gross-Up Schedule ”). The Revised Section 338(h)(10) Gross-Up Schedule shall reflect (i) Seller’s actual tax liability for such year, (ii) a revised calculation of what Seller’s tax liability would have been for such year in the absence of the Section 338(h)(10) Elections (based on the final amounts included in Seller’s applicable Tax Returns) and (iii) any adjustments to the Purchase Price that have occurred since the finalization of the Preliminary Section 338(h)(10) Gross-Up Schedule, but shall otherwise be prepared in all respects (including purchase price allocation) in accordance with the Preliminary Section 338(h)(10) Gross-Up Schedule. If, within ten (10) days following delivery of the Revised Section 338(h)(10) Gross-Up Schedule, Buyer does not notify Seller in writing of its disagreement, the Revised Section 338(h)(10) Gross-Up Schedule shall be final and binding (subject to the other adjustments permitted by Section 8.6(d) ). If within such 10-day period Buyer notifies Seller of its disagreement, Seller and Buyer shall endeavor to resolve such disagreement, and if they are able to do so, shall make such revisions to the Revised Section 338(h)(10) Gross-Up Schedule to reflect such resolution, which shall be final and binding (subject to the other adjustments permitted by Section 8.6(d) ). If, within thirty (30) days following delivery of the Revised Section 338(h)(10) Gross-Up Schedule to Buyer, the parties are unable to resolve such disagreement, Buyer and Seller may refer the items remaining in dispute for resolution to the Chosen Firm using principles similar to those described in Section 2.4(e) , which resolution shall be final and binding (subject to the other adjustments permitted by Section 8.6(d) ). Within five (5) days following finalization of the Revised Section 338(h)(10) Gross-Up Schedule, Buyer shall pay to Seller (or Seller shall pay to Buyer) an amount that when added to (or netted against) the Preliminary Section 338(h)(10) Gross-Up Amount results in Seller receiving an aggregate (or net) amount equal to the Revised Section 338(h)(10) Gross-Up Amount.

(d) The Revised Section 338(h)(10) Gross-Up Schedule may be revised by Buyer or Seller using principles similar to those set forth in Section 8.6(c) to reflect adjustments to the Section 338(h)(10) Gross-Up Amount attributable to audits or indemnity payments. If Seller receives notification of an audit or proceeding that would be defined as a Section 338 Audit, Seller shall keep Buyer apprised of the status of the claim, liability, or expenses and any resulting suit, proceeding or enforcement action, shall furnish Buyer with all documents and information that Buyer shall reasonably request and shall consult with Buyer regarding negotiation and settlement of the matter. Buyer shall have the option to observe and/or participate in the Section 338 Audit, at its own expense, and Seller shall cooperate fully with Buyer if Buyer chooses such option. Seller shall not be entitled to settle, either administratively or after the commencement of litigation, any claim for Taxes in connection with a Section 338 Audit without the consent of Buyer, which consent shall not be unreasonably withheld.

(e) If Buyer makes the Section 338(h)(10) Request, each of Buyer and Seller agrees that neither it nor any of its Affiliates shall (i) file any federal, state, local and foreign Tax Returns in a manner that is inconsistent with the Preliminary Section 338(h)(10) Gross-Up Schedule (except as modified by the Revised Section 338(h)(10) Gross-Up Schedule), or (ii) take, or fail to take, any action to the extent such action or failure to act, as the case may be, is inconsistent with or would otherwise prejudice any Section 338(h)(10) Elections. If, however, Seller does not receive the Section 338(h)(10) Request within the time-frame required by Section 8.6(a) , the parties shall terminate all discussions under this Section 8.6 and shall not file IRS Form 8023 in connection with the transactions contemplated by this Agreement.

 

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Section 8.7 Survival of Obligations . For the sake of absolute clarity, the obligations of the parties set forth in this ARTICLE 8 shall survive until sixty (60) days after the expiration of all applicable statutes of limitation (taking into account extensions thereof).

ARTICLE 9

INDEMNIFICATION

Section 9.1 Indemnification of Buyer Indemnitees . From and after the Closing, Seller and Parent shall, jointly and severally, indemnify and defend Buyer, the Group Companies, and their successors and assigns and each of the foregoing’s respective shareholders, members, officers, directors, employees and agents (collectively, the “ Buyer Indemnitees ”) against, and hold the Buyer Indemnitees harmless from, any Losses based upon, related to, arising out of, or caused by (i) any inaccuracy in, or breach of, any representation or warranty made by Seller in Section 3.2 (Authority), Section 3.3 (Enforceability), Section 3.5 (Capitalization) or Section 3.23 (Brokers) (collectively, the “ Fundamental Representations ”), (ii) any breach of, or failure to comply with, any covenant or agreement made by Seller in this Agreement, which contemplates performance after the Closing or otherwise expressly by its terms survives the Closing, (iii) any Seller Benefit Plan (including any Losses related to a Seller Benefit Plan prior to such arrangement being transferred to Seller or an Affiliate and becoming a Seller Benefit Plan) or any other employee benefit plan, program, policy, practice or Contract that would be a Seller Benefit Plan if employees, officers or directors of a Group Company participated, and any Multiemployer Plan to the extent such Loss is directly attributable to the participation in such plan by, and the contribution history of, Seller or Affiliates of Seller (other than the Group Companies) (it being understood, a Loss will be deemed directly attributable to the participation by, and the contribution history of, Seller and its Affiliates if a Multiemployer Plan, in its assessment of withdrawal liability, allocates to the Group Companies any of the contribution history of Seller or its Affiliates (other than the Group Companies)), (iv) the matters set forth in Schedule 9.1(iv) , subject to any limitations set forth therein and (v) any amounts required to pay any Indebtedness of the Group Companies as of the Closing Date that were not reflected on the Closing Statement.

Section 9.2 Indemnification of Seller Indemnitees . From and after the Closing, Buyer shall indemnify and defend Parent, Seller, their respective Affiliates, and their successors and assigns and each of the foregoing’s respective shareholders, members, officers, directors, employees and agents (collectively, the “ Seller Indemnitees ”; and together with the Buyer Indemnitees, the “ Indemnitees ”) against, and hold the Seller Indemnitees harmless from, any Losses based upon, related to, arising out of, or caused by (i) any inaccuracy in, or breach of, any representation or warranty made by Buyer in Section 4.2 (Authority), Section 4.3 (Enforceability), Section 4.8 (Brokers) and Section 4.10 (Solvency) (collectively, the “ Buyer Fundamental Representations ”) and (ii) any breach of, or failure to comply with, any covenant or agreement made by Buyer in this Agreement, which contemplates performance after the Closing or otherwise expressly by its terms survives the Closing.

 

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Section 9.3 Indemnification Adjustments to Purchase Price . Buyer and Seller agree to report each indemnification payment made in respect of a Loss as an adjustment to the Purchase Price for federal income Tax purposes.

Section 9.4 Cooperation . Seller shall assume and control the defense of a Third Party Claim pursuant to its obligations under clause (iv) of Section 9.1 and Buyer shall cause the Group Companies to reasonably cooperate with Seller in the defense or prosecution thereof. Such cooperation shall include, at Seller’s reasonable request, the provision to Seller at Seller’s expense of records and information in the possession, custody or control of the Group Companies that are relevant to such Third Party Claim, and making employees of the Group Companies available on a mutually convenient basis to provide additional information and explanation of any records and material provided hereunder. From and after the Closing Date, Seller shall keep Buyer and the Group Companies reasonably informed on the status of all such Third Party Claims and Seller shall, at Buyer’s reasonable request and expense, make available to Buyer and/or the Group Companies for review and copying all relevant information in Seller’s possession, custody or control respecting any such Third Party Claim. Buyer shall have the right to participate or associate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by Seller. Buyer and its representatives shall be permitted, at Buyer’s expense, to be present at, and participate in, any Action or meeting with respect to such defense. Notwithstanding the foregoing, Seller shall not settle such Third Party Claim without the prior written consent of Buyer (which consent shall not be unreasonably withheld, conditioned or delayed) unless such settlement (i) does not involve any finding or admission of any violation of Law or any violation of the rights of Buyer Indemnitees and would not have any adverse effect on any other claims that may be made against Buyer Indemnitees, (ii) does not involve any relief other than monetary damages that are paid in full by Seller and (iii) completely, finally and unconditionally releases Buyer Indemnitees in connection with such Third Party Claim and would not otherwise adversely affect Buyer Indemnitees. If Seller proposes to accept any settlement of such Action which is not approved by Buyer, then Seller shall not be liable for any Losses in respect of such Action in excess of the proposed settlement amount.

Section 9.5 Limitations on Indemnification; Exclusive Remedies .

(a) Notwithstanding anything to the contrary herein, neither Seller nor Parent will have any indemnification obligation under this Agreement in respect of any amounts taken into account in the determination of Net Working Capital, Closing Net Cash or Financing Adjustment as of the Effective Time.

(b) Neither Seller nor Parent will have any indemnification obligation under this Agreement in respect of any Losses to the extent they arise or are incurred as a result of the passing of, or a change in, any Law after the Closing. Neither Seller, Parent nor Buyer will have any indemnification obligation under this Agreement in respect of any Losses if they would not have arisen but for any act, omission, transaction or arrangement carried out at the written request of an Indemnitee.

 

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(c) Losses shall be computed net of any insurance proceeds or other amounts which any Indemnitee recovers from Persons other than the indemnifying party with respect thereto. All Indemnitees shall use reasonable commercial efforts to mitigate any Losses potentially subject to indemnification hereunder, and Buyer and Seller shall cause their respective Indemnitees to comply with such requirement. If an indemnifying party provides indemnification hereunder in respect of any Losses, the indemnifying party shall be subrogated, to the extent of such payments, to all rights and remedies of the relevant Indemnitee(s) to any insurance benefits or other claims of the Indemnitee(s) with respect to such matter.

(d) The parties hereto acknowledge and agree that, except as provided in Section 2.4 , Section 8.1 or as expressly provided in any Ancillary Document, and except in the case of actual fraud, their sole and exclusive remedy after the Closing with respect to any and all monetary claims relating to the subject matter of this Agreement, the transactions contemplated hereby, or any instruments executed or delivered in connection herewith shall be pursuant to the indemnification provisions set forth in this ARTICLE 9 . From and after the Closing, no party shall or shall permit any of its respective Indemnitees to bring any action, claim or proceeding, at law, equity or otherwise, against any other party or its respective Releasees for monetary damages, in respect of any actual or alleged inaccuracy of any representation or warranty, or any actual or alleged breach of any covenant, agreement or other provision of this Agreement, or otherwise in respect of the transactions contemplated hereby, except pursuant to the express provisions of this ARTICLE 9 or in the case of actual fraud.

ARTICLE 10

MISCELLANEOUS

Section 10.1 Nonsurvival of Representations, Warranties and Covenants . Other than in the case of Fundamental Representations or Buyer Fundamental Representations, or actual fraud by Seller or Buyer, none of the representations, warranties, covenants and other agreements, in each case, of Seller or Buyer contained in this Agreement, or in any instrument or certificate delivered by it at Closing, will survive the Closing or termination of this Agreement, and neither Seller, Parent nor Buyer shall have any liability after the Closing in respect thereof, except for those covenants and agreements which contemplate performance after the Closing or termination of this Agreement or otherwise expressly by their terms survive the Closing or termination of this Agreement. For the avoidance of doubt, the Fundamental Representations and Buyer Fundamental Representations shall survive the Closing and the covenants and agreements set forth in ARTICLES 8 and 9 shall survive, and contemplate performance after, the Closing.

Section 10.2 Entire Agreement; Assignment . This Agreement, the Exhibits, annexes and Schedules, and the Confidentiality Agreements constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the parties hereto with respect to the subject matter hereof. This Agreement shall not be assigned by any party hereto (whether by operation of Law or otherwise) without the prior written consent of Buyer and Seller, provided that Buyer may assign (i) all or any portion of its rights and interests herein for collateral security purposes to any Financing Sources, any lenders and any other securityholders (including agents or trustees therefor) of Buyer or any Subsidiary thereof and (ii) all or any portion of its rights and interests herein (including the right to purchase the Shares from Seller) to Beacon Sales Acquisition, Inc., it being understood and agreed that no such assignment shall release any liability or obligation of Buyer hereunder, including liabilities or obligations first arising after the date of any such assignment. Any attempted assignment of this Agreement not in accordance with the terms of this Section 10.2 shall be void.

 

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Section 10.3 Notices . All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile (followed by overnight courier), E-mail (followed by overnight courier), or by registered or certified mail (postage prepaid, return receipt requested) to the other parties hereto as follows:

To Buyer :

  Beacon Roofing Supply, Inc.

  505 Huntmar Park Drive, Suite 300

  Herndon, Virginia 20170

  Attn: Joe Nowicki, Executive Vice President and Chief Financial Officer

  Facsimile: (703) 437-1919

  Email: jnowicki@becn.com

  And to:

  Beacon Roofing Supply, Inc.

  6701 Democracy Blvd., Suite 200

  Bethesda, Maryland 20817

  Attn: Ross D. Cooper, Executive Vice President, General Counsel &

  Secretary

  Facsimile: (301) 272-2125

  Email: rcooper@becn.com

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

  Sidley Austin LLP

  One South Dearborn

  Chicago IL 60603

  Attn: Jeffrey N. Smith

  Email: jnsmith@sidley.com

To Seller or Parent :

  Oldcastle, Inc.

  900 Ashwood Parkway, Suite 600

  Atlanta, Georgia 30338

  Attn: Philip Wheatley, Group Development Director

  Email: pwheatley@crh.com

 

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

  Oldcastle Law Group

  900 Ashwood Parkway, Suite 600

  Atlanta, Georgia 30338

  Attn: William Miller, General Counsel

  Email: bill.miller@oldcastlelaw.com

  And to:

  Kilpatrick Townsend & Stockton LLP

  1100 Peachtree Street NE, Suite 2800

  Atlanta, GA 30309

  Attn: Richard Cicchillo, Jr., Esq.

  Email: rcicchillo@kilpatricktownsend.com

or to such other address as the person to whom notice is given may have previously furnished to the other in writing in the manner set forth above.

Section 10.4 Governing Law . This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware, without giving effect to any choice of Law or conflict of Law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Law of any jurisdiction other than the State of Delaware.

Section 10.5 Fees and Expenses . Except as otherwise set forth in this Agreement, whether or not the transactions contemplated by this Agreement are consummated, all fees and expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement, including the fees and disbursements of counsel, financial advisors and accountants, shall be paid by the party hereto incurring such fees or expenses. For the avoidance of doubt and notwithstanding anything that may be read to the contrary, any fees and expenses incurred by any Group Company up to the Effective Time in connection with this Agreement and the transactions contemplated hereby shall be attributed to and timely paid by or at the expense of Seller, except that Buyer shall reimburse Seller for fifty-percent (50%) of any reasonable out-of-pocket fees and expenses incurred in connection with the commissioning by the Company of environmental studies at the request of Buyer. The agreements under this Section 10.5 shall survive the Closing and termination of this Agreement.

Section 10.6 Exhibits and Schedules . All Exhibits and Schedules or other documents expressly incorporated into this Agreement, are hereby incorporated into this Agreement and are hereby made a part hereof as if set out in full in this Agreement. The specification of any dollar amount in the representations or warranties contained in this Agreement or the inclusion of any specific item in any Schedule is not intended to imply that such amounts, or higher or lower amounts or the items so included or other items, are or are not material, and no party shall use the fact of the setting of such amounts or the inclusion of any such item in any dispute or controversy as to whether any obligation, items or matter not described herein or included in a Schedule is or is not material for purposes of this Agreement.

Section 10.7 Parties in Interest . This Agreement shall be binding upon and inure solely to the benefit of each party and its successors and permitted assigns and, except (a) as provided in Section 5.7 , and Section 5.16 and (b) the proviso to the second sentence of Section 10.2 , this Section 10.7 , the proviso to the first sentence of Section 10.9 , Section 10.12 , Section 10.13(b) ,

 

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Section 10.16 and the definition of “Financing Sources” and the constituent definitions thereof (with respect to which the Financing Sources are express third party beneficiaries and shall be enforceable by each Financing Source, it being understood that the provisions and definitions identified in this clause (b) may not be amended in a manner adverse to any Financing Source in any respect without the prior written consent of such Financing Source), nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.

Section 10.8 Severability . If any term or other provision of this Agreement is invalid, illegal or unenforceable, all other provisions of this Agreement shall remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.

Section 10.9 Amendment . Prior to the Effective Time, subject to applicable Law and Section 10.10 , this Agreement may be amended or modified only by a written agreement executed and delivered by duly authorized officers of Buyer and Seller; provided, however, that the proviso to the second sentence of Section 10.2 , Section 10.7 , this proviso of Section 10.9 , Section 10.12 , Section 10.13(b) , Section 10.16 and the definition of “Financing Sources” and the constituent definitions thereof may not be amended in a manner adverse to any Financing Source in any respect without the prior written consent of such Financing Source. This Agreement may not be modified or amended except as provided in the immediately preceding sentence and subject to Section 10.7 , and any purported amendment by any party or parties hereto effected in a manner which does not comply with this Section 10.9 shall be void.

Section 10.10 Extension; Waiver . At any time prior to the Closing, Seller may (a) extend the time for the performance of any of the obligations or other acts of Buyer contained herein, (b) waive any inaccuracies in the representations and warranties of Buyer contained herein or in any document, certificate or writing delivered by Buyer pursuant hereto or (c) waive compliance by Buyer with any of the agreements or conditions contained herein. At any time prior to the Closing, Buyer may (i) extend the time for the performance of any of the obligations or other acts of Seller contained herein, (ii) waive any inaccuracies in the representations and warranties of Seller contained herein or in any document, certificate or writing delivered by Seller pursuant hereto or (iii) waive compliance by Seller with any of the agreements or conditions contained herein. Any agreement on the part of any party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party. The failure of any party hereto to assert any of its rights hereunder shall not constitute a waiver of such rights.

Section 10.11 Counterparts; Facsimile Signatures . This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or scanned pages shall be effective as delivery of a manually executed counterpart to this Agreement.

 

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Section 10.12 Waiver of Jury Trial . THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO (INCLUDING ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM INVOLVING THE FINANCING SOURCES (AND THEIR RESPECTIVE AFFILIATES AND REPRESENTATIVES)), IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

Section 10.13 Jurisdiction and Venue .

(a) Any state or federal court sitting in Delaware shall be the exclusive jurisdiction of in any action or proceeding arising out of or relating to this Agreement and all claims in respect of the action or proceeding may be heard and determined in any such court and no Person shall bring any action or proceeding arising out of or relating to this Agreement in any other court. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto. Each party hereto agrees that service of summons and complaint or any other process that might be served in any action or proceeding may be made on such party by sending or delivering a copy of the process to the party to be served at the address of the party and in the manner provided for the giving of notices in Section 10.3 . Nothing in this Section 10.13 , however, shall affect the right of any party to serve legal process in any other manner permitted by Law. Each party hereto agrees that a final, non-appealable judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by Law.

(b) Notwithstanding anything to the contrary contained in this Agreement and without limiting Section 10.16 , each of the parties hereto, on behalf of itself and their respective Affiliates: (i) agrees that it shall not (and shall cause their respective Affiliates to not) bring or support any Person in any Action, cause of action, claim, cross-claim, third-party claim, suit or proceeding of any kind or description, whether in law or in equity, whether in contract or in tort or otherwise, against any of the Debt Financing Sources or the Pre-Closing Equity Financing Sources and their respective current, former or future directors, officers, general or limited partners, stockholders, members, managers, controlling persons, Affiliates, employees or representatives (in each case, in such capacity) in any way relating to this Agreement, the Debt Commitment Letter or any of the Debt Documents, including any dispute arising out of or relating in any way to the Financing or the performance thereof, in any forum other than the Supreme Court of the State of New York, County of New York, or, if under applicable Law exclusive jurisdiction is vested in the federal courts, the United States District Court for the Southern District of New York (and appellate courts thereof); (ii) agrees that, except as specifically set forth in the Debt Commitment Letter, all claims, cross-claims, third party-claims or causes of action (whether at law, in equity, in contract, in tort or otherwise) against any of the

 

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Debt Financing Sources or the Pre-Closing Equity Financing Sources and their respective current, former or future directors, officers, general or limited partners, stockholders, members, managers, controlling persons, Affiliates, employees or representatives (in each case, in such capacity) in any way relating to this Agreement, the Debt Commitment Letter or any of the Debt Documents, including any dispute arising out of or relating in any way to the Financing or the performance thereof, shall be exclusively governed by, and construed in accordance with, the internal Laws of the State of New York, without giving effect to principles or rules of choice or conflict of Laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction; and (iii) hereby irrevocably and unconditionally waives and shall cause its Affiliates to waive any right such party may have to a trial by jury in respect of any litigation (whether in Law or in equity, whether in contract or in tort or otherwise) directly or indirectly arising out of or relating in any way to this Agreement, the Debt Commitment Letter or any of the Debt Documents, including any dispute arising out of or relating in any way to the Financing or the performance thereof.

Section 10.14 Remedies . Each party hereto acknowledges and agrees that the other parties would be damaged irreparably in the event any provision of this Agreement is not performed in accordance with its specific terms or otherwise breached, so that, in addition to any other remedy that a party may have under law or equity, a party shall be entitled to injunctive relief to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof. Each party hereto acknowledges and agrees that monetary damages would be inadequate in the event of any such failure to perform or breach, and waives any equitable defense to the granting of specific performance or other injunctive relief available to such party. In the event that a court of competent jurisdiction fails to grant specific performance or other injunctive relief to a party as a remedy for such failure to perform or breach, the parties hereby acknowledge and agree that such party shall be entitled to receive benefit of the bargain and lost profits damages as redress for such failure to perform or breach. Each party further agrees that no other party hereto or any other Person shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 10.14 , and each party hereto irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument. Notwithstanding anything contained in this Agreement to the contrary, Seller’s right to seek specific performance or other injunction relief shall cease if Buyer pays, or causes to be paid to Seller, an amount equal to the Termination Fee by wire transfer of immediately available funds, and upon such payment, this Agreement shall automatically and without any further action be terminated and thereby become void and there shall be no liability or obligation on the part of Buyer or Seller or their respective officers, directors or equityholders with the exception of the obligations which by their express terms survive termination under the last sentence of Section 5.3 , under Section 5.15(c) with respect to Buyer’s reimbursement and indemnity obligations, Section 7.2 and Section 7.3 , as well as the provisions of ARTICLE 1 and ARTICLE 10 solely as they relate to such surviving obligations. For the sake of clarity, in the event an amount equal to the Termination Fee is paid to Seller in accordance with this Section 10.14 , Seller shall have no right to the Termination Fee or other rights under Section 7.3 or any claim for fraud of willful breach.

 

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Section 10.15 Conflicts; Privilege . Recognizing that Kilpatrick Townsend & Stockton LLP and internal counsel belonging from time to time to the Oldcastle Law Group (“ Internal Counsel ”) have acted as legal counsel to the Group Companies and certain of their respective Affiliates prior to the date hereof, and that Kilpatrick Townsend & Stockton LLP and Internal Counsel intend to act as legal counsel to Seller and its Affiliates after the Closing (which will no longer include the Group Companies), Buyer hereby waives, on its own behalf and agrees to cause its Affiliates and the Group Companies to waive, any conflicts that may arise in connection with Kilpatrick Townsend & Stockton LLP or Internal Counsel representing Seller or its Affiliates after the Closing as such representation may relate to Buyer, the Group Companies or the transactions contemplated hereby. In addition, all communications involving attorney-client confidences between the Group Companies and their respective Affiliates, on the one hand, and Kilpatrick Townsend & Stockton LLP or Internal Counsel or Seller or its Affiliates, on the other hand, in the course of the negotiation, documentation and consummation of the transactions contemplated hereby shall be deemed to be attorney-client confidences that belong solely to Seller and its Affiliates (and not the Group Companies). Accordingly, the Group Companies shall not have access to any such communications or to the files of Kilpatrick Townsend & Stockton LLP or such Internal Counsel relating to such engagement from and after the Closing. Without limiting the generality of the foregoing, from and after the Closing, (a) Seller and its Affiliates (and not the Group Companies) shall be the sole holders of the attorney-client privilege with respect to such engagement, and none of the Group Companies shall be a holder thereof, (b) to the extent that files of Kilpatrick Townsend & Stockton LLP or such Internal Counsel in respect of such engagement constitute property of the client, only Seller and its Affiliates (and not the Group Companies) shall hold such property rights and (c) Kilpatrick Townsend & Stockton LLP or such Internal Counsel shall have no duty whatsoever to reveal or disclose any such attorney-client communications or files to the Group Companies by reason of any attorney-client relationship between Kilpatrick Townsend & Stockton LLP or such Internal Counsel and the Group Companies or otherwise. Notwithstanding the foregoing, in the event that a dispute arises between Buyer or a Group Company and a third party other than a party to this Agreement after the Closing, Buyer may assert the attorney-client privilege to prevent disclosure of confidential communications by Kilpatrick Townsend & Stockton LLP or Internal Counsel to such third party; provided, however, that Buyer may not waive such privilege without the prior written consent of Seller. This Section 10.15 will be irrevocable, and no term of this Section 10.15 may be amended, waived or modified, without the prior written consent of Kilpatrick Townsend & Stockton LLP and Internal Counsel.

Section 10.16 Waiver of Claims against Financing Sources . Notwithstanding anything herein to the contrary, each of Seller and Parent (and each of their respective directors, officers, general or limited partners, stockholders, members, managers, controlling persons, Affiliates, employees or representatives (in each case, in such capacity)) hereby waives any rights or claims against any of the Financing Sources and their respective current, former or future directors, officers, general or limited partners, stockholders, members, managers, controlling persons, Affiliates, employees or representatives (in each case, in such capacity), in any way relating to this Agreement, the Commitment Letters, any of the Debt Documents or Equity Documents or the transactions contemplated hereby or thereby, including any dispute arising out of or relating in any way to the Financing or the performance thereof, whether at law, in equity, in contract, in tort or otherwise. Notwithstanding the foregoing, nothing in this Section 10.16 shall in any way limit or modify the rights of Buyer under this Agreement or any Financing Sources’ obligations to Buyer under the Commitment Letters.

*  *  *  *  *

 

83


IN WITNESS WHEREOF, each of the parties has caused this Stock Purchase Agreement to be duly executed on its behalf as of the day and year first above written.

 

BUYER:
BEACON ROOFING SUPPLY, INC.
By:   /s/ Ross D. Cooper
  Name: Ross D. Cooper
  Title:   Executive Vice President,
              General Counsel & Secretary

[Signature Page to Stock Purchase Agreement]


IN WITNESS WHEREOF, each of the parties has caused this Stock Purchase Agreement to be duly executed on its behalf as of the day and year first above written.

 

SELLER:
OLDCASTLE DISTRIBUTION, INC.
By:   /s/ Philip Wheatley
  Name: Philip Wheatley
  Title:   Attorney-In-Fact
PARENT:
OLDCASTLE, INC.
By:   /s/ Philip Wheatley
  Name: Philip Wheatley
  Title:   Attorney-In-Fact

[Signature Page to Stock Purchase Agreement]


EXHIBIT A

FORM OF TITLE DOCUMENTS

See attached.


First American Title Company of Oregon

National Commercial Services

,

- Fax

GAP INDEMNITY AGREEMENT

 

Date: 08/21/2017    NCS-245820-8-OR1            

WHEREAS, First American Title Insurance Company (the “Company”) is about to issue its title insurance policy or policies to upon the parcel of real estate (the“Premises”) described in title insurance commitment no. dated ;

AND WHEREAS, the Company has been requested to issue such policy or policies (or “marked-up” commitment therefor) prior to the recording of the deed, mortgage or other instruments to be insured;

NOW THEREFORE, in consideration of the issuance of said title insurance policy or policies and other good and valuable consideration, the undersigned covenants and agrees as follows:

As an inducement to the Company to insure over any matters attaching or created during the “gap” in time between the last continuation of title and the recording of the deed, mortgage, or other such instrument with respect to the Premises, the undersigned shall (1) promptly remove of record any matters filed of record during said gap period, and (2) hold harmless and indemnify the Company or any loss, cost expense, claim or damage, including without limitation reasonable attorneys fees, arising with respect to any such matters.

THE UNDERSIGNED EXECUTES THIS AGREEMENT BECAUSE OF THE BENEFITS DIRECTLY AND INDIRECTLY ACCRUING TO IT BY REASON OF THE ISSUANCE OF SAID POLICY OR POLICIES.

IN WITNESS WHEREOF, this instrument has been executed as of                               , 20      .

 

INDEMNITOR:
By:    
Name:    
Title:    
Agreed and Accepted:
Seller:
Allied Building Products Corp., a New Jersey corporation
By:    
  Name:                                     
  Title:                                   
Agreed and Accepted:
Buyer/Borrower:


Date:    Owner’s Affidavit    File No.:        

 

Commercial Owner’s Affidavit

 

STATE OF                                             }
                                           }
COUNTY OF                                             }

The undersigned affiant first being duly sworn, deposes and says:

 

1. That the Corporation named herein is the owner of certain real property in the State of Oregon described as follows (the “property”):

[LEGAL DESCRIPTION]

 

2. That the undersigned officer of said Corporation is authorized to execute this affidavit, and is authorized to execute all instruments necessary to mortgage or convey the Property pursuant to the resolution of the Board of Directors.

 

3. That the Corporation is incorporated in the State of Oregon , its Corporate charter has not been revoked nor is in threat of revocation, and there are no provisions in the Corporation Articles or By-laws which in any way impedes the Corporation’s ability to mortgage or convey the Property.

 

4. That there have been no construction, repairs, alterations, improvements made, ordered or contracted to be made on or to the Property, nor materials ordered within the last 6 months (or 75 days after completion of work) which have not been paid for, nor are there any fixtures attached to the Property which have not been paid for in full; and there are no outstanding or disputed claims for any such work or item, except:
                                                                                                                                                                               .

 

That the work of improvement, if any:
[    ] Started on    
[    ] Was completed on    
[    ] Will be completed on    

 

5. That there has been no work done, nor notice received that work is to be done by the municipality (city, borough, or township), or at its direction, including but not limited to the installation of water or sewer lines, or for improvements such as paving or repaving of streets or alleys, or the installation of curbs or sidewalks.

 

6. That there are no unrecorded leases or agreements affecting the Property, and there is no one in possession of or that has access to the Property, other than: (enter N/A if such is true)

 

[    ]     the undersigned

[    ]     tenants based on month-to month rental agreements

[    ]     lessees based on existing leases, copies of which are attached hereto

[    ]     affiant(s) please remember to attach copies of leases.

[    ]          


Date:    Owner’s Affidavit    File No.:        

 

7. That there are no rights of first refusal or options to purchase all or any part of the Property except:

 

 
 

(enter “None” or “N/A” if such is true)

 

8. That there are no unpaid real estate taxes or assessments except as shown on the current tax roll. That the undersigned has not received any supplemental tax bill which is unpaid.

 

9. That no actions in bankruptcy have been filed by or against the corporation in any federal court or any other court of competent jurisdiction.

 

10. That there are no matters pending against the Affiant that could give rise to a lien that would attach to the property between the most recent effective date of the title commitment and the recording of the interest to be insured, and that the Affiant has not and will not execute any instrument that would adversely affect the title or interest to be insured.

 

11. That this affidavit is given for the purpose of inducing First American Title Insurance Company and/or its agent to issue its policies of title insurance which may provide coverage as to the matters listed above . The undersigned acknowledge that they have read the foregoing and fully understand the legal aspects of any misrepresentation and/or untrue statements made herein and indemnify and hold harmless FIRST AMERICAN TITLE INSURANCE COMPANY against liability occasioned by reason of reliance upon the statements made herein.

 

By:    
      Name:                                 
      Title:                                 


First American Title Company of Oregon

National Commercial Services

,

- Fax

SURVEY AFFIDAVIT

 

August 21, 2017    NCS-245820-8-OR1        

FIRST AMERICAN TITLE INSURANCE COMPANY Commitment No.  .

THE UNDERSIGNED, BEING FIRST DULY SWORN, DEPOSE AND STATE AS FOLLOWS:

 

1. The undersigned is/are the owner(s) of record of the estate or interest in the land described in the above referenced Commitment for Title Insurance.

 

2. The survey, prepared by , dated , last revised , which has been furnished to First American Title Insurance Company, is a correct and complete representation of the land and all improvements now located thereon.

 

3. Since the date of said survey, the undersigned has not made or caused to be made or allowed to be made any additions or alterations of or improvements, including parking facilities, on the land which would be disclosed by a survey prepared as of the date hereof.

 

4. Since the date of said survey, the undersigned has not granted any easements or rights of way nor allowed the alteration or installation of any utility facilities which would be disclosed by a survey as of the date hereof.

 

5. With respect to any property adjoining the land, the undersigned has no knowledge of any additions alterations or changes since the date of said survey which affect the land and would be disclosed by a survey prepared as of the date hereof.

 

6. The undersigned has no knowledge of any boundary disputes with adjoining property owners.

This affidavit is given to induce First American Title Insurance Company to issue its title insurance policy or policies and endorsements and it is intended that First American Title Insurance company rely on the representation contained herein.

 

Agreed and Accepted:

Seller:

 

Allied Building Products Corp., a New Jersey corporation

 

By:    
      Name:                                 
      Title:                                 

 

Agreed and Accepted:

Buyer/Borrower:                                     


EXHIBIT B

FORM OF RESTRICTIVE COVENANT AGREEMENT

This Restrictive Covenant Agreement (“ Agreement ”) is entered into effective as of                   , 20      (“ Effective Date ”), by and between OLDCASTLE, INC. , a Delaware corporation (“ Parent ”), OLDCASTLE DISTRIBUTION, INC. , a Delaware corporation (“ Seller ”) and BEACON ROOFING SUPPLY, INC. , a Delaware corporation (“ Buyer ”).

RECITALS

A. Pursuant to that certain Stock Purchase Agreement, dated August 24, 2017 (“ Stock Purchase Agreement ”), executed by and between Buyer, Parent and Seller, Seller agreed to sell, and Buyer agreed to purchase the outstanding shares of Allied Building Products Corp., a New Jersey corporation, and Kapalama Kilgos Acquisition Corp., a Delaware corporation (collectively, the “ Companies ”).

B. Section 2.3(c)(v) of the Stock Purchase Agreement requires Parent and Seller to enter into this Agreement as an integral part of, and a material inducement for, Buyer to enter into and consummate, the transactions contemplated in the Stock Purchase Agreement.

COVENANTS

In consideration of the above recitals and the representations, warranties, covenants, and agreements set forth in the Stock Purchase Agreement, the adequacy of which is hereby acknowledged, Parent and Seller each covenants with Buyer, for the benefit of Buyer as follows:

 

  1. For purposes of this Agreement, the following terms have the respective meanings set forth below:

 

  a. Restricted Business ” means the business of distributing Restricted Products manufactured by third parties.

 

  b. Restricted Products ” means any of the following products: gypsum wallboard, acoustical ceiling tiles, insulation (not including, for the avoidance of doubt, insulated glass, insulated concrete masonry units or insulation sold as a component of a product or system that is not a Restricted Product), vinyl siding and cement board siding, waterproofing (not including, for the avoidance of doubt, cement and pavement sealers) and residential and commercial roofing.

 

  c. Territory ” means the United States of America and Canada.

Any capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed thereto in the Stock Purchase Agreement.

 

  2. For a period of four (4) years commencing on the Effective Date, each of Parent and Seller agrees that it shall not, and shall cause its Affiliates not to, without Buyer’s prior written consent, directly or indirectly, engage in the Restricted Business in the Territory, or own, manage, operate, control, or participate in the ownership, management, operation, or control of, any Person engaged in the Restricted Business in the Territory.

 

8


3. Notwithstanding anything to the contrary herein, it will not be a violation of paragraph 2 hereof for Parent, Seller or their Affiliates:

 

  a. to own as a passive investor (in the aggregate) less than 5% of the outstanding shares of any class of securities of any Person, if such securities are listed on any national or regional securities exchange;

 

  b. to manufacture any product (including a Restricted Product) and to engage in the sale of any product manufactured by Parent, Seller or any of their Affiliates from time to time; provided , however, except as provided in paragraph 3c below, that Parent, Seller and their Affiliates shall not engage in a distribution business involving such manufactured Restricted Products (it being understood and agreed that the sale of any such products to a third-party distributor or retail outlets for resale shall not constitute engaging in a distribution business);

 

  c. to engage in the distribution of Restricted Products incidental to the conduct of any building products business operated as of the date hereof by any Affiliate of Parent or Seller (other than a Group Company), which Affiliate is not primarily engaged in the Restricted Business, consistent with past practices in such business (which, for the avoidance of doubt, may include future changes in or additions to (i) the locations from which such businesses are conducted or (ii) the specific third party Restricted Products distributed); or

 

  d. to re-sell any Restricted Products purchased from Buyer or any of its Affiliates, including the Group Companies.

Furthermore, paragraph 2 shall not restrict the activities of any Person that becomes an Affiliate of Parent or Seller after the Effective Date as a result of any acquisition by such Person (whether by merger, amalgamation or stock purchase) of CRH plc. For the avoidance of doubt, Buyer acknowledges and agrees that nothing in paragraph 2 shall be construed to restrict or prohibit Parent, Seller or their respective Affiliates (including, for the avoidance of doubt, C.R. Laurence Co., Inc., and its subsidiaries) from engaging in any business conducted by any of them (other than the Group Companies) as of the date hereof, consistent with past practices.

4. Notwithstanding anything to the contrary herein, it will not be a violation of paragraph 2 hereof for Parent, Seller or their Affiliates to acquire and operate any previously non-Affiliated business (regardless of the legal form of the acquisition) that is engaged in part the Restricted Business in the Territory (an “ Acquired Business ”), provided, however , that less than 40% of the aggregate gross revenues of the Acquired Business is from engaging in the Restricted Business in the Territory and further provided that Parent, Seller or the applicable Affiliate (the “ Acquiring Party ”) shall sell or otherwise transfer all right, title and interests in and to the portions of such Acquired Business that would otherwise violate paragraph 2 (such portions, collectively, the

 

9


Competing Business ”) to Buyer, an Affiliate of Buyer or a third-party (i.e., a Person in which the Acquiring Party does not have direct or indirect ownership interest) (such transfer being to “ Divest ”) in accordance with the further provisions of this paragraph 4:

 

  a. Within ten (10) Business Days following the closing of the Acquiring Party’s acquisition of such Competing Business, Parent shall deliver a written notice (the “ Exclusivity Offer Notice ”) to Buyer (i) informing Buyer of such acquisition, and (ii) offering Buyer the option to elect to enter into exclusive negotiations with the Acquiring Party concerning the sale of the Competing Business to Buyer or an Affiliate of Buyer on such terms as the parties may in good faith agree.

 

  b. Buyer may, by delivering written notice (the “ Exercise Notice ”) to Parent within ten (10) Business Days following Buyer’s receipt of the Exclusivity Offer Notice (the “ Exercise Period ”), elect to accept such offer to enter into such exclusive negotiations. If Parent delivers the Exclusivity Offer Notice to Buyer and Buyer does not elect to accept such offer to so enter into such exclusive negotiations or fails to deliver the Exercise Notice to Parent within the Exercise Period (in either case, a “ Non-Exercise ”), then the Acquiring Party shall fully Divest the Competing Business in accordance with the requirements of paragraph 4d.

 

  c.

If Buyer timely provides the Exercise Notice to Parent electing to accept such offer to enter into such exclusive negotiations, then during the Exclusivity Period (as defined below) (i) Buyer and the Acquiring Party shall enter into a confidentiality agreement containing provisions at least as protective of Parent and its Affiliates as the Confidentiality Agreements, (ii) negotiate in good faith regarding the terms of the sale of the Competing Business to Buyer or an Affiliate of Buyer, including, if applicable, lease agreements and such other transitional arrangements as may be reasonably necessary to permit the separation of the Competing Business from the Acquired Business while minimizing any disruption to either business and (iii) subject to the execution of the aforementioned confidentiality agreement, the Acquiring Party shall promptly provide Buyer and its representatives true and complete copies of all financial information, documents and other diligence materials reasonably requested by Buyer or its authorized representatives that are available to the Acquiring Party to the extent relating to the Competing Business. If the parties fail to enter into definitive purchase documents relating to the Competing Business during the Exclusivity Period or if Buyer terminates the Exclusivity Period (collectively, a “ Non-Agreement ”), then the Acquiring Party shall fully Divest the Competing Business in accordance with the requirements of paragraph 4d. The “ Exclusivity Period ” means the period from the date of Buyer’s timely delivery of

 

10


  the Exercise Notice to Parent electing to accept such offer to enter into such exclusive negotiations until the earlier of (i) the date that is six (6) months from the date of such delivery of such Exercise Notice or (ii) the date Buyer delivers a written notice to Parent electing to terminate the Exclusivity Period.

 

  d. In the event of a Buyer Non-Exercise or Non-Agreement, the Acquiring Party shall fully Divest the Competing Business (whether in single transaction or a series of transactions) within twelve (12) months after the expiration, as applicable, of (i) the Exercise Period or (ii) the Exclusivity Period.

 

  e. For the sake of clarity, in no event shall the Acquiring Party, directly or indirectly enter into an agreement with a Person other than Buyer or an Affiliate of Buyer to fully or partially Divest the Competing Business or engage in any negotiations, discussions or other communications with respect to such a divestiture or provide any information with respect to the Competing Business held by the Acquiring Party prior to, as applicable, (i) a Buyer Non-Exercise or (ii) a Non-Agreement.

5. For a period of five (5) years commencing on the Effective Date, each of Parent and Seller agrees that it shall not, and shall cause its Affiliates not to, directly or indirectly, solicit for employment any Company Employee, provided , however , for the avoidance of doubt, the foregoing restriction does not apply to solicitation of any Company Employee who is no longer employed by Buyer or any Group Company or any of their Affiliates as of the first date of any such solicitation, and further provided that general advertisements and other solicitations not specifically targeting Company Employees shall not constitute solicitation for employment within the meaning of this paragraph 5. Nothing herein shall be construed to prohibit Parent or Seller or any of their Affiliates from soliciting for employment at any time any of the following individuals: Robert Feury Jr., Ikechukwu Ofodile and Jacob Walker.

6. Each of Parent and Seller acknowledges that the restrictions imposed by this Agreement are fully understood by Parent and Seller and are fair and reasonable in light of the nature of the transactions under the Stock Purchase Agreement and the direct and indirect benefit to Parent and Seller from such transactions.

7. Each of Parent and Seller agrees that Buyer’s remedy at law for any breach of this Agreement will be inadequate and that Buyer shall not be limited to a remedy at law but also be entitled to equitable relief (including specific performance or other injunctive relief) against any such breach or any threatened breach. Each of Parent and Seller waives for itself and its Affiliates to the fullest extent allowed by Law any requirement for the posting

 

11


of any bond or security by Buyer (if any) in connection with any action to enforce this Agreement. Each of Parent and Seller shall be jointly and severally liable for a breach of this Agreement by the other and if an Acquiring Party is not Parent or Seller, Parent and Seller shall cause the Acquiring Party to comply with its obligations under this Agreement and such failure to comply shall constitute a breach of this Agreement by both Parent and Seller.

8. This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware, without giving effect to any choice of Law or conflict of Law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Law of any jurisdiction other than the State of Delaware. Any state or federal court sitting in Delaware shall be the exclusive jurisdiction of any action or proceeding arising out of or relating to this Agreement and all claims in respect of the action or proceeding may be heard and determined in any such court and no Person shall bring any action or proceeding arising out of or relating to this Agreement in any other court. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto. Each party hereto agrees that service of summons and complaint or any other process that might be served in any action or proceeding may be made on such party by sending or delivering a copy of the process to the party to be served at the address of the party and in the manner provided for the giving of notices in Section 10.3 of the Stock Purchase Agreement. Nothing in this paragraph 8, however, shall affect the right of any party to serve legal process in any other manner permitted by Law.

9. If any term or provision of this Agreement is invalid, illegal or unenforceable, all other provisions of this Agreement shall remain in full force and effect, and the parties authorize any such court to reform this Agreement to render it valid and enforceable to the maximum extent. No modification of this Agreement will be effective unless in a writing signed by both parties, and no waiver of any provision hereof will be binding unless in a writing signed by the waiving party. No failure or delay in exercising any rights hereunder shall constitute a waiver.

10. This Agreement shall be binding upon and inure solely to the benefit of each party and its respective successors and permitted assigns. This Agreement shall not be assigned by any party hereto (whether by operation of Law or otherwise) without the prior written consent of Buyer, Parent and Seller. Any attempted assignment of this Agreement not in accordance with the terms of this paragraph 10 shall be void.

 

12


11. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or scanned pages shall be effective as delivery of a manually executed counterpart to this Agreement.

 

13


IN WITNESS WHEREOF , this Agreement has been duly executed by the parties hereto as of the day and year first above written.

 

BUYER :
BEACON ROOFING SUPPLY, INC.
By:    
  Name:
  Title:
SELLER :
OLDCASTLE DISTRIBUTION, INC.
By:    
  Name:
  Title:
PARENT :
OLDCASTLE, INC.
By:    
  Name:
  Title:

[Signature Page to Restrictive Covenant Agreement]

EXHIBIT 10.1

EXECUTION VERSION

 

 

 

INVESTMENT AGREEMENT

dated as of August 24, 2017

by and among

Beacon Roofing Supply, Inc.,

CD&R Boulder Holdings, L.P.

and

Clayton, Dubilier & Rice Fund IX, L.P.

(solely for purposes of Sections 4.13 and 4.14 hereof)

 

 

 


Table of Contents

 

         Page  
  Article I   
  Purchase; Closing   

Section 1.1

  Purchase      1  

Section 1.2

  Closing      2  

Section 1.3

  Closing Conditions      2  
  Article II   
  Representations and Warranties of the Company   

Section 2.1

  Organization and Authority      5  

Section 2.2

  Capitalization.      5  

Section 2.3

  Authorization      6  

Section 2.4

  Sale and Status of Securities      7  

Section 2.5

  SEC Documents; Financial Statements      8  

Section 2.6

  Undisclosed Liabilities      9  

Section 2.7

  Absence of Changes      9  

Section 2.8

  Brokers and Finders      9  

Section 2.9

  Registration Rights      9  

Section 2.10

  Compliance with Laws; Anti-Corruption; Trade Controls      9  

Section 2.11

  Listing and Maintenance Requirements      11  

Section 2.12

  No Additional Representations      11  
  Article III   
  Representations and Warranties of the Purchaser   

Section 3.1

  Organization and Authority      11  

Section 3.2

  Authorization      12  

Section 3.3

  Purchase for Investment      12  

Section 3.4

  Financial Capability      13  

Section 3.5

  Brokers and Finders      13  

Section 3.6

  Ownership      13  

Section 3.7

  Acknowledgment of No Other Representations or Warranties      13  
  Article IV   
  Covenants   

Section 4.1

  Filings; Other Actions      14  

Section 4.2

  Reasonable Best Efforts to Close      15  

Section 4.3

  Confidentiality      15  

 

i


Section 4.4

  State Securities Laws      16  

Section 4.5

  Interim Operating Covenants      16  

Section 4.6

  Exclusivity      17  

Section 4.7

  Tax Matters      18  

Section 4.8

  United States Real Property Interest      18  

Section 4.9

  Transfer Restrictions      18  

Section 4.10

  Board Representation      20  

Section 4.11

  Preemptive Rights      21  

Section 4.12

  [Reserved]      24  

Section 4.13

  Voting of Company Shares; Standstill      24  

Section 4.14

  Restrictive Covenants      26  

Section 4.15

  Legend      27  
  Article V   
  Indemnity   

Section 5.1

  Indemnification by the Company      28  

Section 5.2

  Indemnification by the Purchaser      28  

Section 5.3

  Indemnification Procedure      29  

Section 5.4

  Tax Matters      30  

Section 5.5

  Survival      30  

Section 5.6

  Limitations on Indemnification      30  

Section 5.7

  Limitation on Damages      31  

Section 5.8

  Exclusive Remedy      32  
  Article VI   
  Miscellaneous   

Section 6.1

  Expenses      32  

Section 6.2

  Amendment; Waiver      33  

Section 6.3

  Counterparts; Electronic Transmission      33  

Section 6.4

  Governing Law      33  

Section 6.5

  WAIVER OF JURY TRIAL      33  

Section 6.6

  Notices      33  

Section 6.7

  Entire Agreement      34  

Section 6.8

  Assignment      34  

Section 6.9

  Interpretation; Other Definitions      35  

Section 6.10

  Captions      44  

Section 6.11

  Severability      44  

Section 6.12

  No Third Party Beneficiaries      44  

Section 6.13

  Public Announcements      44  

Section 6.14

  Specific Performance      44  

Section 6.15

  Termination      45  

Section 6.16

  Effects of Termination      46  

Section 6.17

  Non-Recourse      46  

 

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Exhibit A: Form of Certificate of Designations

Exhibit B: Form of Registration Rights Agreement

Schedules

 

 

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INVESTMENT AGREEMENT, dated as of August 24, 2017 (this “ Agreement ”), by and among Beacon Roofing Supply, Inc., a Delaware corporation (the “ Company ”), CD&R Boulder Holdings, L.P., a Cayman Islands exempted limited partnership (the “ Purchaser ”), and, solely for purposes of Sections 4.13 and 4.14 hereof, Clayton, Dubilier & Rice Fund IX, L.P., a Cayman Islands exempted limited partnership (the “ CD&R Fund ”).

RECITALS:

WHEREAS, the Company proposes to enter into a Stock Purchase Agreement (as it may be amended or supplemented from time to time, the “ Allied Acquisition Agreement ”), by and among the Company, Oldcastle, Inc., a Delaware corporation, and Oldcastle Distribution, Inc., a Delaware corporation (“ Seller ”), pursuant to, and on the terms and subject to the conditions of which, the Company will purchase all of the issued and outstanding shares of Allied Building Products Corp., a New Jersey corporation, and Kapalama Kilgos Acquisition Corp., a Delaware corporation (collectively, the “ Target ”), from Seller (the “ Allied Acquisition ”);

WHEREAS, the Company proposes to issue and sell to the Purchaser shares of its preferred stock, par value $0.01 per share, designated as “Series A Cumulative Convertible Participating Preferred Stock” (the “ Preferred Stock ”), having the terms set forth in the Certificate of Designations, Preferences and Rights of Series A Cumulative Convertible Participating Preferred Stock in the form attached hereto as Exhibit A (the “ Certificate of Designations ”), subject to the terms and conditions set forth in this Agreement;

WHEREAS, the Preferred Stock will be convertible into shares of Common Stock of the Company; and

WHEREAS, capitalized terms used in this Agreement have the meanings set forth in Section  6.9 .

NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements set forth herein, the parties agree as follows:

ARTICLE I

Purchase; Closing

Section 1.1 Purchase .

(a) At least three (3) business days prior to the Closing Date, the Company will deliver to the Purchaser a written notice (the “ Election Notice ”) setting forth the number of shares of Preferred Stock to be purchased by the Purchaser from the Company at the Closing pursuant to Section  1.1(b) (the “ Purchased Shares ”), in exchange for an aggregate purchase price equal to the number of Purchased Shares set forth in the Election Notice multiplied by $1,000.00 (such aggregate purchase price, the “ Purchase Price ”); provided , that in no event shall the number of Purchased Shares set forth in the Election Notice ( A ) be less than 400,000 or ( B ) exceed 498,000.


(b) On the terms and subject to the conditions herein, on the Closing Date, the Company agrees to sell and issue to the Purchaser, and the Purchaser agrees to purchase from the Company the Purchased Shares, in exchange for the Purchase Price, free and clear of any Liens (other than restrictions arising under applicable securities Laws and restrictions set forth in Section  4.9 ).

Section 1.2 Closing .

(a) Subject to the satisfaction or waiver of the conditions set forth in this Agreement, the closing of the purchase and sale by the Purchaser of the Purchased Shares pursuant to this Agreement (the “ Closing ”) shall be held at the offices of Sidley Austin LLP, One South Dearborn Street, Chicago, Illinois 60603, at 10:00 a.m. New York time on the date the closing of the Allied Acquisition as contemplated by the Allied Acquisition Agreement occurs ( provided , that notice of such date of closing of the Allied Acquisition has been delivered to the Purchaser at least thirteen (13) business days prior to such date), after the satisfaction or waiver of the latest to occur of the conditions set forth in Section  1.3 (other than those conditions that by their nature are to be satisfied by actions taken at the Closing, but subject to their satisfaction or waiver) or at such other date, time and place as the Company and the Purchaser mutually agree in writing (the “ Closing Date ”).

(b) Subject to the satisfaction or waiver at or prior to the Closing of the applicable conditions to the Closing set forth in Section  1.3 , at the Closing:

(1) the Company shall deliver to the Purchaser: ( A ) evidence of the issuance of the Purchased Shares reasonably satisfactory to the Purchaser, ( B ) the Registration Rights Agreement, in the form of Exhibit B hereto, executed by the Company, and ( C ) the officer’s certificate required to be delivered by the Company to the Purchaser pursuant to Section  1.3(b)(6) of this Agreement; and

(2) the Purchaser shall deliver or cause to be delivered ( A ) to a bank account designated by the Company in writing at least two (2) business days prior to the Closing Date, the Purchase Price by wire transfer of immediately available funds, ( B ) the Registration Rights Agreement, in the form of Exhibit B hereto, executed by Purchaser, and (C) the officer’s certificate required to be delivered by the Purchaser to the Company pursuant to Section  1.3(c)(3) of this Agreement.

Section 1.3 Closing Conditions .

(a) The obligation of the Purchaser, on the one hand, and the Company, on the other hand, to effect the Closing is subject to the satisfaction or waiver by the Purchaser and the Company at or prior to the Closing of the following conditions:

(1) no temporary restraining order, preliminary or permanent injunction or other judgment or order issued by any Governmental Entity, and no Law shall be in effect restraining, enjoining, making illegal or otherwise prohibiting the consummation of the transactions contemplated by this Agreement; provided , however , that the party claiming such failure of condition shall have used its reasonable best efforts to prevent the entry of any such injunction or order and to appeal as promptly as possible any injunction or other order that may be entered;

 

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(2) all applicable waiting periods (and any extension thereof) prescribed by the HSR Act shall have expired or shall have been terminated; and

(3) the Allied Acquisition shall have been consummated, or is being consummated substantially concurrently with the Closing, in accordance with the terms and conditions set forth in the Allied Acquisition Agreement (subject to any amendments, supplements or other modifications permitted by the last sentence of Section  4.2 or otherwise consented to by the Purchaser), without waiver of (x) the condition contained in Section 6.2(a)(ii) to the Allied Acquisition Agreement without Purchaser’s prior written consent or (y) any of the other conditions to the obligation of the Company to complete the Allied Acquisition without Purchaser’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed).

(b) The obligation of the Purchaser to effect the Closing is also subject to the satisfaction or waiver by the Purchaser at or prior to the Closing of the following conditions:

(1) substantially contemporaneous with the Closing, the Company shall have reimbursed Purchaser for the out-of-pocket costs and expenses described in clauses (a) and (b) of Section  6.1 to the extent such out-of-pocket costs and expenses are incurred prior to the Closing and invoices evidencing the same are delivered to the Company at least two (2) business days prior to the Closing Date;

(2) if the Purchaser has identified the Purchaser Designees to the Company in writing at least three (3) business days prior to the Closing Date, the Company Board shall have taken all actions necessary to, effective immediately upon the Closing and in accordance with Section  4.10 , cause each Purchaser Designee to be elected to the Company Board as permitted by Law, and the Purchaser shall have received evidence reasonably satisfactory to it of the taking of such actions;

(3) (i) the representations and warranties of the Company set forth in Article  II hereof (other than Sections 2.1 , 2.2 , 2.3(a) , 2.4 and 2.8 ) shall be true and correct (disregarding all qualifications or limitations as to materiality or Company Material Adverse Effect) as of the date of this Agreement and as of the Closing Date as though made on and as of such date (except to the extent that any such representation or warranty speaks to an earlier date, in which case such representation or warranty shall be true and correct as of such earlier date), except where the failure of such representations and warranties to be so true and correct would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (ii) the representations and warranties of the Company set forth in Section  2.2 shall be true and correct in all but de minimis respects as of the Capitalization Date, and (iii) the representations and warranties of the Company set forth in Sections 2.1 , 2.3(a) , 2.4 and 2.8 shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as though made on and as of such date;

 

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(4) the Company shall have performed in all material respects all obligations required to be performed by it pursuant to this Agreement at or prior to the Closing;

(5) since the date hereof, there shall not have occurred any Company Material Adverse Effect; and

(6) the Purchaser shall have received a certificate signed on behalf of the Company by a duly authorized senior executive officer of the Company certifying to the effect that the conditions set forth in Sections  1.3(b)(2) , (3) , (4) and (5)  have been satisfied.

(c) The obligation of the Company to effect the Closing is also subject to the satisfaction or waiver by the Company at or prior to the Closing of the following conditions:

(1) (i) the representations and warranties of the Purchaser set forth in Article III hereof (other than Section  3.1 , 3.2(a) and 3.5 ) shall be true and correct (disregarding all qualifications or limitations as to materiality) as of the date of this Agreement and as of the Closing Date as though made on and as of such date (except to the extent that any such representation or warranty speaks to an earlier date, in which case such representation or warranty shall be true and correct as of such earlier date), except where the failure of such representations and warranties to be so true and correct would not, individually or in the aggregate, reasonably be expected to prevent or materially delay the consummation of the transactions contemplated by this Agreement or the ability of the Purchaser to fully perform its covenants and obligations under this Agreement, and (ii) the representations and warranties of the Purchaser set forth in Section  3.1 , 3.2(a) and 3.5 shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as though made on and as of such date;

(2) the Purchaser shall have performed in all material respects all obligations required to be performed by it pursuant to this Agreement at or prior to the Closing; and

(3) the Company shall have received a certificate signed on behalf of the Purchaser by a duly authorized senior executive officer of the Purchaser certifying to the effect that the conditions set forth in Section  1.3(c)(1) and (2)  have been satisfied.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth (a) in the SEC Documents filed or furnished by the Company with the SEC, and publicly available, after December 31, 2014 and before the date of this Agreement (but excluding any disclosures set forth in risk factors or any “forward looking statements” within the meaning of the Securities Act or the Exchange Act) or (b) in a correspondingly identified schedule attached hereto (such schedules, collectively, the “ Disclosure Schedules ”), the Company represents and warrants to the Purchaser, as of the date hereof and as of the Closing Date (except to the extent made only as of a specified date, in which case as of such date), that:

 

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Section 2.1 Organization and Authority .

(a) The Company is a corporation duly organized and validly existing under the laws of the State of Delaware, has all requisite corporate power and authority to own its properties and conduct its business as presently conducted, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified (in the case of good standing, to the extent such jurisdiction recognizes such concept), except where such failure to be so qualified, individually or in the aggregate, would not be reasonably expected to have a Company Material Adverse Effect. True and accurate copies of the certificate of incorporation of the Company (the “ Certificate of Incorporation ”) and the bylaws of the Company (the “ Bylaws ”), each as in effect as of the date of this Agreement, have been made available to the Purchaser prior to the date hereof.

(b) Each material Company Subsidiary is duly organized and validly existing under the laws of its jurisdiction of organization, has all requisite corporate or other applicable entity power and authority to own its properties and conduct its business as presently conducted, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified (in the case of good standing, to the extent such jurisdiction recognizes such concept), except where such failure to be so qualified, individually or in the aggregate, would not be reasonably expected to have a Company Material Adverse Effect. As used herein, “ Subsidiary ” means, with respect to any Person, any corporation, partnership, joint venture, limited liability company or other entity ( i ) of which such Person or a subsidiary of such Person is a general partner or ( ii ) of which a majority of the voting securities or other voting interests, or a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the board of directors or persons performing similar functions with respect to such entity, that is directly or indirectly owned by such person and/or one or more subsidiaries thereof; and “ Company Subsidiary ” means any Subsidiary of the Company.

Section 2.2 Capitalization .

(a) The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock, par value $0.01 per share, and 5,000,000 shares of preferred stock, par value $0.01 per share. As of the close of business on August 23, 2017 (the “ Capitalization Date ”), there were 60,389,882 shares of Common Stock issued and outstanding and no shares of preferred stock of the Company issued and outstanding. As of the close of business on the Capitalization Date, ( i ) 2,122,431 shares of Common Stock were subject to issuance upon the exercise of stock options outstanding on such date that were granted pursuant to the Company Equity Plans (“ Company Stock Options ”), of which 671,231 were then unvested, ( ii ) 517,699 unvested time-based restricted stock units from awards granted pursuant to the Company Equity Plans (“ Company RSUs ”) were outstanding, ( iii ) 253,960 unvested performance-based restricted stock units (at target level of performance) granted pursuant to the Company Equity Plans (“Company PRSUs”) were outstanding, ( iv ) no shares of Common Stock were held by the Company in its treasury, and ( v ) 4,094,211 shares of Common Stock were available for future awards under the Company Equity Plans. All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid, non - assessable and free of

 

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preemptive rights. From the Capitalization Date through and as of the date of this Agreement, no other shares of Common Stock or preferred stock have been issued other than those shares of Common Stock subject to issuance upon the exercise of outstanding Company Stock Options granted under the Company Equity Plans. The Company does not have outstanding shareholder purchase rights or “poison pill” or any similar arrangement in effect.

(b) No bonds, debentures, notes or other Indebtedness having the right to vote (or convertible into or exchangeable for, securities having the right to vote) on any matters on which the stockholders of the Company may vote (“ Voting Debt ”) are issued and outstanding. As of the date of this Agreement, except ( i ) pursuant to any cashless exercise provisions of any Company Stock Options or pursuant to the surrender of shares to the Company or the withholding of shares by the Company to cover tax withholding obligations under Company Stock Options, Company RSUs or Company PRSUs, and ( ii ) as set forth in Section  2.2(a) , the Company does not have and is not bound by any outstanding options, preemptive rights, rights of first offer, warrants, calls, commitments or other rights or agreements calling for the purchase or issuance of, or securities or rights convertible into, or exchangeable for, any shares of Common Stock or any other equity securities of the Company or Voting Debt or any securities representing the right to purchase or otherwise receive any shares of capital stock of the Company (including any rights plan or agreement).

Section 2.3 Authorization .

(a) The Company has the corporate power and authority to enter into this Agreement and the other Transaction Documents and to carry out its obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company and the consummation of the transactions contemplated hereby and thereby have been duly authorized by the board of directors of the Company (the “ Company Board ”), including all approvals required by Section 203 of the Delaware General Corporation Law. This Agreement has been, and (as of the Closing) the other Transaction Documents will be, duly and validly executed and delivered by the Company and, assuming due authorization, execution and delivery by the Purchaser, this Agreement is, and (as of the Closing) each of the other Transaction Documents will be, a valid and binding obligation of the Company enforceable against the Company in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles). No other corporate proceedings are necessary for the execution and delivery by the Company of this Agreement or the other Transaction Documents, and no other corporate proceedings (except to the extent set forth in the other Transaction Documents and except for the adoption of Company Board resolutions appointing the Purchaser Designees at Closing) are necessary for the performance by the Company of its obligations hereunder or thereunder or the consummation by it of the transactions contemplated hereby or thereby.

(b) Neither the execution and delivery by the Company of this Agreement or the other Transaction Documents, nor the consummation of the transactions contemplated hereby or thereby, nor compliance by the Company with any of the provisions hereof or thereof, will ( i ) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in

 

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the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any Lien upon any of the material properties or assets of any Company Group Member under any of the terms, conditions or provisions of ( x ) the Certificate of Incorporation, the Certificate of Designations, the Bylaws or the certificate of incorporation, charter, articles of association, bylaws or other governing instrument of any Company Subsidiary or ( y ) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which any Company Group Member is a party or by which it may be bound, or to which any Company Group Member or any of the properties or assets of any Company Group Member may be subject, or ( ii ) violate any law, statute, ordinance, rule, regulation, permit, franchise or any judgment, ruling, order, writ, injunction or decree applicable to any Company Group Member or any of its respective properties or assets, except in the case of clauses (i)(y) and (ii), for such violations, conflicts and breaches as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

(c) Other than the securities or blue sky laws of the various states and approval or expiration of applicable waiting periods under the HSR Act, no notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of any Governmental Entity, nor expiration or termination of any statutory waiting period, is necessary for the consummation by the Company of the transactions contemplated by this Agreement or the other Transaction Documents.

Section 2.4 Sale and Status of Securities .

(a) Subject to the accuracy of the representations made by the Purchaser in Section  3.3 , the offer, sale and issuance of the Purchased Shares ( i ) have been and will be made in compliance with applicable exemptions from the registration and prospectus delivery requirements of the Securities Act and ( ii ) will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state blue sky laws.

(b) ( i ) The Purchased Shares and ( ii ) the shares of Common Stock issuable upon conversion of the Purchased Shares (including shares of Preferred Stock issued as dividends thereon as provided in the Certificate of Designations) have been duly authorized by all necessary corporate action. When issued and sold against receipt of the consideration therefor as provided in this Agreement or the Certificate of Designations, the Purchased Shares will be validly issued, fully paid and nonassessable, will not be subject to preemptive rights of any other stockholder of the Company, and will effectively vest in the Purchaser good title to the Purchased Shares, free and clear of all Liens (other than restrictions arising under applicable securities Laws or pursuant to Section  4.9 ). Upon any conversion of any Purchased Shares (including shares of Preferred Stock issued as dividends thereon as provided in the Certificate of Designations), the shares of Common Stock upon such conversion will be validly issued, fully paid and non-assessable, and will not be subject to preemptive rights of any other stockholder of the Company, and will effectively vest in the Purchaser good title to all such securities, free and clear of all Liens (other than restrictions arising under applicable federal, state or foreign securities Laws or pursuant to Section  4.9 ). The respective rights, preferences, privileges and restrictions of the Common Stock and the Preferred Stock are as stated in the Certificate of

 

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Incorporation and the Certificate of Designations. The shares of Common Stock and shares of Preferred Stock to be issued upon any conversion of the Purchased Shares (including shares of Preferred Stock issued as dividends thereon as provided in the Certificate of Designations) and have been duly reserved for such issuance.

Section 2.5 SEC Documents; Financial Statements .

(a) The Company has filed all required reports, proxy statements, forms, and other documents with the U.S. Securities and Exchange Commission (the “ SEC ”) since December 31, 2014 (collectively, the “ SEC Documents ”). Each of the SEC Documents, as of its respective date, complied in all material respects with the requirements of the Securities Act of 1933, as amended (the “ Securities Act ”), and the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Documents. Except to the extent that information contained in any SEC Document has been revised or superseded by a later filed SEC Document filed and publicly available prior to the date of this Agreement, as of their respective dates, or if amended, as of the date of the last such amendment, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

(b) The Company ( i ) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are reasonably designed to ensure that material information relating to the Company Group is made known to the individuals responsible for the preparation of the Company’s filings with the SEC and ( ii ) has disclosed, based on its most recent evaluation prior to the date of this Agreement, to the Company’s outside auditors and the Company Board’s audit committee ( A ) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and ( B ) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting. As of the date of this Agreement, to the Knowledge of the Company, there is no reason that its outside auditors and its chief executive officer and chief financial officer will not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, without qualification, when next due.

(c) There is no transaction, arrangement or other relationship between the Company and/or any of its Subsidiaries and an unconsolidated or other off-balance sheet entity that is required by applicable Law to be disclosed by the Company in its SEC Documents and is not so disclosed.

(d) The financial statements of the Company and its consolidated subsidiaries included in the SEC Documents ( i ) complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, in each case as of the date such SEC Document was filed, and ( ii ) have been prepared in

 

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accordance with generally accepted accounting principles in the United States (“ GAAP ”) applied on a consistent basis during the periods involved (except as may be indicated in such financial statements or the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows of the Company and its consolidated subsidiaries for the periods then ended (subject, in the case of unaudited statements, to the absence of footnote disclosures and normal audit adjustments, which are not reasonably expected to be material individually or in aggregate).

Section 2.6 Undisclosed Liabilities . Except for ( i ) those liabilities that are reflected or reserved for in the consolidated financial statements of the Company included in its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017, ( ii ) liabilities incurred since June 30, 2017 in the ordinary course of business consistent with past practice, ( iii ) liabilities incurred pursuant to the transactions contemplated by the Transaction Documents and the Debt Commitment Letter (as defined in the Allied Acquisition Agreement), and ( iv ) liabilities that would not, individually or in the aggregate, be material to the Company Group, taken as a whole, the Company Group does not have any liabilities or obligations of any nature whatsoever (whether accrued, absolute, contingent or otherwise) that would be required under GAAP, as in effect on the date hereof, to be reflected on a consolidated balance sheet of the Company (including the notes thereto).

Section 2.7 Absence of Changes . Since November 22, 2016 through the date of this Agreement, there has not been any ( i ) Company Material Adverse Effect or ( ii ) action taken by any Company Group Member that, if such action had been taken between the date of this Agreement and the Closing Date, would violate Section  4.5 without the prior written consent of Purchaser.

Section 2.8 Brokers and Finders . Except for Citigroup Global Markets Inc. and Wells Fargo Securities, LLC, the fees and expenses of which will be paid by the Company, no Company Group Member and none of their respective officers, directors, employees or agents has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Company in connection with this Agreement or the transactions contemplated hereby.

Section 2.9 Registration Rights . Except as provided in the Registration Rights Agreement, the Company has not granted or agreed to grant, and is not under any obligation to provide, any rights to register under the Securities Act any of its presently outstanding equity securities or any of its equity securities that may be issued subsequently.

Section 2.10 Compliance with Laws; Anti-Corruption; Trade Controls .

(a) No Company Group Member is, or since January 1, 2012, has been, in violation in any respect of any applicable Law, except as would not, individually or in the aggregate, be material to the Company Group, taken as a whole. No Company Group Member is subject to a pending investigation by a Governmental Entity with respect to compliance with any applicable Law, except for ( i ) such of the foregoing as would not, individually or in the aggregate, reasonably be material to the Company Group, taken as a whole, and ( ii ) as otherwise expressly disclosed in the SEC Documents.

 

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(b) Since January 1, 2012, each Company Group Member and, to the Knowledge of the Company, each of its respective officers, directors, employees and agents, (together with the term Company Group Member, collectively, the “ Relevant Persons ”) have not directly or indirectly violated or taken any act in furtherance of violating any provision of the U.S. Foreign Corrupt Practices Act of 1977 (as amended), the U.K. Bribery Act 2010 or any other anti-corruption or anti-bribery Laws applicable to any Company Group Member.

(c) Since January 1, 2012, the Relevant Persons have not directly or indirectly taken any act in furtherance of any unlawful payment, gift, bribe, rebate, loan, payoff, kickback or any other unlawful transfer of value, or offer, promise or authorization thereof, to any Person, including any Government Official, for the purpose of: ( i ) improperly influencing or inducing such Person to do or omit to do any act or to make any decision in an official capacity or in violation of a lawful duty or ( ii ) inducing such Person to influence improperly his or her or its employer, public or private, or any Governmental Entity, to affect an act or decision of such employer or Governmental Entity, including to assist any Person in obtaining or retaining business, except as would not, individually or in the aggregate, be material to the Company Group, taken as a whole.

(d) Since January 1, 2012, the Relevant Persons have not in the course of their actions for, or on behalf of, any Company Group Member engaged directly or indirectly in transactions: ( i ) connected with any of North Korea, Crimea, Cuba, Iran, Syria, Myanmar or Sudan; ( ii ) connected with any government, country or other entity or Person that is the target of U.S. economic sanctions administered by the U.S. Treasury Department Office of Foreign Assets Control (“ OFAC ”) or by Her Majesty’s Treasury in the U.K., or the target of any applicable U.N., E.U. or other international sanctions regime, including any transactions with specially designated nationals or blocked persons designated by OFAC or with persons on any U.N., E.U. or U.K. assets freeze list; or ( iii ) that is prohibited by any Law administered by OFAC, or by any other economic or trade sanctions Law of the U.S. or any other jurisdiction, except as would not, individually or in the aggregate, be material to the Company Group, taken as a whole.

(e) Since January 1, 2012, no Relevant Person is a Person whose property or interests in property are blocked or frozen under the economic sanctions laws of the U.S., the E.U. or any other jurisdiction; and no Relevant Person is designated as a denied person by the U.S. Commerce Department Bureau of Industry and Security or as a debarred party by the U.S. State Department’s Directorate of Defense Trade Control, except as would not, individually or in the aggregate, be material to the Company Group, taken as a whole.

(f) Since January 1, 2012, the Relevant Persons have not in the course of their actions for, or on behalf of, any Company Group Member exported or reexported (including deemed exportation or reexportation) any merchandise, software or technology in violation of the Export Administration Regulations, the International Traffic in Arms Regulations, or any other applicable export control laws of the U.S. or any other jurisdiction, except as would not, individually or in the aggregate, be material to the Company Group, taken as a whole.

 

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(g) Since January 1, 2012, the Relevant Persons have not in the course of their actions for, or on behalf of, any Company Group Member taken any actions, refused to take any actions, or furnished any information in violation of the applicable U.S. laws restricting participation in international boycotts, except as would not, individually or in the aggregate, be material to the Company Group, taken as a whole.

Section 2.11 Listing and Maintenance Requirements . The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to the Knowledge of the Company is reasonably likely to, have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received as of the date of this Agreement any notification that the SEC is contemplating terminating such registration.

Section 2.12 No Additional Representations . Except for the representations and warranties made by the Company in Article II , neither the Company nor any other person makes any express or implied representation or warranty with respect to any Company Group Member or their respective businesses, operations, assets, liabilities, employees, employee benefit Plans, conditions or prospects, and the Company hereby disclaims any such other representations or warranties. In particular, without limiting the foregoing disclaimer, neither the Company nor any other person makes or has made any representation or warranty to the Purchaser, or any of its Affiliates or representatives, with respect to (i) any financial projection, forecast, estimate, budget or prospect information relating to any Company Group Member or their respective business, or (ii) except for the representations and warranties made by the Company in Article II , any oral or written information presented to the Purchaser or any of its Affiliates or representatives in the course of their due diligence investigation of the Company, the negotiation of this Agreement or in the course of the transactions contemplated hereby.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser hereby represents and warrants to the Company, as of the date hereof and as of the Closing Date (except to the extent made only as of a specified date, in which case as of such date), that:

Section 3.1 Organization and Authority . The Purchaser is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified and where failure to be so qualified would reasonably be expected to materially and adversely affect the Purchaser’s ability to perform its obligations under this Agreement or consummate the transactions contemplated hereby on a timely basis, and the Purchaser has the requisite power and authority and governmental authorizations to own its properties and assets and to carry on its business as it is now being conducted.

 

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Section 3.2 Authorization .

(a) The Purchaser has the requisite power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution, delivery and performance of this Agreement by the Purchaser and the consummation of the transactions contemplated hereby have been duly authorized by all requisite action on the part of the Purchaser, and no further approval or authorization by any of its stockholders, partners, members or other equity owners, as the case may be, is required. This Agreement has been duly and validly executed and delivered by the Purchaser and assuming due authorization, execution and delivery by the Company, is a valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles).

(b) None of the execution, delivery and performance by the Purchaser of this Agreement, the consummation of the transactions contemplated hereby, or compliance by the Purchaser with any of the provisions hereof, will ( i ) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any Lien upon any of the properties or assets of the Purchaser under any of the terms, conditions or provisions of ( x ) its governing instruments or ( y ) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Purchaser is a party or by which it may be bound, or to which the Purchaser or any of the properties or assets of the Purchaser may be subject, or ( ii ) subject to compliance with the statutes and regulations referred to in the next paragraph, violate any Law, statute, ordinance, rule or regulation, permit, concession, grant, franchise or any judgment, ruling, order, writ, injunction or decree applicable to the Purchaser or any of its respective properties or assets except in the case of clauses (i)(y) and (ii) for such violations, conflicts and breaches as would not reasonably be expected to materially and adversely affect the Purchaser’s ability to perform its respective obligations under this Agreement or consummate the transactions contemplated hereby on a timely basis.

(c) Other than the securities or blue sky laws of the various states, and approval or expiration of applicable waiting periods under the HSR Act, no notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of, any Governmental Entity, nor expiration or termination of any statutory waiting period, is necessary for the consummation by the Purchaser of the transactions contemplated by this Agreement.

Section 3.3 Purchase for Investment . The Purchaser acknowledges that the Purchased Shares have not been registered under the Securities Act or under any state or other applicable securities laws. The Purchaser ( i ) acknowledges that it is acquiring the Purchased Shares and the Common Stock issuable upon conversion of the Preferred Stock pursuant to an exemption from registration under the Securities Act solely for investment with no present intention to distribute any of the Purchased Shares to any Person in violation of applicable securities laws, ( ii ) will not sell or otherwise dispose of any of the Purchased Shares or the Common Stock issuable upon conversion of the Purchased Shares, except in compliance with the registration requirements or

 

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exemption provisions of the Securities Act and any other applicable securities laws (and the provisions of Section  4.9 hereof), ( iii ) has such knowledge and experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of its investment in the Purchased Shares and of making an informed investment decision, ( iv ) is an “accredited investor” (as that term is defined by Rule 501 of the Securities Act), ( v ) is a “qualified institutional buyer” (as that term is defined in Rule 144A of the Securities Act), and ( vi ) ( A ) has been furnished with or has had full access to all the information that it considers necessary or appropriate to make an informed investment decision with respect to the Purchased Shares and the Common Stock issuable upon conversion of the Purchased Shares, ( B ) has had an opportunity to discuss with management of the Company the intended business and financial affairs of the Company and to obtain information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to it or to which it had access and ( C ) can bear the economic risk of ( x ) an investment in the Purchased Shares and the Common Stock issuable upon conversion of the Purchased Shares indefinitely and ( y ) a total loss in respect of such investment. The Purchaser has such knowledge and experience in business and financial matters so as to enable it to understand and evaluate the risks of and form an investment decision with respect to its investment in the Purchased Shares and the Common Stock issuable upon conversion of the Purchased Shares and to protect its own interest in connection with such investment.

Section 3.4 Financial Capability . Purchaser has delivered to the Company a true and complete copy of the Equity Commitment Letter, pursuant to which Clayton, Dubilier & Rice Fund IX, L.P. has committed, subject only to the terms and conditions thereof, to invest the amounts set forth therein in an amount up to the Purchase Price assuming the purchase of 498,000 Purchased Shares pursuant to Section  1.1(a) on the date on which the Closing should occur pursuant to Section  1.2 . As of the date of this Agreement, the Equity Commitment Letter is in full force and effect and constitutes the enforceable, legal, valid and binding obligations of each of the parties thereto. At the Closing, the Purchaser will have available funds necessary to consummate the purchase and pay the Purchase Price (assuming the purchase of 498,000 Purchased Shares pursuant to Section  1.1(a) ) on the terms and conditions contemplated by this Agreement. Purchaser is not aware of any reason why the funds sufficient to pay the Purchase Price will not be available on the Closing Date.

Section 3.5 Brokers and Finders . Neither the Purchaser nor its Affiliates or any of their respective officers, directors, employees or agents has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Purchaser, in connection with this Agreement or the transactions contemplated hereby.

Section 3.6 Ownership . As of the date of this Agreement, neither the Purchaser nor any of its controlled Affiliates are the owners of record or the Beneficial Owners of shares of Common Stock or securities convertible into or exchangeable for Common Stock.

Section 3.7 Acknowledgment of No Other Representations or Warranties . Each of Purchaser and its Affiliates acknowledges that it has conducted its own independent investigation and analysis of the business, operations, assets, liabilities, results of operations, condition (financial or otherwise) and prospects of the Company. Each of Purchaser and its Affiliates

 

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acknowledges and agrees that, except for the representations and warranties contained in  Article II , neither the Company nor any of its Subsidiaries, nor any other Person, makes any express or implied representation or warranty with respect to any Company Group Member or their respective businesses, operations, assets, liabilities, employees, employee benefit Plans, conditions or prospects, and the Company hereby disclaims any such other representations or warranties. In particular, without limiting the foregoing disclaimer, neither the Company nor any of its Subsidiaries, nor any other Person, makes or has made any representation or warranty to the Purchaser, or any of its Affiliates or representatives, with respect to ( i ) any financial projection, forecast, estimate, budget or prospect information relating to any Company Group Member or their respective business, or ( ii ) except for the representations and warranties made by the Company in Article II , any oral or written information presented to the Purchaser or any of its Affiliates or representatives in the course of their due diligence investigation of the Company, the negotiation of this Agreement or in the course of the transactions contemplated hereby. To the fullest extent permitted by applicable Law, except with respect to the representations and warranties contained in  Article II , neither the Company nor any of its Affiliates shall have any liability (except in the case of actual fraud) to Purchaser or its Affiliates or representatives on any basis (including in contract or tort, under federal or state securities Laws or otherwise) based upon any other representation or warranty, either express or implied, included in any information or statements (or any omissions therefrom) provided or made available by the Company or its Affiliates to Purchaser or its Affiliates or representatives in the course of their due diligence investigation of the Company, the negotiation of this Agreement or in the course of the transactions contemplated by this Agreement.

ARTICLE IV

Covenants

Section 4.1 Filings; Other Actions . During the period commencing on the date hereof and terminating on the earlier to occur of ( a ) the Closing and ( b ) the termination of this Agreement in accordance with the provisions hereof (the “ Pre-Closing Period ”), each of the Purchaser, on the one hand, and the Company, on the other hand, will cooperate and consult with the other and use their respective reasonable best efforts to prepare and file all necessary documentation, to effect all necessary applications, notices, petitions, filings and other documents, and to obtain all necessary permits, consents, orders, approvals and authorizations of, or any exemption by, all third parties and Governmental Entities, and the expiration or termination of any applicable waiting period, necessary or advisable to consummate the transactions contemplated by this Agreement, and to perform the covenants contemplated by this Agreement. Each party shall execute and deliver both before and after the Closing such further certificates, agreements and other documents and take such other actions as the other parties may reasonably request to consummate or implement the transactions contemplated by this Agreement or to evidence such events or matters. In particular, the Purchaser and the Company shall use all reasonable best efforts to as promptly as reasonably practicable following the date hereof, submit the notifications under the HSR Act, with respect to the transactions contemplated hereby, including the issuance of the Purchased Shares to the Purchaser (and the issuance of Common Stock upon conversion of any Purchased Shares). The Purchaser and the Company will have the right to review in advance, and to the extent reasonably practicable, each will consult with the other, in each case subject to applicable Laws relating to the exchange of

 

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information, all the information relating to such other party, and any of their respective Affiliates, which appears in any filing made with, or written materials submitted to, any third party or any Governmental Entity in connection with the transactions contemplated by this Agreement. In exercising the foregoing right, each of the parties hereto agrees to act reasonably and as promptly as reasonably practicable. Each party hereto agrees to keep the other party reasonably apprised of the status of matters referred to in this Section  4.1 . The Purchaser shall promptly furnish the Company, and the Company shall promptly furnish the Purchaser, to the extent permitted by applicable Law, with copies of written communications received by it or its Subsidiaries from any Governmental Entity in respect of the transactions contemplated by this Agreement. Notwithstanding anything herein to the contrary, under no circumstances shall any Company Group Member be required to ( x ) make any payment to any Person to secure such Person’s consent, approval or authorization (excluding any applicable filing fees or other de minimis expenses that are required to be paid by the Company) or ( y ) proffer to, or agree to, license, dispose of, sell or otherwise hold separate or restrict the operation of any of its assets, operations or other rights.

Section 4.2 Reasonable Best Efforts to Close . During the Pre-Closing Period, the Company and the Purchaser each will use reasonable best efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary under applicable Laws so as to permit consummation of the transactions contemplated hereby as promptly as reasonably practicable and otherwise to enable consummation of the transactions contemplated hereby and shall cooperate reasonably with the other party hereto to that end, including in relation to the satisfaction of the conditions to Closing set forth in Sections 1.3(a) , (b) and (c)  and cooperating in seeking to obtain any consent required from Governmental Entities; provided , that under no circumstances shall the Purchaser or any Company Group Member be required to make any material payment in respect of the obligations set forth in this  Section 4.2 . During the Pre-Closing Period, the Company shall not cause or permit any amendment, modification or supplement to the Allied Acquisition Agreement in a manner that would be materially less favorable to the Company without the prior written consent of the Purchaser (which consent shall not be unreasonably withheld, conditioned or delayed).

Section 4.3 Confidentiality . Each party to this Agreement will hold, and will cause its respective Affiliates and their respective directors, managers, officers, employees, agents, consultants and advisors to hold, in strict confidence, unless disclosure to a Governmental Entity is necessary in connection with any necessary regulatory approval, examination or inspection or unless disclosure is required by judicial or administrative process or by other requirement of Law or the applicable requirements of any Governmental Entity or relevant stock exchange (in which case, other than in connection with a disclosure in connection with a routine audit or examination by, or document request from, a regulatory or self-regulatory authority, bank examiner or auditor, the party disclosing such information shall provide the other party with prior written notice of such permitted disclosure to the extent lawful), all non-public records, books, contracts, instruments, computer data and other data and information (collectively, “ Information ”) concerning the other party hereto furnished to it by or on behalf of such other party or its representatives pursuant to this Agreement (except to the extent that such Information can be reasonably demonstrated to have been ( a ) previously known by such party from other sources, provided that such source was not known by such party to be bound by a contractual, legal or fiduciary obligation of confidentiality to the other party, ( b ) in the public domain through no

 

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violation of this Section  4.3 by such party or ( c ) later lawfully acquired from other sources by the party to which it was furnished), and neither party hereto shall release or disclose such Information to any other person, except its auditors, attorneys, financial advisors, financing sources and other consultants and advisors.

Section 4.4 State Securities Laws . During the Pre-Closing Period, the Company shall use its reasonable best efforts to ( a ) obtain all necessary permits and qualifications, if any, or secure an exemption therefrom, required by any state or country prior to the offer and sale of the Purchased Shares and ( b ) cause such authorization, approval, permit or qualification to be effective as of the Closing.

Section 4.5 Interim Operating Covenants . Except as set forth on Schedule 4.5 , during the Pre-Closing Period, the Company shall, and shall cause each other member of the Company Group (i) to operate its business in the ordinary course in substantially the same manner in which it previously has been conducted and (ii) use its reasonable best efforts to preserve intact in all material respects its business and assets and its relationships with customers, suppliers, employees and others having business dealings with it. Without limiting the generality of the foregoing, during the Pre-Closing Period, without the prior written consent of the Purchaser, the Company shall not, and shall cause each other member of the Company Group to not:

(a) declare, or make payment in respect of, any dividend or other distribution upon any shares of capital stock of the Company;

(b) redeem, repurchase or acquire any capital stock of any Company Group Member, other than repurchases of capital stock from employees, officers or directors of any Company Group Member in the ordinary course of business for purposes of the payment of the exercise price of a Company Stock Option or for purposes of tax withholding pursuant to, or as required by, any of the Company Group’s agreements or Plans in effect as of the date hereof;

(c) amend the Certificate of Incorporation, the Certificate of Designations or the Bylaws (other than in connection with the filing of the Certificate of Designations with the Secretary of State of the State of Delaware at or prior to Closing) or take or authorize any action to wind up its affairs or dissolve;

(d) authorize, grant, issue or reclassify any capital stock, or securities exercisable for, exchangeable for or convertible into capital stock (including options, warrants or rights), of any Company Group Member other than grants of Company Stock Options, Company RSUs and Company PRSUs under the Company Equity Plans in the ordinary course of business to employees, officers or directors of any Company Group Member or issuances of capital stock, or securities exercisable for, exchangeable for or convertible into shares or other capital stock, of the Company upon the exercise or settlement of any Company Stock Option, Company RSU, or Company PRSU outstanding on the date of this Agreement;

(e) (i) amend the Debt Commitment Letter (as defined in the Allied Acquisition Agreement), (ii) amend any agreements in existence as of the date hereof relating to indebtedness for borrowed money of the Company (excluding any such agreements that will be amended or amended and restated, as applicable, on or prior to the Closing, which amended or

 

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amended and restated agreements are addressed by clause (iii) below) that will remain in effect following the Closing, or (iii) enter into any agreements or arrangements relating to indebtedness for borrowed money (including any Debt Documents (as defined in the Allied Acquisition Agreement)) or otherwise complete the Debt Financing (as defined in the Allied Acquisition Agreement) on any terms that are inconsistent with the terms set forth in the Debt Commitment Letter (as defined in the Allied Acquisition Agreement), in the case of each of clauses (i) through (iii), in a manner (x) that is material and adverse to the Purchaser (it being understood and agreed that any change that would limit or restrict the Company’s ability to take any action in accordance with the Certificate of Designations, which failure to take such action would result in a Triggering Event (as defined in the Certificate of Designations), would be material and adverse to the Purchaser) or (y) that would otherwise restrict or limit in any respect the ability of the Company to pay dividends on the Preferred Stock in kind or limit in any material respect the ability of the Company to pay cash dividends on the Preferred Stock under the terms of the Certificate of Designations; or

(f) agree or commit to do any of the foregoing.

Section 4.6 Exclusivity .

(a) Prior to the Closing, without Purchaser’s prior written consent, neither the Company nor any Company Subsidiary shall, directly or indirectly, take (and the Company shall not authorize or permit any directors, officers or employees of the Company or, to the extent within the Company’s control, other Affiliates or representatives of the Company or any Company Subsidiary to take) any action to ( i ) encourage (including by way of furnishing non-public information), solicit, initiate or facilitate any Acquisition Proposal, ( ii ) enter into any agreement with respect to any Acquisition Proposal or enter into any agreement, arrangement or understanding requiring it to abandon, terminate or fail to consummate the issuance of at least 400,000 Purchased Shares or any other transaction contemplated by this Agreement or the Transaction Documents or ( iii ) participate in any way in discussions or negotiations with, or furnish any information to, any Person in connection with, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or would reasonably be expected to lead to, any Acquisition Proposal. Prior to the Closing, the Company shall use reasonable best efforts to take all actions reasonably necessary to ensure that the directors, officers and employees of the Company or any Company Subsidiary and, to the extent within the Company’s control, other Affiliates or representatives of the Company or any Company Subsidiary, do not take or do any of the actions referenced in the immediately foregoing sentence. Upon execution of this Agreement and prior to the Closing, unless Purchaser otherwise consents in writing, the Company shall, if applicable, cease immediately and cause to be terminated any and all existing discussions or negotiations with any parties conducted heretofore with respect to an Acquisition Proposal and promptly request that all confidential information with respect thereto furnished on behalf of the Company be returned.

(b) Prior to the Closing, the Company shall, as promptly as practicable (and in no event later than one business day after receipt thereof), advise the Purchaser of any Acquisition Proposal, potential Acquisition Proposal, or any inquiry received by it relating to any potential Acquisition Proposal and of the material terms of any proposal or inquiry, including, but not limited to, the identity of the Person and its Affiliates making the same, that it may

 

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receive in respect of any such Acquisition Proposal, potential Acquisition Proposal, or inquiry, or of any information requested from it or of any negotiations or discussions being sought to be initiated with it, shall furnish to the Purchaser a copy of any such proposal or inquiry, if it is in writing, or a reasonably accurate written summary of any such proposal or inquiry, if it is not in writing, and shall keep the Purchaser informed on a reasonably prompt basis with respect to any developments with respect to the foregoing.

Section 4.7 Tax Matters .

(a) The Company shall pay any and all documentary, stamp and similar issue or transfer taxes due upon the issuance of ( i ) the Purchased Shares and ( ii ) the shares of Common Stock issuable upon conversion of the Purchased Shares (including shares of Preferred Stock issued as dividends thereon pursuant to the Certificate of Designations), and the Company shall, at its own expense, file all necessary Tax Returns and other documentation with respect to all such Taxes and fees and, if required by Law, the Purchaser shall, and shall cause its Affiliates to, join in the execution of any such Tax Returns and other documentation; provided , however , in the case of conversion of shares of Preferred Stock, the Company shall not be required to pay any Tax that may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that of the holder of the shares to be converted, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Company the amount of any such tax or duty, or has established to the satisfaction of the Company that such tax or duty has been paid.

(b) Unless required under applicable Law, the Purchaser and the Company agree not to treat the Purchased Shares (based on their terms as set forth in the Certificate of Designations) as “preferred stock” within the meaning of Section 305 of the Code, and Treasury Regulation Section 1.305-5 for U.S. federal income tax and withholding tax purposes and shall not take any position inconsistent with such treatment.

(c) The Company and its paying agent shall be entitled to withhold Taxes on all payments on the Purchased Shares and the Common Stock issuable upon conversion thereof to the extent required by applicable Law.

Section 4.8 United States Real Property Interest . As and when reasonably requested by Purchaser, the Company agrees to provide prompt assistance in connection with determinations by Purchaser of whether specified shares of Common Stock or shares of Preferred Stock that Purchaser holds or has held constitute a “United States real property interest” under Section 897 of the Code.

Section 4.9 Transfer Restrictions .

(a) In order to induce the Company to consummate the transactions contemplated by this Agreement, the Purchaser hereby agrees that, from the Closing until the day that is eighteen (18) months after the Closing Date (the “ Lock-up Period ”), the Purchaser Parties shall not, directly or indirectly, in any single transaction or series of related transactions: ( a ) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put

 

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equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, with respect to (collectively, “ Transfer ”) any of the Purchased Shares (or any shares of Preferred Stock issued as dividends on the Purchased Shares) or any shares of Common Stock received upon conversion thereof (such shares, collectively, the “ Lock-up Shares ”), ( b ) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of the Lock-up Shares, for cash or otherwise, or ( c ) publicly announce any intention to effect any transaction specified in clause (a) or (b). The Purchaser hereby authorizes the Company during the Lock-up Period to cause its transfer agent for the Lock-up Shares to decline to transfer, and to note stop transfer restrictions on the stock register and other records relating to, Lock-up Shares for which the Purchaser (or any Purchaser Party) is the record holder. Following the Lock-up Period, the Purchaser hereby agrees that the Purchaser Parties shall not Transfer the Purchased Shares (or any shares of Preferred Stock issued as dividends on the Purchased Shares) unless such shares are converted into Common Stock in connection with such Transfer; provided , that the Purchaser Parties shall be permitted to Transfer the Purchased Shares (and any shares of Preferred Stock issued as dividends on the Purchased Shares) without converting such shares into Common Stock if the Common Stock ceases to be listed or quoted on the NASDAQ (or its successor) or another U.S. national securities exchange or automated inter-dealer quotation system. Notwithstanding the foregoing provisions of this Section  4.9(a) , any Purchaser Party may Transfer the Purchased Shares (or any shares of Preferred Stock issued as dividends on the Purchased Shares) or any shares of Common Stock received upon conversion thereof to ( i ) another Purchaser Party, but only if such other Purchaser Party agrees in writing for the benefit of the Company (in form and substance reasonably satisfactory to the Company) to be bound by the terms of this Agreement and if the transferee and the transferor agree for the express benefit of the Company that the transferee shall Transfer the Purchased Shares (or any shares of Preferred Stock issued as dividends on the Purchased Shares) or any shares of Common Stock received upon conversion thereof so Transferred back to the transferor at or before such time as the transferee ceases to be an Affiliate of the transferor; ( ii ) any other person to the extent such Transfer has been approved in writing by a majority of the Company Board excluding the Purchaser Designees; and ( iii ) the Company (including by way of surrender or repurchase) or any Company Subsidiary.

(b) Notwithstanding Section  4.9(a) , the Purchaser Parties shall not at any time, directly or indirectly, without the prior written consent of the Company Board excluding the Purchaser Designees, in any single transaction or series of related transactions, Transfer any of the Purchased Shares (or any shares of Preferred Stock issued as dividends on the Purchased Shares) or any shares of Common Stock received upon conversion thereof:

(1) other than in accordance with all applicable Laws and the other terms and conditions of this Agreement; or

(2) to any Prohibited Transferee, other than any Transfer (i) effected pursuant to an underwritten Block Sale (as defined in the Registration Rights Agreement) or (ii) into the public market pursuant to a bona fide , broadly distributed underwritten public offering, in each case made pursuant to the Registration Rights Agreement.

 

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The Purchaser Parties shall not be deemed to have breached their obligations under Section  4.9(b)(2) as it relates to Activist Investors with respect to the Transfer of Purchased Shares to any Person so long as the Purchaser Parties act in good faith, based on generally available public information and the advice of its financial advisors, to determine whether such person is an Activist Investor. The reporting by a Person of its ownership of the securities of an issuer on Schedule 13G shall be deemed to establish conclusively that such person is not an Activist Investor with respect to such issuer for purposes of the definition of “Activist Investor”, except to the extent such person subsequently (but prior to such transfer) files a Schedule 13D with respect to such issuer; provided that any such determination for any Person with respect to one issuer shall not preclude such Person from otherwise being an Activist Investor.

(c) Any attempted Transfer in violation of this Section  4.9 shall be null and void ab initio .

Section 4.10 Board Representation .

(a) From and after the Closing, until such time as the Purchaser Parties collectively no longer Beneficially Own a number of shares of Purchased Shares equal to ( i ) at least 50% of the Purchased Shares received by the Purchaser pursuant to this Agreement (adjusted for subdivisions, stock-splits, combinations, recapitalizations or similar events, and provided that any shares of Common Stock issued upon conversion of shares of Preferred Stock shall be treated as that number of shares of Preferred Stock with respect to which such shares of Common Stock was converted into), the Purchaser shall be entitled to designate two (2) persons, who shall be Partners, Managing Directors, Advisors or Principals of the Purchaser, Clayton Dubilier & Rice, LLC or their respective Affiliates (an “ Affiliated Fund ”), to serve on the Company Board (the “ Purchaser Designees ” and each a “ Purchaser Designee ”) and ( ii ) at least 25% (but less than 50%) of the Purchased Shares received by the Purchaser pursuant to this Agreement (adjusted for subdivisions, stock-splits, combinations, recapitalizations or similar events, and provided that any shares of Common Stock issued upon conversion of shares of Preferred Stock shall be treated as that number of shares of Preferred Stock with respect to which such shares of Common Stock was converted into), the Purchaser shall be entitled to designate one (1) Purchaser Designee. At such time that the Purchaser is no longer entitled to designate one or both Purchaser Designees pursuant to the previous sentence, the Purchaser shall promptly cause one or both Purchaser Designees, as applicable, to offer to resign from the Company Board. The Purchaser Designees shall initially be those persons named on Schedule  4.10 to this Agreement. A person that is a Purchaser Designee shall remain and be regarded as a Purchaser Designee for purposes of this Agreement for the remainder of such person’s term on the Company Board or, if earlier, death or resignation. The Company’s obligations to have any Purchaser Designee appointed to the Company Board or nominate any Purchaser Designee for election as a director at any meeting of the Company’s stockholders pursuant to this  Section 4.10 , as applicable, shall in each case be subject to such Purchaser Designee’s satisfaction of all requirements regarding service as a director of the Company under applicable Law and stock exchange rules regarding service as a director of the Company. The Purchaser Parties will cause each Purchaser Designee to make himself or herself reasonably available for interviews and to consent to such reference and background checks or other investigations and provide such information as the Company Board may reasonably request to determine the Purchaser’s Designee’s eligibility and qualification to serve as a director of the Company Board.

 

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(b) From and after the Closing, the Company shall take such actions as are necessary to cause the Purchaser Designees to be nominated as members of the Company Board and shall, subject to applicable Law, include in any proxy statement prepared, used, delivered or publicly filed by the Company to solicit the vote of its stockholders in connection with any meeting of Company stockholders the recommendation of the Company Board that stockholders of the Company vote in favor of the Purchaser Designees and solicit votes in favor of the election of the Purchaser Designees to Company Board consistent with the Company’s efforts to solicit votes in favor of the election of the Company’s other nominees to the Company Board.

(c) The Company, the Purchaser and each Purchaser Designee shall enter into a confidentiality and non-disclosure agreement on reasonably acceptable terms and which shall provide that a Purchaser Designee shall be permitted to disclose confidential or non-public information received by such Purchaser Designee in its capacity as a member of the Company Board to representatives of the Purchaser and its Affiliates.

Section 4.11 Preemptive Rights .

(a) From the Closing until such time as the Purchaser Parties cease to Beneficially Own at least 25% of the Purchased Shares received by the Purchaser pursuant to this Agreement (adjusted for subdivisions, stock-splits, combinations, recapitalizations or similar events; and provided that any shares of Common Stock issued upon conversion of shares of Preferred Stock shall be treated as that number of shares of Preferred Stock with respect to which such shares of Common Stock was converted into), if the Company makes any public or non-public offering of any Equity Securities or any securities that are convertible or exchangeable into (or exercisable for) Equity Securities, including, for the purposes of this Section  4.11 , warrants, options or other such rights (any such security, a “ New Security ”) (other than (1) pursuant to any employee or director benefit Plan or the granting or exercise of employee stock options or RSUs or PRSUs or other equity incentives pursuant to the Company Equity Plans (or any successor equity incentive Plans of the Company) or employment or consulting arrangements with the Company or any of its Subsidiaries, (2) issuances made as consideration for any acquisition (by sale, merger in which the Company is the surviving corporation, or otherwise) by the Company of equity in, or assets of, another Person, business unit, division or business, (3) issuances of any securities issued as a result of a stock split, stock dividend, reclassification or reorganization or similar event, (4) issuances of Equity Securities issued upon conversion or exchange of, or as a dividend on, shares of Preferred Stock then outstanding, and (5) as set forth on Schedule 4.11(a) ), Purchaser and each Purchaser Party to whom Purchaser later transfers any shares of Preferred Stock purchased on the Closing Date (or any shares of Common Stock issued upon conversion of such shares of Preferred Stock) shall be afforded the opportunity to acquire from the Company such Purchaser Party’s Preemptive Rights Portion of such New Securities for the same price as that offered to the other purchasers of such Equity Securities or other securities; provided , that the Purchaser Parties shall not be entitled to acquire any New Securities pursuant to this Section  4.11 to the extent the issuance of such New Securities to the Purchaser Parties would require approval of the stockholders of the Company as a result of any such Purchaser Party’s status as an Affiliate of the Company or pursuant to the rules and listing standards of NASDAQ (including NASDAQ Rule 5635), in which case the Company may consummate the proposed issuance of New Securities to other Persons prior to obtaining approval of the stockholders of the Company (subject to compliance by the Company with Section  4.11(f) below).

 

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(b) Subject to the foregoing proviso in Section  4.11(a) , the amount of New Securities that each Purchaser Party shall be entitled to purchase in the aggregate shall be determined by multiplying (1) the total number of such offered shares of New Securities by (2) a fraction, the numerator of which is the number of shares of As-Converted Common Stock held by such Purchaser Party, as of such date, and the denominator of which is the number of shares of As-Converted Common Stock then outstanding, as of such date (the “ Preemptive Rights Portion ”).

(c) If the Company proposes to offer New Securities, it shall give the Purchaser written notice of its intention, describing the anticipated price (or range of anticipated prices), anticipated amount of New Securities and other material terms and timing upon which the Company proposes to offer the same (including, in the case of a registered public offering and to the extent possible, a copy of the prospectus included in the registration statement filed with respect to such offering) at least five (5) business days prior to such issuance (or, in the case of a registered public offering, at least five (5) business days prior to the commencement of such registered public offering) (provided that, to the extent the terms of such offering cannot reasonably be provided five (5) business days prior to such issuance, notice of such terms may be given as promptly as reasonably practicable but in any event prior to such issuance). The Company may provide such notice to the Purchaser on a confidential basis prior to public disclosure of such offering. Other than in the case of a registered public offering, the Purchaser may notify the Company in writing at any time on or prior to the second business day immediately preceding the date of such issuance (or, if notice of all such terms has not been given prior to the second business day immediately preceding the date of such issuance, at any time prior to such issuance) whether any of the Purchaser Parties will exercise such preemptive rights and as to the amount of New Securities the Purchaser Parties desires to purchase, up to the maximum amount calculated pursuant to Section  4.11(b) . In the case of a registered public offering, the Purchaser shall notify the Company in writing at any time prior to the second business day immediately preceding the date of commencement of such registered public offering (or, if notice of all such terms has not been given prior to the second business day immediately preceding the date of commencement of such registered public offering, at any time prior to the date of commencement of such registered public offering) whether any of the Purchaser Parties will exercise such preemptive rights and as to the amount of New Securities the Purchaser Parties desires to purchase, up to the maximum amount calculated pursuant to Section  4.11(b) . Such notice to the Company shall constitute a binding commitment by the Purchaser Parties to purchase the amount of New Securities so specified at the price and other terms set forth in the Company’s notice to it. Subject to receipt of the requisite notice of such issuance, the failure of Purchaser to respond prior to the time a response is required pursuant to this Section  4.11(c) shall be deemed to be a waiver of the Purchaser Parties’ purchase rights under this Section  4.11 only with respect to the offering described in the applicable notice.

(d) Each Purchaser Party shall purchase the New Securities that it has elected to purchase under this Section  4.11 concurrently with the related issuance of such New Securities by the Company (subject to the receipt of any required approvals from any Governmental Entity to consummate such purchase by such Purchaser Party); provided , that if such related issuance is

 

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prior to the fifteenth (15th) business day following the date on which such Purchaser Party has notified the Company that it has elected to purchase New Securities pursuant to this Section  4.11 , then each Purchaser Party shall purchase such New Securities within fifteen (15) business days following the date of the related issuance. If the proposed issuance by the Company of securities which gave rise to the exercise by the Purchaser Parties of its preemptive rights pursuant to this Section  4.11 shall be terminated or abandoned by the Company without the issuance of any securities, then the purchase rights of the Purchaser Parties pursuant to this Section  4.11 shall also terminate as to such proposed issuance by the Company (but not any subsequent or future issuance), and any funds in respect thereof paid to the Company by the Purchaser Parties in respect thereof shall be refunded in full.

(e) In the case of the offering of securities for consideration in whole or in part other than cash, including securities acquired in exchange therefor (other than securities by their terms so exchangeable), the consideration other than cash shall be deemed to be the fair value thereof as reasonably determined by the Company Board; provided , however , that such fair value as determined by the Company Board shall not exceed the aggregate market price of the securities being offered as of the date the Company Board authorizes the offering of such securities.

(f) In the event that the Purchaser Parties are not entitled to acquire any New Securities pursuant to this Section  4.11 because such issuance would require the Company to obtain stockholder approval in respect of the issuance of such New Securities to the Purchaser Parties as a result of any such Purchaser Party’s status as an Affiliate of the Company or pursuant to the rules and listing standards of NASDAQ (including NASDAQ Rule 5635), the Company shall, upon the Purchaser’s reasonable request delivered to the Company in writing within five (5) business days following its receipt of the written notice of such issuance to Purchaser pursuant to  Section  4.11(c) , at Purchaser’s election, (i) waive the restrictions set forth in  Section  4.13(b)  solely to the extent necessary to permit any Purchaser Party to acquire such number of New Securities equivalent to its Preemptive Rights Portion of such issuance such Purchaser Party would have been entitled to purchase had it been entitled to acquire such New Securities pursuant to  Section  4.11(a)-(c) ; (ii) consider and discuss in good faith modifications proposed by the Purchaser Parties to the terms and conditions of such portion of the New Securities which would otherwise be issued to the Purchaser Parties such that the Company would not be required to obtain stockholder approval in respect of the issuance of such New Securities as so modified; and/or (iii) solely to the extent that stockholder approval is required in connection with the issuance of Equity Securities to Persons other than the Purchaser Parties, use reasonable best efforts to seek stockholder approval in respect of the issuance of any New Securities to the Purchaser Parties.

(g) The election by any Purchaser Party to not exercise its subscription rights under this Section  4.11 in any one instance shall not affect its right as to any subsequent proposed issuance.

(h) The Company and the Purchaser Parties shall cooperate in good faith to facilitate the exercise of the Purchaser Parties’ rights pursuant to this Section  4.11 , including securing any required approvals or consents.

 

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Section 4.12 [Reserved].

Section 4.13 Voting of Company Shares; Standstill .

(a) Voting of Company Shares :

(1) At each meeting of the stockholders of the Company and at every postponement or adjournment thereof, each of CD&R Fund and the Purchaser Parties shall, and shall use reasonable best efforts to cause each of their respective Affiliates and representatives to, take such action as may be required so that all of the shares of Preferred Stock and Common Stock Beneficially Owned, directly or indirectly, by CD&R Fund or the Purchaser Parties and entitled to vote at such meeting of stockholders are voted (i) in favor of each director nominated and recommended by the Company Board for election at any such meeting (which nomination and recommendation shall include the Purchaser Designees) and (ii) against any stockholder nominations for director or other stockholder proposals which are not approved and recommended by the Company Board for election at any such meeting.

(2) The Purchaser shall, and each of CD&R Fund and Purchaser shall (to the extent necessary to comply with this Section  4.13(a) ) cause the Purchaser Parties to, be present, in person or by proxy, at all meetings of the stockholders of the Company at which directors are nominated so that all shares of Preferred Stock and Common Stock Beneficially Owned by CD&R Fund or the Purchaser Parties may be counted for the purposes of determining the presence of a quorum and voted in accordance with  Section  4.13(a)(1) at such meetings (including at any adjournments or postponements thereof).

(b) Standstill : Each of CD&R Fund and the Purchaser Parties agree that during the Standstill Period, without the prior written approval of the Company Board, CD&R Fund and the Purchaser Parties shall not, directly or knowingly indirectly, and shall use reasonable best efforts to cause their respective Affiliates not to (either individually, or in concert with any other Person, or as a “group” (as such term is used in Section 13(d)(3) of the Exchange Act)):

(1) acquire, offer or seek to acquire, agree to acquire or make a proposal to acquire, by purchase or otherwise, any securities or direct or indirect rights to acquire any equity securities of the Company or any of its Affiliates, any securities convertible into or exchangeable for any such equity securities, any options or other derivative securities or contracts or instruments in any way related to the price of shares of Common Stock or substantially all of the assets or property of the Company and its Subsidiaries (but in any case excluding (1) any issuance by the Company of shares of Common Stock or options, warrants or other rights to acquire Common Stock (or the exercise thereof) (A) to any Purchaser Designee as compensation for their membership on the Company Board or (B) as a result of a dividend payment on, or the conversion of, the Preferred Stock pursuant to the provisions of the Certificate of Designations and (2) the use of cash dividends received by the Purchaser Parties on the Preferred Stock to acquire shares of Common Stock in open market purchases (but only to the extent of such cash dividends paid by the Company on the Preferred Stock), to the extent permitted by applicable Law);

 

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(2) other than to effectuate the nomination and election of the Purchaser Designees pursuant to Section  4.10 , make or in any way participate or engage in any “solicitation” of “proxies” (whether or not relating to the election or removal of directors), as such terms are used in the rules of the SEC, to vote, or knowingly seek to advise or influence any Person with respect to voting of, any voting securities of the Company or any of its Subsidiaries, or call or seek to call a meeting of the Company’s stockholders or initiate any stockholder proposal for action by the Company’s stockholders, or other than with respect to the Purchaser Designees, seek election to or to place a representative on the Company Board or seek the removal of any director from the Company Board;

(3) make any public announcement with respect to, or offer, seek, propose or indicate an interest in (in each case with or without conditions), any merger, consolidation, business combination, tender or exchange offer, recapitalization, reorganization or purchase of all or substantially all of the assets of the Company and its Subsidiaries, or any other extraordinary transaction involving the Company or any Subsidiary of the Company or any of their respective securities or assets, or enter into any discussions, negotiations, arrangements, understandings or agreements (whether written or oral) with any other Person regarding any of the foregoing;

(4) effect or seek to effect (including by entering into discussions, negotiations, agreements or understandings with any third person), offer or propose (whether publicly or otherwise) to effect, or cause or participate in, or in any way assist or facilitate any other person to effect or seek, offer or propose (whether public or otherwise) to effect or participate (except as a holder of Common Stock or Preferred Stock) in a merger, consolidation, division, acquisition or exchange of substantially all assets or equity, change of control transaction, recapitalization, restructuring, liquidation or similar transaction involving the Company or any of its Subsidiaries;

(5) excluding Purchaser Designees, otherwise act, alone or in concert with others, to seek to control or influence, in any manner, management or the Company Board or any of its Subsidiaries;

(6) make any public proposal or public statement of inquiry or publicly disclose any intention, plan or arrangement inconsistent with any of the foregoing;

(7) advise, assist, knowingly encourage or direct any Person to do, or to advise, assist, encourage or direct any other person to do, any of the foregoing;

(8) take any action that would reasonably be expected to require the Company to make a public announcement regarding the possibility of a transaction or any of the events described in this Section  4.13(b) ;

(9) enter into any discussions, negotiations, arrangements or understandings with any third party (including security holders of the Company, but excluding, for the avoidance of doubt, any Purchaser Parties) with respect to any of the foregoing, including forming, joining or in any way participating in a “group” (as such term is used in Section 13(d)(3) of the Exchange Act) with any third party with respect to any securities of the Company or otherwise in connection with any of the foregoing;

 

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(10) request the Company or any of its representatives, directly or indirectly, to amend or waive any provision of this Section  4.13(b) , provided that this clause shall not prohibit the Purchaser Parties from making a confidential request to the Company seeking an amendment or waiver of the provisions of this Section  4.13(b) , which the Company may accept or reject in its sole discretion, so long as any such request is made in a manner that does not require public disclosure thereof by any Person; or

(11) contest the validity of this Section  4.13(b) or make, initiate, take or participate in any demand, action (legal or otherwise) or proposal to amend, waive or terminate any provision of this Section  4.13(b) ;

provided , however , that nothing in this Section  4.13(b) will limit (1) the Purchaser Parties’ ability to vote (subject to Section  4.12 4.13(a) and the other Transaction Documents) or Transfer (subject to Section  4.9 and the other Transaction Documents) their shares of Preferred Stock or Common Stock, or otherwise exercise rights under their shares of Preferred Stock pursuant to the Certificate of Designations, (2) the preemptive rights of any Purchaser Party pursuant to Section  4.11 , or (3) the ability of any Purchaser Designee to act in his or her capacity as a member of the Company Board, including, but not limited to, his or her ability to vote or otherwise exercise his or her fiduciary duties.

Section 4.14 Restrictive Covenants . During the Standstill Period, each of CD&R Fund and the Purchaser Parties shall not, and shall cause their respective Affiliates and all other investment funds or Persons controlled or managed by any of the general partners of CD&R Fund or the Purchaser Parties or their respective Affiliated Funds not to, directly or indirectly:

(a) solicit for employment, employ or attempt to employ or divert any senior management-level employee of any Group Company as of the date hereof; provided , that the Purchaser and its Affiliates may ( 1 ) engage in general solicitations of employment (including through search firms) not specifically directed at such employees and ( 2 ) solicit for employment or employ or attempt to employ any person who is no longer employed by any Group Company at such time; or

(b) engage or participate, as an owner, investor, partner, member, shareholder or lender, in a business primarily engaged in the distribution of roofing materials, drywall or ceiling tile and related accessories anywhere in the United States or Canada.

Notwithstanding the foregoing, the restrictions set forth in this Section  4.14 shall not apply to any portfolio company of CD&R Fund, the Purchaser Parties or any Affiliated Fund (or any controlled Affiliate of any such portfolio company), except to the extent CD&R Fund, the Purchaser Parties or any Affiliated Fund (other than their respective portfolio companies or controlled Affiliates thereof) either directs or causes such portfolio company (or controlled Affiliate) to take an action that would be a breach of this Section  4.14 if CD&R Fund or the Purchaser Parties had taken such action; provided that service by one or more representatives of the Purchaser Parties, CD&R Fund or any Affiliated Fund as a director of a portfolio company

 

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shall not, on its own, constitute directing or causing such portfolio company (or controlled Affiliate) to take any action that would be a breach of this Section  4.14 if the Purchaser Parties or CD&R Fund had taken such action. Each of CD&R Fund and the Purchaser Parties shall not, and shall cause the Affiliated Funds not to, vote in their capacity as equityholders in favor of, or fail to exercise a contractual veto right over, an action by such portfolio company (or controlled Affiliate) that would be a breach of this Section  4.14 if CD&R Fund or the Purchaser Parties had taken such action.

Section 4.15 Legend .

(a) Purchaser agrees that any certificates or other instruments representing the Preferred Stock or Common Stock subject to this Agreement will bear a legend substantially to the following effect:

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND OTHER RESTRICTIONS SET FORTH IN AN INVESTMENT AGREEMENT, DATED AS OF AUGUST 24, 2017, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE ISSUER.

(b) Upon request of Purchaser, upon receipt by the Company of an opinion of counsel reasonably satisfactory to the Company to the effect that such legend is no longer required under the Securities Act and applicable state laws, the Company shall promptly cause the first paragraph of the legend to be removed from any certificate for any Preferred Stock or Common Stock to be Transferred in accordance with the terms of this Agreement and the second paragraph of the legend shall be removed upon the expiration of such transfer and other restrictions set forth in this Agreement (and, for the avoidance of doubt, immediately prior to any termination of this Agreement). Purchaser acknowledges that the Preferred Stock and Common Stock issuable upon conversion of the Preferred Stock or, if applicable, issued pursuant to this Agreement have not been registered under the Securities Act or under any state securities laws and agrees that it will not sell or otherwise dispose of any of the Preferred Stock or Common Stock issuable upon conversion of the Preferred Stock or, if applicable, issued pursuant to this Agreement, except in compliance with the registration requirements or exemption provisions of the Securities Act and any other applicable securities laws.

 

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ARTICLE V

Indemnity

Section 5.1 Indemnification by the Company . From and after the Closing, the Company agrees to indemnify the Purchaser and its Affiliates and its and their respective officers, directors, managers, employees, partners, representatives and agents (collectively, “ Purchaser Related Parties ”) from, and hold each of them harmless against, any and all losses (including losses arising from the diminution in value of the Company as a result of such indemnification by the Company, in each case subject to Section  5.7 ), damages, actions, suits, proceedings (including any investigations, litigation or inquiries), demands and causes of action, and, in connection therewith, all reasonable costs, losses, liabilities, damages or expenses of any kind or nature whatsoever (including the reasonable and documented fees and disbursements of outside counsel and all other reasonable expenses incurred in connection with investigating, defending or preparing to defend any such matter that may be incurred by them or asserted against or involve any of them) (collectively, “ Losses ”), whether or not involving a Third Party Claim, incurred by or asserted against such Purchaser Related Parties, as a result of or arising out of ( i ) the failure of the representations or warranties made by the Company contained in Article II or in any certificate delivered pursuant hereto to be true and correct or ( ii ) the breach of any of the covenants of the Company contained herein; provided , that in the case of the immediately preceding clause (i), such claim for indemnification relating to a breach of any representation or warranty is made prior to the expiration of such representation or warranty as set forth in Section  5.5 ; provided , further , that for purposes of determining when an indemnification claim has been made, the date upon which a Purchaser Related Party shall have given written notice (stating in reasonable detail the basis of the claim for indemnification) to the Company shall constitute the date upon which such claim has been made; provided , further , for the purposes of calculating the amount of Losses and for determining whether a breach of any representation or warranty has occurred for purposes of this Section  5.1 , all materiality, Company Material Adverse Effect and similar qualifiers contained in Article II shall be disregarded therefrom. For the avoidance of doubt, for purposes of determining Losses of the Purchaser Related Parties as a result of diminution of value attributable solely to Losses of the Company and its Subsidiaries (as opposed to Losses of the Purchaser Related Parties that do not result indirectly from Losses of the Company and its Subsidiaries), such Losses shall be measured by reference to the Purchaser Related Parties’ proportionate ownership of the Common Stock (assuming full conversion of all outstanding shares of Preferred Stock held by the Purchaser Related Parties into Common Stock).

Section 5.2 Indemnification by the Purchaser . From and after the Closing, the Purchaser agrees to indemnify the Company and its respective officers, directors, managers, employees, partners, representatives and agents (collectively, “ Company Related Parties ”) from, and hold each of them harmless against, any and all Losses, whether or not involving a Third Party Claim, incurred by or asserted against such Company Related Parties as a result of or arising out of ( i ) the failure of any of the representations or warranties made by the Purchaser contained in Article III or in any certificate delivered pursuant hereto to be true and correct or ( ii ) the breach of any of the covenants of the Purchaser contained herein; provided , that in the case of the immediately preceding clause (i), such claim for indemnification relating to a breach of any representation or warranty is made prior to the expiration of such representation or warranty as set forth in Section  5.5 ; provided , further , that for purposes of determining when an indemnification claim has been made, the date upon which a Company Related Party shall have given written notice (stating in reasonable detail the basis of the claim for indemnification) to the Purchaser shall constitute the date upon which such claim has been made.

 

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Section 5.3 Indemnification Procedure .

(a) A claim for indemnification for any matter not involving a Third Party Claim may be asserted by written notice to the party from whom indemnification is sought; provided , however , that failure to so notify the indemnifying party shall not preclude the indemnified party from any indemnification that it may claim in accordance with this Article V , except as otherwise provided in Sections 5.1 and 5.2 and except to the extent that the indemnifying party is materially prejudiced by such failure.

(b) Promptly after any Company Related Party or Purchaser Related Party (hereinafter, the “ Indemnified Party ”) has received notice of any indemnifiable claim hereunder, or the commencement of any action, suit or proceeding by a third person, which the Indemnified Party believes in good faith is an indemnifiable claim under this Agreement (each, a “ Third Party Claim ”), the Indemnified Party shall give the indemnitor hereunder (the “ Indemnifying Party ”) written notice of such Third Party Claim; provided , that failure or delay to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability it may have to such Indemnified Party hereunder, except to the extent that the Indemnifying Party is materially prejudiced by such failure or delay. Such notice shall specify in reasonable detail the nature and the basis of such Third Party Claim to the extent then known. The Indemnifying Party shall have the right to assume and control the defense of, and settle, at its own expense and by its own counsel, any such matter as long as the Indemnifying Party pursues the same diligently and in good faith. If the Indemnifying Party undertakes to assume and control the defense or settle such Third Party Claim, it shall promptly, and in no event later than fifteen (15) business days after notice of such indemnification claim, notify the Indemnified Party of its intention to do so, and the Indemnified Party shall cooperate with the Indemnifying Party and its counsel in all reasonable respects in the defense thereof and/or the settlement thereof. Such cooperation shall include, but shall not be limited to, furnishing the Indemnifying Party with any books, records and other information reasonably requested by the Indemnifying Party and related to such Third Party Claim and in the Indemnified Party’s possession or control. Such cooperation of the Indemnified Party shall be at the cost of the Indemnifying Party. After the Indemnifying Party has notified the Indemnified Party of its intention to undertake to defend or settle any such asserted liability, and for so long as the Indemnifying Party diligently pursues such defense, the Indemnifying Party shall not be liable for any additional legal expenses incurred by the Indemnified Party in connection with any defense or settlement of such asserted liability; provided , however , that the Indemnified Party shall be entitled ( i ) at its own expense, to participate in the defense of such asserted liability and any negotiations of the settlement thereof and ( ii ) if ( A ) the Indemnifying Party has, within fifteen (15) business days of when the Indemnified Party provides written notice of a Third Party Claim, failed to assume the defense or settlement of such Third Party Claim and notify the Indemnified Party of such assumption, or ( B ) the defendants in any such action include both the Indemnified Party and the Indemnifying Party and counsel to the Indemnified Party shall have concluded that there may be reasonable defenses available to the Indemnified Party that are different from or in addition to those available to the Indemnifying Party or if the interests of the Indemnified Party reasonably may be deemed to conflict with the interests of the Indemnifying Party, then, in each case, the Indemnified Party shall have the right to select a separate counsel and, upon prompt notice to the Indemnifying Party, to assume such settlement or legal defense and otherwise to participate in the defense of such action, with the expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the Indemnifying Party; provided , that the Indemnified Parties shall not be entitled to reimbursement of fees and expenses of more than one firm of

 

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separate counsel (other than in respect of appropriate local counsel in the applicable jurisdiction). Notwithstanding any other provision of this Agreement, neither the Indemnifying Party nor the Indemnified Party shall settle any indemnified claim without the written consent of the other (which consent shall not be unreasonably withheld, conditioned or delayed), unless the settlement thereof (x) does not involve any Governmental Entity and (y) imposes no liability, restriction or obligation on, and includes a complete release from liability of, and does not contain any admission of wrongdoing by, the Indemnified Party or the Indemnifying Party, as applicable.

Section 5.4 Tax Matters . All indemnification payments under this Article V shall be treated as adjustments to the Purchase Price for U.S. federal income tax purposes, except as otherwise required by applicable Law.

Section 5.5 Survival . The representations and warranties of the parties contained in this Agreement shall survive for twelve (12) months following the Closing, except that ( i ) the representations and warranties of the Company contained in Sections 2.1 , 2.3(a) and Section  2.4 shall survive until sixty (60) days following the expiration of the applicable statutes of limitation, ( ii ) the representations and warranties of the Company contained in Section  2.2 shall survive indefinitely, and ( iii ) the representations and warranties of the Purchaser contained in Section  3.1 and Section  3.2(a) shall survive until sixty (60) days following the expiration of the applicable statutes of limitation. All of the covenants or other agreements of the parties contained in this Agreement shall survive until fully performed or fulfilled, unless and to the extent that non-compliance with such covenants or agreements is waived in writing by the party entitled to such performance.

Section 5.6 Limitations on Indemnification .

(a) In the case of any matter for which a party may seek indemnification under this Article V :

(1) no Losses shall be indemnifiable under Section  5.1(i) or Section  5.2(i) unless and until the Purchaser Related Parties or the Company Related Parties, as the case may be, have suffered, incurred, sustained or become subject to Losses referred to in Section  5.1(i) or Section  5.2(i) , respectively, in excess of one percent (1%) of the Purchase Price (the “ Deductible ”), in which case the Indemnified Parties shall be entitled to recover the amount of such Losses in excess of the Deductible; provided , however , that this Section  5.6(a)(1) shall not apply to the failure of any of the representations and warranties of the Company contained in Section  2.1 , 2.2 , 2.3(a) , Section  2.4 or Section  2.8 or the failure of any of the representations and warranties of the Purchaser contained in Section  3.1 , Section  3.2(a) or Section  3.5 to be true and correct; and

(2) no Losses shall be indemnifiable pursuant to Section  5.1(i) or Section  5.2(i) as a result of or arising out of the failure of any of the representations and warranties of the Company or the Purchaser, as applicable, to be true and correct (other than the representations and warranties of the Company contained in Section  2.1 , 2.2 , 2.3(a) , Section  2.4 or Section  2.8 and the representations and warranties of the Purchaser contained in Section  3.1 , Section  3.2(a) or Section  3.5 ) if the amount of Losses with respect to such indemnity claim is less than $100,000 (each such claim referred to in this Section  5.6(a)(2) being referred to as a “ De Minimis Claim ”), and no such De Minimis Claim shall be counted towards the Deductible.

 

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(b) In calculating amounts payable to an Indemnified Party, the amount of any indemnified Losses shall be determined without duplication of any other Loss for which an indemnification payment has been made, shall be increased by any net Tax detriment (determined on a with and without basis) actually incurred by an Indemnified Party or its Affiliates or its direct and indirect partners, as a result of the receipt or accrual of the indemnification payment required to be made hereunder in respect of such Losses and shall be computed net of (i) payments actually recovered by the Indemnified Party under any insurance policy with respect to such Losses or pursuant to any contribution rights, (ii) any amounts actually recovered by the Indemnified Party from any Person with respect to such Losses (including pursuant to any indemnification agreement or arrangement with any third party) and (iii) any net Tax Benefit (determined on a with and without basis) actually realized by the Indemnified Party or its Affiliates or its direct and indirect partners, in each of clauses (i), (ii) and (iii), calculated net of any out-of-pocket documented reasonable expenses related to the receipt of such recovery, including any incremental insurance premium costs (it being understood that with respect to (i) and (ii), each Indemnified Party shall use its reasonable best efforts to pursue all available insurance recoveries and indemnification). For the purposes hereof, “ Tax Benefit ” shall mean any refund of Taxes paid or credit of or reduction in the amount of Taxes which otherwise would have been paid in the year such Losses were incurred or in the following year.

(c) In respect of any Loss for which indemnification may be sought pursuant to this Article V , nothing herein shall relieve an Indemnified Party from its duty to mitigate its Losses under applicable Laws. If an Indemnified Party shall have failed to mitigate any Loss to the extent required by the preceding sentence, then notwithstanding anything contained in this Agreement to the contrary, neither the Company nor the Purchaser (as the case may be) shall be required to indemnify such Indemnified Party for that portion of the Losses that would reasonably be expected to have been avoided if such Indemnified Party had not failed to mitigate any Loss to the extent required by the preceding sentence.

(d) Upon making payment to an Indemnified Party for any claim for indemnification pursuant to this Article V , the Indemnifying Party shall be subrogated to the extent of such payment to the rights of the Indemnified Party against any other Persons with respect to the subject matter of such claim, and the Indemnified Party shall take such actions, at the cost and expense of the Indemnifying Party, as the Indemnifying Party may reasonably require to perfect such subrogation or to pursue such rights against such other Persons as the Indemnified Party or its Affiliates may have; provided , however , that the Indemnifying Party shall not be subrogated with respect to any cost of recovery to an Indemnified Party or any indemnified Losses not covered by reason of a limitation of liability provision set forth in this Article V .

Section 5.7 Limitation on Damages . Notwithstanding any other provision of this Agreement, except in the case of actual fraud, neither party hereto shall have any liability to the other party in excess of the Purchase Price, and neither party shall be liable for any exemplary or punitive damages, remote or speculative Losses or any other damages arising out of or in connection with this Agreement or the transactions contemplated hereby to the extent not reasonably foreseeable (in each case, unless any such damages are specifically awarded pursuant to a Third Party Claim).

 

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Section 5.8 Exclusive Remedy . Except in the case of actual fraud, from and after the Closing, recovery pursuant to this Article V shall constitute the Indemnified Parties’ sole and exclusive remedy for any and all Losses relating to or arising from this Agreement and the transactions contemplated hereby; provided, however, that the foregoing shall not be deemed to deny any party injunctive or equitable relief when it is otherwise available under Section  6.14 or applicable Law (it being understood that this provision does not impact any rights that the Company has as a third party beneficiary of the Equity Commitment Letter prior to the Closing).

ARTICLE VI

Miscellaneous

Section 6.1 Expenses . Except as set forth in Section  4.7(a) , each party will bear and pay all other costs and expenses incurred by it or on its behalf in connection with the transactions contemplated pursuant to this Agreement; provided , that the Company shall (a) reimburse the Purchaser for all filing fees under the HSR Act and ( b ) (i) upon the Closing (or, to the extent any such costs and expenses are incurred after the Closing, promptly following written notice from Purchaser requesting reimbursement thereof) or (ii) promptly following the termination of this Agreement pursuant to (x)  Section  6.15(b) or Section  6.15(e) hereof, in each case at a time when Purchaser could have terminated this Agreement pursuant to Section  6.15(c) hereof or (y)  Section  6.15(c) hereof (and provided, in the case of each of clauses (x) and (y), that the Allied Acquisition Agreement is terminated by the Company pursuant to (I) Section 7.1(d) thereof, (II) Section 7.1(b) thereof (in the case of each of clauses (I) and (II), in a circumstance in which the failure to close the Allied Acquisition or termination of the Allied Acquisition Agreement, as applicable, resulted from the Company’s failure to use its reasonable best efforts pursuant to Section  4.2 of this Agreement) or (III) by mutual agreement of the parties thereto pursuant to Section 7.1(a) thereof (excluding, in each case, any such termination (x) arising from the failure of one or more conditions to closing the Allied Acquisition to be satisfied on or prior to the Termination Date (other than as a result of the Company’s failure to use its reasonable best efforts pursuant to Section 4.2 of this Agreement) or (y) consented to by Purchaser in writing)), reimburse the Purchaser for its reasonable and documented out-of-pocket costs and expenses incurred in connection with the evaluation (including due diligence), negotiation and consummation of this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby (including the Allied Acquisition), including fees and expenses of its outside legal and accounting advisors in connection with any of the foregoing. In the event that the Company brings an action against the Purchaser or CD&R Fund to enforce the terms of the Equity Commitment Letter, then the non-prevailing party in such action shall reimburse the prevailing party for its costs and expenses (including, without limitation, legal fees and expenses) incurred in connection with such action.

 

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Section 6.2 Amendment; Waiver . No amendment or waiver of any provision of this Agreement will be effective with respect to any party unless made in writing and signed by an officer or duly authorized representative of such party. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The conditions to each party’s obligation to consummate the Closing are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable Law. No waiver of any party to this Agreement will be effective unless it is in a writing signed by a duly authorized officer of the waiving party that makes express reference to the provision or provisions subject to such waiver. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.

Section 6.3 Counterparts; Electronic Transmission . For the convenience of the parties hereto, this Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement. Executed signature pages to this Agreement may be delivered by facsimile or other means of electronic transmission and such facsimiles or other means of electronic transmission will be deemed as sufficient as if actual signature pages had been delivered.

Section 6.4 Governing Law . This Agreement will be governed by and construed in accordance with the laws 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 Laws of another jurisdiction. The parties hereby irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the state and federal courts located in the State of Delaware for any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby. The parties hereby irrevocably and unconditionally consent to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such action, suit or proceeding and irrevocably waive, to the fullest extent permitted by Law, any objection that they may now or hereafter have to the laying of the venue of any such action, suit or proceeding in any such court or that any such action, suit or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such action, suit or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section  6.6 shall be deemed effective service of process on such party.

Section 6.5 WAIVER OF JURY TRIAL . EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 6.6 Notices . Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be deemed to have been duly given ( a ) on the date of delivery if delivered personally or by telecopy, facsimile or electronic mail, upon confirmation of receipt, ( b ) on the first business day following the date of dispatch if delivered by a recognized next-day courier service, or ( c ) on the third business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

 

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(a) If to Purchaser:

c/o Clayton, Dubilier & Rice, LLC

375 Park Avenue, 18 th Floor

New York, NY 10152

Attn: Nathan K. Sleeper, JL Zrebiec

Fax: (212) 407-5252

Email: nsleeper@cdr-inc.com, jzrebiec@cdr-inc.com

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

Debevoise & Plimpton LLP

919 Third Avenue

New York, New York 10022

Attention: Paul S. Bird; Uri Herzberg

Email: psbird@debevoise.com; uherzberg@debevoise.com

(b) If to the Company:

Beacon Roofing Supply, Inc.

6701 Democracy Blvd., Suite 200

Bethesda, Maryland 20817

Attention: Ross D. Cooper, Executive Vice President, General Counsel &

                 Secretary

Fax: (301) 272-2125

Email: rcooper@becn.com

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

Sidley Austin LLP

1 South Dearborn Street

Chicago, Illinois 60603

Attention: Jeffrey N. Smith; Michael P. Heinz

Fax: (312) 853-7036

Email: jnsmith@sidley.com; mheinz@sidley.com

Section 6.7 Entire Agreement . This Agreement (including the Exhibits and Schedules hereto) constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof.

Section 6.8 Assignment . Neither this Agreement, nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of Law or otherwise) without the prior written consent of the other party, provided , however , that ( a ) the Purchaser may assign its rights, interests and obligations under this Agreement, in whole

 

34


or in part, to one or more Permitted Transferees in accordance with this Agreement, including Section  4.9 , and ( b ) in the event of such assignment, such assignee shall agree in writing to be bound by the provisions of this Agreement, including the rights, interests and obligations so assigned; provided , that no such assignment will relieve the Purchaser of its obligations hereunder prior to the Closing. This Agreement shall bind and inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns.

Section 6.9 Interpretation; Other Definitions . Wherever required by the context of this Agreement, the singular shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa, and, unless specified otherwise, references to any agreement, document or instrument shall be deemed to refer to such agreement, document or instrument as amended, supplemented or modified from time to time. All article, section, paragraph or clause references not attributed to a particular document shall be references to such parts of this Agreement, and all exhibit, annex and schedule references not attributed to a particular document shall be references to such exhibits, annexes and schedules to this Agreement. In addition, the following terms are ascribed the following meanings:

 

  (1) the term “ business day ” means any day that is not a Saturday, a Sunday or any other day on which commercial banks are generally required or authorized by Law to be closed in New York City, New York;

 

  (2) the terms “ herein ,” “ hereof ” and “ hereunder ” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision;

 

  (3) the words “ including ,” “ includes ,” “ included ” and “ include ” are deemed to be followed by the words “ without limitation ”;

 

  (4) the word “ or ” is not exclusive; and

 

  (5) the term “ person ” has the meaning given to it in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act.

 

  (6) accredited investor ” shall have the meaning set forth in Section  3.3 .

 

  (7)

Acquisition Proposal ” means any proposal or offer from any Person relating to any direct or indirect (i) sale, lease or other disposition directly or indirectly by merger, consolidation, business combination, share exchange, joint venture or otherwise of assets of the Company or any Subsidiary representing 20% or more of the consolidated assets of the Company Group (other than sales of inventory in the ordinary course of business and consistent with past practice); ( ii ) issuance, sale or other disposition, directly or indirectly (including by way of merger, consolidation, business combination, share exchange, joint venture or any similar transaction), of securities (or options, rights or warrants to purchase, or securities convertible into or exchangeable for, such securities) representing 10% or more of any class of equity securities of the Company (other than grants of Company Stock Options, Company RSUs and Company PRSUs under the Company Equity Plans in the ordinary course of business to employees, officers or directors of any

 

35


  Company Group Member); ( iii ) tender offer or exchange offer as defined pursuant to the Exchange Act that, if consummated, would result in any Person Beneficially Owning 10% or more of any class or series (or the voting power of any class or series) of equity securities of the Company or any other transaction in which any Person shall acquire Beneficial Ownership or the right to acquire Beneficial Ownership, of 10% or more of any class or series (or the voting power of any class or series) of equity securities; (iv) merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving any Company Group Member representing 20% or more of the consolidated assets of the Company Group; or ( v ) combination of the foregoing (in each case, other than the arrangements contemplated by the Transaction Documents).

 

  (8) Activist Investor ” means, as of any date, any Person that has, directly or indirectly through its publicly disclosed Affiliates, whether individually or as a member of a publicly disclosed “group” (as such term is used in Section 13(d)(3) of the Exchange Act), within the two-year period immediately preceding such date, and in each case with respect to the Company or any of its equity securities (i) publicly made, engaged in or been a participant (as defined in Instruction 3 to Item 4 of Schedule 14A under the Exchange Act) in any “solicitation” of “proxies” (as such terms are defined in Regulation 14A as promulgated by the SEC), to vote any equity securities of the Company, including in connection with a proposed change in control or other extraordinary or fundamental transaction involving the Company or any of its Subsidiaries, or a public proposal for the election or replacement of any directors of the Company, not approved by the Company Board prior to first public disclosure thereof, (ii) publicly called, or publicly sought to call, a meeting of stockholders of the Company or publicly initiated any stockholder proposal or meeting agenda item for action by stockholders of the Company (including through action by written consent), in each case not approved by the Company Board prior to first public disclosure thereof, (iii) commenced a “tender offer” (as such term is used in Regulation 14D under the Exchange Act) to acquire equity securities of the Company that was not approved (at or before the time of commencement) by the Company Board, (iv) otherwise publicly acted, alone or in concert with others, to seek to control or influence the Company Board or stockholders of the Company (provided that this clause (iv) is not intended to apply to the activities of any member of the Company Board, with respect to the Company, taken in good faith solely in his or her capacity as a director of the Company), or to vote against any recommendations of the Company Board or influence the stockholders of the Company with respect to any meeting agenda item for action by stockholders of the Company, or (v) publicly disclosed any intention, plan, arrangement or other Contract to do any of the foregoing.

 

  (9)

Affiliate ” means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with, such other person; provided , that ( i ) portfolio companies in which any Person or any of its Affiliates has an investment shall not be deemed an Affiliate of such Person (other than for

 

36


  purposes of Section  3.5 and Section  3.6) , ( ii ) no Company Group Member, and none of the Company’s other controlled Affiliates, will be deemed to be Affiliates of Purchaser for purposes of this Agreement and ( iii ) each Company Subsidiary shall be deemed an Affiliate of the Company and of each other Company Subsidiary. For purposes of this definition, “ control ” (including, with correlative meanings, the terms “ controlled by ” and “ under common control with ”) when used with respect to any Person, means the possession, directly or indirectly, of the power to cause the direction of management or policies of such person, whether through the ownership of voting securities, by contract or otherwise.

 

  (10) Affiliated Fund ” shall have the meaning set forth in Section  4.10(a) .

 

  (11) Agreement ” shall have the meaning set forth in the Preamble.

 

  (12) Allied Acquisition ” shall have the meaning set forth in the Recitals.

 

  (13) Allied Acquisition Agreement ” shall have the meaning set forth in the Recitals.

 

  (14) Antitrust Laws ” means the Sherman Act, 15 U.S.C. §§ 1-7, as amended; the Clayton Act, 15 U.S.C. §§ 12-27, 29 U.S.C. §§ 52-53, as amended; the HSR Act; the Federal Trade Commission Act, 15 U.S.C. § 41-58, as amended; and all other federal, state and foreign statutes, rules, regulations, orders, decrees, administrative and judicial doctrines, and other Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade.

 

  (15) As-Converted Common Stock ” means at the time of determination (i) the issued and outstanding Common Stock, (ii) shares of Common Stock issuable upon conversion of all issued and outstanding shares of Preferred Stock (including shares of Preferred Stock issued as dividends thereon pursuant to the Certificate of Designations), disregarding for this purpose the last sentence of Section 6(a)(i)(B) of the Certificate of Designations, and (iii) shares of Common Stock issuable upon the conversion of any other issued and outstanding convertible securities of the Company but only if at the time of determination the holder thereof has the right to so convert such securities.

 

  (16) Beneficial Ownership ” or “ Beneficially Own ” shall have the meaning given such term in Rule 13d-3 under the Exchange Act and a Person’s Beneficial Ownership of securities shall be calculated in accordance with the provisions of such Rule; provided , however , that for purposes of determining any Person’s Beneficial Ownership, such person shall be deemed to be the Beneficial Owner of any Equity Securities which may be acquired by such person, whether within sixty (60) days or thereafter, upon the conversion, exchange, redemption or exercise of any warrants, options, rights or other securities issued by the Company or any Company Subsidiary.

 

  (17) Bylaws ” shall have the meaning set forth in Section  2.1(a) .

 

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  (18) Capitalization Date ” shall have the meaning set forth in Section  2.2(a) .

 

  (19) CD&R Fund ” shall have the meaning set forth in the Preamble.

 

  (20) Certificate of Designations ” shall have the meaning set forth in the Recitals.

 

  (21) Certificate of Incorporation ” shall have the meaning set forth in Section  2.1(a) .

 

  (22) Closing ” shall have the meaning set forth in Section  1.2(a) .

 

  (23) Closing Date ” shall have the meaning set forth in Section  1.2(a) .

 

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

 

  (25) Common Stock ” means the shares of common stock, par value $0.01 per share, of the Company.

 

  (26) Company ” shall have the meaning set forth in the Preamble.

 

  (27) Company Board ” shall have the meaning set forth in Section  2.3(a) .

 

  (28) Company Competitor ” means, at any time, (a) any Person (other than the Company and its Subsidiaries) that, directly or indirectly, is primarily engaged in the distribution of roofing materials, drywall or ceiling tile and related accessories anywhere in the United States or Canada, (b) without limiting the generality of the preceding clause (a), any of the Persons listed in Schedule A to this Agreement or any Person that directly or indirectly controls such Persons and (c) any controlled Affiliate of any such Person in the preceding clause (a) or clause (b).

 

  (29) Company Equity Plans ” means the Beacon Roofing Supply, Inc. Amended and Restated 2004 Stock Plan and the Beacon Roofing Supply, Inc. Amended and Restated 2014 Stock Plan, in each case, as amended to date, and the forms of award agreements thereunder.

 

  (30) Company Group ” means the Company and the Company Subsidiaries from time to time.

 

  (31) Company Group Member ” means any corporation, partnership, joint venture, limited liability company, unincorporated association, trust or other entity within the Company Group.

 

  (32)

Company Material Adverse Effect ” means, with respect to the Company, any Effect that, individually or taken together with all other Effects that have occurred prior to the date of determination of the occurrence of the Company Material Adverse Effect, is or is reasonably likely to be materially adverse to the business, assets, liabilities, results of operations or financial condition of the Company Group, taken as a whole; provided , however , that in no event shall any of the following occurring after the date hereof, alone or in combination, be deemed to

 

38


  constitute, or be taken into account in determining whether a Company Material Adverse Effect has occurred: ( A ) any decrease in the market price of the Company’s Common Stock on NASDAQ, ( B ) any failure by the Company to meet any internal or public revenue or earnings projections, ( C ) any Effect that results from changes affecting the industry in which the Company operates, or the United States economy generally, or any Effect that results from changes affecting general worldwide economic or capital market conditions, ( D ) except with respect to Section  2.3(b) , any Effect caused by the announcement or pendency of the transactions contemplated by this Agreement or the Allied Acquisition Agreement; ( E ) acts of war or terrorism or natural disasters, ( F ) actions or omissions of the Company expressly required by the terms of this Agreement, the Allied Acquisition Agreement and the transactions contemplated hereby and thereby, including compliance with the covenants set forth herein or therein (excluding Section  4.5 of this Agreement), or any action taken or omitted to be taken by the Company at the written request of the Purchaser; ( G ) changes in GAAP or other accounting standards (or any interpretation thereof); or ( H ) changes in any Laws or other binding directives issued by any Governmental Entity or interpretations or enforcement thereof; provided , however , that ( x ) the exceptions in clause ( A ) and ( B ) shall not prevent or otherwise affect a determination that any Effect underlying such decrease or failure has resulted in, or contributed to, a Company Material Adverse Effect, ( y ) with respect to clauses ( C ), ( E ), ( G ) and ( H ), such Effects, alone or in combination, may be deemed to constitute, or be taken into account in determining whether a Company Material Adverse Effect has occurred, but only to the extent such Effects disproportionately affect the Company Group, taken as a whole, relative to other companies operating in the same industry as the Company Group. An Effect or Effects on Target that would not be a Company Material Adverse Effect with respect to the Target, taken alone, will not be deemed a Company Material Adverse Effect.

 

  (33) Company PRSUs ” shall have the meaning set forth in Section  2.2(a) .

 

  (34) Company Related Parties ” shall have the meaning set forth in Section  5.2 .

 

  (35) Company RSUs ” shall have the meaning set forth in Section  2.2(a) .

 

  (36) Company Stock Options ” shall have the meaning set forth in Section  2.2(a) .

 

  (37) Company Subsidiary ” shall have the meaning set forth in Section  2.1(b) .

 

  (38) Contract ” means any written or oral agreement, arrangement, commitment or other instrument or obligation.

 

  (39) Debt Financing Documents ” shall have the meaning set forth in the Certificate of Designations.

 

  (40)

Disclosure Schedules ” shall have the meaning set forth in Article II .

 

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  (41) Effect ” means any change, event, effect, state of facts, occurrence, development or circumstance.

 

  (42) Election Notice ” shall have the meaning set forth in Section  1.1(a) .

 

  (43) Equity Commitment Letter ” means that certain Equity Commitment Letter by and between CD&R Fund and Purchaser, dated as of the date hereof, a copy of which has been delivered to the Company concurrently with the execution of this Agreement.

 

  (44) Equity Securities ” means the equity securities of the Company, including the Common Stock.

 

  (45) ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and all rules, regulations, rulings and interpretations adopted by the Internal Revenue Service or the Department of Labor thereunder.

 

  (46) Exchange Act ” shall have the meaning set forth in Section  2.5 .

 

  (47) GAAP ” shall have the meaning set forth in Section  2.5(d) .

 

  (48) Government Official ” means any ( i ) officer, employee or other Person acting for or on behalf of any Governmental Entity or public international organization or ( ii ) holder of, or candidate for, public office, political party or official thereof or member of a royal family, or any other Person acting for or on behalf of the foregoing.

 

  (49) Governmental Entity ” means any transnational, multinational, domestic or foreign federal, state, provincial or local governmental, regulatory or administrative authority, instrumentality, department, court, arbitrator, agency, commission or official, including any political subdivision thereof, any state-owned or state-controlled enterprise, or any non-governmental self-regulatory agency, commission or authority.

 

  (50) Group Companies ” means, collectively, Allied Building Products Corp., a New Jersey corporation, and Kapalama Kilgos Acquisition Corp., a Delaware corporation, and each of their respective Subsidiaries (direct or indirect).

 

  (51) Holder ” shall have the meaning set forth in the Certificate of Designations.

 

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

 

  (53)

Indebtedness ” means, with respect to any Person, all obligations (including all obligations in respect of principal, interest, penalties, fees and premiums and all fees, expenses, payments and costs associated with prepayment, termination, redemption, breakage or unwinding) of such Person (a) for borrowed money, (b) evidenced by notes, bonds, debentures or similar instruments, (c) in respect of

 

40


  reimbursement obligations under letters of credit, bankers’ acceptances, bank overdrafts, surety or performance bonds and similar instruments, (d) for the deferred purchase price of goods or services, including earn-outs, but excluding trade payables and other current liabilities incurred in the ordinary course of business, (e) under leases required to be classified as capital leases under GAAP, (f) under hedging or swap obligations or similar arrangements, (g) that are secured by an Encumbrance (as defined in the Allied Acquisition Agreement) (other than a Permitted Encumbrance (as defined in the Allied Acquisition Agreement)) on any assets or properties of such Person and (h) guarantees of, or assurances to a creditor against, a loss with respect to the obligations described in clauses (a) through (g) above of any other Person. Notwithstanding the foregoing, “Indebtedness” shall not include any intercompany obligations or any accounts payable or accrued expenses arising in the ordinary course of business, or obligations under leases that are properly accounted for as operating leases under GAAP.

 

  (54) Indemnified Party ” shall have the meaning set forth in Section  5.3(b) .

 

  (55) Indemnifying Party ” shall have the meaning set forth in Section  5.3(b) .

 

  (56) Information ” shall have the meaning set forth in Section  4.3 .

 

  (57) Knowledge of the Company ” means the actual knowledge, after reasonable inquiry, of the individuals set forth in Section  6.9 .

 

  (58) Law ” or “ Laws ” mean any statute, law, ordinance, treaty, rule, code, regulation or other binding directive issued, promulgated or enforced by any Governmental Entity.

 

  (59) Lien ” means any mortgage, deed of trust, pledge, option, power of sale, retention of title, right of pre-emption, right of first refusal, hypothecation, security interest, encumbrance, claim, lien or charge of any kind, or an agreement, arrangement or obligation to create any of the foregoing.

 

  (60) Lock-up Period ” shall have the meaning set forth in Section  4.9 .

 

  (61) Lock-up Shares ” shall have the meaning set forth in Section  4.9.

 

  (62) Losses ” shall have the meaning set forth in Section  5.1 .

 

  (63) Multiemployer Plan ” means ( x ) a “multiemployer plan” as defined in Section 3(37) of ERISA that is maintained in the United States and ( y ) a non-U.S. defined-benefit pension plan for the benefit of employees of multiple unrelated employers, in each case, to which any Company Group Member contributes or is or has been required to contribute.

 

  (64) NASDAQ ” means the NASDAQ Stock Market (or its successor).

 

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  (65) New Security ” shall have the meaning set forth in Section  4.11(a) .

 

  (66) Non-Recourse Party ” shall have the meaning set forth in Section  6.17 .

 

  (67) OFAC ” shall have the meaning set forth in Section  2.10(d) .

 

  (68) Permitted Transferee ” means, with respect to any Person, ( i ) any Affiliate of such Person, ( ii ) any successor entity of such Person and ( iii ) with respect to any Person that is an investment fund, vehicle or similar entity, any other investment fund, vehicle or similar entity of which such person or an Affiliate, advisor or manager of such person serves as the general partner, manager or advisor; provided , however , that no portfolio company of any Person shall be a Permitted Transferee.

 

  (69) Person ” means an individual, a corporation, a general or limited partnership, a limited liability company, an association, a trust, other legal entity or organization or Governmental Entity.

 

  (70) Plan ” means any employee benefit plan (as defined in Section 3(3) of ERISA, whether or not subject to ERISA) maintained for current or former employees of the Company, any Company Subsidiary or any other person with whom the Company is considered a single employer under Section 414 of the Code or Title IV of ERISA, to which any Company Group Member is required to contribute, including any pension, profit-sharing, retirement, death, disability, supplemental retirement, welfare benefit, retiree health, and life insurance plan, agreement or arrangement, or any other compensation plan, policy, program, agreement or arrangement, including any employment, change in control, bonus, equity or equity-based compensation, retention, severance, termination, deferred compensation or other similar agreement, arrangement, plan, policy or program that any Company Group Member, maintains, sponsors, is a party to, or as to which any Company Group Member otherwise has or would reasonably be expected to have any material obligation or material liability, but excluding any Multiemployer Plans.

 

  (71) Pre-Closing Period ” shall have the meaning set forth in Section  4.1 .

 

  (72) Preemptive Rights Portion ” shall have the meaning set forth in Section  4.11(b) .

 

  (73) Preferred Stock ” shall have the meaning set forth in the Recitals.

 

  (74) Prohibited Transferee ” means (a) any Company Competitor, (b) any Person or “group” (as such term is used in Section 13(d)(3) of the Exchange Act) who, without giving effect to the Transfer, Beneficially Owns five percent (5%) or more of any class or series (or the voting power of any class or series) of equity securities of the Company or (c) any Activist Investor.

 

  (75) Purchase Price ” shall have the meaning set forth in the Section  1.1(a) .

 

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  (76) Purchased Shares ” shall have the meaning set forth in Section  1.1(a) .

 

  (77) Purchaser ” shall have the meaning set forth in the Preamble.

 

  (78) Purchaser Designee ” shall have the meanings set forth in Section  4.10(a) .

 

  (79) Purchaser Parties ” means Purchaser and any Affiliated Fund.

 

  (80) Purchaser Related Parties ” shall have the meaning set forth in Section  5.1 .

 

  (81) Registration Rights Agreement ” means that certain Registration Rights Agreement, the form of which is set forth as Exhibit B .

 

  (82) Relevant Persons ” shall have the meaning set forth in Section  2.10(b) .

 

  (83) SEC ” shall have the meaning set forth in Section  2.5(a) .

 

  (84) SEC Documents ” shall have the meaning set forth in Section  2.5(a) .

 

  (85) Securities Act ” shall have the meaning set forth in Section  2.5 .

 

  (86) Software ” means all computer software, whether in source code and object code formats, including mobile applications, in any and all forms and media, and all related documentation.

 

  (87) Standstill Period ” means the longer of (x) the 24-month period following the Closing Date and (y) the period beginning on the Closing Date and ending on the date that is six (6) months after the date on which a Purchaser Designee is no longer serving on the Company Board (whether due to resignation or otherwise).

 

  (88) Subsidiary ” shall have the meaning set forth in Section  2.1(b) .

 

  (89) Target ” shall have the meaning set forth in the Recitals.

 

  (90) Tax Return ” means any return, declaration, report, statement or other document filed or required to be filed in respect of Taxes (including any attached schedules), including any information return, claim for refund, amended return and declaration of estimated Tax.

 

  (91) Taxes ” means any federal, state, local, provincial or non-U.S. taxes, charges, fees, levies or other assessments, including income, capital gains, alternative minimum, accumulated earnings, personal holding company, franchise, capital stock, profits, windfall profits, gross receipts, production, goods and services, sales, use, value added, transfer, registration, stamp, premium, excise, customs duties, severance, environmental (including taxes under section 59A of the Code), real property, personal property, ad valorem, escheat, occupancy, license, occupation, employment, payroll, social security, disability, unemployment, workers’ compensation, withholding, estimated or other similar tax, duty, fee, assessment or other governmental charge or deficiencies thereof (including all interest and penalties thereon, related liabilities and additions thereto).

 

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  (92) Termination Date ” shall have the meaning set forth in Section  6.15(b) .

 

  (93) Third Party Claim ” shall have the meaning set forth in Section  5.3(b) .

 

  (94) Transaction Documents ” means this Agreement, the Certificate of Designations and the Registration Rights Agreement.

 

  (95) Transfer ” shall have the meaning set forth in Section  4.9 .

 

  (96) Voting Debt ” shall have the meaning set forth in Section  2.2(b) .

Section 6.10 Captions . The article, section, paragraph and clause captions herein are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof.

Section 6.11 Severability . If any provision of this Agreement or the application thereof to any Person (including the officers and directors of the parties hereto) or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

Section 6.12 No Third Party Beneficiaries . Except as expressly provided herein, nothing contained in this Agreement, expressed or implied, is intended to confer upon any Person other than the parties hereto (and their permitted assigns), any benefit, right or remedies.

Section 6.13 Public Announcements . Subject to each party’s disclosure obligations imposed by Law or regulation or the rules of any stock exchange upon which its securities are listed, each of the parties hereto will cooperate with each other in the development and distribution of all news releases and other public information disclosures with respect to this Agreement and any of the transactions contemplated by this Agreement, and neither the Company nor the Purchaser will make any such news release or public disclosure without first consulting with the other, and, in each case, also receiving the other’s consent (which consent shall not be unreasonably withheld or delayed) and each party shall coordinate with the party whose consent is required with respect to any such news release or public disclosure.

Section 6.14 Specific Performance . The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement and the transactions contemplated hereby were not performed in accordance with their specific terms or were otherwise breached and that time is of the essence. It is accordingly agreed that, without the necessity of posting bond or other undertaking, the parties shall be entitled to specific performance of the terms

 

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hereof, and the Company as a third party beneficiary shall have the rights of specific performance as provided for in the Equity Commitment Letter, this being in addition to any other remedies to which the parties are entitled at Law or equity, and in the event that any action or suit is brought in equity to enforce the provisions of this Agreement, and no party will allege, and each party hereby waives, the defense or counterclaim that there is an adequate remedy at Law.

Section 6.15 Termination . This Agreement will survive the Closing so long as any shares of Preferred Stock are outstanding. Prior to the Closing, this Agreement may only be terminated:

(a) by mutual written agreement of the Company and the Purchaser;

(b) by the Company or the Purchaser, upon written notice to the other party given at any time on or after February 28, 2018 (the “ Termination Date ”); provided , however , that the right to terminate this Agreement pursuant to this Section  6.15(b) shall not be available to any party whose failure to fulfill any obligations under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date; and further provided that, if all of the conditions specified in Article VI to the Allied Acquisition Agreement have been satisfied or waived as of such date (or, with respect to those conditions which, by their nature can only be satisfied at the closing thereof, would reasonably be capable of satisfaction as of such date), other than the conditions specified in Section 6.1 to the Allied Acquisition Agreement with respect to the HSR Act or Antitrust Laws, then the Termination Date shall automatically be extended to August 31, 2018;

(c) by the Company or the Purchaser, upon written notice to the other party given at any time after the termination of the Allied Acquisition Agreement in accordance with its terms; provided , however , that the right to terminate this Agreement pursuant to this Section  6.15(c) shall not be available to any party whose failure to fulfill any obligations under this Agreement shall have been the cause of, or shall have resulted in, the termination of the Allied Acquisition Agreement in accordance with its terms;

(d) by notice given by the Company to the Purchaser, if there have been one or more inaccuracies in or breaches of one or more representations, warranties, covenants or agreements made by the Purchaser in this Agreement such that the conditions in Section  1.3(c) would not be satisfied and which have not been cured by the Purchaser within the earlier of (i) thirty (30) days after receipt by the Purchaser of written notice from the Company requesting such inaccuracies or breaches to be cured or (ii) if applicable, five (5) business days after receipt by the Purchaser from the Company of a copy of the written notice from the Seller pursuant to Section 7.3(b) of the Allied Acquisition Agreement; or

(e) by notice given by the Purchaser to the Company, if there have been one or more inaccuracies in or breaches of one or more representations, warranties, covenants or agreements made by the Company in this Agreement such that the conditions in Section  1.3(b) would not be satisfied and which have not been cured by the Company within thirty (30) days after receipt by the Company of written notice from the Purchaser requesting such inaccuracies or breaches to be cured.

 

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Section 6.16 Effects of Termination . In the event of any termination of this Agreement in accordance with Section  6.15 , neither party (nor any of its Affiliates) shall have any liability or obligation to the other (or any of its Affiliates) under or in respect of this Agreement, except to the extent of ( A ) any liability arising from any intentional and material breach by such party of its obligations under this Agreement arising prior to such termination or ( B ) any fraud of this Agreement. In the event of any such termination, this Agreement shall become void and have no effect, and (if such termination is prior to the Closing) the transactions contemplated hereby shall be abandoned without further action by the parties hereto, in each case, except ( x ) as set forth in the preceding sentence and ( y ) that the provisions of Section  4.3 ( Confidentiality ), Section  6.1 (Expenses) , Section  6.2 through Section  6.13 ( Amendment, Waiver; Counterparts; Governing Law; Waiver of Jury Trial; Notices; Entire Agreement, Assignment; Interpretation; Other Definitions; Captions; Severability; No Third Party Beneficiaries; Public Announcements ) and Section  6.17 ( Non-Recourse ) shall survive the termination of this Agreement. For the avoidance of doubt, an intentional and material breach by Purchaser shall be deemed to include any failure by Purchaser to consummate the Closing if it is obligated to do so hereunder.

Section 6.17 Non-Recourse . This Agreement may only be enforced against, and any claims or causes of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may only be made against the entities that are expressly identified as parties hereto, including entities that become parties hereto after the date hereof, and no former, current or future equityholders, controlling persons, directors, officers, employees, agents or Affiliates of any party hereto or any former, current or future equityholder, controlling person, director, officer, employee, general or limited partner, member, manager, advisor, agent or Affiliate of any of the foregoing (each, a “ Non-Recourse Party ”) shall have any liability for any obligations or liabilities of the parties to this Agreement or for any claim (whether in tort, contract or otherwise) based on, in respect of, or by reason of, the transactions contemplated hereby or in respect of any representations made or alleged to be made in connection herewith. Without limiting the rights of either party against the other party hereto, in no event shall either party or any of its Affiliates seek to enforce this Agreement against, make any claims for breach of this Agreement against, or seek to recover monetary damages from, any Non-Recourse Party.

[ Remainder of page intentionally left blank ]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first herein above written.

 

BEACON ROOFING SUPPLY, INC.
By:  

/s/ Ross D. Cooper

  Name: Ross D. Cooper
  Title:   Executive Vice President, General
              Counsel & Secretary
CD&R BOULDER HOLDINGS, L.P.
By:  

/s/ Theresa A. Gore

  Name: Theresa A. Gore
 

Title:   Vice President, Treasurer & Assistant

            Secretary

CLAYTON, DUBILIER & RICE FUND IX, L.P. (solely for purposes of Sections 4.13 and 4.14 hereof)
By:   CD&R Associates IX, L.P., its general partner
By:   CD&R Investment Associates IX, Ltd., its
general partner
By:  

/s/ Theresa A. Gore

  Name: Theresa A. Gore
  Title: Vice President, Treasurer & Assistant           Secretary

[Signature Page to Investment Agreement]

 


Exhibit A

Form of Certificate of Designations

 


FORM OF CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF

SERIES A CUMULATIVE CONVERTIBLE PARTICIPATING PREFERRED STOCK

OF BEACON ROOFING SUPPLY, INC.

 

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

 

 

The undersigned, pursuant to the provisions of Section 151 of the General Corporation Law of the State of Delaware (the “ DGCL ”), does hereby certify that, pursuant to the authority expressly vested in the Board of Directors of Beacon Roofing Supply, Inc., a Delaware corporation (the “ Corporation ”), by the Certificate of Incorporation, the Board of Directors has by resolution duly provided for the issuance of and created a series of preferred stock of the Corporation, par value $0.01 per share, and in order to fix the designation and amount and the voting powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions, of such series of preferred stock, has duly adopted resolutions setting forth such rights, powers and preferences, and the qualifications, limitations and restrictions thereof, of such series of preferred stock as set forth in this Certificate of Designations, Preferences and Rights of Series A Cumulative Convertible Participating Preferred Stock (this “ Certificate ”).

Section  1. Number of Shares and Designation. [•] shares of preferred stock of the Corporation shall constitute a series of preferred stock designated as Series A Cumulative Convertible Participating Preferred Stock (the “Preferred Stock”). Subject to and in accordance with the provisions of Section 11(b), the number of shares of Preferred Stock may be increased (to the extent of the Corporation’s authorized and unissued preferred stock) by further resolution duly adopted by the Board of Directors and the filing of a certificate of increase with the Secretary of State of the State of Delaware.

Section  2. Rank . Each share of Preferred Stock shall rank equally in all respects and shall be subject to the provisions herein. The Preferred Stock shall, with respect to payment of dividends, redemption payments, rights (including as to the distribution of assets) upon liquidation, dissolution or winding up of the affairs of the Corporation, or otherwise (i) rank senior and prior to the Corporation’s common stock, par value $0.01 per share (the “Common Stock”), and each other class or series of equity securities of the Corporation, whether currently issued or issued in the future, that by its terms does not expressly rank senior to, or on parity with, the Preferred Stock as to payment of dividends, redemption payments, rights (including as to the distribution of assets) upon liquidation, dissolution or winding up of the affairs of the Corporation, or otherwise (all of such equity securities, including the Common Stock, are collectively referred to herein as “Junior Securities”), (ii) rank junior to each class or series of equity securities of the Corporation, whether currently issued or issued in the future without violation of this Certificate, that by its terms expressly ranks senior to the Preferred Stock as to payment of dividends, redemption payments, rights (including as to the distribution of assets) upon liquidation, dissolution or winding up of the affairs of the Corporation, or otherwise (all of such equity securities are collectively referred to herein as “Senior Securities”), and (iii) rank on parity with each class or series of equity securities of the Corporation, whether currently issued or issued in the future without violation of this Certificate, that expressly provides that it ranks

 

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on parity with the Preferred Stock as to payment of dividends, redemption payments or rights (including as to the distribution of assets) upon liquidation, dissolution or winding up of the affairs of the Corporation (all of such equity securities are collectively referred to herein as “Parity Securities”). The respective definitions of Junior Securities, Senior Securities and Parity Securities shall also include any securities, rights or options exercisable or exchangeable for or convertible into any of the Junior Securities, Senior Securities or Parity Securities, as the case may be.

Section 3. Definitions.

(a) As used herein, the following terms shall have the meanings set forth below or in the section cross-referenced below, as applicable, whether used in the singular or the plural:

Accrued Dividends ” means, as of any date, with respect to any share of Preferred Stock, all dividends that have accrued pursuant to Section  4(a)(ii) but that have not been paid as of such date.

Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with, such Person.

Base Amount ” means, with respect to any share of Preferred Stock, as of any date, the sum of (x) the Liquidation Preference and (y) the Base Amount Accrued Dividends with respect to such share.

Base Amount Accrued Dividends ” means, with respect to any share of Preferred Stock, as of any date, (i) if a Preferred Dividend Payment Date has occurred since the issuance of such share, the Accrued Dividends with respect to such share as of the preceding Preferred Dividend Payment Date (taking into account the payment of Preferred Dividends in respect of such period ending on such preceding Preferred Dividend Payment Date, if any, as of such Preferred Dividend Payment Date) or (ii) if no Preferred Dividend Payment Date has occurred since the issuance of such share, zero.

Base Dividend Rate ” means, for any day, 6.00% per annum .

Beneficially Own ” and “ Beneficial Ownership ” has the meaning given such term in Rule 13d-3 under the Exchange Act, and a Person’s beneficial ownership of Capital Stock of any Person shall be calculated in accordance with the provisions of such rule, but without taking into account any contractual restrictions or limitations on voting or other rights; provided , however , that for purposes of determining beneficial ownership, a Person shall be deemed to be the beneficial owner of any security which may be acquired by such Person, whether within sixty (60) days or thereafter, upon the conversion, exchange or exercise of any warrants, options, rights or other securities.

Board of Directors ” means the board of directors of the Corporation or any committee thereof duly authorized to act on behalf of such board of directors for the purposes in question.

 

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Business Day ” means any day that is not a Saturday, a Sunday or any other day on which commercial banks are generally required or authorized by Law to be closed in New York City, New York.

By-laws ” means the Amended and Restated By-Laws of the Corporation, as amended from time to time.

Capital Stock ” of any Person means any and all shares, interests (including partnership interests), rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any preferred stock, but excluding any debt securities convertible into such equity.

Certificate ” has the meaning set forth in the preamble.

Certificate of Incorporation ” means the Second Amended and Restated Certificate of Incorporation of the Corporation, as amended from time to time.

Change of Control ” means the occurrence, directly or indirectly, of any of the following:

(i) any purchase, merger, acquisition or other transaction or series of related transactions immediately following which any Person or Group (excluding the Investor or its Affiliates or any Group including the Investor or its Affiliates) shall Beneficially Own, directly or indirectly, Voting Stock entitling such Person to exercise more than 50% of the total voting power of all classes of Voting Stock of the Corporation, other than as a result of any such transaction in which (x) the holders of securities that represented 100% of the Voting Stock of the Corporation immediately prior to such transaction are substantially the same as the holders of securities that represent a majority of the total voting power of all classes of Voting Stock of the surviving Person or any parent entity thereof immediately after such transaction and (y) the holders of securities that represented 100% of the Voting Stock of the Corporation immediately prior to such transaction own directly or indirectly Voting Stock of the surviving Person or any parent entity thereof in substantially the same proportion to each other as immediately prior to such transaction;

(ii) any transaction or series of related transactions immediately following which the Persons who Beneficially Own the Voting Stock of the Corporation immediately prior to such transaction or transactions cease to Beneficially Own more than 50% of the Voting Stock of the Corporation, any successor thereto or any parent entity thereof immediately following such transaction or transactions; or

(iii) ( x ) the Corporation merges or consolidates with or into any other Person, another Person merges with or into the Corporation, or the Corporation conveys, sells, transfers or leases all or substantially all of the Corporation’s assets to another Person or ( y ) the Corporation engages in any recapitalization, reclassification or other transaction in which all or substantially all of the Common Stock is exchanged for or converted into cash, securities or other property, in each case other than a merger or consolidation:

(A) that does not result in a reclassification, conversion, exchange or cancellation of the outstanding Common Stock;

 

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(B) which is effected solely to change the Corporation’s jurisdiction of incorporation and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of common stock of the surviving entity; or

(C) where the Voting Stock outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such merger or consolidation).

Change of Control Effective Date ” has the meaning set forth in Section  8(a) .

Change of Control Sale ” has the meaning set forth in Section  8(a) .

Common Stock ” has the meaning set forth in Section  2 .

Common Stock Dividend Record Date ” has the meaning set forth in Section  4(a)(iv) .

Common Stock Trading Price ” means, as of any Trading Day, the closing price of a share of Common Stock on such Trading Day (as reported on Bloomberg, based on composite transactions for the NASDAQ).

control ” (including the terms “ controlling ”, “ controlled by ” and “ under common control with ”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.

Conversion Date ” has the meaning set forth in Section  6(b)(iv) .

Conversion Notice ” has the meaning set forth in Section  6(b)(i) .

Conversion Option ” has the meaning set forth in Section  6(a)(i)(A) .

Conversion Option Date ” has the meaning set forth in Section  6(a)(i)(A) .

Conversion Option Measurement Period ” has the meaning set forth in Section  6(a)(i)(A) .

Conversion Price ” means, as of any date, the Initial Conversion Price, as adjusted pursuant to Section  9 .

Conversion Right ” has the meaning set forth in Section  6(a)(i)(B) .

Convertible Securities ” means indebtedness or shares of Capital Stock convertible into or exchangeable for Common Stock.

Corporation ” has the meaning set forth in the preamble.

 

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Debt Financing Documents ” means [•].

DGCL ” has the meaning set forth in the preamble.

Dividend Payment Record Date ” has the meaning set forth in Section  4(a)(iv) .

Dividend Rate ” means, for any day, the Base Dividend Rate as increased by the Noncompliance Additional Rate, if any, applicable on such day pursuant to Section  4(b) .

Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time.

Excess Conversion Shares ” means, prior to receipt of any Requisite Stockholder Approval, in connection with any conversion of shares of Preferred Stock (disregarding for this purpose the last sentence of Section  6(a)(i)(B) ), those shares of Common Stock (if any) that would result in the number of shares of Common Stock issued in such conversion (when taken together with all shares of Common Stock previously issued in connection with any conversion of shares of Preferred Stock) exceeding 12,071,937.

Excess PIK Dividends ” means, prior to receipt of any Requisite Stockholder Approval, additional shares of Preferred Stock paid as dividends on the Purchased Shares (and on any shares of Preferred Stock issued as dividends thereon) to the extent such additional shares of Preferred Stock would, when taken together with the Purchased Shares (and any shares of Preferred Stock issued as dividends thereon), upon conversion of all such shares of Preferred Stock into shares of Common Stock (disregarding for this purpose the last sentence of Section  6(a)(i)(B) ), cause the number of shares of Common Stock issued in such conversion (when taken together with all shares of Common Stock previously issued in connection with any conversion of shares of Preferred Stock) to exceed 12,071,937.

Exchange Property ” has the meaning set forth in Section  7(a) .

Ex-Date ” means, when used with respect to any distribution, the first date on which the Common Stock or other securities in question do not have the right to receive the distribution giving rise to an adjustment to the Conversion Price.

Group ” means any “group” as such term is used in Section 13(d)(3) of the Exchange Act.

Holder ” means, at any time, any Person in whose name shares of Preferred Stock are registered, which may be treated by the Corporation as the absolute owner of such shares of Preferred Stock for the purpose of making payment and settling the related conversions and for all other purposes.

Implied Quarterly Dividend Amount ” means, with respect to any share of Preferred Stock, as of any date, the product of ( a ) the Base Amount of such share of Preferred Stock as of the first day of the applicable Payment Period and ( b ) one-fourth of the Dividend Rate applicable to such share on such date.

 

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Initial Conversion Price ” means ( i ) with respect to each share of Preferred Stock issued on the Original Issuance Date, $41.26 per share of Common Stock and ( ii ) with respect to each share of Preferred Stock issued as payment of a Preferred Dividend in accordance with Section  4 , the Conversion Price in effect immediately prior to the issuance of such share.

Investment Agreement ” means that certain Investment Agreement, dated as of August 24, 2017, by and among the Corporation, CD&R Boulder Holdings, L.P. and Clayton, Dubilier & Rice Fund IX, L.P. (solely for purposes of Sections 4.13 and 4.14 thereof), as the same may be amended from time to time.

Investor ” means, collectively, one or more investment vehicles affiliated with or managed by Clayton, Dubilier & Rice, LLC who acquire shares of Preferred Stock pursuant to the Investment Agreement.

Issuance Date ” means, with respect to a share of Preferred Stock, the date of issuance of such share of Preferred Stock.

Junior Securities ” has the meaning set forth in Section  2 .

Law ” has the meaning set forth in the Investment Agreement.

Liquidation ” means the voluntary or involuntary liquidation, dissolution or winding up of the Corporation.

Liquidation Preference ” means, with respect to each share of Preferred Stock, $1,000.00 per share.

Market Price ” means, with respect to any particular security on any particular date, ( i ) if such security is listed or quoted on a principal U.S. national or regional securities exchange or traded on an over-the-counter market, the volume weighted average price per share (as reported on Bloomberg based, in the case of a listed security, on composite transactions for the principal U.S. national or regional securities exchange on which such security is listed or quoted) of such security for the period of ten (10) consecutive Trading Days preceding the date of determination (or for any other period specified for this purpose in the applicable provision of this Certificate), or ( ii ) if such security is not listed or quoted on a principal U.S. national or regional securities exchange or traded on an over-the-counter market, the fair market value of such security on the date of determination, as determined by a nationally recognized independent investment banking firm that has for this purpose ( x ) been selected by the Board of Directors and ( y ) been consented to by Holders of a majority of the outstanding shares of Preferred Stock.

NASDAQ ” means the NASDAQ Stock Market (or its successor).

Noncompliance Additional Rate ” means 3.00% per annum .

Options ” means rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

Original Issuance Date ” means the date of closing pursuant to the Investment Agreement.

 

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Parity Securities ” has the meaning set forth in Section  2 .

Participating Dividends ” has the meaning set forth in Section  4(a)(i) .

Payment Period ” means, with respect to a share of Preferred Stock, the period beginning on the day after the preceding Preferred Dividend Payment Date (or if no Preferred Dividend Payment Date has occurred since the Issuance Date of such Preferred Share, the day that would have been the day after the preceding Preferred Dividend Payment Date had the Issuance Date with respect to such Preferred Share occurred prior to such date) to and including the next Preferred Dividend Payment Date.

Person ” means an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).

Preferred Dividend Payment Date ” means January 15, April 15, July 15 and October 15 of each year (each, a “Quarterly Date”), commencing on the first Quarterly Date immediately following the Original Issuance Date; provided, that if any such Quarterly Date is not a Business Day then the “Preferred Dividend Payment Date” shall be the next Business Day immediately following such Quarterly Date.

Preferred Dividends ” has the meaning set forth in Section  4(a)(ii) .

Preferred Stock ” has the meaning set forth in Section  1 .

Pro Rata Repurchase ” means any purchase of shares of Common Stock by the Corporation or any Affiliate thereof (other than, if applicable, the Investor or any of its Affiliates) pursuant to any tender offer or exchange offer subject to Section 13(e) of the Exchange Act, or pursuant to any other offer available to substantially all holders of Common Stock, whether for cash, shares of capital stock of the Corporation, other securities of the Corporation, evidences of indebtedness of the Corporation or any other Person or any other property (including shares of capital stock, other securities or evidences of indebtedness of a Subsidiary of the Corporation), or any combination thereof, effected while any shares of Preferred Stock are outstanding; provided , however , that “Pro Rata Repurchase” shall not include any purchase of shares by the Corporation or any Affiliate thereof made in accordance with the requirements of Rule 10b-18 as in effect under the Exchange Act. The “ Effective Date ” of a Pro Rata Repurchase means the date of acceptance of shares for purchase or exchange under any tender or exchange offer which is a Pro Rata Repurchase or the date of purchase with respect to any Pro Rata Repurchase that is not a tender or exchange offer.

Purchased Shares ” has the meaning set forth in Section  9(a)(iv) .

Redemption Date ” has the meaning set forth in Section  10(a) .

Redemption Notice ” has the meaning set forth in Section  10(a) .

Redemption Price ” has the meaning set forth in Section  10(a) .

 

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Register ” means the securities register maintained in respect of the Preferred Stock by the Corporation, or to the extent the Corporation has engaged a transfer agent, such transfer agent.

Reorganization Event ” means any of the following transactions:

(i) any reorganization, consolidation, merger, share exchange, statutory exchange, tender or exchange offer or other similar business combination involving the Corporation with or into another Person, in each case, pursuant to which the Common Stock will be converted into, or exchanged for, cash, securities or other property of the Corporation or another Person;

(ii) any reclassification, recapitalization or reorganization of the Common Stock into securities other than the Common Stock; or

(iii) any direct or indirect sale, assignment, conveyance, transfer, lease or other disposition (including in connection with any Liquidation) by the Corporation of all or substantially all of its assets or business, in each case under this clause ( iii ), pursuant to which the Common Stock will be converted into cash, securities or other property.

Requisite Stockholder Approval ” means the affirmative vote of a majority of the votes cast at a regular or special meeting of the stockholders of the Corporation (at which a quorum is present), in accordance with the NASDAQ Listing Rule 5635(d) for the approval of the conversion and the voting of Excess Conversion Shares in accordance with this Certificate.

Securities Act ” means the Securities Act of 1933, as amended.

Senior Securities ” has the meaning set forth in Section  2 .

Subsidiary ” or “ Subsidiaries ” means, with respect to any Person, any other Person of which ( i ) if a corporation, a majority of the total voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or ( ii ) if a limited liability company, partnership, association or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more other Subsidiaries of that Person or a combination thereof and for this purpose, a Person or Persons owns a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be or control any managing director or general partner of such business entity (other than a corporation). For the purposes hereof, the term “Subsidiary” shall include all Subsidiaries of such Subsidiary.

Trading Day ” means a day on which the NASDAQ is open for the transaction of business.

Transfer Restrictions ” means the restrictions on Transfer (as defined in the Investment Agreement) set forth in Section 4.9 of the Investment Agreement.

 

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Triggering Event ” means: ( i ) the Corporation’s failure to pay any Participating Dividends when required pursuant to, and in accordance with, Section  4(a)(i) or to pay Preferred Dividends on each Preferred Dividend Payment Date pursuant to, and in accordance with, Section  4(a)(ii) and Section  4(a)(iii) ; ( ii ) the Corporation’s failure to comply with its obligations to effect the conversion of shares of Preferred Stock (including to reserve and keep available for issuance the requisite number of shares of Common Stock and Preferred Stock) in compliance with Section  6 , ( iii ) the Corporation’s failure to comply with its obligations to repurchase shares of Preferred Stock in compliance with Section  8 , ( iv ) the Corporation’s violation of any restrictions set forth in this Certificate relating to payment of dividends or distributions to the holders of Common Stock or other Capital Stock, ( v ) the Corporation taking any action described in Section  11(b) without the prior affirmative vote or written consent of the Holders representing at least a majority of the then-issued and outstanding shares of Preferred Stock, voting as a separate class, ( vi ) the Corporation’s failure to maintain the listing of the Common Stock on the NASDAQ (or its successor) or another U.S. national securities exchange or automated inter-dealer quotation system (or its successor), or ( vii ) the payment of any shares of Preferred Stock paid as dividends pursuant to, and in accordance with, Section  4(a)(ii) and Section  4(a)(iii) that would constitute Excess PIK Dividends (for so long as any outstanding shares of Preferred Stock so paid as dividends would constitute Excess PIK Dividends).

Voting Stock ” means Capital Stock of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances (determined without regard to any classification of directors) to elect one or more members of the Board of Directors (without regard to whether or not, at the relevant time, Capital Stock of any other class or classes (other than Common Stock) shall have or might have voting power by reason of the happening of any contingency).

(b) In addition to the above definitions, unless the context requires otherwise:

(i) any reference to any statute, regulation, rule or form as of any time shall mean such statute, regulation, rule or form as amended or modified and shall also include any successor statute, regulation, rule or form from time to time;

(ii) the word “including” shall be deemed to be followed by the words “without limitation”;

(iii) references to “$” or “dollars” means the lawful coin or currency the United States of America; and

(iv) references to “Section” are references to Sections of this Certificate.

Section 4. Dividends.

(a) Holders of the issued and outstanding shares of Preferred Stock shall be entitled to receive, out of assets legally available for the payment of dividends, dividends on the terms described below:

 

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(i) Holders of shares of Preferred Stock shall be entitled to participate equally and ratably with the holders of shares of Common Stock in all dividends paid on the shares of Common Stock (other than dividends paid in the form of Common Stock, Convertible Securities or Options) as if immediately prior to each Common Stock Dividend Record Date, all shares of Preferred Stock then outstanding were converted into shares of Common Stock (including any Excess Conversion Shares and disregarding for this purpose the last sentence of Section  6(a)(i)(B) ). Dividends payable pursuant to this Section  4(a)(i) (the “ Participating Dividends ”) shall be payable on the same date that such dividends are payable to holders of shares of Common Stock, and no dividends shall be payable to holders of shares of Common Stock unless the full dividends contemplated by this Section  4(a)(i) are paid at the same time to the Holders of the Preferred Stock.

(ii) In addition to any dividends pursuant to Section  4(a)(i) , the Corporation shall pay, if, as and when declared by the Board of Directors, out of funds legally available therefor, on each Preferred Dividend Payment Date dividends on each outstanding share of Preferred Stock (the “ Preferred Dividends ”) at a rate per annum equal to the Dividend Rate as further specified in this Section  4(a)(ii) and in accordance with Section  4(a)(iii) below. Preferred Dividends on each share of Preferred Stock shall accrue and accumulate on a daily basis from the Issuance Date of such share, whether or not declared and whether or not the Corporation has funds legally available for the payment of such dividends, shall compound quarterly on each Preferred Dividend Payment Date (to the extent not paid on such Preferred Dividend Payment Date) and shall be payable quarterly in arrears, if, as and when so authorized and declared by the Board of Directors, on each Preferred Dividend Payment Date, commencing on the first Preferred Dividend Payment Date following the Issuance Date of such share. The amount of Preferred Dividends accruing with respect to any share of Preferred Stock for any day shall be determined by dividing ( x ) the Implied Quarterly Dividend Amount as of such day by ( y ) the actual number of days in the applicable Payment Period; provided that if, during any current Payment Period, Accrued Dividends are paid in respect of one or more prior Payment Periods, then after the date of such payment, the amount of Preferred Dividends accruing with respect to any share of Preferred Stock for any day shall be determined by dividing ( x ) the Implied Quarterly Dividend Amount (recalculated to take into account such payment of Accrued Dividends) by ( y ) the actual number of days in such current Payment Period. The amount of Preferred Dividends payable with respect to any share of Preferred Stock for any Payment Period shall equal the sum of the Preferred Dividends accrued in accordance with the prior sentence of this Section  4(a)(ii) with respect to such share during such Payment Period. Preferred Dividend payments shall be aggregated per Holder and shall be made to the nearest cent (with $.005 being rounded upward).

(iii) The Preferred Dividends may, at the option of the Corporation, be paid in cash or by issuing fully paid and nonassessable shares of Preferred Stock; provided that ( A ) Preferred Dividends paid on any date shall be paid by issuing fully paid and nonassessable shares of Preferred Stock to the extent payment in cash on such date would be prohibited under the terms, conditions or provisions of any of the Debt Financing Documents and ( B ) any Base Amount Accrued Dividends shall be paid by issuing fully paid and nonassessable shares of Preferred Stock; and provided further that, if the Corporation elects to pay any Preferred Dividends in shares of Preferred Stock with respect to any Payment Period, the Corporation shall make the same election with respect to all Preferred Dividends paid with respect to such Payment Period. If the Corporation pays any Preferred Dividend in shares of Preferred Stock, the number of shares of Preferred Stock to be paid in respect of such Preferred Dividend will be equal to the number of shares (including fractional shares) that have an aggregate Liquidation Preference equal to the amount of such Preferred Dividend.

 

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(iv) Each Participating Dividend or Preferred Dividend shall be paid pro rata to the Holders of shares of Preferred Stock entitled thereto. Each Participating Dividend or Preferred Dividend shall be payable to the Holders of Preferred Stock as they appear on the Register at the close of business on the record date designated by the Board of Directors for such dividends (each such date, a “ Dividend Payment Record Date ”), which ( i ) with respect to Participating Dividends, shall be the same day as the record date for the payment of dividends to the holders of shares of Common Stock (the “ Common Stock Dividend Record Date ”), and ( ii ) with respect to Preferred Dividends, shall be not more than thirty (30) days nor less than ten (10) days preceding the applicable Preferred Dividend Payment Date. Notwithstanding the foregoing, but subject to the proviso in the first sentence of Section  4(a)(iii) , the Base Amount Accrued Dividends may be declared and paid in cash or in shares of Preferred Stock at any time to Holders of record on the Dividend Payment Record Date therefor.

(b) Upon the occurrence of a Triggering Event, the Dividend Rate shall increase by the Noncompliance Additional Rate from and including the date on which the Triggering Event shall occur and be continuing through but excluding the date on which all then occurring Triggering Events are no longer continuing. The Dividend Rate shall not be increased further pursuant to this Section  4(b) for a subsequent Triggering Event occurring while the Dividend Rate is already increased pursuant to this Section  4(b) .

(c) At any time during which a Triggering Event shall be occurring, without the consent of the Holders representing at least a majority of the then-issued and outstanding shares of Preferred Stock, no dividends shall be declared or paid or set apart for payment, or other distributions declared or made, upon any Junior Securities, nor shall any Junior Securities be redeemed, purchased or otherwise acquired for any consideration (nor shall any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such Junior Securities) by the Corporation, directly or indirectly (except, subject to and in accordance with the provisions of Section  6 hereof, by conversion into or exchange for Junior Securities or the payment of cash in lieu of fractional shares in connection therewith).

(d) Without the consent of the Holders representing at least a majority of the then-issued and outstanding shares of Preferred Stock, the Corporation shall not ( i ) declare, pay or set aside for payment any dividends or distributions upon any Junior Securities or ( ii ) repurchase, redeem or otherwise acquire any Junior Securities (other than repurchases of shares of Common Stock from employees, officers or directors of the Corporation in the ordinary course of business) for any consideration or pay any moneys or make available for a sinking fund for the redemption of any shares of such Junior Securities, unless, in each case, ( A ) immediately before and after the taking of such action, the fair value of the Corporation’s assets would exceed the sum of its debts (including for this purpose the aggregate Liquidation Preference and the aggregate Accrued Dividends of the Preferred Stock), ( B ) immediately after the taking of such action, the Corporation, in its good faith judgment, would be able to pay all of its debts (including the aggregate Liquidation Preference and the aggregate Accrued Dividends of the Preferred Stock) as they are reasonably expected to come due and ( C ) such action is otherwise in compliance with applicable Law.

 

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(e) For the avoidance of doubt, the consequences described in Sections 4(b) , ( c ) and ( d ) above shall constitute the sole and exclusive remedies of the Holders upon the occurrence of the Triggering Event described in clause ( vii ) of the definition thereof.

Section 5. Liquidation Rights.

(a) In the event of any Liquidation, each Holder shall be entitled to receive liquidating distributions out of the assets of the Corporation legally available for distribution to its stockholders, before any payment or distribution of any assets of the Corporation shall be made or set apart for holders of any Junior Securities, including the Common Stock, for such Holder’s shares of Preferred Stock in an amount equal to the greater of ( i ) the sum of ( A ) the aggregate Liquidation Preference and ( B ) the aggregate Accrued Dividends of such shares as of the date of the Liquidation and ( ii ) the amount such Holder would have received had such shares of Preferred Stock, immediately prior to such Liquidation, been converted into shares of Common Stock (including in respect of any Excess Conversion Shares and disregarding for this purpose the last sentence of Section  6(a)(i)(B) ) pursuant to Section  6 , without regard to any of the limitations on conversion or convertibility contained therein.

(b) In the event the assets of the Corporation available for distribution to stockholders upon a Liquidation shall be insufficient to pay in full the amounts payable with respect to all outstanding shares of Preferred Stock pursuant to Section  5(a) , such assets, or the proceeds thereof, shall be distributed among the Holders ratably in proportion to the full respective liquidating distributions to which they would otherwise be respectively entitled upon such Liquidation.

(c) Neither the sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the assets, capital stock or business of the Corporation (other than in connection with the liquidation, dissolution or winding up of the Corporation) nor the merger, consolidation, share exchange, statutory exchange or any other business combination transaction of the Corporation into or with any other Person shall by itself be deemed to be a Liquidation for purposes of this Section  5 .

Section 6. Conversion.

(a) Conversion of Preferred Stock .

(i) Subject to and in accordance with the provisions of this Section  6 , shares of Preferred Stock may be converted into shares of Common Stock as follows:

(A) If ( a ) at any time after the Original Issuance Date, the Common Stock Trading Price exceeds 200% of the then applicable Conversion Price for at least 75 Trading Days (whether or not consecutive) during any 90 consecutive Trading Day period (such period, the “ Conversion Option Measurement Period ”) and ( b ) the Corporation, at its option, delivers a written notice to the Holders of the Preferred Stock within 10 Business Days following the conclusion of the applicable Conversion Option Measurement Period, then each share of Preferred Stock outstanding shall be converted (the “ Conversion Option ”), as of the Business Day immediately prior to the date of such notice (the “ Conversion Option Date ”), into such number of fully paid and non-assessable shares of Common Stock (calculated as to each conversion to the nearest 1/10,000th of a share) equal to the quotient of ( A ) the sum of ( 1 ) the

 

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Liquidation Preference and ( 2 ) the Accrued Dividends on such share as of the Conversion Option Date, divided by ( B ) the Conversion Price of such share in effect as of the Conversion Option Date; provided that if any shares of Common Stock issuable in connection with any Conversion Option would constitute Excess Conversion Shares, the Corporation may not exercise the Conversion Option until after the Requisite Stockholder Approval has been obtained.

(B) Subject to the last sentence of this Section  6(a)(i)(B) , each Holder of shares of Preferred Stock shall have the right (the “ Conversion Right ”), at any time and from time to time, at such Holder’s option, to convert all or any portion of such Holder’s shares of Preferred Stock into fully paid and non-assessable shares of Common Stock. Upon a Holder’s election to exercise its Conversion Right, each share of Preferred Stock for which the Conversion Right is exercised shall be converted into such number of shares of Common Stock (calculated as to each conversion to the nearest 1/10,000th of a share) equal to the quotient of ( A ) the sum of ( 1 ) the Liquidation Preference and ( 2 ) the Accrued Dividends on such share as of the Conversion Date, divided by ( B ) the Conversion Price of such share in effect at the time of conversion. Notwithstanding anything to the contrary contained in this Certificate, prior to the Requisite Stockholder Approval, in no event shall the number of shares of Preferred Stock converted pursuant to this Section  6(a)(i)(B) result in the issuance of any Excess Conversion Shares (when taken together with all shares of Common Stock previously issued in connection with any conversion of shares of Preferred Stock).

(ii) No fractional shares of Common Stock shall be issued upon the conversion of any shares of Preferred Stock. If more than one share of Preferred Stock subject to conversion is held by the same Holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the sum of ( A ) the aggregate Liquidation Preference and ( B ) the aggregate Accrued Dividends as of the Conversion Date on all shares of Preferred Stock so subject. If the conversion of any share or shares of Preferred Stock results in a fractional share of Common Stock issuable after application of the immediately preceding sentence, the Corporation shall pay a cash amount in lieu of issuing such fractional share in an amount equal to the value of such fractional interest multiplied by the Market Price of a share of Common Stock on the Trading Day immediately prior to the Conversion Date.

(iii) The Corporation will at all times reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting conversions of the Preferred Stock into shares of Common Stock, a number of shares of Common Stock equal to 110% of the number of shares of Common Stock issuable upon conversion of all then outstanding shares of Preferred Stock (including any Excess Conversion Shares and disregarding for this purpose the last sentence of Section  6(a)(i)(B) ). The Corporation shall take all action permitted by Law, including calling meetings of stockholders of the Corporation and soliciting proxies for any necessary vote of the stockholders of the Corporation, to amend the Certificate of Incorporation to increase the number of authorized and unissued shares of Common Stock, if at any time there shall be insufficient authorized and unissued shares of Common Stock to permit such reservation or to permit the conversion of all outstanding shares of Preferred Stock (including any Excess Conversion Shares and disregarding for this purpose the last sentence of Section  6(a)(i)(B) ). The Corporation covenants that the Preferred Stock and all Common Stock that may be issued upon conversion of Preferred Stock shall upon issuance be duly authorized, fully paid and non-assessable and will not be subject to preemptive rights or subscription rights of any other stockholder of the Corporation. The Corporation further covenants that the

 

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Corporation shall, if permitted by the rules of the NASDAQ, at its sole expense, cause to be authorized for listing or quotation on the NASDAQ, all Common Stock issuable upon conversion of the Preferred Stock, subject to official notice of issuance. The Corporation will use its reasonable best efforts to ensure that such Common Stock may be issued without violation of any applicable Law or regulation.

(b) Mechanics of Conversion .

(i) If the Corporation exercises the Conversion Option and delivers notice thereof in accordance with Section  6(a)(i)(A) , the Corporation shall notify the Holders of Preferred Stock in writing of the Conversion Option promptly following the Conversion Option Date by delivery of written notice to such Holders and shall update or cause to be updated the Register, effective as of the Conversion Option Date, to reflect the shares of Common Stock held by such Holders as a result of the Conversion Option and shall, as promptly as practicable thereafter, issue or cause to be issued to each such Holder the number of validly issued, fully paid and non-assessable shares of Common Stock to which such Holder shall be entitled and deliver or cause to be delivered to each such Holder evidence of such issuance reasonably satisfactory to such Holders.

(ii) The Conversion Right of a Holder of Preferred Stock shall be exercised by the Holder by delivering written notice to the Corporation that the Holder elects to convert all or a portion of the shares of Preferred Stock held by such Holder (a “ Conversion Notice ”) and specifying the name or names (with address or addresses) in which shares of Common Stock are to be issued and (if so required by the Corporation or the Corporation’s transfer agent, if any) by a written instrument or instruments of transfer in form reasonably satisfactory to the Corporation or the transfer agent, as applicable, duly executed by the Holder or its legal representative.

(iii) As promptly as practicable after the receipt of the Conversion Notice, and the payment of required taxes or duties pursuant to Section  12(i) , if applicable, and in no event later than three Trading Days thereafter, the Corporation shall update or cause to be updated the Register to reflect the shares of Common Stock held by such Holder as a result of such conversion and shall issue and shall deliver or cause to be issued and delivered to such Holder, or to such other Person on such Holder’s written order ( A ) evidence of such issuance reasonably satisfactory to such Holder, and ( B ) cash for any fractional interest in respect of a share of Common Stock arising upon such conversion settled as provided in Section  6(a)(ii) .

(iv) The conversion of any share of Preferred Stock shall be deemed to have been made (i) in connection with any Conversion Option, at the close of business on the Conversion Option Date, and (ii) in connection with any exercise of the Conversion Right, at the close of business on the date of giving the Conversion Notice (the “ Conversion Date ”). Until the Conversion Date with respect to any share of Preferred Stock has occurred, such share of Preferred Stock will remain outstanding and will be entitled to all of the powers, designations, preferences and other rights provided herein, including that such share shall ( A ) accrue and accumulate Preferred Dividends and participate in Participating Dividends pursuant to Section  4 and ( B ) entitle the Holder thereof to the voting rights provided in Section  11 ; provided , however , that any such shares that are repurchased pursuant to Section  8 or redeemed pursuant to Section  10 shall not be entitled to be converted.

 

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(c) Corporation’s Obligations to Issue Common Stock . Subject to the last sentence of Section  6(a)(i)(B) , the Corporation’s obligations to issue and deliver shares of Common Stock or Preferred Stock (as applicable) upon conversion of shares of Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by any Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by any Holder or any other Person of any obligation to the Corporation or any violation or alleged violation of Law by any Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to any Holder in connection with the issuance of such shares of Common Stock or Preferred Stock (as applicable).

Section 7. Reorganization Events.

(a) Treatment of Preferred Stock Upon a Reorganization Event . Subject to applicable Law, upon the occurrence of any Reorganization Event, ( i ) if the Corporation is the surviving company in such Reorganization Event, each share of Preferred Stock outstanding immediately prior to such Reorganization Event shall remain outstanding following such Reorganization Event (or be exchanged for an equivalent share of Preferred Stock governed by the terms herein); provided , that ( x ) each share of Preferred Stock shall become convertible into the kind and amount of securities, cash and other property that the Holder of such share of Preferred Stock (other than the counterparty to the Reorganization Event or an Affiliate of such other party) would have received in such Reorganization Event had such share of Preferred Stock, immediately prior to such Reorganization Event, been converted into the applicable number of shares of Common Stock using the Conversion Price immediately prior to such Reorganization Event (including in respect of any Excess Conversion Shares and disregarding for this purpose the last sentence of Section  6(a)(i)(B) ) (such securities, cash and other property, the “ Exchange Property ”), without interest on such Exchange Property, and ( y ) appropriate adjustments shall be made to the conversion provisions set forth in Section  6 and the adjustment to conversion price provisions set forth in Section  9 as determined reasonably and in good faith by the Board of Directors to place the Holders in as nearly as equal of a position as possible with respect to such matters following such Reorganization Event as compared to immediately prior to such Reorganization Event, or ( ii ) if the Corporation is not the surviving company in such Reorganization Event or will be dissolved in connection with such Reorganization Event, each share of Preferred Stock outstanding immediately prior to such Reorganization Event shall be converted or exchanged into a security of the Person surviving such Reorganization Event or such other continuing entity in such Reorganization Event having rights, powers and preferences, and the qualifications, limitations and restrictions thereof, as nearly equal as possible to those provided herein (with such adjustments as are appropriate to place the Holders in as nearly as equal of a position as possible following such Reorganization Event as compared to immediately prior to such Reorganization Event).

(b) Form of Consideration . In the event that shares of Preferred Stock are converted into Exchange Property and the holders of Common Stock have the opportunity to elect the form of consideration to be received in such transaction, the Exchange Property shall be based on the types and amounts of consideration received by the holders of Common Stock on a pro rata basis; provided , however , that, to the extent the applicable transaction agreement provides for adjustments to such elected types and amounts of consideration that are generally applicable to holders of Common Stock making such elections, the Exchange Property will be subject to such adjustments.

 

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(c) Successive Reorganization Events . The provisions of this Section  7 shall similarly apply to successive Reorganization Events.

(d) Notice of Reorganization Events . The Corporation (or any successor) shall, within 10 days following the consummation of any Reorganization Event, provide written notice to the Holders of such consummation of such event and of the kind and amount of the cash, securities or other property that constitutes the Exchange Property. Failure to deliver such notice shall not affect the operation of this Section  7 .

(e) Requirements of Reorganization Events . The Corporation shall not, without consent of the Holders representing at least a majority of the then-issued and outstanding shares of Preferred Stock, enter into any agreement for, or consummate, any transaction or series of transactions constituting a Reorganization Event unless (i) such agreement provides for or does not interfere with or prevent (as applicable) conversion of the Preferred Stock into the Exchange Property in a manner that is consistent with and gives effect to this Section  7 , and (ii) to the extent that the Corporation is not the surviving company in such Reorganization Event or will be dissolved in connection with such Reorganization Event, proper provision shall be made in the agreements governing such Reorganization Event for the conversion of the Preferred Stock into a security of the Person surviving such Reorganization Event or such other continuing entity in such Reorganization Event.

(f) Change of Control . For the sake of clarity, if a Reorganization Event constitutes a Change of Control, then Section  8 shall take precedence over this Section  7 to the extent there is any inconsistency between such sections.

Section  8. Change of Control Sale .

(a) Change of Control Sale . In the event of a Change of Control, each Holder of shares of Preferred Stock shall have the option, during the period beginning on the effective date of the Change of Control (the “ Change of Control Effective Date ”) and ending on the date that is 20 Business Days after the later of ( x ) receipt of written notice contemplated by Section  8(c) and ( y ) the Change of Control Effective Date, to require the Corporation (or the successor thereto) to purchase, to the extent permitted by applicable Law, all or any portion of its shares of Preferred Stock at a purchase price per share, payable in cash, equal to the sum of ( A ) the Liquidation Preference and ( B ) the Accrued Dividends of each such share of Preferred Stock as of the date of such purchase (a “ Change of Control Sale ”).

(b) Initial Change of Control Notice . On or before the 20 th Business Day prior to the date on which the Corporation anticipates consummating any Change of Control (or, if later, promptly after the Corporation discovers that the Change of Control will occur or has occurred), the Corporation shall deliver to each Holder (as appearing in the Register of the Corporation) a written notice setting forth a description of the anticipated Change of Control and the date on which the Change of Control is anticipated to be effected (or, if applicable, the date on which a Schedule TO or other schedule, form or report disclosing a Change of Control was filed).

 

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(c) Final Change of Control Notice . On the Change of Control Effective Date (or, if later, promptly after the Corporation discovers that the Change of Control has occurred), the Corporation shall deliver to each Holder a written notice setting forth:

(i) the date, which shall be no earlier than the 20 th Business Day after the Change of Control Effective Date (or, if later, the date of delivery of such notice), by which the Change of Control Sale option must be exercised;

(ii) the amount of cash payable per share of Preferred Stock in accordance with Section  8(a) and the purchase date for such shares, which shall be no greater than 10 Business Days following the expiration of the twenty (20) Business Day period referred to in Section  8(a) (which purchase date will be the effective date of such Change of Control Sale if such option is exercised); and

(iii) the instructions (which shall be reasonable and consistent with this Section  8 ) a Holder must follow to exercise its Change of Control Sale option in connection with such Change of Control.

(d) Change of Control Sale Procedure . To exercise a Change of Control Sale option, a Holder must, no later than 5:00 p.m., New York City time, on the date specified in the written notice referred to in Section  8(c)(i) by which such option must be exercised, notify the Corporation in writing of the number of shares of Preferred Stock as to which such Change of Control Sale option is being exercised.

(e) Delivery upon Change of Control Sale . Upon a Change of Control Sale, the Corporation shall deliver or cause to be delivered to the Holder by wire transfer the purchase price payable upon the purchase by the Corporation of such Holder’s shares of Preferred Stock in accordance with this Section  8 substantially concurrently with the Change of Control Sale. Subject to the payment of the purchase price for shares of Preferred Stock to be purchased pursuant to this Section  8 substantially concurrently with a Change of Control Sale, from and after the Change of Control Sale, the dividend, voting and other powers, designations, preferences and rights provided herein with respect to such repurchased shares of Preferred Stock shall cease.

(f) Insufficient Legally Available Funds . If, on the date on which the Change of Control Sale is otherwise to occur in accordance with this Section  8 , the Corporation does not have sufficient legally available funds to purchase all shares of Preferred Stock surrendered in connection with such Change of Control Sale in accordance with this Section  8 , then ( i ) the Corporation shall purchase the maximum number of shares of Preferred Stock that may be purchased, on a pro rata basis, with such legally available funds and ( ii ) except to the extent a Holder withdraws its exercise of the Change of Control Sale option with respect to unpurchased shares, shall purchase any remaining shares, on a pro rata basis, as soon as it has any additional legally available funds. Notwithstanding the foregoing, if the Corporation does not have legally available funds that are available to purchase all shares of Preferred Stock that Holders have elected to be purchased, or otherwise fails to comply with any provisions of Section  8 , the price per share for any share of Preferred Stock purchased pursuant to clause (ii) above after the date on which the Change of Control Sale is otherwise to occur in accordance with this Section  8 (disregarding this Section  8(f) ) shall be increased by the amount of any Accrued Dividends accruing between the date on which the Change of Control Sale is otherwise to occur and the date of such purchase.

 

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(g) Senior Indebtedness . Notwithstanding anything in this Section  8 to the contrary, in the event that the Corporation is also required upon a Change of Control to repurchase or repay amounts outstanding under the Debt Financing Documents (and the holders of rights to receive payment of such amounts have not waived such rights and have not otherwise failed to exercise such rights), the rights of holders of debt obligations of the Corporation to receive payments under the Debt Financing Documents in the event of such Change of Control will be senior pursuant to and to the extent provided by applicable law to the rights of each Holder of such shares of Preferred Stock to receive the purchase price payable in respect of such shares of Preferred Stock surrendered in connection with a Change of Control Sale in accordance with this Section  8 (it being understood that the foregoing shall not limit the rights of the Holders in any voluntary or involuntary bankruptcy, reorganization, insolvency or liquidation proceeding).

(h) Partial Change of Control Sale . If a portion, but less than all, of the shares of Preferred Stock held by any Holder are purchased in accordance with this Section  8 on any particular date, the Corporation shall promptly thereafter reflect in the Register the remaining shares of Preferred Stock held by such Holder.

Section 9. Adjustments to Conversion Price.

(a) Adjustments to Conversion Price . Except as provided in Section  9(d) , the Conversion Price shall be subject to the following adjustments:

(i) Stock Dividends and Distributions . If the Corporation declares a dividend or makes a distribution on the Common Stock payable in shares of Common Stock, then the Conversion Price in effect at the opening of business on the Ex-Date for such dividend or distribution shall be adjusted to the price determined by multiplying the Conversion Price at the opening of business on such Ex-Date by the following fraction:

        OS 0          

OS 1

Where,

OS 0 = the number of shares of Common Stock outstanding at the close of business on the Business Day immediately preceding the Ex-Date for such dividend or distribution.

OS 1 = the sum of the number of shares of Common Stock outstanding at the close of business on the Business Day immediately preceding the Ex-Date for such dividend or distribution plus the total number of shares of Common Stock constituting such dividend or distribution.

If any dividend or distribution described in this Section  9(a)(i) is declared but not so paid or made, the Conversion Price shall be readjusted, effective as of the date and time the Board of Directors determines not to make such dividend or distribution, to such Conversion Price that would be in effect if such dividend or distribution had not been declared.

 

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(ii) Subdivisions, Splits and Combination of the Common Stock . If the Corporation subdivides, splits or combines the shares of Common Stock, then the Conversion Price in effect immediately prior to the effective date of such share subdivision, split or combination shall be adjusted to the price determined by multiplying the Conversion Price in effect immediately prior to the effective date of such share subdivision, split or combination by the following fraction:

    OS 0     

OS 1

Where,

OS 0 = the number of shares of Common Stock outstanding immediately prior to the effective date of such share subdivision, split or combination.

OS 1 = the number of shares of Common Stock outstanding immediately after the opening of business on the effective date of such share subdivision, split or combination.

If any subdivision, split or combination described in this Section  9(a)(ii) is announced but the outstanding shares of Common Stock are not subdivided, split or combined, the Conversion Price shall be readjusted, effective as of the date the Board of Directors determines not to subdivide, split or combine the outstanding shares of Common Stock, to such Conversion Price that would be in effect if such subdivision, split or combination had not been announced.

(iii) Other Distributions . If the Corporation distributes to all holders of shares of Common Stock any Convertible Securities or Options or any other assets for which there is no corresponding distribution in respect of the Preferred Stock pursuant to Section  4(a)(i) (which excludes, for the avoidance of doubt, any distribution of cash or non-cash property for which there is a corresponding distribution in respect of the Preferred Stock pursuant to Section  4(a)(i) ), then the Conversion Price in effect immediately prior to the Ex-Date for such distribution shall be adjusted to the price determined by multiplying the Conversion Price in effect immediately prior to the Ex-Date for such distribution by the following fraction:

        SP 0 – FMV    

SP 0

Where,

SP 0 = the Market Price of a share of Common Stock on the date immediately prior to the Ex-Date for such distribution.

 

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FMV = the fair market value of the portion of the distribution applicable to one share of Common Stock on the Ex-Date for such distribution, in the case of a non-cash distribution or with respect to the non-cash portion of a distribution, if any, as determined (i) by the good faith determination of the Board of Directors or (ii) if, within five Business Days following notice from the Corporation of the value determined by the Board of Directors pursuant to clause (i), the Holders of a majority of the outstanding shares of Preferred Stock object in good faith to such determination, then the fair market value will be determined by a nationally recognized independent investment banking firm that has for this purpose (x) been selected by the Board of Directors, and (y) is reasonably acceptable to Holders of a majority of the outstanding shares of Preferred Stock; provided , that such value, whether determined pursuant to the foregoing clause (i) or (ii), shall not for the purposes hereof in any event be equal to or greater than the Market Price of a share of Common Stock on such date.

In a “spin-off,” where the Corporation makes a distribution to all holders of shares of Common Stock consisting of capital stock of any class or series, or similar equity interests of, or relating to, a Subsidiary of the Corporation or other business unit, the Conversion Price will be adjusted on the 15 th Trading Day after the effective date of the distribution by multiplying such Conversion Price in effect immediately prior to such 15 th Trading Day by the following fraction:

        MP 0          

MP 0 + MP s

Where,

MP 0 = ( i ) if the Common Stock is listed or quoted on a principal U.S. national or regional securities exchange or traded on an over-the-counter market, the Market Price of a share of Common Stock for the period ending on and including the tenth Trading Day following the effective date of such distribution, or ( ii ) if the Common Stock is not listed or quoted on a principal U.S. national or regional securities exchange or traded on an over-the-counter market, the Market Price of a share of Common Stock on the effective date of such distribution.

MP s = (i) if the capital stock or equity interests distributed to the holders of shares of Common Stock are listed or quoted on a principal U.S. national or regional securities exchange or traded on an over-the-counter market, an amount equal to the product of ( x ) the number of shares of such capital stock or equity interests representing the portion of the distribution applicable to one share of Common Stock and ( y ) the Market Price of such capital stock or equity interests for the period ending on and including the tenth Trading Day following the effective date of such distribution, or ( ii ) if such capital stock or equity interests are not listed or quoted on a principal U.S. national or regional securities exchange or traded on an over-the-counter market, the Market Price of the capital stock or equity interests representing the portion of the distribution applicable to one share of Common Stock on the effective date of such distribution (after giving effect to such distribution).

In the event that such distribution described in this Section  9(a)(iii) is not so paid or made, the Conversion Price shall be readjusted, effective as of the date the Board of Directors publicly announces its decision not to pay or make such dividend or distribution, to the Conversion Price that would then be in effect if such dividend or distribution had not been declared.

 

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(iv) Certain Repurchases of Common Stock . If the Corporation effects a Pro Rata Repurchase of Common Stock that involves the payment by the Corporation of consideration per share of Common Stock that exceeds the Market Price of a share of Common Stock on the Effective Date of such Pro Rata Repurchase ( provided that if part or all of the consideration is not cash, the fair market value of the non-cash consideration shall be determined by a nationally recognized independent investment banking firm that has for this purpose (x) been selected by the Board of Directors, and (y) been consented to by Holders of a majority of the outstanding shares of Preferred Stock, voting as a separate class, then the Conversion Price in effect immediately prior to the Effective Date of such Pro Rata Repurchase shall be adjusted (such adjustment to become effective immediately prior to the opening of business on the day following the Effective Date of such Pro Rata Repurchase) by multiplying the Conversion Price in effect immediately prior to the Effective Date of such Pro Rata Repurchase by the following fraction:

(OS 0 x SP 0 ) – AC

SP 0 x OS 1

Where,

SP 0 = the Market Price of a share of Common Stock on the Trading Day immediately preceding the first announcement of the intent to effect such Pro Rata Repurchase.

OS 0 = the number of shares of Common Stock outstanding at the Effective Date of such Pro Rata Repurchase, including, if applicable, any shares validly tendered and not withdrawn or exchanged shares.

OS 1 = the number of shares of Common Stock outstanding at the Effective Date of such Pro Rata Repurchase, including, if applicable, any shares validly tendered or exchanged and not withdrawn, minus the number of shares purchased in such Pro Rata Repurchase (which shares shall equal the Purchased Shares (as defined below) if such Pro Rata Repurchase is effected pursuant to a tender offer or exchange offer).

AC = the aggregate cash and fair market value of the other consideration payable in such Pro Rata Repurchase, and in the case of non-cash consideration, as determined by a nationally recognized independent investment banking firm that has for this purpose (x) been selected by the Board of Directors, and (y) been consented to by Holders of a majority of the outstanding shares of Preferred Stock, voting as a separate class, based, in the case of a tender offer or exchange offer, on the number of shares actually accepted for purchase (the “ Purchased Shares ”).

In the event that the Corporation, or one of its Affiliates, is obligated to purchase shares of Common Stock pursuant to any such Pro Rata Repurchase, but the Corporation, or such Affiliate, is permanently prevented by applicable Law from effecting any such purchases, or all such purchases are rescinded, then the Conversion Price shall be readjusted to be such Conversion Price that would then be in effect if such Pro Rata Repurchase had not been made.

 

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(v) Rights Plans . To the extent that the Corporation has a rights plan in effect with respect to the Common Stock on any Conversion Date, upon conversion of any shares of the Preferred Stock into Common Stock, the Holders will receive, in addition to the shares of Common Stock, the rights under the rights plan, unless, prior to such Conversion Date, the rights have separated from the shares of Common Stock, in which case the Conversion Price will be adjusted at the time of separation as if the Corporation had issued the rights to all holders of the Common Stock in an issuance triggering an adjustment pursuant to Section  9(a)(iii) , subject to readjustment in the event of the expiration, termination or redemption of such rights.

(b) Other Adjustments .

(i) The Corporation may make decreases in the Conversion Price, in addition to any other decreases required by this Section  9 , if the Board of Directors deems it advisable to avoid or diminish any income tax to holders of the Common Stock resulting from any dividend or distribution of shares of Common Stock (or issuance of Options for Common Stock) or from any event treated as such for income tax purposes.

(ii) If the Corporation takes any action affecting the Common Stock, other than an action described in Section  9(a) , which upon a determination by the Board of Directors, in its good faith discretion (such determination intended to be a “fact” for purposes of Section 151(a) of the DGCL), would materially adversely affect the conversion rights of the Holders of shares of Preferred Stock, the Conversion Price shall be adjusted, to the extent permitted by Law, in such manner, if any, and at such time, as the Board of Directors determines in good faith to be equitable in the circumstances.

(c) Successive Adjustments . Successive adjustments in the Conversion Price shall be made, without duplication, whenever any event specified in Section  9(a) or Section  9(b) shall occur.

(d) Rounding of Calculations; Minimum Adjustments . All adjustments to the Conversion Price shall be calculated to the nearest one-tenth (1/10 th ) of a cent. No adjustment in the Conversion Price shall be required if such adjustment would be less than $0.01; provided , that any adjustments which by reason of this Section  9(d) are not required to be made shall be carried forward and taken into account in any subsequent adjustment; provided , further that on any Conversion Date adjustments to the Conversion Price will be made with respect to any such adjustment carried forward and which has not been taken into account before such date.

(e) Statement Regarding Adjustments; Notices . Whenever the Conversion Price is to be adjusted in accordance with one or more of Section  9(a) or Section  9(b) , the Corporation shall: ( i ) compute the Conversion Price in accordance with Section  9(a) or Section  9(b) , taking into account the one cent threshold set forth in Section  9(d) ; ( ii ) ( x ) in the event that the Corporation shall give notice or make a public announcement to the holders of Common Stock of any action of the type described in Section  9(a) (but only if the action of the type described in Section  9(a) would result in an adjustment to the Conversion Price or a change in the type of securities or property to be delivered upon conversion of the Preferred Stock), the Corporation shall, at the time of such notice or announcement, and in the case of any action which would require the fixing of a record date, at least ten (10) days prior to such record date, give notice to each Holder by mail, first class postage prepaid, at the address appearing in the

 

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Register, which notice shall specify the record date, if any, with respect to any such action, the approximate date on which such action is to take place and the facts with respect to such action as shall be reasonably necessary to indicate the effect on the Conversion Price and the number, kind or class of shares or other securities or property which shall be deliverable upon conversion or redemption of the Preferred Stock or ( y ) in the event that the Corporation does not give notice or make a public announcement as set forth in subclause (x) of this clause (ii), the Corporation shall, as soon as practicable following the occurrence of an event that requires an adjustment to the Conversion Price pursuant to one or more of Section  9(a) or Section  9(b) , taking into account the one cent threshold set forth in Section  9(d)  (or if the Corporation is not aware of such occurrence, as soon as practicable after becoming so aware), provide, or cause to be provided, a written notice to the Holders of the occurrence of such event, in the same manner and with the same detail as the notice set forth in subclause (x) of this clause (ii); and ( iii ) whenever the Conversion Price shall be adjusted pursuant to one or more of Section  9(a) or Section  9(b) , the Corporation shall, as soon as practicable following the determination of the revised Conversion Price, ( x ) file at the principal office of the Corporation, a statement showing in reasonable detail the facts requiring such adjustment, the Conversion Price that shall be in effect after such adjustment and the method by which the adjustment to the Conversion Price was determined and ( y ) cause a copy of such statement to be sent in the manner set forth in subclause (x) of clause (ii) to each Holder.

(f) Certain Adjustment Rules . If an adjustment in the Conversion Price made hereunder would reduce the Conversion Price to an amount below par value of the Common Stock, then such adjustment in Conversion Price made hereunder shall reduce the Conversion Price to the par value of the Common Stock. As a condition precedent to the taking of any action which would require an adjustment pursuant to this Section  9 , the Corporation shall use its reasonable best efforts to take any and all actions which may be necessary, including obtaining regulatory, NASDAQ (or such exchange or automated quotation system on which the Common Stock is then listed) or stockholder approvals or exemptions, in order that the Corporation may thereafter validly and legally issue as fully paid and nonassessable all shares of Common Stock issuable upon conversion of the Preferred Stock in compliance with the applicable listing standards of NASDAQ (or such exchange or automated quotation system on which the Common Stock is then listed).

Section 10. Optional Redemption.

(a) Subject to and in accordance with the provisions of this Section  10 , the Corporation shall have the right, at its option, at any time (subject to Section  10(c) ), to redeem, out of funds legally available therefor, (i) all or (ii) any portion of the shares of Preferred Stock then outstanding at a redemption price per share in cash (the “ Redemption Price ”) equal to two times (2x) the sum of ( A ) the Liquidation Preference and ( B ) the Accrued Dividends of each such share of Preferred Stock as of the date of such redemption; provided , that any Accrued Dividends that have accrued since the most recent Preferred Dividend Payment Date shall instead be calculated at one times (1x) the amount of such current period Accrued Dividends; provided , further , that any redemption under this Section  10 for less than all of the shares of Preferred Stock then outstanding must be for no less than one-third (1/3) of the total number of shares of Preferred Stock initially issued to the Investor on the Original Issuance Date and must not result in the Investor’s Beneficial Ownership of the Common Stock (on an as-converted to Common Stock basis) falling below five percent (5%) of the Common Stock then outstanding as

 

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of the Redemption Date (on an as-converted to Common Stock basis). The Corporation may exercise its right to require redemption under this Section  10 by sending a written notice to each Holder of Preferred Stock (the “ Redemption Notice ”) specifying (x) the date on which the redemption shall occur (the “ Redemption Date ”), which shall be a Business Day that is no earlier than 30 days and no later than 60 days from the date the Redemption Notice is sent and (y) the aggregate number of shares of Preferred Stock which are being redeemed pursuant to such redemption. If fewer than all of the shares of Preferred Stock then outstanding are to be redeemed pursuant to this Section  10(a) , then such redemption shall occur on a pro rata basis with respect to all Holders of Preferred Stock based on the total number of shares of Preferred Stock then held by such Holder relative to the total number of shares of Preferred Stock then outstanding. Notwithstanding anything to the contrary in this Section  10(a) , each Holder of shares of Preferred Stock to be redeemed by the Corporation may elect to convert all or any portion of the shares of Preferred Stock held by such Holder into Common Stock in accordance with the provisions of Section  6  (taking into account the limitation in the last sentence of Section 6(a)(i)(B), applied ratably with respect to each outstanding share of Preferred Stock) at any time prior to the applicable Redemption Date.

(b) Redemption pursuant to Section  10(a)  shall become effective on the Redemption Date