Sterling Infrastructure, Inc 8-K, filed Jan 5, 2022
Sterling Infrastructure, Inc. (STRL)
8-K
2022-01-05
For: 2021-12-29
View Original
Added on
April 09, 2026
About this 8-K
Sterling Infrastructure, Inc filed this 8-K on January 5, 2022, reporting on events of December 29, 2021.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.01: Completed an acquisition or sale of assets
- Item 2.03: New debt or off-balance-sheet obligation
- Item 3.02: Unregistered sale of equity
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM | ||
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 29, 2021
(Exact name of registrant as specified in its charter) | ||||||||||||||
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
Registrant’s telephone number, including area code: ( | ||||||||||||||
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||
| (Title of Class) | (Trading Symbol) | (Name of each exchange on which registered) | ||||||
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | |||||||||||
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||||||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||||||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||||||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||||||||
| Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR § 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. | ||||
Purchase Agreement On December 30, 2021 (the “Closing Date”), Sterling Construction Company, Inc. (the “Company”) entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Michael V. Petillo, in his individual capacity (“Mr. Petillo”) and as the sellers’ representative, the 2020 Audrey Petillo Family Trust and the Michael V. Petillo Family Trust, each a New Jersey trust, Petillo LLC, a Delaware limited liability company (“Petillo LLC”), Petillo NY LLC, a Delaware limited liability company (“Petillo NY LLC”), Petillo Maryland Incorporated, a Maryland corporation (“Petillo MD” and, together with Petillo LLC and Petillo NY LLC, including such companies’ legal successors, the “Acquired Companies” or “Petillo”), Petillo NJ Holdings Incorporated, a New Jersey corporation (“NJ Seller”), Petillo NY Holdings Incorporated, a New York corporation (“NY Seller”), and Petillo MD Holdings Incorporated, a Maryland corporation (“MD Seller” and together with NJ Seller and NY Seller, the “Sellers”), pursuant to which the Company acquired all of the issued and outstanding equity interests of the legal successors to the Acquired Companies following their respective reorganizations pursuant to Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended (the “Acquisition”) for the aggregate consideration of $195,000,000 paid on the Closing Date (the “Base Purchase Price”) consisting of (i) $175,000,000 in cash (as adjusted based on cash, indebtedness, funded debt, transaction expenses and net working capital); and (ii) 759,447 shares of the Company’s common stock, $0.01 par value per share, valued at $20,000,000 (the “Shares”). The Shares are subject to lock-up agreements entered into in connection with the Purchase Agreement for 12 months after the Acquisition closes. The Acquired Companies are engaged in the business of large-scale site infrastructure improvement services, including full-service excavation, underground utility construction, environmental remediation, drainage systems for commercial construction, and water management and distribution systems. Additionally under the Purchase Agreement, upon the satisfaction of certain operating income thresholds attributable to the Acquired Companies during the five-year period following the Closing Date (the “earn-out period”), subject to Mr. Petillo’s continued employment and certain other conditions (each as specified in the Purchase Agreement), the Company is required to make earn-out payments to Sellers in an amount equal to 30% of the aggregate operating income of the Acquired Companies that is in excess of certain specified thresholds calculated as of December 31 of each of the five years following the Closing Date, which earn-out payments are payable during the fiscal year following such determination dates. The earn-out payments are capped at $20,000,000 in the aggregate over the earn-out period. The Company also entered into employment agreements with Mr. Petillo and certain of the Acquired Companies’ key employees. The employment agreement with Mr. Petillo provides for cash retention payments in the aggregate amount of $15,000,000 payable in equal $3,000,000 installments over a five-year period commencing on the first anniversary of the Closing Date. The Purchase Agreement contains customary representations, warranties and covenants for transactions of this type, including covenants by the Sellers to indemnify the Company for breaches of certain representations, warranties and covenants in the Purchase Agreement, subject to customary exclusions and caps. In connection with its entry into the Purchase Agreement, the Company also bound a customary buyer-side representations and warranties insurance policy (the “R&W Insurance Policy”) as additional recourse for certain losses arising out of a breach of the representations and warranties of the Sellers contained in the Purchase Agreement and certain pre-closing taxes of the Acquired Companies. The R&W Insurance Policy is subject to certain policy limits, exclusions, deductibles and other terms and conditions. Sellers’ obligation to indemnify the Company for breaches of the representations and warranties contained in the Purchase Agreement that are covered by the R&W Insurance Policy is generally limited to half of the retention under the representations and warranties insurance policy. The Purchase Agreement contains representations and warranties of the parties, which have been made for the benefit of the other party and should not be relied upon by any other person. Such representations and warranties (i) have been qualified by schedules and exhibits, (ii) are subject to materiality standards that may differ from what may be viewed as material by investors, (iii) are made as of specified dates, and (iv) may have been used for the purpose of allocating risk among the parties rather than establishing matters of fact. Accordingly, the representations and warranties should not be relied upon as characterizations of the actual state of facts. The foregoing description of the Purchase Agreement and the transactions contemplated thereby is not complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference. | |||||
Credit Agreement Amendment Effective December 29, 2021, the Company, as borrower, and certain of its subsidiaries, as guarantors (the “Subsidiary Guarantors”), entered into a Third Amendment to Credit Agreement (the “Amendment”) with the financial institutions party thereto as lenders (the “Lenders”) and BMO Harris Bank N.A., as administrative agent for the Lenders (the “Agent”). The Amendment amends that certain Credit Agreement, dated as of October 2, 2019, as previously amended by that certain First Amendment to Credit Agreement, dated as of December 2, 2019, and that certain Second Amendment to Credit Agreement, dated as of June 28, 2021, each by and among the Company, the Subsidiary Guarantors, the Lenders party thereto and the Agent (the “Credit Agreement”). The Credit Agreement previously provided the Company with senior secured debt financing in an amount up to $475,000,000 in the aggregate, consisting of (i) a senior secured first lien term loan facility in the amount of $400,000,000 (the “Existing Term Loans”) and (ii) a senior secured first lien revolving credit facility in an aggregate principal amount of $75,000,000 (with a $75,000,000 sublimit for the issuance of letters of credit and a $15,000,000 sublimit for swing line loans) (collectively, the “Credit Facility”). The obligations under the Credit Facility are secured by substantially all assets of the Company and the Subsidiary Guarantors, subject to certain permitted liens and interests of other parties. The Amendment amends and restates the Credit Agreement in order to: •increase the Existing Term Loans through a new incremental term loan in the aggregate principal amount of $140,000,000 to be extended by certain of the Lenders (the “Incremental Term Loans”) with the same maturity as the Existing Term Loans, in order to, among other permitted uses under the Credit Agreement, finance a portion of the purchase price of the Acquisition and pay fees and expenses incurred in connection with the Acquisition and the Amendment; •expressly permit the Acquisition; •amend the schedule of quarterly amortization payments of the Existing Term Loans and the Incremental Term Loans as follows: (i) in the case of the Existing Term Loans, the calendar quarter ending December 31, 2021 in an amount equal to (x) 1.25% of the principal amount of such Existing Term Loans outstanding as of June 28, 2021, in the case of each calendar quarter ending on or prior to March 31, 2023 and (y) 1.875% of the principal amount of such Existing Term Loans outstanding as of June 28, 2021, in the case of each calendar quarter ending on June 30, 2023 or thereafter, with the remaining outstanding principal amount of such Existing Term Loans repaid at maturity and (ii) in the case of the Incremental Term Loans, the calendar quarter ending March 31, 2022, in each case in amounts equal to (x) 1.25% of the initial principal amount of such Incremental Term Loans, in the case of each calendar quarter ending on or prior to March 31, 2023 and (y) 1.875% of the initial principal amount of such Incremental Term Loans, in the case of each calendar quarter ending on June 30, 2023 or thereafter, with the remaining outstanding principal amount of such Incremental Term Loans repaid at maturity; •provide that the applicable margins with respect to outstanding loans, reimbursement obligations, commitment fees and letter of credit fees shall be the rates per annum set at Level III (as defined under the Credit Agreement) from the effective date of the Amendment until the delivery by the Company of the required financial statements and the related compliance certificate for the fiscal quarter ending March 31, 2022, after which the applicable margins shall be as previously determined under the Credit Agreement; •amend the financial covenants as follows: (i) testing dates for compliance with the Total Leverage Ratio (as defined under the Credit Agreement) are modified such that the Company is required to maintain a Total Leverage Ratio at the last day of each fiscal quarter not to be greater than 3.25 to 1.00 ending on December 31, 2021 through and including June 30, 2022, and 3.00 to 1.00 ending on September 30, 2022 and thereafter, and (ii) the forgiveness of any portion of the SBA PPP Loans (as defined under the Credit Agreement) shall be excluded from calculations of net income and, to the extent forgiven, the SBA PPP Loans (other than interest thereon) shall be disregarded for purposes of calculating financial covenants in the Credit Agreement; •provide that that the amount of any mandatory prepayment in respect of excess cash flow pursuant to the Credit Agreement for the fiscal year ending December 31, 2021 is waived; •provide for the same accordion rights to increase the Credit Facility except that the aggregate amount of all incremental commitments following (and after giving effect to the Incremental Term Loans made in connection with) the Amendment shall not exceed $100,000,000; and •effectuate certain conforming, administrative and non-material modifications to the Credit Agreement as more fully set forth in the Amendment. | |||||
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to such document, which is filed as Exhibit 10.1 hereto and incorporated herein by reference. | |||||
| Item 2.01 | Completion of Acquisition or Disposition of Assets. | ||||
The information set forth under Item 1.01 to this Current Report on Form 8-K regarding the Purchase Agreement and the Acquisition is incorporated herein by reference. | |||||
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. | ||||
The information set forth under Item 1.01 to this Current Report on Form 8-K regarding the Amendment is incorporated herein by reference. | |||||
| Item 3.02 | Unregistered Sales of Equity Securities. | ||||
On December 30, 2021, the Company issued the Shares to the Sellers as a portion of the Base Purchase Price for the Acquisition. The information set forth under Item 1.01 regarding the Acquisition and related issuance of the Shares is incorporated herein by reference. The Shares were issued pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, in accordance with Regulation D promulgated thereunder, as the offer and sale of the Shares did not involve a public offering. In addition, the Sellers made representations and warranties to the Company in the Purchase Agreement regarding, among other things, each of their status as an accredited investor and investment intent. | |||||
| Item 9.01 | Financial Statements and Exhibits. | ||||
(a) Financial Statements of Business Acquired The audited consolidated financial statements of Petillo as of and for the year ended December 31, 2020 are filed as Exhibit 99.1 and incorporated by reference herein. The unaudited consolidated financial statements of Petillo as of and for the nine months ended September 30, 2021 are filed as Exhibit 99.2 and incorporated by reference herein. The consent of RMG CPA, LLC, Petillo’s independent auditor, is attached as Exhibit 23.1. (b) Pro Forma Financial Information The unaudited pro forma condensed combined financial information as of and for the nine months ended September 30, 2021 and for the year ended December 31, 2020 with respect to the Acquisition is filed as Exhibit 99.3 and incorporated by reference herein. (d) Exhibits | |||||
| Exhibit Number | Description | |||||||
| 2.1 | ||||||||
| 10.1 | ||||||||
| 23.1 | ||||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 99.3 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
| 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. | ||
| STERLING CONSTRUCTION COMPANY, INC. | |||||||||||
| Date: | January 5, 2022 | By: | /s/ Ronald A. Ballschmiede | ||||||||
| Ronald A. Ballschmiede | |||||||||||
| Chief Financial Officer | |||||||||||
Exhibit 2.1 Execution Version {N4469832.17} STOCK PURCHASE AGREEMENT BY AND AMONG MICHAEL V. PETILLO, THE 2020 AUDREY PETILLO FAMILY TRUST, THE MICHAEL V. PETILLO FAMILY TRUST, PETILLO LLC, PETILLO NY LLC, PETILLO MARYLAND INCORPORATED, PETILLO NJ HOLDINGS INCORPORATED, PETILLO NY HOLDINGS INCORPORATED, PETILLO MD HOLDINGS INCORPORATED, SELLERS REPRESENTATIVE and STERLING CONSTRUCTION COMPANY, INC. dated as of DECEMBER 30, 2021
i {N4469832.17} TABLE OF CONTENTS Page ARTICLE 1 PURCHASE AND SALE .......................................................................................... 2 Section 1.1 Purchase and Sale ......................................................................................2 Section 1.2 Estimated Adjustment ...............................................................................3 Section 1.3 Base Purchase Price; Transactions to be Effected at the Closing .........3 Section 1.4 Closing .........................................................................................................6 Section 1.5 Calculations ................................................................................................6 Section 1.6 Review; Disputes ........................................................................................7 Section 1.7 Payment Upon Final Determination of Adjustments .............................8 Section 1.8 Purchase Price Allocation .........................................................................9 Section 1.9 Asset Allocation ........................................................................................10 Section 1.10 Cash Retention Bonus..............................................................................11 Section 1.11 Earn-Out Payments .................................................................................11 ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF COVENANTORS ................... 14 Section 2.1 Organization and Authority of Covenantors ........................................14 Section 2.2 Organization, Authority and Qualification of the Acquired Companies ....................................................................................................................15 Section 2.3 Capitalization ...........................................................................................15 Section 2.4 No Subsidiaries .........................................................................................16 Section 2.5 No Conflicts; Consents ............................................................................16 Section 2.6 Financial Statements ................................................................................16 Section 2.7 Undisclosed Liabilities; Indebtedness ....................................................17 Section 2.8 Absence of Certain Changes, Events and Conditions...........................17 Section 2.9 Material Contracts ...................................................................................18 Section 2.10 Title to Assets; Sufficiency of Assets; Real Property ............................20 Section 2.11 Intellectual Property; Internet Accounts; IT Systems; Data Protection ..................................................................................................22 Section 2.12 Legal Proceedings; Governmental Orders ............................................24 Section 2.13 Compliance With Laws; Permits ............................................................24 Section 2.14 Environmental Matters ...........................................................................25 Section 2.15 Employee Benefit Matters .......................................................................26 Section 2.16 Employment Matters ...............................................................................29 Section 2.17 Taxes..........................................................................................................30 Section 2.18 Brokers ......................................................................................................34 Section 2.19 Receivables and Payables ........................................................................34 Section 2.20 Material Customers and Material Suppliers .........................................34 Section 2.21 Related Party Transactions .....................................................................35 Section 2.22 Insurance ..................................................................................................35 Section 2.23 Investment Purpose .................................................................................35 Section 2.24 Independent Investigation .......................................................................35 Section 2.25 Service Warranties...................................................................................36 Section 2.26 Bank Accounts ..........................................................................................36
ii {N4469832.17} Section 2.27 Books and Records ...................................................................................36 Section 2.28 Government Contracts and Government Bids......................................36 Section 2.29 Backlog ......................................................................................................37 Section 2.30 Coronavirus Pandemic Matters..............................................................37 Section 2.31 No Other Representations or Warranties..............................................38 ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BUYER ................................... 38 Section 3.1 Organization and Authority of Buyer ....................................................38 Section 3.2 No Conflicts; Consents ............................................................................39 Section 3.3 Investment Purpose .................................................................................39 Section 3.4 Buyer Capital Structure ..........................................................................39 Section 3.5 Valid Issuance of Buyer Common Stock ...............................................40 Section 3.6 SEC Filings; Financial Statements. ........................................................40 Section 3.7 Compliance with Laws ............................................................................41 Section 3.8 Brokers ......................................................................................................41 Section 3.9 Legal Proceedings ....................................................................................41 Section 3.10 Absence of Changes .................................................................................42 Section 3.11 Availability of Funds; Solvency ..............................................................42 Section 3.12 Absence of Undisclosed Liabilities .........................................................42 Section 3.13 No Other Representations and Warranties ...........................................42 ARTICLE 4 COVENANTS ......................................................................................................... 42 Section 4.1 Employees; Benefit Plans ........................................................................42 . 42 Section 4.2 Confidentiality ..........................................................................................44 Section 4.3 Books and Records ...................................................................................44 Section 4.4 Public Announcements ............................................................................45 Section 4.5 Further Assurances ..................................................................................45 Section 4.6 Tax Matters ..............................................................................................45 Section 4.7 Transfer Taxes .........................................................................................47 Section 4.8 R&W Insurance Policy ............................................................................47 Section 4.9 Financial Information ..............................................................................47 Section 4.10 Buyer Stock Consideration .....................................................................48 Section 4.11 Indemnification of Directors and Officers. ............................................48 Section 4.12 Conduct of the Acquired Business Prior to Closing .............................48 Section 4.13 Access to Information ..............................................................................49 Section 4.14 Exclusive Dealing .....................................................................................49 Section 4.15 Reorganizations ........................................................................................49 ARTICLE 5 INDEMNIFICATION .............................................................................................. 49 Section 5.1 Survival .....................................................................................................49 Section 5.2 Indemnification by Covenantors ............................................................50 Section 5.3 Indemnification by Buyer........................................................................51 Section 5.4 Indemnification Procedures ....................................................................52 Section 5.5 Miscellaneous Indemnification Provisions ............................................53
iii {N4469832.17} Section 5.6 Satisfaction of Covenantors’ Indemnification Obligations; Release of Remaining Escrow Amount ....................................................................55 ARTICLE 6 CONDITIONS TO CLOSING................................................................................. 56 Section 6.1 Conditions to Obligations of All Parties ................................................56 Section 6.2 Conditions to Obligations of Buyer ........................................................56 Section 6.3 Conditions to Obligations of the Seller Parties .....................................57 Section 6.4 Frustration of Conditions ........................................................................57 ARTICLE 7 TERMINATION ...................................................................................................... 57 Section 7.1 Termination ..............................................................................................57 Section 7.2 Effect of Termination ..............................................................................58 ARTICLE 8 MISCELLANEOUS ................................................................................................ 59 Section 8.1 Expenses ....................................................................................................59 Section 8.2 Notices .......................................................................................................59 Section 8.3 Interpretation ...........................................................................................60 Section 8.4 Headings....................................................................................................60 Section 8.5 Severability ...............................................................................................60 Section 8.6 Entire Agreement .....................................................................................60 Section 8.7 Successors and Assigns ............................................................................60 Section 8.8 No Third-party Beneficiaries ..................................................................60 Section 8.9 Amendment and Modification; Waiver .................................................60 Section 8.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial ...61 Section 8.11 Specific Performance ...............................................................................62 Section 8.12 Counterparts ............................................................................................62 Section 8.13 Covenantor Release .................................................................................62 Section 8.14 Waiver of Conflicts Regarding Representation; Non-Assertion of Attorney-Client Privilege. .......................................................................63 Section 8.15 The Sellers Representative ......................................................................64 EXHIBITS AND SCHEDULES(*) Exhibit A Definitions Exhibit B Sample Working Capital Calculation and Seller Accounting Principles Exhibit C RCAs Exhibit D Escrow Agreement Exhibit E Employment Agreements Exhibit F Lock-Up Agreements Exhibit G Assignment Seller Disclosure Schedule (*) Certain exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K because the information contained therein is not material and is not otherwise publicly disclosed. The registrant undertakes to furnish supplementally a copy of the exhibits and schedules to the Securities and Exchange Commission upon request.
{N4469832.17} STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of December 30, 2021 (the “Effective Date”), is entered into by and among Michael V. Petillo, an individual resident of the State of New Jersey (“Mr. Petillo”); the 2020 Audrey Petillo Family Trust and the Michael V. Petillo Family Trust (collectively, the “Trusts,” each a “Trust” and, together with Mr. Petillo, “Covenantors” and each of the Trusts and Mr. Petillo a “Covenantor”); Petillo LLC, a Delaware limited liability company (“Petillo LLC”); Petillo NY LLC, a Delaware limited liability company (“Petillo NY LLC”), Petillo Maryland Incorporated, a Maryland corporation (“Petillo MD” and, together with Petillo LLC and Petillo NY LLC, including all of their respective legal predecessors pursuant to the Reorganizations, the “Acquired Companies”); Petillo NJ Holdings Incorporated, as a New Jersey corporation (“NJ Seller”); Petillo NY Holdings Incorporated as a New York corporation (“NY Seller”); Petillo MD Holdings Incorporated, a Maryland corporation (“MD Seller” and together with NJ Seller and NY Seller, the “Sellers”), Michael V. Petillo, solely in his capacity as the representative of Covenantors (“Sellers Representative”); and Sterling Construction Company, Inc., a Delaware corporation (“Buyer”). Buyer, the Acquired Companies, the Seller Parties and, to the extent applicable, Sellers Representative are also referred to herein individually as a “Party” and collectively as the “Parties”. Certain other capitalized terms used herein have the meanings ascribed to such terms in Exhibit A. RECITALS WHEREAS, prior to the Closing Date, (i) Mr. Petillo and the Trusts incorporated NJ Seller; (ii) Mr. Petillo and the Trusts contributed all of the issued and outstanding shares of capital stock of Petillo Incorporated, a New Jersey corporation (“Petillo”) to NJ Seller in exchange for an equal number of shares of capital stock of NJ Seller (“NJ Contribution”), (iii) NJ Seller properly executed and timely filed or caused to be timely filed IRS Form 8869 electing for Petillo to be a qualified subchapter S subsidiary effective as of the effective date of the contribution effected in clause (ii) (the steps taken in clauses (i) through (iii) being effected in a manner consistent with Revenue Ruling 2008-18 and constituting a reorganization described in Section 368(a)(1)(F) of the Code); (iv) NJ Seller organized Petillo LLC with NJ Seller as its sole member; and (v) NJ Seller merged Petillo with and into Petillo LLC, with Petillo LLC as the survivor (“NJ Merger”) and Petillo LLC being an entity disregarded as separate from NJ Seller for federal and applicable state income tax purposes (collectively, the steps taken in clauses (i) through (v) constituting the “NJ Reorganization”); WHEREAS, prior to the Closing Date, (i) Mr. Petillo incorporated NY Seller; (ii) Mr. Petillo contributed all of the issued and outstanding shares of capital stock of Petillo NY Incorporated, a New York corporation (“Petillo NY”) to NY Seller in exchange for an equal number of shares of capital stock of NY Seller (“NY Contribution”), (iii) NY Seller properly executed and timely filed or caused to be timely filed IRS Form 8869 electing for Petillo NY to be a qualified subchapter S subsidiary effective as of the effective date of the contribution effected in clause (ii) (the steps taken in clauses (i) through (iii) being effected in a manner consistent with Revenue Ruling 2008-18 and constituting a reorganization described in Section 368(a)(1)(F) of the Code); (iv) NY Seller organized Petillo NY LLC with NY Seller as its sole member; and (v) NY Seller merged Petillo NY with and into Petillo NY LLC (“NY Merger”), with Petillo NY LLC as the survivor and Petillo NY LLC being an entity disregarded as separate from NY Seller for
{N4469832.17} 2 federal and applicable state income tax purposes (collectively, the steps taken in clauses (i) through (v) constituting the “NY Reorganization”); WHEREAS, prior to the Closing Date, (i) Mr. Petillo incorporated MD Seller, (ii) Mr. Petillo contributed all of the issued and outstanding shares of capital stock of Petillo MD to MD Seller in exchange for an equal number of shares of capital stock of MD Seller (the “MD Contribution” and together with the NJ Contribution and the NY Contribution, the “Contribution(s)”, and (iii) MD Seller properly executed and timely filed or caused to be timely filed IRS Form 8869 electing for Petillo MD to be a qualified subchapter S subsidiary effective as of the effective date of the contribution effected in clause (ii) (the steps taken in clauses (i) through (iii) being effected in a manner consistent with Revenue Ruling 2008-18 and constituting a reorganization described in Section 368(a)(1)(F) of the Code); (collectively, the steps taken in clauses (i) through (iii) constituting the “MD Reorganization” and collectively with the NJ Reorganization and the NY Reorganization, the “Reorganizations”); WHEREAS, immediately after the Reorganizations, (i) the Trusts and Mr. Petillo became the owner of all of the issued and outstanding shares of capital stock of NJ Seller (the “Petillo Shares”), and (ii) Mr. Petillo became the owner of all of the issued and outstanding shares of capital stock of NY Seller (the “Petillo NY Shares”) and all of the issued and outstanding shares of capital stock of MD Seller (the “Petillo MD Shares”); WHEREAS, immediately after the Reorganizations, (i) NJ Seller became the owner of all of the issued and outstanding limited liability company interests in Petillo LLC (the “Petillo Equity”), (ii) NY Seller became the owner of all of the issued and outstanding limited liability company interests in Petillo NY LLC (the “Petillo NY Equity”), and (iii) MD Seller became the owner of all of the issued and outstanding shares of capital stock of Petillo MD (the “Petillo MD Equity” and, collectively with the Petillo Equity and Petillo NY Equity, the “Equity”); WHEREAS, Sellers wish to sell to Buyer, and Buyer wishes to purchase from Sellers, the Equity (the “Acquisition”); and WHEREAS, each of the Covenantors will directly and indirectly financially benefit from the Acquisition, and they all have agreed to become party to this Agreement for the purpose of covenanting in the manner set forth herein. NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: ARTICLE 1 PURCHASE AND SALE Section 1.1 Purchase and Sale. Subject to the terms and conditions set forth herein, at the Closing, each Seller shall sell to Buyer, and Buyer shall purchase from such Seller, for the consideration specified in Section 1.3, the Equity owned by such Seller, free and clear of all Encumbrances (other than restrictions on transfer imposed under applicable securities Laws).
{N4469832.17} 3 Section 1.2 Estimated Adjustment. At least five Business Days prior to the Closing Date, Covenantors shall prepare and deliver to Buyer (a) an estimated balance sheet of the Acquired Business as of 11:59 p.m. on December 31, 2021, but which does not reflect the transactions occurring at the Closing (the “Estimated Closing Balance Sheet”), together with a statement that sets forth Covenantors’ good faith estimates of Closing Cash (the “Estimated Closing Cash”), Closing Company Indebtedness (the “Estimated Closing Company Indebtedness”), Company Transaction Expenses (the “Estimated Company Transaction Expenses”) and Closing Net Working Capital Amount (the “Estimated Net Working Capital Amount”), along with reasonable supporting detail therefor, and (b) a schedule (the “Consideration Schedule”) setting forth (i) the allocation of the Closing Date Cash Payment to each Seller in accordance with such Seller’s ownership of the Equity and the applicable Organizational Documents of the Acquired Companies, (ii) the wire instructions for the account designated for payment by each Seller, and (iii) the Consideration Percentage of each Seller. The Estimated Closing Balance Sheet was prepared in accordance with GAAP on a basis consistent with the accounting principles, methodologies and assumptions (the “Seller Accounting Principles”) and the sample net working capital calculation (the “Sample Net Working Capital Calculation”), all as set forth on Exhibit B attached hereto. Covenantors shall deliver or make available to Buyer copies of the records and work papers used in the calculation of the Estimated Closing Cash, Estimated Closing Company Indebtedness, Estimated Company Transaction Expenses and Estimated Net Working Capital Amount, and Covenantors and their representatives made themselves reasonably available to Buyer and its representatives after delivery of the Estimated Closing Balance Sheet to discuss such calculation and the records and work papers related thereto. Section 1.3 Base Purchase Price; Transactions to be Effected at the Closing. (a) At the Closing, Buyer shall: (i) pay to Sellers, in each case in accordance with the Consideration Schedule, (A) $175,000,000 (the “Cash Consideration”), plus (B) the Estimated Closing Cash, minus (C) the Estimated Closing Company Indebtedness, minus (D) the Estimated Company Transaction Expenses, plus (E) the amount, if any, by which the Estimated Net Working Capital Amount exceeds the Target Net Working Capital Amount, minus (F) the amount, if any, by which the Target Net Working Capital Amount exceeds the Estimated Net Working Capital Amount, minus (G) the Working Capital Escrow Amount, and minus (H) the Indemnification Escrow Amount (collectively, the “Closing Date Cash Payment”); and (ii) issue to Sellers, in each case in accordance with the Consideration Schedule, the Buyer Stock Consideration. The Cash Consideration plus the value of the Buyer Stock Consideration at the Closing is referred to herein as the “Base Purchase Price.” The Closing Date Cash Payment shall be paid by wire transfer of immediately available funds in accordance with the Consideration Schedule. (b) In addition to its obligations under Section 1.3(a), at or prior to the Closing, Buyer shall deliver to Sellers Representative:
{N4469832.17} 4 (i) written evidence reasonably acceptable to the Sellers Representative of submission by Buyer of instructions to the registrar and transfer agent for the Buyer Common Stock for the issuance to Sellers of the shares of Buyer Common Stock issuable as Buyer Stock Consideration; (ii) the restrictive covenant agreements with each Covenantor attached hereto as Exhibit C (collectively, the “RCAs”), each duly executed by Buyer; (iii) the escrow agreement by and among Buyer, Sellers Representative and Escrow Agent attached hereto as Exhibit D (the “Escrow Agreement”), duly executed by Buyer; (iv) employment agreements between Petillo and each of the Key Employees (other than Robert Ginda and Christopher Erb), each in a form previously agreed between Buyer and each Key Employee (collectively, the “Employment Agreements”), each duly executed by Buyer; (v) the lock-up agreements with each Covenantor attached hereto as Exhibit F (collectively, the “Lock-Up Agreements”), each duly executed by Buyer; (vi) the assignment of equity attached hereto as Exhibit G (the “Assignment”), duly executed by Buyer. (c) At or prior to the Closing, Sellers Representative shall deliver to Buyer: (i) the Assignment, duly executed by Sellers; (ii) the RCAs, duly executed by each Covenantor as applicable; (iii) the Escrow Agreement, duly executed by Sellers Representative and Escrow Agent; (iv) the Employment Agreements, duly executed by each Key Employee as applicable; (v) the Lock-Up Agreements, duly executed by each Covenantor; (vi) a duly executed certificate of the trustee of the Trusts attaching resolutions of such trustee authorizing the execution, delivery and performance of this Agreement and the other agreements contemplated hereby to which each Trust is a party and the consummation of the transactions contemplated hereby and thereby; (vii) a duly executed certificate of the secretary or other duly authorized officer of each Seller attaching (A) resolutions of the applicable governing body of such Seller ratifying and authorizing the execution, delivery and performance of this Agreement and the other agreements contemplated hereby to which each such Seller is a party and the consummation of the transactions contemplated hereby and thereby, and (B) true and correct copies of the certificate of
{N4469832.17} 5 incorporation, and bylaws of each Seller, as amended, including a statement that no amendments have been made to such documents since the dates thereof; (viii) final invoices with respect to all Company Transaction Expenses; (ix) a certificate of good standing with respect to each Acquired Company, in each case issued by the Secretary of State of the State of Delaware, dated no more than five Business Days prior to the Closing Date; (x) evidence of the termination as of the Closing Date of all Tax- sharing, Tax allocation agreements or similar agreements with respect to or involving any Acquired Company, in form and substance reasonably satisfactory to Buyer; (xi) a certification of non-foreign status pursuant to Section 1.1445- 2(b)(2) of the Treasury regulations promulgated under the Code, duly executed by Sellers; (xii) (A) payoff letters or other evidence of discharge and extinguishment, in form and substance reasonably satisfactory to Buyer, from each creditor with respect to all Closing Company Indebtedness, which letters shall be addressed to the respective Acquired Company confirming the amount of outstanding Closing Company Indebtedness owed to such creditor as of a date not less than two Business Days prior to the Closing Date and any per diem payable thereafter; and (B) any Encumbrance releases and associated documentation (including UCC financing statement amendments and termination statements), in form and substance reasonably satisfactory to Buyer, necessary to terminate the Encumbrance associated with such Closing Company Indebtedness upon repayment thereof; and (xiii) evidence of the termination of that certain continuing guarantee by Petillo securing 30 Farinella Associates 1.0 LLC’s obligations under a certain mortgage loan agreement in the sum of $7,000,000, in form and substance reasonably satisfactory to Buyer. (d) At the Closing, Buyer (on behalf of the Acquired Companies) shall pay the Estimated Closing Company Indebtedness out of the Cash Consideration to the Persons set forth on a schedule to be delivered to Buyer at least three (3) Business Days prior to the Closing, by wire transfer of immediately available funds to the accounts that were designated by such Persons no later than three Business Days prior to the Closing Date. (e) At the Closing, Buyer (on behalf of the Acquired Companies) shall pay the Estimated Company Transaction Expenses out of the Cash Consideration to the Persons set forth on a schedule to be delivered to Buyer at least three (3) Business Days prior to the Closing, by wire transfer of immediately available funds to the accounts that were designated by such Persons no later than three Business Days prior to the Closing Date. (f) At the Closing, Buyer shall pay the Working Capital Escrow Amount and the Indemnification Escrow Amount out of the Cash Consideration to Escrow Agent, by wire transfer of immediately available funds to an account that was designated by Escrow Agent (the “Escrow Account”).
{N4469832.17} 6 (g) Any certificates issued in respect of or exchange for the shares of Buyer Common Stock issuable as Buyer Stock Consideration shall include an endorsement typed or otherwise denoted conspicuously thereon of the following legend (along with any other legends that may be required under applicable Laws): “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE ACT”), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO TRANSFER MAY BE EFFECTED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT RELATED THERETO OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH SHARES MAY BE TRANSFERRED PURSUANT TO RULE 144 OR ANOTHER AVAILABLE EXEMPTION UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER.” In the event the Buyer Common Stock issuable as Buyer Stock Consideration is represented by book-entry account on the books and records of the Buyer’s transfer agent, such book- entry shall include such a restrictive legend. (h) In no event shall the aggregate number of shares of Buyer Common Stock issued hereunder (the “Issued Shares”) exceed a number of shares equal to 19.9% of the number of shares of Buyer Common Stock outstanding immediately prior to the Closing (the “19.9% Threshold”). In the event that the number of shares of Buyer Common Stock otherwise comprising the Issued Shares would exceed the 19.9% Threshold, the number of shares of Buyer Common Stock issued as Buyer Stock Consideration will be cut back to the 19.9% Threshold and the cash component of the Purchase Price will be increased by an amount equal to the Buyer Common Stock Price with respect to each cut back share of Buyer Common Stock. Section 1.4 Closing. Subject to the terms and conditions of this Agreement, the closing of the purchase and sale of the Equity contemplated hereby (the “Closing”) shall take place by electronic exchange of duly executed documents on the next Business Day following the date on which all of the conditions to Closing set forth in Article 6 have been satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date, but subject to the satisfaction or waiver thereof at the Closing), or at such other time, on such other date or by such other means as Sellers Representative and Buyer may mutually agree upon in writing (the day on which the Closing actually takes place being the “Closing Date”). The Parties agree that, should the Closing occur, the effective time and date of the consummation of the transactions contemplated herein shall be 12:01 a.m., Eastern Time, on the Closing Date. Section 1.5 Calculations. In no event later than 90 days following the Closing Date, Buyer shall, at its expense, (a) cause to be prepared, in accordance with GAAP on a basis consistent with the Seller Accounting Principles, a balance sheet of the Acquired Companies as of 11:59 p.m. on December 31, 2021, but which shall not reflect the transactions occurring at the Closing (the “Closing Balance Sheet”), together with a statement (the “Closing Date Schedule”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash, Closing Company Indebtedness,
{N4469832.17} 7 Company Transaction Expenses and Closing Net Working Capital Amount, and (b) deliver to Sellers Representative the Closing Balance Sheet and the Closing Date Schedule. The Parties agree and acknowledge that the Closing Date Schedule is not intended to permit the introduction of different working capital line items, or different accounting methods, policies, practices, procedures, classifications, conventions, categorizations, definitions, principles, judgments, assumptions, techniques or estimation methods with respect to financial statements (including any of the foregoing as they relate to the nature of accounts, calculation of levels of reserves or levels of accruals), from the Seller Accounting Principles or the Sample Net Working Capital Calculation. Notwithstanding any other provision herein or elsewhere to the contrary, to the extent that the Closing Date Schedule corrects an error or noncompliance with the Seller Accounting Principles or the Sample Net Working Capital Calculation, and Sellers agree with such correction, then the Target Net Working Capital Amount shall be reduced or increased as a result of such error or noncompliance, as appropriate, to reflect such error or noncompliance. Section 1.6 Review; Disputes. (a) From and after the Effective Date, Buyer shall provide Sellers Representative and its representatives with reasonable access to the books, records, work papers and other relevant materials of the Acquired Companies, and the relevant personnel, accountants, advisors and other representatives, for the purposes of enabling Sellers Representative and its representatives to review and discuss Buyer’s calculation of the Closing Cash, Closing Company Indebtedness, Company Transaction Expenses and Closing Net Working Capital Amount. (b) If Sellers Representative disputes the calculation of any item set forth in the Closing Date Schedule, then Sellers Representative shall deliver a written notice (a “Dispute Notice”) to Buyer at any time during the 30-day period commencing upon receipt by Sellers Representative of the Closing Balance Sheet and the Closing Date Schedule, all as prepared by Buyer in accordance with the requirements of Section 1.5 (the “Review Period”). The Dispute Notice shall set forth the basis for the dispute of any such calculation in reasonable detail. (c) If Sellers Representative does not deliver a Dispute Notice to Buyer prior to the expiration of the Review Period, Buyer’s calculation of the Closing Cash, Closing Company Indebtedness, Company Transaction Expenses and Closing Net Working Capital Amount set forth in the Closing Date Schedule shall be deemed final and binding on Buyer and Sellers for all purposes of this Agreement. (d) If Sellers Representative delivers a Dispute Notice to Buyer prior to the expiration of the Review Period, then Sellers Representative and Buyer shall use commercially reasonable efforts to reach agreement on the disputed calculations set forth in such Dispute Notice. If Sellers Representative and Buyer are unable to reach agreement on the Closing Date Schedule within 30 days after the end of the Review Period, either Party shall have the right to refer such dispute after such 30th day to Ernst & Young, or if Ernst & Young is unable or unwilling to serve, to another nationally-recognized accounting or financial firm mutually agreed upon between Buyer and Sellers Representative (such firm, or any successor thereto, being referred to herein as the “Firm”). In connection with the resolution of any such dispute by the Firm: (i) each of Buyer and Sellers Representative shall have a reasonable opportunity to submit to the Firm a written statement of their views as to any disputed issues with respect to the calculation of any of the Closing Cash,
{N4469832.17} 8 Closing Company Indebtedness, Company Transaction Expenses and Closing Net Working Capital Amount, a copy of which shall also be delivered to the other Parties; (ii) the Firm shall determine the Closing Cash, Closing Company Indebtedness, Company Transaction Expenses and Closing Net Working Capital Amount in accordance with the terms of this Agreement based solely on the written submissions delivered to the Firm pursuant to sub-clause (i) of this Section 1.6(d) within 30 days of such referral and, upon reaching such determination, shall deliver a copy of its calculations to Sellers Representative and Buyer; and (iii) the determination made by the Firm of the Closing Cash, Closing Company Indebtedness, Company Transaction Expenses and Closing Net Working Capital Amount shall be final and binding on Buyer and Sellers for all purposes of this Agreement, absent manifest error or intentional misconduct. Notwithstanding anything else contained herein, in calculating the Closing Cash, Closing Company Indebtedness, Company Transaction Expenses and Closing Net Working Capital Amount, (x) the Firm shall act as an expert and not as an arbitrator, (y) the Firm shall be limited to addressing any particular disputes referred to in the Dispute Notice and (z) such calculation shall, with respect to any disputed item, be no greater than the highest amount calculated by Sellers Representative or Buyer, and no less than the lowest amount calculated by Sellers Representative or Buyer, as the case may be. All fees and expenses of the Firm shall be borne by Buyer, on the one hand, and Sellers, on the other hand, proportionately to the amount of the difference between the disputed items submitted to the Firm and the final determination of the disputed items by the Firm. For illustrative purposes only, if Buyer’s calculation of a disputed item is $80, Sellers Representative’s calculation of such disputed item is $100, and the amount as finally resolved by the Firm is $95, then Buyer shall pay 75% ((95-80) / (100-80)) of such fees and expenses and Sellers shall pay 25% ((100-95) / (100-80)) of such fees and expenses. Each Party will be responsible for 100% of its own fees and expenses relating to the dispute resolution procedures described in this Section 1.6. Section 1.7 Payment Upon Final Determination of Adjustments. (a) The “Adjustment Amount” shall initially be zero and shall be increased or decreased as follows: (i) if the Closing Cash, as finally determined in accordance with Section 1.6, is less than the Estimated Closing Cash, then the Adjustment Amount shall be decreased, dollar for dollar, by the absolute value of such shortfall; (ii) if the Closing Cash, as finally determined in accordance with Section 1.6, is greater than the Estimated Closing Cash, then the Adjustment Amount shall be increased, dollar for dollar, by the amount of such excess; (iii) if the Closing Company Indebtedness, as finally determined in accordance with Section 1.6, is less than the Estimated Closing Company Indebtedness, then the Adjustment Amount shall be increased, dollar for dollar, by the absolute value of such shortfall; (iv) if the Closing Company Indebtedness, as finally determined in accordance with Section 1.6, is greater than the Estimated Closing Company Indebtedness, then the Adjustment Amount shall be decreased, dollar for dollar, by the amount of such excess; (v) if the Company Transaction Expenses, as finally determined in accordance with Section 1.6, are less than the Estimated Company Transaction Expenses, then the Adjustment Amount shall be increased, dollar for dollar, by the absolute value of such shortfall; (vi) if the Company Transaction Expenses, as finally determined in accordance with Section 1.6, are greater than the Estimated Company Transaction Expenses, then the Adjustment Amount shall be decreased, dollar for dollar, by the amount of such excess; (vii) if the Closing Net Working Capital Amount, as finally determined in accordance with Section 1.6, is less than the Estimated Net Working Capital Amount, then the Adjustment Amount shall be decreased, dollar for dollar, by the absolute value of such shortfall; and (viii) if the Closing Net Working Capital Amount, as
{N4469832.17} 9 finally determined in accordance with Section 1.6, is greater than the Estimated Net Working Capital Amount, then the Adjustment Amount shall be increased, dollar for dollar, by the amount of such excess. (b) If the Adjustment Amount is a negative number in accordance with Section 1.7(a), then Buyer and Sellers Representative shall, no later than five Business Days after such determination, deliver joint written instructions to Escrow Agent instructing Escrow Agent to pay from the Escrow Account (i) to an account designated in writing by Buyer an amount equal to the lesser of (A) the aggregate amount of such Adjustment Amount and (B) the Working Capital Escrow Amount and (ii) to an account designated in writing by Sellers Representative the amount, if any, by which the Working Capital Escrow Amount exceeds the Adjustment Amount. To the extent that the Working Capital Escrow Amount is less than the Adjustment Amount (such amount, the “Excess Buyer Recovery Amount”), then Sellers shall, jointly and severally, no later than five Business Days after the determination of the Adjustment Amount, pay to Buyer the Excess Buyer Recovery Amount by wire transfer of immediately available funds to an account designated in writing by Buyer. (c) If the Adjustment Amount is a positive number in accordance with Section 1.7(a) then (i) Buyer shall, no later than five Business Days after such determination, deliver or cause to be delivered the amount of such Adjustment Amount by wire transfer of immediately available funds to the accounts designated in writing by Sellers Representative and (ii) Buyer and Sellers Representative shall, no later than five Business Days after such determination, deliver joint written instructions to Escrow Agent instructing Escrow Agent to pay from the Escrow Account to an account designated in writing by Sellers Representative an amount equal to the Working Capital Escrow Amount. Section 1.8 Purchase Price Allocation. (a) The Purchase Price and any other amounts treated as additional consideration for income Tax purposes shall be allocated among the Acquired Companies in accordance with the allocation statement provided by Buyer to Sellers Representative within 90 days after Closing (the “Purchase Price Allocation”). (b) With respect to the Acquired Companies, Sellers shall prepare and deliver copies of Form 8594 and any required exhibits thereto consistent with the Asset Allocation (the “Asset Acquisition Statements”). Buyer shall prepare and deliver to Sellers from time to time revised copies of the Asset Acquisition Statements (the “Revised Statements”) to report any matters set forth on the Asset Acquisition Statements requiring an update (including adjustments to the Purchase Price, if any) consistent with the Purchase Price Allocation and Asset Acquisition Statements or the then-applicable Revised Statements. The total consideration for the Equity shall be allocated in accordance with the Purchase Price Allocation and the Asset Acquisition Statements, or the then-applicable Revised Statements, provided by Sellers to Buyer, and all Tax Returns and reports filed by Buyer and Sellers shall be prepared consistently with such allocations. Neither Buyer nor Sellers shall, nor shall they permit their respective Affiliates to, take any position inconsistent with the Purchase Price Allocation, Asset Acquisition Statements or the then- applicable Revised Statements unless otherwise required by applicable Law.
{N4469832.17} 10 Section 1.9 Asset Allocation. (a) Within 90 days after Closing, Buyer shall deliver to Sellers Representative a statement setting forth in reasonable detail its proposed allocation of the portion of the Purchase Price and any other amounts treated as additional consideration for income Tax purposes that is allocated to the equity of such Acquired Company pursuant to the Purchase Price Allocation, among the assets of such Acquired Company (the “Proposed Asset Allocation”); provide no more than $500,000 shall be allocated to the RCAs. No later than 15 days following the delivery of the Proposed Asset Allocation, Sellers Representative may deliver to Buyer a statement setting forth in reasonable detail any objections thereto, the basis for such objections, and Sellers Representative’s proposed allocation of the portion of the Purchase Price and any other amounts treated as additional consideration for Tax purposes among the assets of the Acquired Companies (“Sellers’ Asset Allocation Notice”). If Sellers Representative timely deliver to Buyer a Sellers’ Asset Allocation Notice, Sellers Representative and Buyer shall, during the 15 days following such delivery, use commercially reasonable efforts to reach agreement on the disputed items or amounts. The Proposed Asset Allocation, if no Sellers’ Asset Allocation Notice is timely delivered, or as adjusted pursuant to any agreement between Sellers Representative and Buyer during the 15-day period following the timely delivery of Sellers’ Asset Allocation Notice, shall be final and binding on the Parties. If Sellers’ Asset Allocation Notice is timely delivered and Sellers Representative and Buyer are unable to reach agreement within such 15-day period, Buyer and Sellers shall submit such remaining disagreements to the Firm. Buyer and Sellers Representative shall submit, in writing, to the Firm a statement of their views as to any such disputed items, and the Firm shall make a written determination as to the appropriate allocation of the portion of the Purchase Price and any other amounts treated as additional consideration for Tax purposes among the assets of the Acquired Companies, which determination shall be final and binding on the Parties for all purposes hereunder. Buyer and Sellers Representative will each use their commercially reasonable efforts to cause the Firm to render its determination within 30 days or as soon thereafter as reasonably practicable. Each of Buyer, on the one hand, and Sellers, on the other hand, shall bear 50% of the fees and expenses of the Firm incurred in connection with this Section 1.9. The allocation of the Purchase Price and any other amounts treated as additional consideration for income Tax purposes, as finally determined pursuant to this Section 1.9(a), is referred to herein as the “Asset Allocation.” The Purchase Price Allocation shall be revised to be consistent with the Asset Allocation. (b) Within 15 days after determination of the Asset Allocation pursuant to Section 1.9(a), Sellers Representative shall deliver to Buyer a statement setting forth in reasonable detail its calculation of the Gross-Up Amount including any work papers (the “Proposed Gross- Up Amount”). No later than 30 days following the delivery of the Proposed Gross-Up Amount, Buyer may deliver to Sellers Representative a statement setting forth in reasonable detail any objections thereto, the basis for such objections, and Buyer’s proposed Gross-Up Amount (“Buyer’s Gross-Up Notice”). If Buyer timely delivers to Sellers Representative a Buyer’s Gross- Up Notice, Sellers Representative and Buyer shall, during the 15 days following such delivery, use commercially reasonable efforts to reach agreement on the disputed items or amounts. The Proposed Gross-Up Amount, if no Buyer’s Gross-Up Notice is timely delivered, or adjusted pursuant to any agreement between Sellers Representative and Buyer during the 15-day period following the timely delivery of Buyer’s Gross-Up Notice, shall be final and binding on the Parties. Buyer shall no later than five Business Days after the such Gross-Up Notice becoming final and
{N4469832.17} 11 binding, pay to Sellers the Gross-Up Amount by wire transfer of immediately available funds to an account designated in writing by the Sellers Representative. If Buyer’s Gross-Up Notice is timely delivered and Sellers Representative and Buyer are unable to reach agreement within such 15-day period, Buyer and Sellers shall submit such remaining disagreements to the Firm. Buyer and Sellers Representative shall submit, in writing, to the Firm a statement of their views as to any such disputed items, and the Firm shall make a written determination as to the appropriate calculation of the Gross-Up Amount, which determination shall be final and binding on the Parties for all purposes hereunder. Buyer shall no later than five Business Days after the Gross-Up Notice becoming final and binding, pay to Sellers the Gross-Up Amount by wire transfer of immediately available funds to an account designated in writing by the Sellers Representative. Buyer and Sellers Representative will each use their commercially reasonable efforts to cause the Firm to render its determination within 30 days or as soon thereafter as reasonably practicable. Buyer, on the one hand, and Sellers, on the other hand, shall bear 50% of the fees and expenses of the Firm incurred in connection with this Section 1.9. Section 1.10 Cash Retention Bonus. Mr. Petillo shall have the opportunity to earn an aggregate cash retention bonus amount of $15,000,000 in accordance with the terms and conditions of the Petillo Employment Agreement (the “Cash Retention Bonus”). Section 1.11 Earn-Out Payments. (a) Following the Closing, Buyer shall pay to Sellers, in addition to the Base Purchase Price (as it may be adjusted), in each case in accordance with their respective Consideration Percentages, additional consideration for the acquisition of the Equity based on the performance of the Acquired Companies and the occurrence of certain other events described herein during each calendar year between January 1, 2022 and December 31, 2026 (such five-year period, the “Aggregate Earn-Out Period” and each calendar year during such period, an “Annual Earn-Out Period”). With respect to each Annual Earn-Out Period, if the Aggregate IFO during such Annual Earn-Out Period exceeds the Aggregate IFO threshold for such Annual Earn-Out Period as set forth below (the “IFO Threshold”), the Sellers shall be paid an amount equal to thirty percent (30%) of the amount by which the Aggregate IFO during such Annual Earn-Out Period exceeds such IFO Threshold (the “Earn-Out Payment”); provided that in no event shall the Earn- Out Payments exceed $20,000,000 (the “Earn-Out Cap”) for the Aggregate Earn-Out Period. The IFO Thresholds are $32.7 million, $36.0 million, $39.6 million, $43.5 million and $47.9 million for the Annual Earn-Out Periods ending on December 31, 2022, December 31, 2023, December 31, 2024, December 31, 2025 and December 31, 2026, respectively. Notwithstanding anything herein to the contrary, no Seller shall be entitled to receive any Earn-Out Payment (other than Earn-Out Payments already received) if during the Aggregate Earn-Out Period (i) Mr. Petillo’s employment with Petillo LLC following the Closing is terminated for Cause (as defined in the Petillo Employment Agreement) or (ii) Mr. Petillo voluntarily resigns from his employment with Petillo LLC following the Closing in accordance with Section 8.1 of the Petillo Employment Agreement. (b) Within five (5) Business Days following the filing of Buyer’s Form 10-K, Buyer shall deliver to Sellers Representative a statement (the “Earn-Out Payment Statement”) that sets forth Buyer’s calculation of Aggregate IFO for the prior calendar year’s Annual Earn-Out Period; provided that in the event the Buyer’s Form 10-K is delayed past March 30 of the
{N4469832.17} 12 applicable year other than as a result of matters relating to the Acquired Companies, Buyer shall deliver the Earn-Out Payment Statement no later than April 15 of the applicable year. The Earn- Out Payment Statement shall be accompanied by supporting work papers and other materials prepared by Buyer in connection with the preparation thereof and, Buyer shall provide or cause to be provided to the Sellers Representative and its attorneys, accountants and other agents and representatives reasonable access (including electronic access, to the extent available), during normal business hours, to the applicable books, records, properties, personnel, advisors, accountants and other representatives of Buyer and the Acquired Companies for purposes of (i) evaluating the information in the Earn-Out Payment Statement and (ii) preparing any Earn-Out Objection. If Buyer does not deliver an Earn-Out Payment Statement by the expiration of the applicable five (5) Business Day period following the filing of Buyer’s Form 10-K, the Sellers Representative shall be entitled to prepare and deliver to Buyer such Earn-Out Payment Statement, setting forth the Sellers Representative’s calculation of Aggregate IFO for such Annual Earn-Out Period. In such event, the Sellers Representative and his attorneys, accountants and other agents and representatives shall be entitled to access all supporting work papers, books, records, properties, personnel, advisors, accountants and other representatives of Buyer and the Acquired Companies that Sellers Representative in good faith believes are relevant for purposes of preparing the Earn-Out Payment Statement. (c) During the forty five (45)-day period immediately following receipt of the Earn-Out Payment Statement, Sellers Representative or Buyer, as the case may be, may dispute the calculation of Aggregate IFO set forth on such Earn-Out Payment Statement by delivering notice of its objection (the “Earn-Out Objection”) to Buyer or Sellers Representative, as the case may be. If Sellers Representative or Buyer does not deliver the Earn-Out Objection to the other Party within such forty five (45)-day period, the calculation of Aggregate IFO for such Annual Earn-Out Period set forth in the respective Earn-Out Payment Statement shall be deemed to be final. An Earn-Out Objection delivered pursuant to this Section 1.11(c) shall specify in reasonable detail the nature and, to the extent known, dollar amount of any disagreement so asserted. During the thirty (30) days following delivery of an Earn-Out Objection, the Parties shall seek in good faith to resolve in writing any differences which they may have with respect to the matters specified in the Earn-Out Objection. At the end of such thirty (30)-day period, Sellers Representative and the Buyer shall submit any and all matters (but only such matters) which remain in dispute and which were properly included in the Earn-Out Objection to the Firm for review and resolution. Buyer and Sellers Representative shall instruct the Firm to make a final and binding determination with respect to the computation of the Aggregate IFO for such Annual Earn-Out Period in accordance with this Section 1.11(c). Buyer and Sellers Representative shall cooperate with the Firm during the term of its engagement and will use commercially reasonable efforts to cause the Firm to resolve all remaining disagreements with respect to the computation of Aggregate IFO for such Annual Earn-Out Period as soon as practicable. The Firm shall consider only those items and amounts in Buyer’s and Sellers Representative’s calculations of Aggregate IFO for such Annual Earn-Out Period that are identified as being items and amounts to which Buyer and Sellers Representative have been unable to agree. In resolving any disputed item, the Firm shall act as an expert and not as an arbitrator, and may not assign a value to any item greater than the greatest value for such item claimed by either Party or less than the smallest value for such item claimed by either Party. The Firm’s determination of Aggregate IFO for the Annual Earn-Out Period will be based solely on written materials submitted by Buyer and Sellers Representative (i.e., not on independent review) and on the definitions included herein. The Firm’s determination of
{N4469832.17} 13 Aggregate IFO for the Annual Earn-Out Period shall, absent manifest error or intentional wrongdoing by the Firm, be final and binding on the Parties (which final determination shall be requested by the Parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Firm shall not be subject to court review or otherwise appealable. The fees and expenses of the Firm pursuant to this Section 1.11(c) shall be paid in the manner set forth in Section 1.6(d)), mutatis mutandi. (d) Within five (5) Business Days after the Annual Earn-Out Payment has been deemed final or is finally determined pursuant to Section 1.11(c) and so long as payment is due to Sellers pursuant to this Section 1.11, Sellers Representative shall deliver to the Buyer a funds flow statement, which such statement shall include the payment instructions for each of the Sellers, who shall be entitled to receive payment from Buyer in accordance with their respective Consideration Percentages. The Earn-Out Payment shall be paid in cash, by wire transfer of immediately available funds, to Sellers within five (5) Business Days following Buyer’s receipt of such funds flow statement. (e) Buyer shall have the right to set-off against any Earn-Out Payment owing to Sellers any amounts to which Buyer is entitled pursuant to (i) the purchase price adjustment provisions set forth in Section 1.7, and/or (ii) the indemnification provisions contained in Article 5 (including as specifically described in Section 5.6(c)). In furtherance of the foregoing, to the extent that Buyer is entitled, following a final, non-appealable decision of a court of competent jurisdiction, or pursuant to a settlement agreement entered into in accordance with Section 5.4, to an indemnification payment from Sellers pursuant to Article 5 (subject to terms, conditions and limitations set forth therein), the amount of such indemnification payment, as finally determined in accordance with this Agreement, may be set-off against the Earn-Out Payments due to Sellers. Any Earn-Out Payment amounts that are set-off pursuant to this Agreement shall be deemed to have been paid to Sellers for all purposes of this Agreement. (f) The right of each Seller to receive such Sellers’ Consideration Percentage of the Earn-Out Payment, if any, (i) is solely a contractual right and is not a security for purposes of any federal or state securities laws (and shall confer upon such Seller only the rights of a general unsecured creditor under applicable state law); (ii) will not be represented by any form of certificate or instrument; (iii) is not redeemable; and (iv) may not be sold, assigned, pledged, gifted, conveyed, transferred or otherwise disposed. (g) From Closing until the end of the Aggregate Earn-Out Period, Buyer shall: (i) act in good faith with respect to the operation of the Acquired Business; (ii) operate the Acquired Business in a manner consistent with the manner in which the Acquired Business was operated during the 12 month period ended on the Closing Date, (iii) not shift revenue or clients from any Acquired Company to Buyer or any Affiliate of Buyer with the intent to reduce the Acquired Companies’ Aggregate IFO;
{N4469832.17} 14 (iv) maintain the corporate, business and accounting independence of the Acquired Companies including maintenance of such accounting books and records as are necessary to facilitate the determination of the Acquired Companies’ operating income during an Annual Earn-Out Period and the corresponding Earn-Out Payment; (v) permit Mr. Petillo (for so long as he remains employed by the Buyer or any of the Buyer’s Affiliates) to manage the operations of the Acquired Companies in the same manner as he had done so in the 12 months prior to the Closing Date, including with respect to hiring, engaging or terminating employees or independent contractors, conducting marketing and sales activities, determining pricing for products and services, entering into contracts and transactions with employees and labor unions, clients, suppliers and other business partners, and purchasing equipment and other resources; (vi) not enter into any transaction in connection with the operation of the Acquired Business, except on arm’s length, market terms; (vii) not unduly or materially impose costs and expenses upon the Acquired Business; and (viii) use commercially reasonable efforts to pass on to the Acquired Business efficiency savings related to being part of a larger company (e.g., insurance cost savings). Notwithstanding anything to the contrary, the Parties acknowledge and agree that following the Closing, the Acquired Companies will be subject to certain costs associated with being acquired by a public company, e.g., corporate governance, internal controls and Sarbanes-Oxley compliance, and the Acquired Companies’ incurrence of such costs shall not be considered a breach of this Section 1.11(g). (h) Notwithstanding anything to the contrary, an amount equal to the Earnout Cap minus the aggregate amount of Earn-Out Payments made to the Sellers as of the applicable date shall accelerate and become due and payable in accordance with Section 1.11(d) if a Change of Control of any of the Acquired Companies occurs prior to the end of the Aggregate Earn-Out Period; provided, however, that this Section 1.11(h) shall not apply if the Change of Control is effectuated by any Buyer Financing Source. ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF COVENANTORS Except as set forth in the Seller Disclosure Schedule, Covenantors, jointly and severally, represent and warrant to Buyer that the statements contained in this Article 2 are true and correct as of the date hereof. Section 2.1 Organization and Authority of Covenantors. Mr. Petillo is a natural person resident in the State of New Jersey. Each of the Trusts is a trust duly organized, validly existing and in good standing under the Laws of the State of New Jersey. Each Covenantor has all necessary power and authority to enter into this Agreement and each other agreement and instrument contemplated hereby to which such Covenantor is or will be a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby
{N4469832.17} 15 and thereby. This Agreement and each other agreement and instrument contemplated hereby to which any Covenantor is a party has been duly executed and delivered by each such Covenantor, and (assuming due authorization, execution and delivery by the other parties thereto) each of this Agreement and each other agreement and instrument contemplated hereby to which any Covenantor is a party constitutes a legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity) (collectively, “Enforceability Exceptions”). Sellers have made available to Buyer correct and complete copies of the Organizational Documents of the Trusts and the Acquired Companies (as amended through the date of this Agreement). Section 2.2 Organization, Authority and Qualification of the Acquired Companies. Each Acquired Company is duly organized, validly existing and in good standing under the Laws of the state of its incorporation and has all necessary power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it is currently conducted. Each Acquired Company is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing has not given rise to a Material Adverse Effect. Each Acquired Company has all necessary power and authority to enter into this Agreement and each other agreement and instrument contemplated hereby to which such Acquired Company is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by the Acquired Companies of this Agreement and each other agreement and instrument contemplated hereby to which an Acquired Company is a party, the performance by each Acquired Company of its obligations hereunder and thereunder and the consummation by each Acquired Company of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of the Acquired Companies. This Agreement and each other agreement and instrument contemplated hereby to which any Acquired Company is a party has been duly executed and delivered by each such Acquired Company, and (assuming due authorization, execution and delivery by the other parties thereto) each of this Agreement and each other agreement and instrument contemplated hereby to which an Acquired Company is a party constitutes a legal, valid and binding obligation of such Acquired Company, enforceable against such Acquired Company in accordance with its terms, subject only to Enforceability Exceptions. Section 2.3 Capitalization. (a) The authorized, issued and outstanding Equity Interests of each Acquired Company are set forth in Section 2.3(a) of the Seller Disclosure Schedule. All of the outstanding Equity Interests of each Acquired Company were duly authorized and validly issued, are fully paid and non-assessable, and are owned of record and beneficially by the equityholders thereof as set forth in Section 2.3(a) of the Seller Disclosure Schedule, free and clear of all Encumbrances. None of the outstanding Equity Interests of any Acquired Company have been issued in violation of any preemptive or similar rights or in violation of any applicable Laws.
{N4469832.17} 16 (b) There are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character obligating any Acquired Company to issue, sell, repurchase or redeem any Equity Interests. No Acquired Company has any outstanding or authorized stock appreciation, phantom stock, profit participation or similar rights. There are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Equity Interests of any Acquired Company. Section 2.4 No Subsidiaries. No Acquired Company owns, or has any interest in, any Equity Interests of any other Person. No Acquired Company is party to or is bound by any contract to acquire any Equity Interest of any Person or any direct or indirect Equity Interest of any other business. No Acquired Company is obligated or committed to provide funds to or make any investment (whether in the form of a loan, capital contribution, or otherwise) in any other Person. Section 2.5 No Conflicts; Consents. The execution, delivery and performance by Sellers and the Acquired Companies of this Agreement and each other agreement and instrument contemplated hereby, and the consummation of the transactions contemplated hereby and thereby, will not upon the Closing: (a) result in a violation or breach of any provision of the Organizational Documents of any Trust or any Acquired Company; (b) result in a violation or breach of any provision of any Law or Governmental Order applicable to any Seller or any Acquired Company; or (c) except as set forth in Section 2.5 of the Seller Disclosure Schedule, require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default under, or result in the acceleration of any obligation under any Material Contract or material Permit. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to any Seller or any Acquired Company in connection with the execution and delivery of this Agreement and each other agreement and instrument contemplated hereby and the consummation of the transactions contemplated hereby and thereby, except such consents, approvals, Permits, Governmental Orders, declarations, filings or notices which, in the aggregate, would not reasonably be expected to be material to the Acquired Business, taken as a whole, and except for such filings as may be required under the HSR Act. Section 2.6 Financial Statements. Copies of the Audited Financial Statements, and unaudited financial statements consisting of the balance sheet of the Acquired Business as at October 31, 2021 and the related internally prepared statements of income and cash flow for the ten-month period then ended (the “Interim Financial Statements” and together with the Audited Financial Statements, the “Financial Statements”), have been made available to Buyer. The Financial Statements have been prepared in accordance with GAAP on a basis consistent with the Seller Accounting Principles, consistently applied (except, in the case of the Interim Financial Statements, for normal recurring year-end adjustments and the absence of footnotes) and the books and records of the Acquired Business. The Financial Statements fairly present in all material respects the financial condition of the Acquired Business and, in the case of the Audited Financial Statements, Petillo Properties as of the respective dates on which they were prepared. The balance sheet of the Acquired Business as of October 31, 2021 is referred to herein as the “Balance Sheet” and the date thereof as the “Balance Sheet Date.”
{N4469832.17} 17 Section 2.7 Undisclosed Liabilities; Indebtedness. No Acquired Company has any liabilities, obligations or commitments (whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due), except those (a) which are reflected or reserved against in the Balance Sheet as of the Balance Sheet Date, (b) that have been incurred in the Ordinary Course of Business since the Balance Sheet Date and which are not material in amount, individually or in the aggregate, or (c) that have been incurred in connection with this Agreement and the transactions contemplated hereby. Except for the Indebtedness set forth in Section 2.7 of the Seller Disclosure Schedule, the Acquired Business does not have any Indebtedness. Section 2.8 Absence of Certain Changes, Events and Conditions. Except as contemplated by this Agreement or as set forth in Section 2.8 of the Seller Disclosure Schedule, from December 31, 2020, until the date of this Agreement, the Acquired Business has operated in the Ordinary Course of Business. From the Balance Sheet Date there has not been, with respect to the Acquired Business, any: (a) event, occurrence or development that has had or would reasonably be expected to have a Material Adverse Effect; (b) amendment of the Organizational Documents of any Acquired Company; (c) split, combination or reclassification of any Equity Interests in any Acquired Company; (d) issuance, sale or other disposition of any Equity Interests in any Acquired Company, or grant of any options, warrants or other rights to purchase or obtain (including upon conversion, exchange or exercise) any Equity Interests in any Acquired Company; (e) declaration or payment of any dividends or distributions on or in respect of any Equity Interests in any Acquired Company or redemption, purchase or acquisition of any Equity Interests in any Acquired Company; (f) change in any method of accounting, Tax election or accounting practice of the Acquired Business, except as required by GAAP or applicable Law; (g) incurrence, assumption or guarantee of any Indebtedness in an aggregate amount exceeding $50,000, except unsecured current obligations and liabilities incurred in the Ordinary Course of Business; (h) purchase, lease, sale or other disposition of, or imposition of any Encumbrance upon, any of the assets shown or reflected on the Balance Sheet, except in the Ordinary Course of Business; (i) (i) material increase in the compensation of its Employees, other than (x) as provided for in any written agreements dated prior to the date hereof and made available to Buyer or (y) in the Ordinary Course of Business, (ii) entrance into or termination of any employment agreement or collective bargaining agreement, written or oral, or modification of the terms of any
{N4469832.17} 18 existing such agreement, or (iii) hiring of any new Employee entitled to receive excess compensation in excess of $75,000; (j) adoption, material modification or termination of any Benefit Plan; (k) acquisition by merger or consolidation with, or by purchase of a substantial portion of the assets or stock of, or by any other manner, any business or any Person or any division thereof for consideration in excess of $50,000; (l) adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against any Acquired Company under any similar Law; (m) acceleration of, termination of or material modification to any Material Contract; (n) making or commitment to make any capital expenditures in excess of $50,000; (o) transfer, assignment or grant of any license or sublicense of any Company Intellectual Property; (p) settlement of or other payments made in connection with any pending or threatened action, suit, claim, investigation, arbitration, audit or other legal proceeding for an amount in excess of $50,000, except for those such settlements or other payments (i) fully covered under an applicable insurance policy set forth on Section 2.22 of the Seller Disclosure Schedule or (ii) for which an insurer has otherwise agreed (in a writing made available to Buyer) to make a full payment; (q) action or omission to take any action that could reasonably be expect to cause any Permit to be suspended or revoked; (r) entrance into any new line of business; (s) damage, destruction or loss (whether or not covered by insurance) to any of the Acquired Business’ assets in excess of $50,000; or (t) any agreement to do any of the foregoing, or any action or omission that would result in any of the foregoing. Section 2.9 Material Contracts. Section 2.9(a) of the Seller Disclosure Schedule lists each of the following contracts and other agreements of the Acquired Companies (collectively, the “Material Contracts”): (i) each agreement of an Acquired Company, excluding employment- related agreements, involving annual consideration in excess of $100,000 or requiring performance by any party more than one year from the date hereof except, in each case, for any such agreement
{N4469832.17} 19 that can be terminated by the applicable Acquired Company on 60 days’ or less notice without any further liability or obligation on the part of such Acquired Company; (ii) all agreements with any Material Customer; (iii) all agreements with any Material Supplier (except for purchase orders entered into in the Ordinary Course of Business); (iv) all agreements between or among an Acquired Company, on the one hand, and Sellers or any Affiliate of Sellers (other than an Acquired Company), on the other hand; (v) all collective bargaining agreements, works council agreements, employee representative agreements, or agreements with any labor organization, union or association to which any Acquired Company is a party; (vi) all agreements with Governmental Authorities; (vii) all agreements, including leases that are or should be (in accordance with GAAP) accounted for as operating leases, under which any Acquired Company is (A) a lessee or sublessee of any machinery, equipment or other tangible personal property or (B) a lessor of any other tangible personal property, in each case requiring aggregate future payments in excess of $50,000; (viii) all agreements restricting or prohibiting any Acquired Company from conducting business anywhere in the United States, or limiting the freedom of any Acquired Company from engaging in any line of business, competing with any Person, or soliciting any customer, supplier or employee of any Person; (ix) All agreements pursuant to which any Acquired Company has agreed to provide “most favored nation” pricing or any arrangement whereby such Acquired Company has agreed with any Person that such Person will receive the most favorable terms and conditions that are provided by such Acquired Company to any other Person; (x) all joint venture, partnership, strategic alliance, management or other similar agreements; (xi) all (A) employment agreements providing for aggregate annual consideration in excess of $75,000, and (B) agreements providing for any bonuses, sale bonuses, change of control payments, retention payments or similar payments due or payable by any Acquired Company to any Person in connection with or resulting from the Closing; (xii) all agreements that provide for the payment by any Acquired Company of any compensation or benefits to any Person (including any employee, consultant, director or advisor) upon the consummation of the transactions contemplated by this Agreement or otherwise in connection with or as a result (in whole or in part) of the consummation of the transactions contemplated by this Agreement;
{N4469832.17} 20 (xiii) all agreements relating to material Company Intellectual Property (except for non-exclusive licenses used in the Ordinary Course of Business and license agreements of non-customized, generally commercially available off-the-shelf software); (xiv) all agreements or indentures relating to Indebtedness, or the mortgaging of, pledging or, or otherwise placing an Encumbrance on, any material asset or material group of assets of any Acquired Company (including loan or credit agreements, pledge agreements, notes, security agreements, guaranties, mortgages, debentures, indentures, factoring agreements, letters of credit, performance, bid and completion bonds, and surety agreements); (xv) all agreements under which any Acquired Company has received any Grants; and (xvi) all agreements for the payment of commissions to any agent, independent contractor, employee, or other individual; and (xvii) all agreements not otherwise set forth on Section 2.9(b) of the Seller Disclosure Schedule that are material to the Acquired Business. (b) No Acquired Company and, to the Knowledge of Sellers, no other party to any Material Contract is in breach of, or default under, any Material Contract, nor has any event occurred which, with the giving of notice or the passage of time or both, would constitute a breach or default thereunder, except in each such case where any such breach or default would not reasonably be expected to have a material impact on any Acquired Company. Sellers have made available to Buyer a correct and complete copy (or, in the case of oral agreements, a written summary of the material terms thereof) of each Material Contract, including all amendments, modifications and supplements thereto. Except as set forth on Section 2.9(b) of the Seller Disclosure Schedule, each Material Contract is in full force and effect, and is a legal, valid and binding obligation of the Acquired Business and, to the Knowledge of Sellers, of each other party thereto, enforceable against the applicable Acquired Company in accordance with its terms, subject only to Enforceability Exceptions. Except as set forth on Section 2.9(b) of the Seller Disclosure Schedule, the Acquired Companies and, to the Knowledge of Sellers, all other parties to the Material Contracts, have performed all obligations required to be performed by them prior to the date hereof. Section 2.10 Title to Assets; Sufficiency of Assets; Real Property. (a) The Acquired Companies have good and valid title to, or a valid leasehold interest in, all Real Property and tangible personal property and other assets reflected in the Financial Statements or acquired after the Balance Sheet Date, other than properties and assets sold or otherwise disposed of in the Ordinary Course of Business since the Balance Sheet Date. All such properties and assets (including leasehold interests) are free and clear of Encumbrances, except for Permitted Encumbrances. All material assets of the Acquired Business are free from patent and, to the Knowledge of Sellers, latent defects, have been maintained in accordance with normal industry practice, are in good operating condition and repair (subject to normal wear and tear), and are sufficient for the purposes for which they are currently used.
{N4469832.17} 21 (b) The assets owned or leased by the Acquired Companies constitute all of the assets necessary to conduct the Acquired Business immediately following the Closing in substantially the same manner in all material respects as it is currently conducted. (c) Section 2.10(c) of the Seller Disclosure Schedule sets forth a list of any real property leased or subleased in the operation of the Acquired Business (the “Leased Real Property”), including a list of the buildings, fixtures and improvements located thereon, the street address and current use of each such Leased Real Property. Sellers have delivered to Buyer a correct and complete copy of each written underlying lease (or sub-lease or similar agreement), or an accurate summary of the material terms of each oral underlying lease (or sub-lease or similar agreement), in each case with respect to each parcel of Leased Real Property (each, a “Lease”). With respect to each parcel of Leased Real Property: (i) an Acquired Company is a tenant and possessor in good standing in accordance with the material terms of the applicable Lease, all rents due and owing under each such Lease have been paid, an Acquired Company is in peaceful and undisturbed possession of the space and/or estate in accordance with the terms of the applicable Lease, and no Acquired Company is otherwise and, to the Knowledge of Sellers with respect to the Leased Real Property in New York, no other party to any such Lease is, in default or breach (with or without due notice or lapse of time or both) under the terms of any such Lease; (ii) no Acquired Company has received any written notice that the lessor or any sublessor under any Lease intends to cancel or terminate any such Lease or to exercise or not exercise any option thereunder; (iii) there have not been, and there are not now, any material disputes, oral agreements, temporary waivers or forbearances in effect with respect to such Leased Real Property, and (iv) with respect to each written Lease, an Acquired Company has a valid and enforceable leasehold interest in such Leased Real Property, subject to the Enforceability Exceptions. (d) Petillo Properties is the owner of all Leased Real Property in New Jersey and has good and marketable, indefeasible, fee simple title to each such parcel of Leased Real Property, free and clear of all Encumbrances (other than Permitted Encumbrances). There are no existing or pending or, to the Knowledge of Sellers, threatened in writing, material condemnation or eminent domain proceedings, or their local equivalent, relating to or affecting any portion of the Leased Real Property or other matters materially and adversely affecting the current use or occupancy thereof. Other than the Leases, there is no outstanding option, obligation, right of first refusal, purchase contract or other contractual right to sell, lease or purchase any of the Leased Real Property or any portions thereof or interests therein, nor any other contractual right to sell, dispose or lease any of the Leased Real Property or any portion thereof or any interest therein. Other than the Leases, there are no leases, subleases, licenses, concessions, purchase options, rights of first refusal, rights of first offer, or other contracts (written or oral) granting to any Person or Persons, other than as may exist for the benefit of the Acquired Business, the right to use, possess or occupy any parcel or portion of the Leased Real Property. (e) All of the Leased Real Property and buildings, fixtures and improvements thereon are in good operating condition (ordinary wear and tear excepted), without material structural defects, and all mechanical and other systems located thereon are in good operating condition (ordinary wear and tear excepted). The Leased Real Property has adequate utilities of a capacity and condition to serve such Leased Real Property to operate the Acquired Business as it is currently conducted.
{N4469832.17} 22 (f) The use and occupancy of any of the Leased Real Property, as currently used and occupied, and the conduct of the Acquired Business, as currently conducted, do not violate any deed restrictions, building codes, or zoning, subdivision or other land use or similar Laws. None of the improvements located on the Leased Real Property constitutes a legal non- conforming use or otherwise requires any special dispensation, variance or special permit under and Law. No special assessments have been levied, or, to the Knowledge of Sellers, are contemplated or pending against the Leased Real Property. (g) Except for Petillo Properties, neither the Acquired Companies nor their respective Affiliates (including Sellers) own any real property used in connection with the Acquired Business. (h) The Leased Real Property constitutes all of the real property used in connection with the operation of the Acquired Business. Section 2.11 Intellectual Property; Internet Accounts; IT Systems; Data Protection. (a) Section 2.11(a) of the Seller Disclosure Schedule sets forth a correct and complete list of all Intellectual Property owned or otherwise used by the Acquired Business (the “Company Intellectual Property”), other than commercially available, off-the-shelf software acquired, leased or licensed for less than $50,000 annually, indicating whether such Company Intellectual Property is owned or licensed, registered or unregistered, and the jurisdictions in which they are so registered (as applicable) and/or used. The Acquired Companies own (free and clear of all Encumbrances, except for Permitted Encumbrances) or have the right to use all of the Company Intellectual Property. The Company Intellectual Property constitutes all of the Intellectual Property necessary to conduct the Acquired Business in substantially the same manner as it was conducted as of the date of this Agreement. (b) No Acquired Company has received any written claim or demand (including any offer to license) that (i) alleges that the Acquired Business infringes, misappropriates or otherwise violates any Intellectual Property of any third party or (ii) challenges the rights of any Acquired Company in respect of, any Company Intellectual Property (including the validity, use, ownership, enforceability or registrability of such Company Intellectual Property, as applicable), and, to the Knowledge of Sellers, there are no facts or circumstances in existence that would form the basis for any such claim or demand. (c) To the Knowledge of Sellers, no Person is infringing, misappropriating or otherwise violating any Owned Intellectual Property. (d) The Acquired Companies have taken commercially reasonable measures to protect the Owned Intellectual Property and the confidentiality of the Personal Information, confidential information and trade secrets of the Acquired Companies, including adequate privacy controls in light of any remote working arrangements established or permitted in response to COVID-19. Without limiting the generality of the foregoing, each Acquired Company requires and has required each employee, consultant and contractor whose responsibilities include the creation of Intellectual Property to (i) execute, and each employee, consultant and contractor has executed, such Acquired Company’s standard employee confidentiality agreement, a copy of
{N4469832.17} 23 which has been provided to Buyer, (ii) execute, and each employee, consultant and contractor has executed, such Acquired Company’s standard intellectual property assignment agreement obligating such employee, consultant or contractor to transfer rights for no additional consideration in inventions and authorized works, whether or not patentable or copyrightable, made during the course of his or her employment or work for such Acquired Company, and (iii) adhere to commercially reasonable privacy and data security policies applicable to such Person’s use of any computer, smartphone, tablet or other electronic device in connection with the Acquired Business. Except under valid and enforceable confidentiality obligations, to the Knowledge of Sellers, there has been no material disclosure of any of Acquired Company’s trade secrets of other confidential information to any Person. (e) Section 2.11(e) of the Seller Disclosure Schedule sets forth a true, complete and correct list of all social media, e-commerce, web services, and other similar Internet-based accounts used by the Acquired Business (the “Internet Accounts”). The Acquired Companies and their respective authorized users have complied with the applicable terms of service and privacy policies of such Internet Accounts, and, to the Knowledge of Sellers, there have been no breaches of such terms of service or privacy policies. (f) The Company IT Systems are (i) in good working condition, (ii) reasonably sufficient for the immediate and anticipated needs of the Acquired Business and (iii) to the Knowledge of Sellers, free of any computer code designed to disrupt, disable, impede, permit unauthorized access to, or otherwise harm the operation of any computer software, data, firmware, hardware, network or other Company IT Systems, including, without limitation, a computer virus, malware, spyware or ransomware (“Malicious Code”). Each Acquired Company has taken commercially reasonable steps to safeguard the confidentiality, availability, security, and integrity of the Company IT Systems and to protect against Malicious Code and unauthorized access, use and/or disclosure. Each Acquired Company has implemented and maintains commercially reasonable backup procedures, disaster recovery plans, software and hardware support arrangements, and physical, technical, organizational, and administrative safeguards, including without limitation a written information security program established in accordance with industry standard practices and Data Protection Laws. (g) In the past six years, there has been no malfunction, interference with system operations, failure, continued substandard performance, attempted or successful unauthorized access, use, disclosure, modification, loss or destruction, denial of service, ransomware, cyberattack, data breach or other impairment or event affecting Personal Information, confidential information, or the Company IT Systems. No Acquired Company been required by Data Protection Laws to notify any individuals or Governmental Authority regarding any incident. (h) Each Acquired Company is, and has been for the last six years, in compliance in all material respects with all Data Protection Laws and any contractual obligations, internal policies, and public statements or notices published by such Acquired Company regarding the collection, processing, use, disclosure, retention, privacy, and/or security of Personal Information or data breach notification, and Sellers have made available to Buyer accurate and complete copies of all such policies, notices and statements. Each Acquired Company has provided all required notices and obtained all required consents with respect to its collection, processing, use, disclosure, retention, privacy and/or security of Personal Information.
{N4469832.17} 24 (i) In the past six years, no Acquired Company has been subject to or received any notice of any audit, investigation, complaint, or other claim by any Governmental Authority or other Person concerning (i) the collection, processing, use, disclosure, retention, privacy and/or security of Personal Information; or (ii) an actual, alleged, or suspected violation of Data Protection Laws, and, to the Knowledge of Sellers, there are no facts or circumstances that could reasonably be expected to give rise to any such claim. Section 2.12 Legal Proceedings; Governmental Orders. (a) There are no, and for the last five years there have not been any, actions, suits, claims, investigations or other legal proceedings, in any such case by, before or otherwise involving a Governmental Authority, pending or, to the Knowledge of Sellers, threatened in writing against any Acquired Company or affecting any of their respective properties or assets. To the Knowledge of Sellers, no facts or circumstances exist that could reasonably be expected to give rise to any such actions, suits, claims, investigations or other legal proceedings against any Acquired Company or affecting any of their respective properties or assets. No Seller intends to initiate any actions, suits, claims, investigations or other legal proceedings against any Acquired Company or affecting any of their respective properties or assets. (b) There are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards, in each case against or affecting the Acquired Business or any of the properties or assets used in the Acquired Business. Section 2.13 Compliance With Laws; Permits. (a) The Acquired Business is, and for the last five years has been, in compliance in all material respects with all Laws applicable to it or its business, properties or assets, including all applicable Anti-Bribery Laws and Export Control Laws. No Seller or Acquired Company has received any written or, to the Knowledge of Sellers, oral notice from any Governmental Authority regarding any actual, alleged, or potential violation of, or failure to comply with, any applicable Law in connection with the operation of the Acquired Business. (b) All Permits required to conduct the Acquired Business (the “Company Permits”) are set forth on Section 2.13(b) of the Seller Disclosure Schedule, except where the failure to have such a Permit would not reasonably have a material and adverse impact on the Acquired Business, and all Company Permits are valid and in full force and effect. Sellers and the Acquired Companies are in compliance with all of the Company Permits. None of the Company Permits will become terminable, in whole or in part, as a result of the transactions contemplated by this Agreement. (c) Neither any Seller nor any Acquired Company, nor any director officer, member, manager, agent, employee or other Person acting on behalf of the Acquired Business, has (i) used any funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity, made any direct or indirect unlawful payment to any foreign or domestic governmental official or employee or made any illegal bribe, rebate, payoff, influence payment, kickback or other unlawful payment, or (ii) directly or indirectly given or agreed to give any gift or similar benefit to any customer, supplier, government employee or other Person who is
{N4469832.17} 25 or may be in a position to help or hinder the Acquired Business in connection with any actual or proposed transaction which is related to or for the benefit of the Acquired Business and could reasonably be expected to (A) subject the Acquired Business or, following the Closing, Buyer (or any Affiliate thereof) to any damage or penalty in any civil, criminal or governmental litigation or proceeding, or (B) be prohibited under any applicable Anti-Bribery Laws. (d) Neither any Seller nor any Acquired Company, nor any director officer, member, manager, agent, employee or other Person acting on behalf of the Acquired Business, is aware of or has taken any action, directly or indirectly, related to or for the benefit of the Acquired Business and would result in a violation of any Anti-Bribery Law. No civil or criminal penalties have been imposed on the Acquired Business or any Seller with respect to any violations of any applicable Anti-Bribery Law, nor have any disclosures been submitted in respect of the Acquired Business to any Governmental Authority with respect to violations of any Anti-Bribery Laws. Section 2.14 Environmental Matters. (a) The Acquired Business is, and for the last six years has been, in compliance with all applicable Environmental Laws and Environmental Permits in all material respects. All material Environmental Permits currently held by the Acquired Companies are identified, and the expiration date of each such Environmental Permit (if applicable) is stated, in Section 2.14(a) of the Seller Disclosure Schedule. Sellers have delivered or made available to Buyer correct and complete copies of all such material Environmental Permits. All such material Environmental Permits are in full force and effect in accordance with all applicable Environmental Laws. All applications or notices required to have been filed for the renewal or extensions of such Environmental Permits have been duly filed on a timely basis with the appropriate Governmental Authority. Neither any Seller nor any of its or his Affiliates has been notified in writing or, to the Knowledge of Sellers, otherwise that such renewals or extensions will be withheld or delayed, or of any actual or potential material adverse change in the status, terms or conditions of any such Environmental Permits. No Environmental Permit other than those listed in Section 2.14(a) of the Seller Disclosure Schedule is required in order to conduct the Acquired Business as presently conducted in all material respects. (b) Neither Sellers nor any Acquired Company has received any written or, to the Knowledge of Sellers, other Environmental Notice or Environmental Claim, whether from a Governmental Authority, citizens group, Employee or other Person, the subject of which is pending or unresolved or which involves ongoing material obligations or requirements. (c) Neither Sellers nor any Acquired Company is subject to any pending or, to the Knowledge of Sellers, threatened Environmental Claim. (d) Except in compliance with applicable Environmental Laws, neither Sellers nor any Acquired Company has caused or allowed the Release, or transported or disposed or arranged for the transportation or disposal, of Hazardous Materials in such quantities or manner as to require Remedial Action or which could reasonably be expected to result in a material Environmental Claim against Sellers or any Acquired Company.
{N4469832.17} 26 (e) Neither Sellers nor any Acquired Company has received any written or, to the Knowledge of Sellers, other notice or claim that it, or any of its Affiliates, is a responsible party or potentially responsible party in connection with any real property pursuant to CERCLA or other Environmental Laws. (f) No real properties now or, to the Knowledge of Sellers, previously owned, leased or operated by any Acquired Company or its Affiliates or, to the Knowledge of Sellers, to or at which Sellers or any Acquired Company or their Affiliates transported or disposed of or arranged for transportation or disposal of Hazardous Materials, is listed on, or has been proposed for listing on, the EPA’s National Priorities List, the Superfund Enterprise Management System CERCLIS or any similar state list. (g) No Acquired Company has retained or assumed, by contract or, to the Knowledge of Sellers, operation of Law, any material liabilities or obligations of third parties under Environmental Laws or Environmental Permits. (h) No Acquired Company has any obligations or liabilities under, or any present obligation or intent to enter into, any Governmental Order, or any settlement or other agreement with any Governmental Authority or other Person (other than under agreements entered into with customers in the Ordinary Course of Business) related to Environmental Laws, Environmental Permits or Hazardous Materials that have not been complied with, satisfied and completed in all material respects. (i) To the Knowledge of Sellers, there is no condition, event, investigation or circumstance concerning the Release or regulation of Hazardous Materials or other noncompliance with Environmental Laws or Environmental Permits that could reasonably prevent, impede or materially increase costs associated with the lease or operation of the Leased Real Property or the conduct of the Acquired Business as currently conducted. (j) Section 2.14(j) of the Seller Disclosure Schedule sets forth a correct and complete list of all written environmental reports (including environmental site assessment reports), studies, investigations, sampling data, and/or audits (including environmental compliance audits) relating to the Acquired Business, the Leased Real Property or any real properties now or previously owned, leased or operated by the Acquired Companies or their Affiliates, which Sellers have possession of or access to. A correct and complete copy of each such document has been provided to Buyer. (k) Except as set forth on Section 2.14(k) of the Seller Disclosure Schedule, there are no underground storage tanks (active or abandoned), polychlorinated biphenyls or polychlorinated biphenyl-containing equipment, asbestos or asbestos-containing materials, lead- based paint or other lead-containing materials, per- and polyflourinated alkyl substances, perflourooctanoid acid substances, and perflourooctane sulfonate substances, Hazardous Material landfills or impoundments, open or closed pits, or other facilities for the treatment, storage, or disposal of Hazardous Materials at, on or under any Leased Real Property or other real property or asset of the Acquired Business. Section 2.15 Employee Benefit Matters.
{N4469832.17} 27 (a) Section 2.15(a) of the Seller Disclosure Schedule contains a list of each material written benefit, retirement, incentive, bonus, stock option, restricted stock, stock appreciation right, phantom equity, change in control, severance, welfare and fringe-benefit agreement, plan, policy and program, in effect and covering 1 or more Employees that is maintained, sponsored, contributed to, or required to be contributed to by the Acquired Companies (as listed in Section 2.15(a) of the Seller Disclosure Schedule, each, a “Benefit Plan”). Offer letters and other employment-related documents and agreements for “at-will” employment that do not contain severance or benefits triggered by the transaction contemplated by this Agreement are not required to be listed in Section 2.15(a) of the Seller Disclosure Schedule, unless any such letters and documents provide benefits to the Employees addressed therein that are not generally provided to other Employees. (b) Sellers have made available to Buyer correct and complete copies of each of the Benefit Plans and all amendments thereto (or, in the case of a Benefit Plan that is not in writing, a summary of the material terms thereof) and the following documents related to such Benefit Plans, to the extent applicable: (i) all current summary plan descriptions, amendments, modifications or material supplements; (ii) the annual report (Form 5500) filed with the Internal Revenue Service (the “IRS”) for the most recent plan year; (iii) the most recently received IRS determination or opinion letter; (iv) the most recently prepared actuarial report or financial statement (if applicable) for each of the last two plan years; (v) all material correspondence with a Governmental Authority received or sent in the last six years; and (vi) any related trust agreements, insurance contracts or documents of any other funding arrangements. (c) Each Benefit Plan and related trust has been established, operated and administered in all material respects in accordance with its terms and all applicable laws (including ERISA and the Code). Each Benefit Plan that is intended to be qualified under Section 401(a) of the Code (a “Qualified Benefit Plan”) has received a favorable determination letter from the Internal Revenue Service, or with respect to a prototype or volume submitter plan, can rely on an opinion or advisory letter from the Internal Revenue Service to the prototype or volume submitter plan sponsor, to the effect that such Qualified Benefit Plan is so qualified and that the plan and the trust related thereto are exempt from federal income Taxes under Sections 401(a) and 501(a), respectively, of the Code, and, to the Knowledge of Sellers, nothing has occurred that could reasonably be expected to cause the revocation of such determination letter from the Internal Revenue Service or the unavailability of reliance on such opinion or advisory letter from the Internal Revenue Service. Neither Sellers nor any of the Acquired Companies have taken in the last six years any corrective action or made any filing during the past six years under any voluntary correction program of the IRS, Department of Labor or any other Governmental Authority with respect to any Qualified Benefit Plan, and, to the Knowledge of Sellers, there is no outstanding plan defect with respect to any Qualified Benefit Plan that requires correction under any such program. All benefits, contributions and premiums required by and due under the terms of each Benefit Plan or applicable Law, to the extent required of any of the Acquired Companies, have been timely paid in accordance with the terms of such Benefit Plan, the terms of all applicable Laws and GAAP, in all material respects (d) None of the Acquired Companies nor any ERISA Affiliate has, at any time during the last six years, contributed to or been obligated to contribute to, or otherwise had any obligation with respect to: (i) any plan that is subject to Title IV or Section 302 of ERISA or
{N4469832.17} 28 Section 412 or 4971 of the Code or otherwise incurred liability under Title IV or such sections of the Code, except as set forth on Section 2.15(d) of the Seller Disclosure Schedule; (ii) a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA (a “Multiemployer Plan”), except as set forth on Section 2.15(d) of the Seller Disclosure Schedule; (iii) a plan that has two or more contributing sponsors at least two of whom are not under common control, within the meaning of Section 4063 of ERISA (a “Multiple Employer Plan”); or (iv) a “multiple employer welfare arrangement” within the meaning of Section 3 (40) of ERISA. (e) None of the Acquired Companies or any ERISA Affiliate has, at any time during the last six years, incurred any liability to a Multiemployer Plan or Multiple Employer Plan as a result of a complete or partial withdrawal (as those terms are defined in Part I of Subtitle E of Title IV of ERISA) from a Multiemployer Plan or Multiple Employer Plan that has not been satisfied in full. None of the Multiemployer Plans listed on Section 2.15(d) of the Seller Disclosure Schedule have been terminated under section 4041A of ERISA, have been placed in reorganization status under Title IV of ERISA, or have been determined to be "insolvent" (as defined in Section 4245 of ERISA). With respect to any Multiemployer Plan to which the Company is or was required to contribute, there is no event or condition, including, without limitation, on account of or in connection with the transactions contemplated by this Agreement, that would to the Knowledge of Sellers be expected to cause the Acquired Companies to incur any liability under Section 4201 of ERISA. Other than as required under Section 4980B of the Code or other applicable Law, no Benefit Plan provides benefits or coverage in the nature of health, life or disability insurance following retirement or other termination of employment (other than death benefits when termination occurs upon death or continuation of benefits as part of a severance arrangement). (f) The present value of the aggregate benefit liabilities under the Petillo, Inc. Cash Balance Pension Plan, determined as of the end of such Plan’s most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes in such Plan’s most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities. The term “benefit liabilities” has the meaning specified in Section 4001 of ERISA and the terms “current value” and “present value” have the meaning specified in Sections 3(26) and 3(27) of ERISA respectively. (g) Except as set forth in Section 2.15(g) of the Seller Disclosure Schedule, no Benefit Plan is reasonably expected to: (i) result in the payment to any Employee of any money or other property; or (ii) accelerate the vesting of or provide any additional rights or benefits (including funding of compensation or benefits through a trust or otherwise) to any Employee, in either case, as a result of the execution of this Agreement. Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby is reasonably expected to result in “excess parachute payments” within the meaning of Section 280G(b) of the Code. (h) There are no pending or, to the Knowledge of Sellers, threatened claims (other than routine claims for benefits in the ordinary course), lawsuits or arbitrations that have been asserted or instituted, and, to the Knowledge of Sellers, no circumstances exist that may reasonably be likely to give rise to a claim or lawsuit, against the Benefit Plans or the assets of any of the trusts under any of the Benefit Plans that would reasonably be expected to result in any material liability of Sellers or the Acquired Companies to the Pension Benefit Guaranty
{N4469832.17} 29 Corporation, the IRS, the Department of Labor, any fiduciary that Sellers or any of the Acquired Companies has an obligation to indemnify or any participant in a Benefit Plan. To the Knowledge of Sellers, no Benefit Plan is under audit or the subject of an investigation by the IRS, the Department of Labor, the Pension Benefit Guaranty Corporation, the SEC or any other Governmental Authority, nor is any such audit or investigation pending or, to the Knowledge of Sellers, threatened. (i) None of the Acquired Companies nor, to the Knowledge of Sellers, any other person, including any fiduciary, has engaged in any “prohibited transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA), which could subject any of the Benefit Plans or their related trusts, or the Acquired Companies, or any fiduciary that the Acquired Companies has an obligation to indemnify to any material tax or material penalty imposed under Section 4975 of the Code or Section 502 of ERISA. (j) No Benefit Plan provides for the gross-up or reimbursement of Taxes under Section 409A or 4999 of the Code or otherwise. Section 2.16 Employment Matters. (a) Section 2.16(a) of the Seller Disclosure Schedule contains a correct and complete list as of the date hereof of all Persons who are Employees or independent contractors of the Acquired Business, which sets forth for each such Person the following: (i) name; (ii) title or position (including whether full or part time Employees and/or independent contractors); (iii) hire or engagement date; (iv) current annual base compensation rate; (v) commission, bonus or other incentive-based compensation (including whether any such amounts are guaranteed or subject to a minimum); (vi) leave status, if applicable; (vii) exempt or non-exempt designation for purposes of the Fair Labor Standards Act (the “FLSA”), and (viii) a description of the fringe benefits provided to each such individual, including current vacation balances, sick time, and other paid time off balances. (b) Except as set forth on Section 2.16(b) of the Seller Disclosure Schedule, no Acquired Company is a party to, or bound by, any collective bargaining or other agreement with a labor organization representing any of its Employees. As of the date hereof, no strikes, slowdowns or work stoppages are pending or, to the Knowledge of Sellers, threatened in writing with respect to the Employees, and for the last five years, no Acquired Company has experienced any strike, slowdown or work stoppage. (c) Each Acquired Company is, and for the last five years has been, in compliance in all material respects with all applicable Laws pertaining to employment and employment practices, including employment practices, terms and conditions of employment, contractual obligations, equal employment opportunity, nondiscrimination, immigration (including Form I-9 requirements and any applicable E-Verify obligations), wages, hours, benefits, workers’ compensation, payroll and withholding Taxes, employee classification (for purposes of determining exemptions under the FLSA and for purposes of determining employment status under relevant Internal Revenue Service and Department of Labor standards), the payment of social security and similar Taxes, employee termination (actual or constructive), occupational safety and health, plant closing and changes in operations. There are no actions, suits, claims,
{N4469832.17} 30 investigations or other legal proceedings against any Acquired Company pending, or to the Knowledge of Sellers, threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment of any Employee or former employee of any Acquired Company or otherwise alleging any violations of any labor or employment Law, including claims of unfair labor practice, employment discrimination, wrongful termination, sex- based discrimination, sexual harassment or sexual misconduct, breach of any Acquired Company’s policies relating to the foregoing, or similar matters. (d) During the two-year period preceding the date of this Agreement, no Acquired Company has implemented any layoff of employees or plant closing, each as defined in the WARN Act. Section 2.16(d) of the Seller Disclosure Schedule sets forth an accurate and complete list of all employees of each Acquired Company who have been terminated or laid off, or whose hours of work have been reduced by more than 50%, in the two-year period preceding the date of this Agreement. Section 2.17 Taxes. (a) Except as set forth in Section 2.17 of the Seller Disclosure Schedule: (i) Each of the Acquired Companies and Sellers has filed (taking into account any valid extensions) all material Tax Returns required to be filed by such Person. Such Tax Returns are true, complete and correct in all material respects and were prepared in material compliance with all applicable Laws. No Acquired Company or Seller is currently the beneficiary of any extension of time within which to file any Tax Return. No written claim has been made by an authority in a jurisdiction where any Acquired Company or Seller does not file Tax Returns that such Acquired Company or Seller is or may be subject to taxation by that jurisdiction. All material Taxes due and owing by the Acquired Companies and Sellers (whether or not shown on any Tax Return) have been timely paid or accrued. (ii) No extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of any Acquired Company or Seller. (iii) There are no ongoing actions, suits, claims, investigations or other legal proceedings by any taxing authority against any Acquired Company or Seller. No Seller or director or officer (or employee responsible for Tax matters) of any Acquired Company expects any authority to assess any additional Taxes for any period for which Tax Returns have been filed. No Acquired Company or Seller has received from any federal, state, local, or non-U.S. taxing authority (including jurisdictions where such Acquired Company has not filed Tax Returns) any (A) written or, to the Knowledge of Sellers, oral notice indicating an intent to open an audit or other review, (B) request for information related to Tax matters, or (C) written or, to the Knowledge of Sellers, oral notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted, or assessed, which remains outstanding or unresolved, by any taxing authority against such Acquired Company. (iv) Section 2.17(a)(iv) of the Seller Disclosure Schedule lists all federal, state, local and non-U.S. Tax Returns filed with respect to each Acquired Company and Seller for taxable periods ended on or after December 31, 2015, indicates those Tax Returns that have been
{N4469832.17} 31 audited, and indicates those Tax Returns that currently are the subject of audit. Seller Parties have delivered to Buyer correct and complete copies of all federal and state income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by the Acquired Companies and Sellers filed or received since December 31, 2017. (v) No Acquired Company or Seller is a party to or bound by any Tax allocation or Tax-sharing agreement, with the exception of contracts that are not primarily related to Taxes entered into in the Ordinary Course of Business and liabilities thereunder. (vi) The unpaid Taxes of each of the Acquired Companies and each Seller (A) did not, as of the most recent fiscal month end, exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the most recent Balance Sheet (rather than in any notes thereto) for such company and (B) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with past custom and practice of such company in filing its Tax Returns. (vii) No Acquired Company or Seller has any liability for the Taxes of any Person (other than the Acquired Company) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local, or non-U.S. law), as a transferee or successor, or by contract (with the exception of contracts that are not primarily related to Taxes entered into in the Ordinary Course of Business and liabilities thereunder). (viii) All material Taxes which any Acquired Company or Seller is obligated to withhold from amounts owing to any employee, independent contractor, creditor, stockholder, vendor or other third party have been withheld and paid or accrued, and all Forms W- 2 and 1099 required with respect thereto have been properly completed and timely filed. (ix) Petillo and Petillo NY have at all times since their formation through the date of their respective Contributions, been validly electing subchapter S corporations within the meaning of Code Sections 1361 and 1362 and from the time of their Contribution through the time of their respective Mergers were “qualified subchapter S subsidiaries” within the meaning of Code Section 1361(b)(3)(B)); Petillo MD was at all times since its formation through the date of its respective Contribution a validly electing subchapter S corporation within the meaning of Code Sections 1361 and 1362. (x) NJ Seller, NY Seller and MD Seller are, and have at all times since their formation been, validly electing subchapter S corporations within the meaning of Code Sections 1361 and 1362 and will be such an S corporation up to and include the Closing Date. (xi) Each of the Reorganizations was effected in a manner consistent with the transaction described in Situation 1 of Revenue Ruling 2008-18, 2008-1 C.B. 674, and qualified as a “reorganization” described in Section 368(a)(1)(F) of the Code. (xii) Petillo LLC is disregarded as an entity separate from NJ Seller described in Treasury Regulation Section 301.7701-3(b)(1)(ii) and is not a qualified subchapter S subsidiary as of the Effective Date.
{N4469832.17} 32 (xiii) Petillo NY LLC is disregarded as an entity separate from NY Seller described in Treasury Regulation Section 301.7701-3(b)(1)(ii) and is not a qualified subchapter S subsidiary as of the Effective Date. (xiv) Petillo MD is as of the Effective Date, and from the time of its Contribution has been, a qualified subchapter S subsidiary. (xv) No Acquired Company or Seller will be liable for any Tax under Code Section 1374 in connection with the sale of the Equity. No Acquired Company or Seller has, in the last five years, (A) acquired assets from another corporation in a transaction in which its Tax basis for the acquired assets was determined, in whole or in part, by reference to the Tax basis of the acquired assets (or any other property) in the hands of the transferor or (B) acquired the stock of any entity that is a qualified subchapter S subsidiary. (xvi) No Acquired Company or Seller has any goods inventoried under the LIFO method authorized by Code Section 472. (xvii) No Acquired Company has received or requested any letter ruling from the Internal Revenue Service (or any comparable ruling from any other taxing authority). After the Closing, no Acquired Company will be subject to or bound by any letter ruling from the Internal Revenue Service (or any comparable ruling from any other taxing authority) received or requested on or before the Closing Date. (xviii) No Acquired Company will be required to include any material item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (A) change in method of accounting for a taxable period ending on or prior to the Closing Date; (B) use of an improper method of accounting for a taxable period ending on or prior to the Closing Date; (C) “closing agreement” as described in Code Section 7121 (or any corresponding or similar provision of state, local, or non-U.S. income Tax law) executed on or prior to the Closing Date; (D) intercompany transaction or excess loss account described in Treasury Regulations under Code Section 1502 (or any corresponding or similar provision of state, local, or non-U.S. income Tax law); (E) debt instrument held on or prior to the Closing Date that was acquired with “original issue discount” as defined in Section 1273 of the Code; (F) interest held in a “controlled foreign corporation” (as that term is defined in Section 957 of the Code) on or prior to the Closing Date
{N4469832.17} 33 (G) installment sale or open transaction disposition made on or prior to the Closing Date; or (H) prepaid amount received on or prior to the Closing Date. (xix) There are no liens for Taxes, other than Permitted Encumbrances, on the Equity or the assets of the Acquired Business. (xx) None of the Acquired Companies or Sellers has participated in or been a party to any “reportable transaction” within the meaning of Section 1.6011-4(b)(1) of the Treasury Regulations, or a transaction substantially similar to a reportable transaction. (xxi) No Acquired Company has distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Code Section 355 or 361. (xxii) No Seller is a “foreign person” as defined in Code Section 1445(f)(3) or a “foreign entity” as defined in Code Section 1473(5), and no transaction contemplated herein is subject to the withholding provisions of Code Sec. 3406, subchapter A of Chapter 3 of the Code or Chapter 4 of the Code. (xxiii) Each Acquired Company and Seller has disclosed on its federal income Tax Returns all positions taken thereon which could give rise to a substantial understatement of federal income Tax within the meaning of Code Section 6662. (xxiv) No Acquired Company owns an interest in any other Person that is classified as equity for income Tax purposes. (xxv) Each Acquired Company has complied in all material respects with its filing and remittance obligations with respect to unclaimed property under applicable Law. (xxvi) No Acquired Company has deferred any Taxes under Section 2302 of the CARES Act or claimed any tax credit under Section 2301 of the CARES Act or Sections 7001-7003 of the Families First Coronavirus Response Act as the same may be amended or modified. (xxvii) Each Acquired Company is registered for the purposes of sales Tax, use Tax, value-added Taxes or any similar Tax in all jurisdictions where it is required by applicable Law to be so registered, and has complied in all material respects with all Laws relating to such Taxes. All required sales Tax exemption certificates have been obtained by the Acquired Companies, and all such certificates have been properly completed and maintained. (xxviii)All of the assets of the Acquired Companies have been properly listed and described on the property Tax rolls for all periods prior to and including the Closing Date, and no portion of such assets constitutes omitted property for property Tax purposes.
{N4469832.17} 34 (xxix) No Acquired Company has made any claims for recovery, refund or credit of any Taxes, which have claims that have not been, or will not have been, fully resolved and satisfied as of the Closing Date; (xxx) Notwithstanding anything to the contrary in this Agreement, it is agreed and understood that (i) the representations and warranties of the Acquired Companies in this Section 2.17(a) refer only to activities prior to the Closing and shall not serve as representations and warranties regarding, or a guarantee of, nor can they be relied upon with respect to, Taxes attributable to any Tax period (or a portion thereof) beginning, or Tax positions taken, after the Closing Date, and (ii) no representations or guarantees are made with respect to the amount or availability of Tax attributes of the Acquired Companies for any taxable period (or portion thereof) beginning after the Closing Date. Section 2.18 Brokers. Except as set forth on Section 2.18 of the Seller Disclosure Schedule, no broker, finder or investment banker is entitled to any brokerage, finder’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Sellers. Section 2.19 Receivables and Payables. (a) Except to the extent reserved against in the Balance Sheet, (i) all receivables of the Acquired Companies set forth on the Balance Sheet arose from the performance of services by the Acquired Companies in the Ordinary Course of Business, and represent valid obligations arising from sales actually made or services actually performed by the Acquired Companies, and (ii) the Acquired Companies have not received any written notice from an account debtor disputing the validity of any such account receivable. (b) All accounts payable of the Acquired Companies are reflected in the Financial Statements, and such accounts payable are the result of bona fide transactions in the Ordinary Course of Business and have been paid or are not yet due and payable, and are payable on ordinary trade terms. Section 2.20 Material Customers and Material Suppliers. Section 2.20 of the Seller Disclosure Schedule sets forth (a) a list of the top ten customers of the Acquired Business based on aggregate revenues received during the year ended December 31, 2020 and during the ten- month period ended October 31, 2021 (the “Material Customers”) and the top ten vendors and suppliers of the Acquired Business based on aggregate payments during the year ended December 31, 2020 and during the ten-month period ended October 31, 2021 (the “Material Suppliers”), and (b) the amount of aggregate revenues received from, or payments made to, each such Person, as applicable, during the year ended December 31, 2020 and during the ten-month period ended October 31, 2021. No Material Customer or Material Supplier has communicated in writing or, to the Knowledge of Sellers, orally to any Seller or Acquired Company an intention to discontinue or materially negatively alter its relationship with, or reduce the business it conducts with, the Acquired Business, whether upon consummation of the transactions contemplated hereby or otherwise. No Material Customer has requested a pricing reduction from any Seller or Acquired Company.
{N4469832.17} 35 Section 2.21 Related Party Transactions. Except as set forth in Section 2.21 of the Seller Disclosure Schedule, no (i) Affiliate, director, officer, member, manager, employee, shareholder of any Acquired Company (other than the other Acquired Companies) or (ii) child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in- law, son-in-law, daughter-in-law, brother-in-law or sister-in law, in each case including by adoption (collectively, “Family Members”), of Mr. Petillo: (i) owns any material property or right, whether tangible or intangible, which is used by the Acquired Business; (ii) has any claim or cause of action against the Acquired Business; (iii) owes any money to the Acquired Business or is owed money from the Acquired Business; or (iv) is a party to any contract with the Acquired Business. Section 2.21 of the Seller Disclosure Schedule sets forth each contract, agreement or account between any Acquired Company, on the one hand, and any Acquired Company’s present equity holders, officers, managers, directors, or members of their respective Family Members (or any Person in which any of them has a material financial interest, directly or indirectly), on the other hand, other than employment agreements and arrangements entered into by the applicable Acquired Company in the Ordinary Course of Business. Section 2.22 Insurance. Section 2.22 of the Seller Disclosure Schedule sets forth a true and complete list, including policy number, coverage and amount insured, of all current insurance policies owned by, or otherwise providing coverage to the Acquired Business, copies of which policies have previously been made available to Buyer, together with a list of all pending claims and claims paid under such insurance policies (or predecessor insurance policies) since January 1, 2020. All such policies are legal, valid, binding and in full force and effect. All premiums due on such policies have been paid and, to the Knowledge of Sellers, there exists no breach by the insured under any such policy which gives the insurer the right thereunder to terminate such policy. As of the date hereof, neither any Seller nor any Acquired Company has received any written or, to the Knowledge of Sellers, oral notice of cancellation or intent to cancel, non-renewal, disallowance or material reduction in coverage with respect to any of the policies or of increase or intent to increase the premiums for such policies. There is no material claim by the Acquired Business under any of such policies as to which coverage has been denied or disputed in writing or, to the Knowledge of Sellers, orally by the underwriters of such policies. Section 2.23 Investment Purpose. Sellers are acquiring the Buyer Common Stock being issued as Buyer Stock Consideration solely for their own accounts for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of applicable securities laws. Sellers acknowledge that the Buyer Common Stock being issued as Buyer Stock Consideration is not registered under the Securities Act or any state securities laws, and that such Buyer Common Stock may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable. Each Seller is an “accredited investor” as that term is defined in Rule 501 of Regulation D under the Securities Act and is able to bear the economic risk of holding Buyer Common Stock for an indefinite period (including total loss of its investment), and has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risk of its investment. Section 2.24 Independent Investigation. Sellers have conducted their own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) and assets of Buyer. Sellers acknowledge and agree that neither Buyer nor
{N4469832.17} 36 any other Person has made any representation or warranty as to Buyer, the Buyer Common Stock or this Agreement, except as expressly set forth in Article 3 of this Agreement. Section 2.25 Service Warranties. Each service performed by any Acquired Company has been in conformity with such Acquired Company’s standard warranty or an individually- negotiated warranty, as applicable, and at all times has met in all material respects all standards for quality and workmanship prescribed by Law, industry standards (if any), applicable certifications and technical requirements, contractual agreements and the product literature provided by such Acquired Company. No Acquired Company has any outstanding liability for replacement, repair or re-work thereof or other damages in connection therewith. Section 2.25 of the Seller Disclosure Schedule sets forth a true and correct summary of all claims during the past five years with respect to the quality of or defects relating to each Acquired Company’s services, and all material credits and allowances given to customers during such period with respect thereto. Section 2.26 Bank Accounts. Section 2.26 of the Seller Disclosure Schedule contains a list showing: (a) the name of each bank, safe deposit company or other financial institution in which any Acquired Company has an account, lock box or safe deposit box; and (b) the names of all Persons authorized to draw thereon or to have access thereto and the names of all Persons, if any, holding powers of attorney from any Acquired Company. Section 2.27 Books and Records. The minute books and other similar records of the Acquired Companies contain all records of ownership of any equity interests or other economic interests in the Acquired Companies. Complete and correct copies of such minute books and similar records have been made available to Buyer. The absence of any such minute books or other similar records or Sellers’ failure to maintain any minute books and other similar records that contain records of material actions taken at meetings of shareholders and directors of the Acquired Companies would not reasonably be expected to have a material impact on the Acquired Companies or the Acquired Business. Section 2.28 Government Contracts and Government Bids. (a) Section 2.28(a) of the Seller Disclosure Schedule sets forth a complete list of Government Bids with a contemplated value in excess of $250,000, for which any Acquired Company (i) has received no notice of award; (ii) has not been excluded from the competitive range; or (iii) has not otherwise received notice that the Government Bid was unsuccessful. (b) Each of the Acquired Companies has complied, and is in compliance, with all material terms and conditions of each Government Contract and no Acquired Company (i) has materially breached or violated any Law, certification, representation, clause or provision, (ii) is in breach of any Government Contract or Government Bid, (iii) has been in material non- compliance with any applicable provision of the Federal Acquisition Regulations (“FAR”) or Defense Federal Acquisition Regulation Supplement (“DFARS”), (iv) is the subject of any pending claim pursuant to the False Claims Act (31 U.S.C. §§ 3729 et seq.) and, to the Knowledge of Sellers, no facts or circumstances exist that could reasonably be expected to give rise to a claim under the False Claims Act against the Acquired Companies, or (v) is subject to any material cost disallowance, withhold, offset, overpayment or credit requested by or on behalf of a Governmental Authority. No Government Bid submitted by any of the Acquired Companies has been found to
{N4469832.17} 37 be non-responsive. All statements, representations, and certifications made by Acquired Companies pertaining to any Government Contract were, at the time made, current, accurate and complete. (c) No notice of termination for default and no cure notice, show cause notice or other indication of termination is currently, or since January 1, 2018 has been, in effect pertaining to any Government Contract. (d) None of the Acquired Companies, any of their respective Employees, or, to the Knowledge of Sellers, any Material Customer or Material Supplier has been debarred, suspended or excluded from participation in the award or performance of any Government Contract for any reason, nor has any debarment, suspension or exclusion investigation or audit been threatened or initiated in writing or, to the Knowledge of Sellers, orally against any of the Acquired Companies, any of their respective Employees, or, to the Knowledge of Sellers, any Material Customer or Material Supplier. (e) Since January 1, 2018, the Acquired Companies have not conducted or initiated any internal investigation, or made a voluntary or mandatory disclosure to any Governmental Authority or any other Person with respect to any alleged or potential irregularity, misstatement or omission arising under or relating to a Government Contract or Government Bid. (f) There exist no outstanding material claims or disputes with the Acquired Companies, either by a Governmental Authority or by any other Person arising under or relating to any Government Contract or Government Bid. Section 2.29 Backlog. The September 30, 2021 back-log of the Acquired Business is up- to-date and contains, in all material respects, complete and accurate details of the construction projects in process and those completed through September 30, 2021. To the Knowledge of Sellers, since January 1, 2018, (a) there have been no construction project cancellations by a customer of the Acquired Companies, and (b) no written or, to the Knowledge of Sellers, oral notice of cancellation or termination of any construction project has been received by any Acquired Company. To the Knowledge of Sellers, no construction project cancellations by a customer of the Acquired Companies is currently expected. Section 2.30 Coronavirus Pandemic Matters. (a) With respect to the PPP Loan: (i) Petillo was eligible pursuant to the Paycheck Protection Program Laws to apply for and receive the PPP Loan; (ii) Petillo was, at all times, in compliance in all material respects with all of the terms and conditions of the PPP Loan and the requirements of the Paycheck Protection Program Laws applicable to the PPP Loan; and (iii) all of the proceeds of the PPP Loan were utilized for forgiveness eligible or other allowable uses as proscribed in the Paycheck Protection Program Laws. Sellers have made available true, accurate, and complete copies of all documents received by Petillo from the PPP Lender or any Governmental Authority with respect to the PPP Loan. Other than the PPP Loan, none of the Acquired Companies has received any loan under the Paycheck Protection Program administrated by the U.S. Small Business Administration. Petillo timely submitted application(s) for forgiveness of the PPP Loan and the PPP Loan was forgiven in full on June 10, 2021. Sellers have made
{N4469832.17} 38 available a true, correct and complete copy of each of SBA Form 2483 (Paycheck Protection Program Borrower Application Form) and SBA Form 3508 (Paycheck Protection Program Loan Forgiveness Application), together with all supporting documentation submitted to the PPP Lender in connection with such application. (b) Other than the PPP Loan, the Acquired Companies have not received any other loans, grants, or funding from any government programs or any other third person as a result of or in connection with the Coronavirus Pandemic. (c) None of the Acquired Companies applied for, or received, any relief from Taxes or other Tax benefit under the CARES Act or any other Coronavirus Pandemic-related Law, including claiming an employee retention credit or deferring any amount of employer or employee pay-roll Taxes. Section 2.31 No Other Representations or Warranties. Except for the representations and warranties expressly set forth in this Article 2, no Seller nor any other Person has made, makes or shall be deemed to make any other express or implied representation or warranty, either written or oral, at law or in equity, on behalf of Sellers, any of their Affiliates, any Acquired Company or the Acquired Business, including any representation or warranty as to the accuracy or completeness of any information regarding Sellers or any Acquired Company furnished or made available to Buyer and its Representatives or as to the future revenue, profitability, success or value of any Acquired Company or their respective businesses, or any representation or warranty arising from statute or otherwise in law. Absent Fraud, Sellers hereby disclaim any and all liability and responsibility for any projections, forecasts, estimates, appraisals, statements, promises, advice, data or information made, communicated or furnished (orally or in writing, including electronically) to Buyer or any of Buyer’s Affiliates or any Representatives of Buyer or any of Buyer’s Affiliates, including omissions therefrom, except, in each case, as expressly set forth in the representations and warranties in this ARTICLE 2. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Sellers that the statements contained in this Article 3 are true and correct as of the date hereof. Section 3.1 Organization and Authority of Buyer. Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the state of Delaware. Buyer has all necessary corporate power and authority to enter into this Agreement and the other agreements, instruments and documents contemplated hereby that are to be executed or delivered by the Buyer (the “Buyer Ancillary Agreements”), to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyer of this Agreement and the Buyer Ancillary Agreements, the performance by Buyer of its obligations hereunder and thereunder and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly and validly authorized by all requisite corporate action on the part of Buyer. This Agreement and the Buyer Ancillary Agreements have been (or, when executed, will be) duly executed and delivered by Buyer, and (assuming due authorization, execution and delivery by Sellers) this Agreement and the Buyer
{N4469832.17} 39 Ancillary Agreements constitute or will constitute, as the case may be, legal, valid and binding obligations of Buyer, enforceable against Buyer in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). Section 3.2 No Conflicts; Consents. The execution, delivery and performance by Buyer of this Agreement and the Buyer Ancillary Agreements, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of any provision of the Organizational Documents of Buyer; (b) result in a violation or breach of any provision of any Law or Governmental Order applicable to Buyer; or (c) require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default under or result in the acceleration of any obligation under any material agreement or material Permit to which Buyer is a party or to which Buyer’s assets or properties are bound, in each case other than consents already obtained, notices already given or other actions already taken. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Buyer in connection with the execution and delivery of this Agreement and each Buyer Ancillary Agreement or the consummation of the transactions contemplated hereby or thereby, except for such consents, approvals, Permits, Governmental Orders, declarations, filings or notices which would not have a material adverse effect on Buyer’s ability to consummate the transactions contemplated hereby and except for such filings as may be required under the HSR Act. Section 3.3 Investment Purpose. Buyer is acquiring the Equity and the Acquired Business solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of any applicable securities laws. Buyer acknowledges that the Equity is not registered under the Securities Act of 1933, as amended (the “Securities Act”), or any other federal or state securities Laws, and that the Equity may not be transferred or sold except pursuant to the registration provisions of the Securities Act and applicable state securities Laws or pursuant to an applicable exemption therefrom, and otherwise subject to applicable federal and state securities Laws. Buyer is an “accredited investor” as that term is defined in Rule 501 of Regulation D under the Securities Act and is able to bear the economic risk of holding the Equity for an indefinite period (including total loss of its investment), and has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risk of its investment. Buyer has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) and assets of the Acquired Companies. Buyer acknowledges and agrees that none of Covenantors nor any other Person has made any representation or warranty as to Covenantors, the Acquired Companies, the Equity or this Agreement, except as expressly set forth in Article 2 of this Agreement. Section 3.4 Buyer Capital Structure. As of the date hereof, the authorized capital stock of Buyer consists of 38,000,000 shares of Buyer Common Stock. As of the close of business on December 29, 2021, there were (a) 28,986,002 shares of Buyer Common Stock issued and outstanding, which number includes 28,748 restricted shares of Buyer Common Stock granted under a Buyer Stock Plan, (b) 0 shares of Buyer Common Stock held in treasury, (c) 0 shares of Buyer Common Stock reserved for issuance upon the exercise of options granted by Buyer to
{N4469832.17} 40 purchase shares of Buyer Common Stock under a Buyer Stock Plan, and (d) 0 shares of Buyer Common Stock issued and outstanding that are subject to vesting, conversion or exercise. For purposes of this Agreement, the “Buyer Stock Plans” means the 2019 Employee Stock Purchase Plan and the Amended and Restated 2018 Stock Incentive Plan. All of the issued and outstanding shares of Buyer Common Stock or other equity interests of Buyer and each of its Subsidiaries (together with any securities convertible into equity interests of Buyer or any Subsidiary of Buyer, the “Buyer Equity Securities”), as applicable, were duly authorized and validly issued and are fully paid and nonassessable and are not subject to any preemptive rights. Except as set forth in this Section 3.4, as of the close of business on December 29, 2021, there are no Buyer Equity Securities issued or outstanding, and neither Buyer nor any Subsidiary of Buyer has any obligation to issue any Buyer Equity Securities. Section 3.5 Valid Issuance of Buyer Common Stock. The shares of Buyer Common Stock to be issued pursuant to this Agreement has been duly authorized by all necessary corporate action on the part of Purchaser and will, when issued, be validly issued in compliance with all applicable federal and state securities Laws, fully paid and non-assessable, free and clear of all Encumbrances (other than restrictions on transfer imposed under applicable securities Laws), and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of applicable Law, the Organizational Documents of the Buyer or any agreement to which Buyer is a party or is otherwise bound. At the Closing, good and valid legal and beneficial title to the Buyer Stock Consideration will pass to Sellers, free and clear of any and all Encumbrances (other than restrictions on transfer imposed under applicable securities Laws). Section 3.6 SEC Filings; Financial Statements. (a) The Buyer has filed all registration statements, forms, and reports required to be filed by Buyer with the SEC since January 1, 2021. All such registration statements, forms, reports and other documents are referred to herein as the “Buyer SEC Reports.” All of the Buyer SEC Reports (i) were filed on a timely basis, (ii) at the time filed (or if amended prior to the date hereof, when so amended), complied as to form in all material respects with the requirements of the Securities Act, the Exchange Act and all other Laws applicable to such Buyer SEC Reports, and (iii) did not at the time they were filed contain any untrue statement of a material fact or omit to state a material fact required to be stated in such Buyer SEC Reports or necessary in order to make the statements in such Buyer SEC Reports, in the light of the circumstances under which they were made, not misleading. No Subsidiary of Purchaser is or has been required by applicable regulations promulgated by the SEC to file or furnish under the Exchange Act, or otherwise submit to the SEC, any form, report, registration statement, or other document. (b) Each of the consolidated financial statements (including, in each case, any related notes and schedules) contained in the Buyer SEC Reports at the time filed (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, (ii) were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved and at the dates involved (except as may be indicated in the notes to such financial statements or, in the case of unaudited interim financial statements, as permitted by the SEC on Form 10-Q under the Exchange Act) and (iii) fairly presented in accordance with GAAP the consolidated financial position of the Buyer and its
{N4469832.17} 41 Subsidiaries as of the dates indicated and the consolidated results of their respective operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments. (c) Buyer has established and maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Such disclosure controls and procedures are reasonably designed to ensure that material information relating to Buyer and its subsidiaries required to be disclosed in Buyer’s periodic and current reports under the Exchange Act are made known to Buyer’s chief executive officer and its chief financial officer by others within those entities to allow timely decisions regarding required disclosures as required under the Exchange Act. (d) Buyer and its subsidiaries have established and maintain a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) designed to provide reasonable assurance regarding the reliability of Purchaser’s financial reporting and the preparation of Buyer’s financial statements for external purposes in accordance with GAAP. Buyer has disclosed, based on its most recent evaluation of Buyer’s internal control over financial reporting prior to the date hereof, to Buyer’s auditors and audit committee of Buyer’s board of directors (i) any significant deficiencies and material weaknesses in the design or operation of Buyer’s internal control over financial reporting which are reasonably likely to adversely affect Buyer’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in Buyer’s internal control over financial reporting. (e) Buyer is in compliance in all material respects with all current listing and corporate governance requirements of NASDAQ applicable to Buyer. Section 3.7 Compliance with Laws. Each of the Buyer and its subsidiaries has conducted, and is conducting, its business and operations in compliance in all material respects with all applicable Laws. Neither the Buyer nor any of its subsidiaries has received any notice or other communication from any Governmental Entity or other Person alleging any material noncompliance with any applicable Law that remains unresolved. Neither the Buyer nor any of its subsidiaries has conducted any internal investigation with respect to any actual, potential or alleged violation of any Law by any manager, director, officer or Affiliate concerning any actual or alleged fraud. Section 3.8 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer. Section 3.9 Legal Proceedings. There are no actions, suits, claims, investigations or other legal proceedings pending or, to Buyer’s knowledge, threatened in writing against or by Buyer or any Affiliate of Buyer that (a) challenge or seek to prevent, enjoin, delay or otherwise materially and adversely affect the ability of the Buyer to consummate the transactions contemplated by this Agreement or the Buyer Ancillary Agreements, or (b) if determined adversely to Buyer, would have a material adverse effect on Buyer’s business, operations, assets, liabilities or financial performance.
{N4469832.17} 42 Section 3.10 Absence of Changes. Since December 31, 2020, there has not occurred a Buyer Material Adverse Effect. During the period from December 31, 2020 to the date hereof, other than in respect of the transactions contemplated hereby, the businesses of Buyer and each of its subsidiaries have been conducted in all material respects in the ordinary course of business. Section 3.11 Availability of Funds; Solvency. Buyer has, and will have at all times until satisfying all of its obligations hereunder, sufficient funds to perform all of its respective obligations under this Agreement, including payment of the Earn-Out Cap. Buyer is not entering into the transactions contemplated hereby with the intent to hinder, delay or defraud either present or future creditors of Buyer or any of its Affiliates. Immediately after giving effect to the transactions contemplated hereby, Buyer and the Acquired Companies shall (a) be solvent, (b) have adequate capital to carry on their respective businesses and pay their respective debts as they become due, and (c) own property having a fair saleable value greater than the amounts required to pay their respective debts (including a reasonable estimate of the amount of all contingent liabilities). Section 3.12 Absence of Undisclosed Liabilities. Except as and to the extent set forth in the unaudited consolidated balance sheet of Buyer and its subsidiaries as of September 30, 2021 (including the notes thereto) set forth in Buyer’s report on Form 10-Q for the fiscal quarter ended September 30, 2021 (the “Buyer Balance Sheet”), neither Buyer nor any of its subsidiaries has any Liabilities of a nature required by GAAP to be disclosed on a consolidated balance sheet of Buyer, except for (a) Liabilities incurred in the ordinary course of business consistent with past practice since the date of the Buyer Balance Sheet, and (b) Liabilities that are expressly provided for under this Agreement or that have been incurred in connection with the transactions contemplated by this Agreement. None of Buyer or any of its subsidiaries is a party to any material “off-balance sheet arrangements” as defined in Item 303(a)(4) of Regulation S-K. Section 3.13 No Other Representations and Warranties. Except for the representations and warranties expressly set forth in this Article 3, neither Buyer nor any other Person has made, makes or shall be deemed to make any other express or implied representation or warranty, either written or oral, at law or in equity, on behalf of Buyer or any of its Affiliates, including any representation or warranty as to the accuracy or completeness of any information regarding Buyer furnished or made available to Sellers and their Representatives or as to the future revenue, profitability, success or value of Buyer and its businesses, or any representation or warranty arising from statute or otherwise in law. Absent fraud, Buyer hereby disclaims any and all liability and responsibility for any projections, forecasts, estimates, appraisals, statements, promises, advice, data or information made, communicated or furnished (orally or in writing, including electronically) to Sellers or any of Sellers’ Affiliates or any Representatives of Sellers or any of Sellers’ Affiliates, including omissions therefrom, except, in each case, as expressly set forth in the representations and warranties in this Article 3. ARTICLE 4 COVENANTS Section 4.1 Employees; Benefit Plans.
{N4469832.17} 43 (a) Buyer acknowledges the obligations of the Acquired Companies under all existing collective bargaining agreements entered into by the Acquired Companies, and agrees to assume all obligations thereunder and abide by all terms thereof as of and following the Closing Date. Buyer acknowledges Sellers’ and the Acquired Companies’ obligations and liabilities under the Multiemployer Plans, and agrees to assume such obligations and liabilities. (b) Until the first anniversary of the Closing Date, Buyer shall, or shall cause an Affiliate to, provide each non-union Employee who remains employed by the Acquired Companies, by Buyer or any other Affiliate of Buyer immediately after the Closing (a “Company Continuing Employee”) with base salary or hourly wage rate, bonus opportunity and other compensation and benefits consistent with the Acquired Companies’ past practices, as applicable. (c) With respect to any employee benefit plan maintained by Buyer or its Subsidiaries, including the Acquired Companies (collectively, “Buyer Benefit Plans”) in which any Company Continuing Employees will participate effective as of the Closing or thereafter, Buyer and its Subsidiaries (including the Acquired Companies) shall recognize all service of the Company Continuing Employees with the Acquired Companies and Acquired Business for vesting, eligibility, and benefit accrual (other than in a single-employer defined benefit pension plan) purposes in any Buyer Benefit Plan in which such Company Continuing Employees may be eligible to participate after the Closing Date. Buyer shall also (i) use its commercially reasonable efforts to cause all applicable benefit plan providers, insurers and vendors to waive any and all pre-existing conditions (or actively at work or similar limitations), eligibility waiting periods and evidence of insurability requirements under any group health or welfare plans with respect to the Company Continuing Employees and their eligible dependents, and (ii) provide Company Continuing Employees with credit for any co-payments, deductibles, and offsets (or similar payments) made during the plan year to the extent reflected in records provided to Buyer for the purposes of satisfying any applicable deductible, out-of-pocket, or similar requirements under any employee benefit plans, programs or arrangements in which they are eligible to participate after the Closing Date; provided that in no event shall any service credit be given to the extent it would increase benefit accruals under a Buyer Benefit Plan subject to Title IV of ERISA or result in the duplication of benefits for the same period of service; provided further, however, that nothing in this paragraph (c) shall relieve Buyer of its obligations under paragraph (a) above. (d) Seller Parties shall fully satisfy and pay all Multiemployer Plan withdrawal liability that may be or become due pursuant to Section 4201 of ERISA in connection with the pre- Closing cessation of contributions to and withdrawal from the New Jersey Building Laborers Statewide Pension Fund Locals 3, 77, 78, 55, 325 and 620 by the Acquired Companies, as applicable. (e) The parties agree to cooperate and share such information as may be necessary in order for the parties to complete Code Section 6055 and 6056 reporting with respect to all employees (including Company Continuing Employees) of the Acquired Business for the 2021 tax year. (f) This Section 4.1 shall be binding upon and inure solely to the benefit of each of the parties to this Agreement, and nothing in this Section 4.1, express or implied, shall confer upon any other Person any rights or remedies of any nature whatsoever under or by reason
{N4469832.17} 44 of this Section 4.1. Nothing contained herein, express or implied, shall be construed to establish, amend or modify any benefit plan, program, agreement or arrangement. The Parties acknowledge and agree that the terms set forth in this Section 4.1 shall not create any right in any Employee or any other Person to any continued employment with any Acquired Company, Buyer or any of their respective Affiliates or compensation or benefits of any nature or kind whatsoever. Section 4.2 Confidentiality. (a) For a period of five years after the Closing Date, Covenantors shall not and shall cause their Affiliates not to, directly or indirectly, disclose, reveal, divulge or communicate to any Person other than authorized officers, directors and employees of Buyer, or use or otherwise exploit for their own benefit or for the benefit of anyone other than Buyer, any Confidential Information; provided, however, that Covenantors and their Affiliates shall be entitled to disclose Confidential Information to their attorneys, accountants and other advisors bound by professional confidentiality obligations to the extent reasonably required in connection with such Persons’ activities on behalf of Covenantors and their Affiliates. Covenantors shall not have any obligation to keep confidential (or cause their officers, directors or Affiliates to keep confidential) any Confidential Information if and to the extent disclosure thereof is specifically required by applicable Law, subpoena or other judicial process; provided, however, that in the event disclosure is required by applicable Law, subpoena or other judicial process, Covenantors shall, to the extent reasonably possible, provide Buyer with prompt notice of such requirement prior to making any disclosure so that Buyer may seek an appropriate protective order at Buyer’s sole cost. (b) “Confidential Information” means any proprietary information with respect to the Acquired Companies, including methods of operation, customer lists, products, prices, fees, costs, technology, inventions, trade secrets, know-how, software, marketing methods, plans, personnel, suppliers, competitors, markets, any compilation of information, data, records, resources or documents that the Acquired Companies (or Covenantors or Affiliates thereof on behalf of the Acquired Business) have assembled and treat as confidential, or other specialized information or proprietary matters; provided, however, that Confidential Information shall not include any such information that enters the public domain through no fault of Covenantors or their Affiliates. Section 4.3 Books and Records. (a) Subject to Section 4.2(b), Covenantors shall have the right to retain copies of all books and records of the Acquired Business relating to periods ending on or prior to the Closing Date. Buyer agrees that it shall preserve and keep, or cause to be preserved and kept, all original books and records in respect of the Acquired Business relating to periods prior to the Closing in the possession of Buyer or its Affiliates for the longer of (i) any applicable statute of limitations and (ii) a period of three years after the Closing Date. (b) During such three year or longer period, (i) Representatives of Covenantors shall, upon reasonable notice and for any reasonable business purpose, have access during normal business hours to examine, inspect and copy such books and records relating to periods prior to the Closing and (ii) Buyer shall provide, or cause to be provided to, Covenantors access to such original books and records of the Acquired Business as Covenantors shall reasonably request in
{N4469832.17} 45 connection with any action, suit, claim, investigation, arbitration, audit or other legal proceeding to which Covenantors are parties or in connection with the requirements of any Law applicable to Covenantors. Covenantors shall return such original books and records to Buyer or its Affiliate as soon as such books and records are no longer needed in connection with the circumstances described in the immediately preceding sentence. (c) After such three year or longer period, before Buyer or any of its Affiliates shall dispose of any of such books and records relating to periods prior to the Closing, Buyer shall give at least 90 days’ prior written notice of such intention to dispose to Covenantors, and Covenantors shall be given an opportunity, at their cost and expense, to remove and retain all or any part of such books and records as it may elect. (d) If so requested by Buyer, Covenantors shall enter into a customary joint defense agreement with Buyer or such Affiliate with respect to any information to be provided to Covenantors pursuant to this Section 4.3. Section 4.4 Public Announcements. Unless otherwise required by applicable Law or securities exchange regulations, no party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby without the prior written consent of the other parties, and the parties shall cooperate as to the timing and contents of any such announcement. If any party shall determine that it is required to make a public announcement pursuant to applicable Law or securities exchange regulations, it shall provide copies of such proposed announcements to the other Parties sufficiently in advance thereof to allow the other parties to review and provide comments regarding same, and the disclosing party shall consider in good faith any reasonable comments provided by such other parties. Section 4.5 Further Assurances. Each of the Parties shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances, and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement. Section 4.6 Tax Matters. (a) Seller Parties will prepare and timely file, or cause to be prepared and timely filed, all income Tax Returns of the Acquired Companies for any taxable period ending on or prior to the Closing Date (each such Tax Return of the Acquired Companies, a “Pre-Closing Tax Return”). Each Pre-Closing Tax Return required to be filed by Seller Parties shall be prepared in a manner consistent with past practice, except as required by applicable Law; provided, however that with respect to any Pre-Closing Tax Return of Petillo MD or MD Seller (as the successor to Petillo MD for income Tax purposes) that is an income Tax Return, Seller Parties shall (i) make, or cause to be made, an election described in Section 168(k)(7) of the Code (and any corresponding provision of applicable state Law) with respect to all property placed in service by Petillo MD during such taxable year, and (ii) not make, or permit to be made, any election under Section 179 of the Code (or any corresponding provision of applicable state Law) with respect to any property placed in service by Petillo MD during such taxable year. Seller Parties will deliver to Buyer at least 15 days prior to the due date for the filing of any Pre-Closing Tax Return (taking into account any applicable extensions) a copy of such Tax Return and all work papers for Buyer’s review and
{N4469832.17} 46 comment and shall consider in good faith prior to filing such Tax Return any reasonable comments submitted by Buyer in writing at least five Business Days prior the due date of such Tax Return. To the extent permitted by applicable Law, Covenantors shall include any income, gain, loss, deduction or other tax items on their Tax Returns in a manner consistent with the Schedule K-1s furnished by the Sellers to them for such periods. (b) Buyer will prepare and timely file all Tax Returns of the Acquired Companies for a Straddle Period, other than any such Tax Return for which Buyer is responsible pursuant to Section 4.6(a) of this Agreement, in accordance with applicable Law on a basis consistent with past practice, except as required by applicable Law. Buyer will deliver to Sellers Representative at least 30 days prior to the date for the filing of any such Tax Return (taking into account any applicable extensions), a statement setting forth the amount of Tax for which Sellers are responsible applying the principles of Section 4.6(c) and a copy of such Tax Return for Sellers Representative’s review and comment and consider in good faith prior to filing such Tax Return any reasonable comments submitted by Sellers Representative in writing at least five Business Days prior to the due date of such Tax Return. (c) In any case of a Tax Return for a Straddle Period, the Taxes of the Acquired Companies and Buyer shall be allocated between the Pre-Closing Tax Period and the Post-Closing Tax Period as follows: (i) in the case of any property Taxes and similar ad valorem obligations that are imposed on a periodic basis, Taxes attributable to the Pre-Closing Tax Period shall equal the Taxes for such Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Tax Period and the denominator of which is the number of days in the Straddle Period; and (ii) Taxes that (x) are based upon or related to income or receipts or (y) imposed in connection with any sale or other transfer or assignment of property (other than Transfer Taxes described in Section 4.7) attributable to the Pre-Closing Tax Period and the Post-Closing Tax Period shall be computed as if the taxable year ended as of the close of business on the Closing Date. For purposes of computing the Taxes attributable to the two portions of a taxable period pursuant to this Section 4.6(c), the amount of any item that is taken into account only once for each taxable period (e.g., the benefit of graduated tax rates, exemption amounts, etc.) shall be allocated between the two portions of the period in proportion to the number of days in each portion. (d) Buyer and Seller Parties agree to furnish or cause their Affiliates to furnish, to each other, upon request, as promptly as practicable, such information and assistance relating to the Acquired Companies and Acquired Business as is reasonably necessary for the filing of all Tax Returns and other Tax filings contemplated by this Agreement, the preparation for any audit by any taxing authority and the defense of any claim relating to Taxes of the Acquired Companies and Acquired Business. (e) The Sellers shall be entitled to any refunds (including any interest paid thereon) of Taxes of the Acquired Companies attributable to taxable periods (or portions thereof) ending on or before the Closing Date to the extent such refunds were not taken into account in the Closing Net Working Capital. The Buyer and each Buyer Affiliate shall cooperate with the Sellers Representative, at Sellers’ expense, in obtaining any refund to which the Stockholders are entitled under this Section 4.6. The Buyer shall promptly forward to or reimburse the Sellers for the amount of any such refunds (including any interest paid thereon) after receipt thereof (or claiming of such
{N4469832.17} 47 amount as a credit against other Taxes), net of any expenses reasonably incurred by Buyer in obtaining such refunds. (f) Unless required by applicable Law, Buyer shall not (and shall not cause or permit any Acquired Company to) file, amend, re-file or otherwise modify any Tax Return or Tax election, initiate any voluntary disclosure, or agree to the waiver or any extension of the statute of limitations, in each case, for the Acquired Companies with respect to any taxable period (or portion thereof) ending on or before the Closing Date, without the prior written consent of the Sellers Representative (which consent shall not be unreasonably withheld, conditioned or delayed). Section 4.7 Transfer Taxes. All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement (including any real property transfer Tax and any other similar Tax) shall be borne and paid by Buyer when due. Buyer shall, at its expense, timely file any Tax Return or other document with respect to such Taxes or fees (and Sellers Representative shall use commercially reasonable efforts, at Buyer’s expense, to cooperate in good faith with respect thereto as necessary). Section 4.8 R&W Insurance Policy. At the Closing, Buyer shall obtain and bind the buyer-side representation and warranty insurance policy to be issued by QBE Specialty Insurance Company to Buyer in connection with this Agreement (the “R&W Insurance Policy”). All costs and expenses related to the R&W Insurance Policy, including the total premium, retention amounts, underwriting costs, brokerage commission for Buyer’s broker, Taxes related to such policy and other fees and expenses of such R&W Insurance Policy shall be borne fifty percent (50%) by Buyer and fifty percent (50%) by Sellers, and Buyer and Sellers, as applicable, shall pay all such amounts as and when due. Buyer shall ensure that the R&W Insurance Policy contains an irrevocable waiver by the insurer(s) of any right of subrogation against Sellers or their Affiliates (subject to a customary Fraud carveout). From and after the Closing, Buyer shall not, and shall cause its Affiliates not to, amend, modify or otherwise change, terminate or waive any provision of the R&W Policy (a) with respect to the waiver of subrogation set forth therein, or (b) in any manner that would be reasonably likely to increase or expand the ability or rights of any insurer under the R&W Insurance Policy to bring a claim, action, suit or proceeding against, or otherwise seek recourse from, any Covenantors or any of their Affiliates, in each case without the prior written consent of Sellers Representative. Section 4.9 Financial Information. Covenantors shall reasonably cooperate with Buyer and its Affiliates and their respective accountants and auditors by providing access, at Buyer’s expense, to any additional financial information as Buyer or its Affiliates may reasonably request in connection with the preparation by Buyer and its Affiliates of historical and pro forma financial statements related to the Acquired Business, as required to be included in any filing made by Buyer or any of its Affiliates with the SEC under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder, including Regulation S-X. Covenantors hereby consent to the inclusion or incorporation by reference of all financial statements and financial information provided to Buyer and its Affiliates pursuant to this Section 4.9 in any filing by Buyer and its Affiliates with the SEC and, upon request therefor by Buyer, agree to request that any auditor of Covenantors and the Acquired Companies that has compiled any financial statements provided to Buyer and its Affiliates pursuant to this
{N4469832.17} 48 Agreement consent to the inclusion or incorporation by reference of its compiled financial statements with respect to such financial statements in any filing by Buyer and its Affiliates with the SEC. Section 4.10 Buyer Stock Consideration. In order to induce Covenantors to enter into this Agreement, Buyer hereby agrees that it shall (i) after the Closing, use its reasonable best efforts to satisfy the current public information requirements set forth in Rule 144(c)(1) under the Securities Act and (ii) after the twelve month anniversary of the Closing, taking all actions reasonably requested by Sellers Representative to facilitate sales by Covenantors in brokers’ transactions pursuant to Rule 144(f)(1)(i) under the Securities Act, including the removal of any “restrictive” legend on certificates evidencing the Buyer Common Stock and providing an opinion of counsel at Buyer’s cost if requested by the transfer agent in connection with such removal. Covenantors shall provide Buyer, its counsel or the transfer agent with the evidence reasonably requested by them to cause the removal of any such “restrictive” legend, including any information Buyer reasonably deems necessary to determine that the legend is no longer required under the Securities Act or applicable state laws, including a certification that Covenantors are not Affiliates of Buyer (and a covenant to inform Buyer if any Covenantor should thereafter become an Affiliate and to consent to exchange any certificates or instruments representing the Buyer Common Stock comprising the Buyer Stock Consideration for ones bearing an appropriate restrictive legend) and regarding the length of time such Buyer Common Stock has been held. On the next Business Day following the Closing Date, Buyer shall deliver to the Seller Representative book entry confirmation from the registrar and transfer agent of the issuance of the Buyer Stock Consideration. Section 4.11 Indemnification of Directors and Officers. (a) From the Closing Date through the sixth anniversary thereof, Buyer shall, and shall cause the Acquired Companies to, fulfill and honor in all respects, any indemnification provisions under the Organizational Documents of the Acquired Companies or any predecessor as in effect on the date hereof, in each case with respect to their acts and omissions as directors and officers of the Acquired Companies or predecessor thereof occurring prior to the Closing Date, and in each case, subject to applicable Law. (b) If the Buyer or any of the Acquired Companies (i) shall consolidate with or merge into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) shall transfer all or substantially all of its properties and assets to any Person, then, and in each such case, proper provisions shall be made so that the successor and assigns of the Buyer or such Acquired Company, as the case may be, shall assume all of the obligations of this Section 4.11. Section 4.12 Conduct of the Acquired Business Prior to Closing. From the Effective Date until the Closing (the “Interim Period”), the Acquired Companies shall, and Covenantors shall cause the Acquired Companies, as the case may be, to, use commercially reasonable efforts to operate in the Ordinary Course of Business and, subject to the requirements of this Agreement and the agreements and transactions contemplated hereby, to preserve, maintain and protect their material assets and the goodwill of the Acquired Business. Without limiting the generality of the foregoing, during the Interim Period, except as otherwise expressly contemplated by this
{N4469832.17} 49 Agreement, as set forth on Section 4.12 of the Seller Disclosure Schedule, or as consented to by Purchaser, which consent shall not be unreasonably withheld, conditioned or delayed, the Acquired Companies shall not, and Covenantors shall cause the Acquired Companies, as the case may be, not to, taken any of the actions contemplated by Section 2.8. Section 4.13 Access to Information. During the Interim Period, Covenantors will, consistent with applicable Laws, provide Buyer and its Representatives access during normal business hours and upon reasonable advance notice, to all the properties, documents, contracts, personnel files and other records of the Acquired Companies and the Acquired Business and shall furnish Buyer with copies of such documents and with such information with respect to the affairs of the Acquired Companies and the Acquired Business as Purchaser may from time to time reasonably request; provided, that such access does not (a) unreasonably interfere with the normal operations of the Acquired Companies, (b) jeopardize in any material respect the privacy, security and confidentiality of any Personal Information in accordance with applicable Laws, (c) adversely impact the attorney-client privilege between the Acquires Companies and their legal counsel. Section 4.14 Exclusive Dealing. Until the earlier of the Closing or the termination of this Agreement pursuant to Article 7, neither Covenantors nor the Acquired Companies shall, and shall each cause their Affiliates and Representatives not to, directly or indirectly, (a) take any action to solicit, initiate or facilitate any Acquisition Proposal, (b) engage in, continue or maintain any negotiations or discussions, or enter into any arrangement, term sheet, letter of intent or definitive agreement, relating to any Acquisition Proposal, or otherwise consummate any Acquisition Proposal or (c) provide any non-public information relating to any Acquired Company or any of their respective assets or businesses or afford access to the properties, books or records of any Acquired Company or any of their respective assets or businesses to, any person that may be considering making, or has made, any Acquisition Proposal. Section 4.15 Reorganizations. At least five (5) Business Days prior to the Closing, Covenantors shall have, and shall have caused their other applicable Affiliates to, taken the actions required to implement the Reorganizations as contemplated in the Recitals hereof. Prior to entering into or filing any agreements or instruments to effectuate the Reorganizations (“Reorganization Agreements”), Covenantors shall have delivered to Buyer copies of all Reorganization Agreements by close of business on December 21, 2021 and shall have afforded Buyer a two (2) Business Day period following receipt of such Reorganization Agreements (the “Reorganization Review Period”) to review and comment on the contents of such Reorganization Agreements. Covenantors shall incorporate any reasonably appropriate comments delivered by Buyer to Covenantors during the Reorganization Review Period. ARTICLE 5 INDEMNIFICATION Section 5.1 Survival. The representations and warranties set forth herein shall survive the Closing and shall terminate on the close of business on the date that is 18 months after the Closing Date, and no claims may be brought with respect to such representations and warranties thereafter; provided that (a) the Seller Fundamental Representations and the representations and warranties in Section 2.17 (Tax) shall survive until the sixth anniversary of the Closing Date and (b) the representations and warranties in Section 2.14 (Environmental) shall survive until the fifth
{N4469832.17} 50 anniversary of the Closing Date (each such date, as applicable, the “Survival Date”). The covenants contained in this Agreement shall survive and remain in full force in accordance with their terms. No claim for indemnification hereunder for breach of any representations, warranties, covenants, agreements and other provisions may be made after the expiration of the applicable survival period set forth in this Section 5.1. Section 5.2 Indemnification by Covenantors. (a) Subject to the terms and conditions of this Agreement, Covenantors shall, jointly and severally, indemnify Buyer and each of its Affiliates (including, after the Closing, the Company and its Subsidiaries) and their respective officers, directors, members, managers, stockholders, employees and agents, and each of their successors and assigns (collectively, all of the foregoing the “Buyer Indemnified Parties”) against any and all Losses incurred or suffered by the Buyer Indemnified Parties arising out of or otherwise relating to: (i) any breach or inaccuracy of any representation or warranty made in Article 2 of this Agreement; (ii) any breach of any covenant required to be performed by any Seller Party pursuant to this Agreement; or (iii) any loss, claim, liability, expense, or other damage attributable to (A) all Taxes (or the non-payment thereof) of the Seller Parties, (B) all Taxes (or the non-payment thereof) of any Acquired Company for the Pre-Closing Tax Period, (C) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which any Acquired Company (or any predecessor of any of the foregoing) is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulation Section 1.1502-6 or any analogous or similar state, local or non- U.S. law or regulation, and (D) any and all Taxes imposed on an Acquired Company as a transferee or successor, by contract (with the exception of contracts that are not primarily related to Taxes entered into in the Ordinary Course of Business and liabilities thereunder) or pursuant to any law, rule, or regulation, which Taxes relate to an event or transaction occurring before the Closing; provided, however, in the case of clauses, (A), (B), (C) and (D), Sellers shall be liable only to the extent that such Taxes exceed the amount, if any, reserved for such Taxes (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) on the face of the Balance Sheet (rather than in any notes thereto) and taken into account in Closing Net Working Capital. (b) The Buyer Indemnified Parties shall have no right to recover any amounts pursuant to Section 5.2(a) unless on or before the applicable Survival Date Buyer notifies Sellers of a claim therefor in writing pursuant to Section 5.4. (c) The Losses of the Buyer Indemnified Parties described in Section 5.2(a) as to which the Buyer Indemnified Parties are entitled to indemnification are collectively referred to as “Buyer Losses”. (d) Limitations on Indemnification of the Buyer Indemnified Parties.
{N4469832.17} 51 (i) Except in the event of (A) Fraud or (B) any breach or inaccuracy of any Seller Fundamental Representation, the Buyer Indemnified Parties shall not be entitled to be indemnified under Section 5.2(a)(i) until the total amount which the Buyer Indemnified Parties would otherwise be entitled to be indemnified pursuant to Section 5.2(a)(i) exceeds on a cumulative basis an amount equal to the Deductible, and then only to the extent of any such excess. (ii) Except in the event of Fraud, the maximum liability of Sellers for Losses pursuant to Section 5.2(a)(i) for breach or inaccuracy of a Seller Standard Representation shall not exceed the Indemnification Escrow Amount. Except in the event of Fraud, the maximum liability of Sellers for Losses pursuant to Section 5.2(a)(i) for breach or inaccuracy of a Seller Special Representation shall not exceed $20,000,000. (iii) A Buyer Indemnified Party may not seek indemnification for Losses suffered by it if it has already received payment for such Losses as part of the Adjustment Amount or pursuant to the R&W Insurance Policy. (iv) In no event shall a breach of or inaccuracy in any representation or warranty in Article 2 or Article 3 in and of itself constitute or be deemed for any purpose to constitute a breach or failure of any Acquired Company or any Seller Party to perform any covenant or agreement contained in this Agreement, it being understood that nothing in this Section 5.2(d)(iv) shall preclude the same event, circumstance or set of facts from constituting both a breach of a representation or warranty in Article 2 or Article 3 and also a breach of, or failure to perform, a covenant or agreement contained in this Agreement; provided, however, that in no event shall any Buyer Indemnified Party be entitled to recover twice hereunder for the same event, circumstance or set of facts (or set of related events, circumstances or sets of facts). (e) For purposes of determining whether there has been a breach or inaccuracy of any representation or warranty contained in this Agreement and for calculating Losses under this Article 5, any qualification or exception using the term “material” or “materially” or “Material Adverse Effect” contained in any representation or warranty in this Agreement shall be disregarded. Section 5.3 Indemnification by Buyer. (a) Subject to the terms and conditions of this Agreement, Buyer will indemnify Sellers and their equity owners, directors, managers, officers, employees, Affiliates, heirs and assigns (collectively, the “Seller Indemnified Parties”) against any and all Losses actually incurred or suffered by the Seller Indemnified Parties to the extent resulting from, arising out of or otherwise related to: (i) any breach or inaccuracy of any representation or warranty made in Article 3 of this Agreement; (ii) any breach of any covenant required to be performed by Buyer pursuant to this Agreement; (iii) any Taxes imposed on the Seller Parties with respect to any Earn- Out Payment in excess the amount of Taxes that would have been imposed on the Seller Parties
{N4469832.17} 52 with respect to such Earn-Out Payment if the Taxes were imposed using the then-applicable long- term capital gains rate; and (iv) any Taxes imposed upon Seller Parties after an audit of Seller Parties for the taxable period that includes Closing Date, which Taxes would have been included in the Gross-up Amount if the Gross-up Amount were calculated taking in account the results of such audit; provided that Seller Parties provided Buyer with written notice of the commencement of the audit that resulted in the additional Taxes and reasonably defended Seller Party’s original position taken on the Tax Return for the period subject to such audit. (b) The Seller Indemnified Parties shall have no right to recover any amounts pursuant to Section 5.3(a), unless on or before the applicable Survival Date, Sellers notify Buyer of a claim therefor in writing pursuant to Section 5.4. (c) Limitations on Indemnification of the Seller Indemnified Parties. (i) Except in the event of Fraud, the Seller Indemnified Parties shall not be entitled to be indemnified under Section 5.3(a)(i) until the total amount which the Seller Indemnified Parties would otherwise be entitled to be indemnified pursuant to Section 5.3(a)(i) exceeds on a cumulative basis an amount equal to the Deductible, and then only to the extent of any such excess. (ii) Except in the event of Fraud, the maximum liability of Buyer for Losses pursuant to Section 5.3(a)(i) for breach or inaccuracy of a Buyer Standard Representation shall not exceed $20,000,000 for any Losses arising prior to the first anniversary of the Closing and $1,500,000 for any Losses arising from and after the first anniversary of the Closing. Except in the event of Fraud, the maximum liability of Buyer for Losses pursuant to Section 5.3(a)(i) for breach or inaccuracy of a Buyer Fundamental Representation shall not exceed $20,000,000. Section 5.4 Indemnification Procedures. (a) If any Person who or which is entitled to seek indemnification under Section 5.2 or Section 5.3 (an “Indemnified Party”) receives notice of the assertion or commencement of any Third Party Claim against such Indemnified Party with respect to which the Person against whom or which such indemnification is being sought (an “Indemnifying Party”) is obligated to provide indemnification under this Agreement, the Indemnified Party will give such Indemnifying Party reasonably prompt written notice thereof; provided, however, that if the Indemnified Party receives a complaint, petition, or any other pleading in connection with a Third Party Claim which requires the filing of an answer or other responsive pleading, the Indemnified Party shall furnish the Indemnifying Party with a copy of such pleading at least ten (10) days prior to the date a responsive pleading thereto is required to be filed (or reasonably promptly following receipt by the Indemnified Party, if the Indemnified Party receives such complaint, petition or other pleading within such ten-day period); provided, further, that failure to give such notice on a timely basis shall not affect the indemnification provided hereunder except to the extent that such failure results in the forfeiture by the Indemnifying Party of rights and defenses otherwise available to the Indemnifying Party. Such notice by the Indemnified Party will describe the Third Party Claim in reasonable detail, will include the basis for the demand for indemnification under this Agreement
{N4469832.17} 53 with specificity, and will include a copy of any complaint, petition, or any other pleading received by the Indemnified Party in connection with the Third Party Claim. The Indemnifying Party will have the right to participate in the defense of such Third Party Claim at the Indemnifying Party’s expense, or at its option (subject to the limitations set forth in this Section 5.4(a)) to assume the defense thereof by appointing a recognized and reputable counsel to be the lead counsel in connection with such defense; provided, however, that the Indemnifying Party must give the Indemnified Party written notice of its election to assume control of the defense of the Third Party Claim within 15 Business Days of the Indemnifying Party’s receipt of the required notice of the Third Party Claim pursuant to this Section 5.4(a). (b) In the event the Indemnifying Party assumes the defense of the Third Party Claim, the Indemnified Party shall be entitled to participate in the defense of the Third Party Claim and to employ a recognized and reputable counsel of its choice for such purpose; provided, however, that the fees and expenses of such separate counsel shall be borne by the Indemnified Party and shall not be subject to indemnification under this Article 5. In no event shall the Indemnified Party or the Indemnifying Party settle a Third Party Claim without the prior express written consent of the other Party, such consent not to be unreasonably withheld, conditioned, or delayed (it being understood that consent shall not be deemed unreasonably withheld, conditioned or delayed if any such proposed settlement (i) would impose injunctive or other equitable relief upon the Indemnified Party, (ii) does not unconditionally release the Indemnified Party from all liabilities and obligations with respect to such claim without prejudice, (iii) would require the Indemnified Party to pay any amount, or (iv) includes any finding of, or admission or statement with respect to, a violation of Law or violation of the rights of any Indemnified Party or its Affiliates; provided, however, that such consent shall not be required if such settlement requires from the Sellers and/or the Buyer Indemnified Parties only a monetary payment for which the Indemnifying Party agrees to be solely responsible. If the Indemnifying Party is a Seller, the Indemnifying Party shall not take any action that, if taken by the Indemnified Party, would prevent or impair the Indemnified Party’s ability to recover against the R&W Insurance Policy any portion of such Third Party Claim. (c) Any claim by an Indemnified Party on account of Losses that does not result from a Third Party Claim (a “Direct Claim”) will be asserted by giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 30 days after the Indemnified Party becomes actually aware of such Direct Claim; provided that failure to give such notice on a timely basis shall not affect the indemnification provided hereunder except to the extent that such failure results in the forfeiture by the Indemnifying Party of rights and defenses otherwise available to the Indemnifying Party. Such notice by the Indemnified Party will describe the Direct Claim in reasonable detail, will include the basis for the demand under this Agreement with specificity, will include copies of all available material written evidence thereof, and will indicate the estimated amount, if reasonably practicable, of Losses that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have 30 days after receipt of such written notice to respond in writing to such Direct Claim. If after the expiration of such 30-day period the Indemnifying Person has not given the Indemnified Party written notice agreeing to indemnify the Indemnified Party in connection with the Direct Claim, then it is to be presumed that the Indemnifying Person has accepted the Direct Claim. Section 5.5 Miscellaneous Indemnification Provisions.
{N4469832.17} 54 (a) Exclusive Remedy. Except in the event of Fraud, the indemnification provisions of this Article 5 shall be the sole and exclusive remedy of the Indemnified Parties with respect to claims arising out of, concerning, or related to the transactions that are the subject of, this Agreement, whether sounding in contract, tort, statute, or otherwise, and whether asserted against Buyer, an Acquired Company, their respective officers, directors or employees, any of Covenantors, or any other Person. However, in no event shall any Party, its successors, or its permitted assigns be entitled to claim or seek rescission of the transactions contemplated by this Agreement or rescission damages. Except in the event of Fraud, each of the Parties, on behalf of itself and its equity owners, directors, managers, officers, employees, Subsidiaries, and Affiliates, covenants not to sue and agrees not to bring any actions or proceedings, at Law, equity, or otherwise, against any other Party or its equity owners, directors, managers, officers, employees, Subsidiaries or Affiliates arising out of, concerning, or relating to any breach or alleged breach of any representation, warranty or covenant in this Agreement, except pursuant to the express provisions of this Article 5. Notwithstanding any other sentence in this Section 5.5(a) or elsewhere in this Agreement, each party hereto shall be entitled to bring an action for injunctive relief or specific performance to enforce the terms of this Agreement. (b) Purchase Price Adjustment. The parties agree that any indemnification payment made pursuant to this Agreement shall be treated as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law. (c) Insurance Proceeds and Other Recoveries. The Indemnified Party shall use reasonable efforts to make claims for Losses against applicable insurance providers prior to making any claim hereunder against an Indemnifying Party, and the amount of Losses recoverable by an Indemnified Party pursuant to this Article 5 with respect to an indemnity claim shall be reduced by the amount of insurance (including the R&W Insurance Policy) or indemnification proceeds or other amounts actually recovered from other sources (including the R&W Insurer) by such Indemnified Party with respect to the Losses to which such indemnity claim relates, net of any reasonable expenses related to the recovery of such payment. If an Indemnified Party receives any all or any portion of such proceeds from an insurance provider or other source after receiving an indemnification payment hereunder from an Indemnifying Party (the amount of such proceeds the “Double Recovery Amount’), the Indemnified Party shall promptly return an amount equal to the Double Recovery Amount to the applicable Indemnifying Party. (d) Good Faith; Mutual Cooperation. The Indemnifying Party and the Indemnified Party shall reasonably cooperate with each other with respect to resolving any claim or liability with respect to which an Indemnifying Party is allegedly obligated to indemnify an Indemnified Party hereunder. The Indemnified Party shall use all commercially reasonable efforts to mitigate Losses and resolve any such claim or liability. (e) No Limitations Applicable to R&W Insurance Policy. Notwithstanding anything to the contrary contained in this Agreement, no limitations (including any survival limitations and other limitations in this Article 5), qualifications or procedures in this Agreement shall be deemed to limit or modify the rights or ability of a Buyer Indemnified Party to make claims under or recover under the R&W Insurance Policy; it being understood that any matter for which there is coverage available under the R&W Insurance Policy shall be subject to the terms, conditions and limitations, if any, set forth in the R&W Insurance Policy.
{N4469832.17} 55 (f) Non-Recourse. Notwithstanding anything to the contrary contained in this Agreement, each Seller Related Party hereby irrevocably and unconditionally agrees that none of the Buyer Financing Sources shall have any liability or obligation to any Seller Related Party under or in connection with this Agreement, any commitment letter, engagement letter or definitive financing document or any of the transactions contemplated hereby or thereby (including with respect to the Buyer Financing). Each Seller Related Party hereby waives any and all rights or claims and causes of action (whether at law, in equity, in contract, in tort or otherwise) against the Buyer Financing Sources that may be based upon, arise out of or relate to this Agreement, any commitment letter, engagement letter or definitive financing document or any of the transactions contemplated hereby or thereby (including the Buyer Financing), and each Seller Related Party agrees not to commence or support a proceeding against any Buyer Financing Source in connection with this Agreement or any commitment letter, engagement letter or definitive financing document or any of the transactions contemplated hereby or thereby (including any proceeding related to the Buyer Financing). Without limiting the foregoing, no Buyer Financing Source shall be subject to any special, consequential, punitive or indirect damages or damages of a tortious nature to any Seller Related Party. For the avoidance of doubt, nothing set forth herein (including without limitation this Section 5.5(f) or Section 8.8, Section 8.10 and Section 8.11) shall in any way limit Buyer’s obligation to consummate the transactions contemplated hereby upon the fulfillment or waiver of the conditions set forth in Article 5, regardless of whether the Buyer Financing is funded on the Closing Date and any remedies that Sellers may have against Buyer in connection therewith. Section 5.6 Satisfaction of Covenantors’ Indemnification Obligations; Release of Remaining Escrow Amount. (a) Subject to Section 5.6(b) and the applicable limitations set forth in Section 5.2(d), Covenantors shall satisfy their respective obligations under this Article 5 in respect of a claim for indemnification hereunder in the following order: (i) to the extent there are any funds remaining in the Escrow Account, by the Sellers Representative delivering a joint instruction with Buyer to the Escrow Agent instructing the Escrow Agent to disburse funds from the Escrow Account to Buyer in the amount of the lesser of such obligations or the remaining amount of funds in the Escrow Account; and (ii) to the extent there are no longer any funds remaining in the Escrow Account, from the R&W Insurance Policy; and (iii) in respect of any claim for which Covenantors have an indemnification obligation pursuant to this Agreement, from Covenantors, jointly and severally, by wire transfer of immediately available funds to an account specified by Buyer. (b) Notwithstanding the foregoing, (i) in the event of a Sellers’ Retention Amount Reduction, Buyer and the Sellers Representative shall promptly deliver a joint instruction to the Escrow Agent instructing the Escrow Agent to disburse to Sellers an amount equal to the difference between the amount (x) then held in the Escrow Account, less any amounts subject to a claim by Buyer under this Article 5 and (y) the reduced Seller’s Retention Amount and (ii) upon the date that is 18 months following the Closing Date, Buyer and the Sellers Representative shall deliver a joint instruction to the Escrow Agent instructing the Escrow Agent to disburse to Sellers
{N4469832.17} 56 any funds remaining in the Escrow Account that are not otherwise subject to a claim by Buyer under this Article 5. (c) Notwithstanding anything to the contrary set forth in this Agreement or any of the other documents contemplated by this Agreement, and without limitation to Buyer’s rights set forth in Section 1.11(e), Buyer shall have the right (but not the obligation, and such right shall not limit or affect any other right or remedy it may have), to satisfy any amounts owed to Buyer or any other Buyer Indemnified Party under this Agreement by setting off such amounts against any Cash Retention Bonus that may otherwise be due to Mr. Petillo pursuant to the Petillo Employment Agreement or any payments payable to Sellers under this Agreement, including the Annual Earn-Out Payments; provided to the extent any portion of the Cash Retention Bonus is earned, Buyer shall satisfy any amounts in the manner set forth in this Section 5.6(c) first from the Cash Retention Amount, thereafter from any Annual Earn-Out Payment. ARTICLE 6 CONDITIONS TO CLOSING Section 6.1 Conditions to Obligations of All Parties. The obligations of each party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions: (a) No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof. (b) No action, suit or proceeding before any Governmental Authority shall be pending wherein an unfavorable judgment, decree or order would have the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof. Section 6.2 Conditions to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Buyer’s waiver, at or prior to the Closing, of each of the following conditions: (a) The representations and warranties contained in Article 2 shall be true and correct in all respects as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, which shall be true and correct in all respects as of that specified date), except where the failure of such representations and warranties to be true and correct would not reasonably be expected to result in a Material Adverse Effect. (b) The Seller Parties shall have duly performed and complied with the agreements, covenants and conditions required by this Agreement to be performed or complied with by them prior to or on the Closing Date in all material respects.
{N4469832.17} 57 (c) Buyer shall have received a certificate, dated the Closing Date and signed by the Covenantors and a duly authorized officer of each Seller, that each of the conditions set forth in Section 6.2(a) and Section 6.2(b) has been satisfied. (d) Covenantors shall have delivered, or caused to be delivered, to Buyer all documents required to be delivered by Sellers pursuant to Section 1.3(c). (e) There shall not have been a Material Adverse Effect. (f) Covenantors shall have delivered to Buyer two USBs containing a complete copy of all materials contained in the virtual data room under the name “Project Chalet” established at americas.datasite.com. Section 6.3 Conditions to Obligations of the Seller Parties. The obligations of the Seller Parties to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Sellers Representative’s waiver, at or prior to the Closing, of each of the following conditions: (a) The representations and warranties contained in Article 3 shall be true and correct in all respects as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, which shall be true and correct in all respects as of that specified date), except where the failure of such representations and warranties to be true and correct would not have a material adverse effect on Buyer’s ability to consummate the transactions contemplated hereby. (b) Buyer shall have duly performed and complied with the agreements, covenants and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date in all material respects. (c) Sellers Representative shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of Buyer, that each of the conditions set forth in Section 6.3(a) and Section 6.3(b) has been satisfied. (d) Buyer shall have delivered, or caused to be delivered, to Covenantors all documents required to be delivered by Buyer pursuant to Section 1.3(b). Section 6.4 Frustration of Conditions. Neither Buyer nor the Seller Parties may rely on the failure of any condition set forth in this Article 6, as applicable, to be satisfied if such failure was caused by such party’s failure to use its commercially reasonable efforts to consummate the Closing and the transactions contemplated hereby or any other material breach by such party of this Agreement. ARTICLE 7 TERMINATION Section 7.1 Termination. This Agreement may be terminated at any time prior to the Closing:
{N4469832.17} 58 (a) by the mutual written consent of Sellers Representative and Buyer; (b) by Buyer by written notice to Sellers Representative if: (i) Buyer is not then in material breach of any provision of this Agreement and there has been a material breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by any Seller Party pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article 6 and such breach, inaccuracy or failure has not been cured or cannot be cured by the Seller Parties by 3:00 p.m. on December 31, 2021, unless extended in writing by the Parties (the “Expiration Time”); or (ii) the Closing shall not have occurred by the Expiration Time, unless such failure of the Closing to occur shall be due to the failure of Buyer to perform or comply in all material respects with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing; (c) by Sellers Representative by written notice to Buyer if: (i) No Seller Party is then in material breach of any provision of this Agreement and there has been a material breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Buyer pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article 6 and such breach, inaccuracy or failure has not been cured or cannot be cured by Buyer by the Expiration Time; or (ii) the Closing shall not have occurred by the Expiration Time, unless such failure of the Closing to occur shall be due to the failure of Sellers to perform or comply in all material respects with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing; or (d) by Buyer or Sellers Representative in the event that: (i) there shall be any Law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited; or (ii) any Governmental Authority shall have issued a Governmental Order restraining or enjoining the transactions contemplated by this Agreement, and such Governmental Order shall have become final and non-appealable. Section 7.2 Effect of Termination. In the event of the termination of this Agreement in accordance with this Article 7, this Agreement shall forthwith become void and there shall be no liability on the part of any Party except: (a) as set forth in this Section 7.2 and Section 4.2 and Article 8 hereof; and (b) that nothing herein shall relieve any Party from liability for Fraud or any intentional breach of any provision hereof.
{N4469832.17} 59 ARTICLE 8 MISCELLANEOUS Section 8.1 Expenses. Except as otherwise expressly provided herein (including Section 4.6 hereof), all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred; provided, however, that the parties acknowledge that all costs and expenses associated with filings required to be made by the parties pursuant to the HSR Act have been and shall be borne 50% by Buyer and 50% by Covenantors. Section 8.2 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF document (with confirmation of transmission in the case of facsimile and without an automatic “bounceback” in the case of e-mail) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third (3) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 8.2): If to any Seller Party: Michael V. Petillo c/o Petillo NJ Holdings Incorporated [intentionally omitted] Email: [intentionally omitted] with a copy to (which shall not constitute notice): Wilmer Cutler Pickering Hale and Dorr LLP 7 World Trade Center 250 Greenwich Street New York, New York 10007 E-mail: [intentionally omitted]; [intentionally omitted] Attention: David B. Haber; Tal Hacohen If to Buyer: Sterling Construction Company, Inc. 1800 Hughes Landing Blvd. The Woodlands, Texas 77380 E-mail: [intentionally omitted] Attention: Mark Wolf, General Counsel with a copy to (which shall not constitute notice) : Jones Walker LLP 201 St. Charles Avenue, Suite 5100 New Orleans, LA 70170 E-mail: [intentionally omitted]; [intentionally omitted] Attention: Allison Bell; Brett Beter
{N4469832.17} 60 Section 8.3 Interpretation. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Seller Disclosure Schedule and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein. The provisions set forth in Section B of Exhibit A are incorporated herein. Section 8.4 Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement. Section 8.5 Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible. Section 8.6 Entire Agreement. This Agreement constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous representations, warranties, understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement, the Exhibits and Seller Disclosure Schedule (other than an exception expressly set forth as such in the Seller Disclosure Schedule), the statements in the body of this Agreement will control. Section 8.7 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns. Except in connection with the Reorganizations, neither Party may assign its rights or obligations hereunder without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed; provided that Buyer shall be permitted to assign this Agreement to (a) an Affiliate thereof and (b) any financing source of Buyer and/or its Affiliates as collateral security, in each case without the prior written consent of Sellers. No assignment shall relieve the assigning Party of any of its obligations hereunder. Section 8.8 No Third-party Beneficiaries. Except as provided in Article 5 and the last sentence of this Section 8.8, this Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. The Buyer Financing Sources shall be express third party beneficiaries of this Section 8.8 and Sections 5.5(f), 8.9, 8.10 and 8.11, each of such Sections shall expressly inure to the benefit of the Buyer Financing Sources and the Buyer Financing Sources shall be entitled to rely on and enforce the provisions of such Sections. Section 8.9 Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No
{N4469832.17} 61 waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. Notwithstanding the foregoing, the provisions of Sections 5.5(f), 8.8, 8.9, 8.10 and 8.11 (and any other provision of this Agreement to the extent an amendment, supplement, waiver or other modification of such provision would modify the substance of such Sections) may not be amended, supplemented, waived or otherwise modified in any manner that impacts or is otherwise adverse in any respect to the Buyer Financing Sources without the prior written consent of each Buyer Financing Source Section 8.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. (a) This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction); PROVIDED THAT, NOTWITHSTANDING THE FOREGOING, ANY DISPUTES INVOLVING THE BUYER FINANCING SOURCES WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING REGARD TO CONFLICTS OR CHOICE OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK. (b) ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE INSTITUTED IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE OR, TO THE EXTENT THAT SUCH COURT DECLINES JURISDICTION, FIRST TO ANY FEDERAL COURT, OR SECOND TO ANY STATE COURT, EACH LOCATED IN WILMINGTON, DELAWARE, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE PARTIES HEREBY ACKNOWLEDGE AND AGREE THAT, TO THE FULLEST EXTENT PERMITTED BY LAW, THEY INTEND THAT THIS AGREEMENT BE, AND THAT IT WILL BE TREATED AND CONSTRUED AS, A CONTRACT UNDER SEAL UNDER THE LAWS OF THE STATE OF DELAWARE WITH ALL OF THE CONSEQUENCES OF SUCH A CONTRACT UNDER THE LAWS OF THE
{N4469832.17} 62 STATE OF DELAWARE, INCLUDING CAUSING THE AGREEMENT TO BE SUBJECT TO THE 20-YEAR LIMITATIONS PERIOD APPLICABLE TO SEALED INSTRUMENTS. (c) EACH PARTY (AND EACH SELLER RELATED PARTY) ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE BUYER FINANCING IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE BUYER FINANCING OR THE TRANSACTIONS CONTEMPLATED HEREBY (INCLUDING ANY ACTION, PROCEEDING OR COUNTERCLAIM AGAINST ANY BUYER FINANCING SOURCE). EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.10(C). (d) Unless otherwise expressly provided herein, if there shall occur any dispute, suit, action or proceeding between the Parties relating to this Agreement or the transactions contemplated hereby, the non-prevailing Party shall pay all reasonable costs and fees (including reasonable attorneys’ fees and expenses) of the prevailing Party. Section 8.11 Specific Performance. The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to seek specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity. Notwithstanding anything to the contrary in this Agreement or the other agreements contemplated hereby, each Seller Related Party and the parties hereto hereby explicitly agree that nothing in this Agreement shall (a) require Buyer or any of its Affiliates to seek specific performance, injunctive relief or other equitable remedies to enforce their respective rights under the Buyer Loan Commitment or cause the Buyer Financing to be funded, or (b) entitle any Seller Related Party to seek specific performance, injunctive relief or other equitable remedies to cause Buyer or any of its Affiliates to do the same. Section 8.12 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement. Section 8.13 Covenantor Release. Effective as of the Closing, Covenantors hereby waive their rights to, and release and fully discharge, the Acquired Companies and the Acquired Business, and their legal successors and assigns, from any and all claims, liabilities, actions and causes of action, whether now known or unknown, which Covenantors now have, or at any other
{N4469832.17} 63 time may have, against the Acquired Companies or the Acquired Business based upon or arising out of any fact, circumstance, act or omission that occurred or existed prior to the Closing, other than any such claims, liabilities, actions or causes of action that may arise pursuant to the terms of this Agreement. Section 8.14 Waiver of Conflicts Regarding Representation; Non-Assertion of Attorney-Client Privilege. (a) Effective as of the Closing, Buyer hereby waives and agrees not to assert, and Buyer agrees to cause the Acquired Companies and each of its other subsidiaries to waive and not to assert, any conflict of interest arising out of or relating to any representation after the Closing of any Covenantor or any Affiliate, officer, employee or director of any Covenantor (any such Person, a “Designated Person”) in any matter involving this Agreement or any agreement, certificate, instrument or other document executed or delivered pursuant to this Agreement or any transaction contemplated hereby or thereby (including any litigation, arbitration, mediation or other proceeding and including any matter regarding the negotiation, execution, performance or enforceability hereof or thereof) by Wilmer Cutler Pickering Hale and Dorr LLP (“Counsel”) in connection with this Agreement or any agreement, certificate, instrument or other document executed or delivered pursuant to this Agreement or any transaction contemplated hereby or thereby (including the negotiation, execution or performance hereof or thereof). (b) Any privilege attaching as a result of Counsel’s representation of the Company or any Designated Person prior to the Closing (the “Pre-Closing Representation”) shall survive the Closing and shall remain in effect, and such privilege from and after the Closing shall be assigned to, belong to and be controlled by, Covenantors (on their own behalf and on behalf of the Designated Persons). From and after the Closing, such privilege (i) may be waived only by Covenantors (on behalf of themselves and the Designated Persons), and not by Buyer, any Acquired Company or any of their respective Affiliates, and (ii) shall not pass to or be claimed or used by Buyer, any Acquired Company or any of their respective Affiliates. As to any privileged attorney-client communications between Counsel, on the one hand, and the Company or any Designated Person, on the other hand, prior to Closing (collectively, the “Privileged Communications”), Buyer agrees, on its own behalf and on behalf of its Affiliates (including, after the Closing, the Acquired Companies)) and their respective successors and/or assigns, that none of Buyer, any of its Affiliates (including, after the Closing, the Acquired Companies) or any of their respective successors or assigns, may use or rely on any of the Privileged Communications in any action or claim against or involving Sellers or any Designated Person. Further, the Parties understand and agree that any failure to segregate and/or restrict Buyer’s access to any Privileged Communications shall not be considered a waiver of the privilege. From and after the Closing, none of Buyer or any of its Affiliates (including, after the Closing, the Acquired Companies) shall knowingly access any Privileged Communications or the files of any Acquired Company relating to the Pre-Closing Representation with the intent to nullify the effects of the attorney-client privilege on such Privileged Communications or the files of any Acquired Company relating to the Pre-Closing Representation. Without limiting the generality of the foregoing, from and after the Closing (a) Covenantors (on their own behalf and on behalf of the Designated Persons) shall be the sole holders of the attorney-client privilege with respect to the Pre-Closing Representation, (b) to the extent that files of Counsel in respect of the Pre-Closing Representation constitute property of a client of counsel, only Covenantors (on their own behalf and on behalf of the
{N4469832.17} 64 Designated Persons) shall hold such property rights, and (c) Counsel shall have no duty whatsoever to reveal or disclose any Privileged Communications or files to Buyer, any Acquired Company or any of their respective Affiliates by reason of any attorney-client relationship between Counsel, any Acquired Company prior to the Closing, or any Designated Person (or otherwise). Section 8.15 The Sellers Representative. (a) Each Covenantor hereby irrevocably constitutes and appoints the Sellers Representative as his, her or its true and lawful representative, agent, proxy and attorney-in-fact, to serve as the representative of such Covenantor for all purposes authorized under this Agreement and all of the other agreements and instruments contemplated hereby, including the full power on behalf of such Covenantor with respect to (i) giving and receiving communications and notices on behalf of such Covenantor, (ii) making, executing, acknowledging and delivering all such other contracts, guarantees, orders, receipts, endorsements, notices, requests, instructions, certificates, stock powers, letters and other writings, and, in general, doing any and all things and taking any and all action that the Sellers Representative may consider necessary, proper or convenient in connection with or to carry out the transactions contemplated by this Agreement and all of the other agreements and instruments contemplated hereby, (iii) any claims in connection with this Agreement and all of the other agreements and instruments contemplated hereby against such Covenantor, including any indemnification claims, (iv) as further provided in this Section 8.15, and (v) as may otherwise be provided in this Agreement and all of the other agreements and instruments contemplated hereby. (b) Without limiting the generality of the foregoing, each Covenantor hereby specifically authorizes the Sellers Representative to perform all of the following acts and exercise all of the following powers for such Covenantor and in his, her or its name, place and stead: (i) To initiate, prosecute, defend and otherwise represent such Covenantor in any mediation, arbitration or judicial proceeding (whether as plaintiff or defendant) arising under or relating in any manner to any of this Agreement and all of the other agreements and instruments contemplated hereby or the subject matter thereof, and, in connection therewith, to apply for and obtain any injunctions and appeals, give any requisite security and sign any necessary bonds; (ii) To settle and compromise on behalf of such Covenantor, any claim, dispute or proceeding relating to this Agreement or any agreement or instrument contemplated hereby; (iii) To engage attorneys, certified public accountants and other professionals and experts in connection with the prosecution or defense of any claim, or in connection with the Sellers Representative’s exercise of any of the powers granted to the Sellers Representative in this Agreement; (iv) To receive from the Escrow Agent any amounts distributed from the Escrow Account for disbursement to such Covenantor; and (v) To make any payments owed on behalf of such Covenantor pursuant to this Agreement.
{N4469832.17} 65 (c) All decisions and actions by the Sellers Representative in accordance with the terms of this Agreement shall be binding upon all the Covenantors, and no Covenantor shall have the right to object to, dissent from, protest or otherwise contest such decisions or actions. (d) Covenantors may, at any time, substitute or elect a new Person to serve as the Sellers Representative, if such action is agreed to in writing by Covenantors who owned a majority of the Consideration Percentages, acting together as a single class, and a copy of such writing is delivered to each Party to this Agreement. (e) Covenantors shall indemnify and hold harmless the Sellers Representative against any Losses incurred by the Sellers Representative in the course of the Sellers Representative’s conduct as the Sellers Representative, other than Losses resulting from the Sellers Representative’s actual and intentional common law fraud (involving a knowing and intentional misrepresentation with the intent of inducing another person to act or not act and upon which such other person has relied to its, his or her detriment - as opposed to any fraud claim based on constructive knowledge, negligent or reckless misrepresentation or a similar theory), gross negligence or willful misconduct in connection with his performance of his duties under this Agreement and all of the other agreements and instruments contemplated hereby. (f) The Sellers Representative’s power and grant of authority is (i) coupled with an interest and is irrevocable and survives the bankruptcy or liquidation of any Covenantor and will be binding on any successor thereto, and (ii) may be exercised by the Sellers Representative acting by signing as the representative of the Covenantors or any individual Covenantor. [Remainder of page intentionally blank.]
[Signature Page to Stock Purchase Agreement] {N4469832.17} IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. MICHAEL V. PETILLO /s/ Michael V. Petillo THE 2020 AUDREY PETILLO FAMILY TRUST By /s/ Michael V. Petillo Name: Michael V. Petillo Title: Trustee THE MICHAEL PETILLO FAMILY TRUST By /s/ Audrey Petillo Name: Audrey Petillo Title: Trustee PETILLO LLC By /s/ Michael V. Petillo Name: Michael V. Petillo Title: President PETILLO NY LLC By /s/ Michael V. Petillo Name: Michael V. Petillo Title: President PETILLO MARYLAND INCORPORATED By /s/ Michael V. Petillo Name: Michael V. Petillo Title: President
[Signature Page to Stock Purchase Agreement] {N4469832.17} IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. PETILLO NJ HOLDINGS INCORPORATED By /s/ Michael V. Petillo Name: Michael V. Petillo Title: President PETILLO NY HOLDINGS INCORPORATED By /s/ Michael V. Petillo Name: Michael V. Petillo Title: President PETILLO MD HOLDINGS INCORPORATED By /s/ Michael V. Petillo Name: Michael V. Petillo Title: President
[Signature Page to Stock Purchase Agreement] {N4469832.17} STERLING CONSTRUCTION COMPANY, INC. By /s/ Joseph Cutillo Name: Joseph Cutillo Title: Chief Executive Officer
A-i HIGHLY CONFIDENTIAL Exhibit A Defined Terms; Rules of Construction A. Definitions. In addition to the terms defined elsewhere in the Agreement, the following terms have the meanings set forth below: “19.9% Threshold” has the meaning set forth in Section 1.3(h). “Acquired Business” means the business of the Acquired Companies as currently conducted, including site excavation, curb and sidewalk construction, water systems, storm and sanitary sewer systems, demolition, asphalt paving, underground utility installation, construction of retaining walls and erosion control systems. “Acquired Companies” has the meaning set forth in the Preamble. “Acquisition” has the meaning set forth in the Recitals. “Acquisition Proposal” means any proposal or offer (other than any proposal or offer by Buyer or any of its Affiliates) with respect to an Alternative Transaction. “Adjustment Amount” has the meaning set forth in Section 1.7(a). “Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. “Aggregate Earn-Out Period” has the meaning set forth in Section 1.11(a). “Aggregate IFO” means the aggregate operating income of the Acquired Companies during the relevant period of determination, which shall be calculated in accordance with GAAP and, for the avoidance of doubt, shall exclude any Cash Retention Bonus. “Agreement” has the meaning set forth in the Preamble. “Alternative Transaction” means an acquisition of (a) any equity securities of any Acquired Company, or (b) all or any material portion of the business, assets or properties of the Acquired Business, taken as a whole, in each case whether by merger, purchase of stock or assets or otherwise and whether for cash, securities or any other consideration or combination thereof. “Annual Earn-Out Period” has the meaning set forth in Section 1.11(a). “Anti-Bribery Laws” means the provisions of the Corruption of Foreign Public Officials Act, the Foreign Corrupt Practices Act of 1977, as amended, or any other applicable anti- corruption Law.
A-ii HIGHLY CONFIDENTIAL “Asset Acquisition Statements” has the meaning set forth in Section 1.8(b). “Asset Allocation” has the meaning set forth in Section 1.9. “Assignment” has the meaning set forth in Section 1.3(b)(vi). “Audited Financial Statements” means the audited consolidated financial statements, consisting of the consolidated balance sheets as of December 31, 2020, December 31, 2019 and December 31, 2018, and consolidated statements of income and statements of cash flows for the years then ended, of the Acquired Companies and Petillo Properties. “Balance Sheet” has the meaning set forth in Section 2.6. “Balance Sheet Date” has the meaning set forth in Section 2.6. “Base Purchase Price” has the meaning set forth in Section 1.3(a). “Benefit Plan” has the meaning set forth in Section 2.15(a). “Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in Atlanta, Georgia or Houston, Texas are authorized or required by Law to be closed for business. “Buyer” has the meaning set forth in the Preamble. “Buyer Ancillary Agreements” has the meaning set forth in Section 3.1. “Buyer Balance Sheet” has the meaning set forth in Section 3.12 “Buyer Benefit Plans” has the meaning set forth in Section 4.1(c). “Buyer Common Stock” means the share of common stock of Buyer, $0.01 par value per share. “Buyer Common Stock Price” means $26.34, which represents the average of the closing sales price of a share of Buyer Common Stock as quoted by The Nasdaq Stock Market LLC for the period between October 19, 2021 and the last trading day before the date of this Agreement. “Buyer Equity Securities” has the meaning set forth in Section 3.4 “Buyer Financing” means one or more loans or extensions of credit made in order to finance in part the payment of the Purchase Price, including any under any Buyer Loan Commitment. “Buyer Financing Source” means, the agents, arrangers, lenders and other persons that have committed to provide or arrange or otherwise entered into agreements in connection with all or any part of the Buyer Financing or any other financing in connection with the transactions contemplated hereby, including the parties to any joinder agreements, underwriting agreements,
A-iii HIGHLY CONFIDENTIAL engagement letters, indentures or credit agreements entered into in connection therewith, together with their respective affiliates and their and their respective affiliates, direct or indirect, former, current or future general and limited partners officers, directors, employees, controlling persons, agents and representatives and their respective successors and assigns. “Buyer Fundamental Representations” means the representations and warranties contained in Section 3.1 (Organization and Authority of Buyer), Section 3.4 (Buyer Capital Structure), Section 3.5 (Valid Issuance of Buyer Common Stock), and Section 3.8 (Brokers). “Buyer Indemnified Parties” has the meaning set forth in Section 5.2(a). “Buyer Loan Commitment” means any agreement entered into by a Buyer Financing Source relating to the Buyer Financing. “Buyer Losses” has the meaning set forth in Section 5.2(c). “Buyer SEC Reports” has the meaning set forth in Section 3.6(a). “Buyer Standard Representations” means the representations and warranties contained in Article 3, other than the Buyer Fundamental Representations. “Buyer Stock Consideration” means the portion of the Purchase Price comprised of Buyer Common Stock, the number of shares of which shall be determined by dividing $20,000,000 by the Buyer Common Stock Price. “Buyer Stock Plans” has the meaning set forth in Section 3.4 “Buyer’s Gross-Up Notice” has the meaning set forth in Section 1.9(b) “CARES Act” means The Coronavirus Aid, Relief, and Economic Security Act (H.R. 748), and applicable rules, regulations and guidance, in each case, as amended. “Cash Consideration” has the meaning set forth in Section 1.3(a)(i). “Cash Retention Bonus” has the meaning set forth in Section 1.10. “CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq. “CERCLIS” means the Comprehensive Environmental Response, Compensation, and Liability Information System now or formerly maintained by the EPA. “Change of Control” shall have the meaning as to an Acquired Company: (i) the merger, consolidation, or sale of voting securities of the Acquired Company where, immediately after such transaction or series of related transactions, Buyer would not beneficially own, directly or indirectly, voting equity interests representing in the aggregate 51% or more of the combined voting power of the securities of the entity issuing cash or securities in such transaction or series
A-iv HIGHLY CONFIDENTIAL of related transactions (or of its ultimate parent entity, if any), (ii) the sale of all or substantially all of the assets of the Acquired Company or (iii) the liquidation, dissolution or winding up of the Acquired Entity. “Closing” has the meaning set forth in Section 1.4. “Closing Balance Sheet” has the meaning set forth in Section 1.5. “Closing Cash” means all cash and cash equivalents, and undeposited (or deposited but uncleared) checks, drafts, and initiated wire transfers, of the Acquired Companies as of 11:59 p.m. on December 31, 2021. “Closing Company Indebtedness” means all outstanding Indebtedness of the Acquired Business as of 11:59 p.m. on December 31, 2021. “Closing Date” has the meaning set forth in Section 1.4. “Closing Date Cash Payment” has the meaning set forth in Section 1.3(a)(i). “Closing Date Schedule” has the meaning set forth in Section 1.5. “Closing Net Working Capital Amount” means the excess of (i) the Acquired Business’ current assets (excluding Closing Cash) on a consolidated basis as of 11:59 p.m. on December 31, 2021, excluding deferred income Tax assets, over (ii) the Acquired Business’ current liabilities (excluding Closing Company Indebtedness) on a consolidated basis as of 11:59 p.m. on December 31, 2021, excluding deferred income Tax liabilities, all calculated in accordance with GAAP on a basis consistent with the Seller Accounting Principles and (including only the current asset and current liability line items contained in) the Sample Net Working Capital Calculation. “Code” means the Internal Revenue Code of 1986, as amended. “Company Continuing Employee” has the meaning set forth in Section 4.1(b). “Company Indebtedness” means the aggregate amount of Indebtedness of the Company, as of the date and time of its determination. “Company Intellectual Property” has the meaning set forth in Section 2.11(a). “Company IT Systems” means all information technology and computer systems owned, leased, licensed, used or operated by or on behalf of any Acquired Company (including through cloud-based or other third-party service providers), including all Software, hardware, computers, servers, networks, platforms, peripherals, data, communication lines, devices, systems and other information technology equipment and related systems and equipment used for the transmission, storage, maintenance, organization, presentation, generation or processing or analysis of electronic or other data or information (including telecommunications networks and systems for voice, data and video). “Company Permits” has the meaning set forth in Section 2.13(b).
A-v HIGHLY CONFIDENTIAL “Company Transaction Expenses” means, without duplication, to the extent not paid prior to the Closing, (a) all out-of-pocket fees and expenses (including fees and expenses of legal counsel, accountants, investment bankers and other professional advisors) incurred by, or on behalf of, the Seller Parties and/or the Acquired Companies prior to the Closing in connection with the negotiation or approval of this Agreement and any other agreement or instrument contemplated hereby or the consummation of the transactions contemplated hereby and thereby, plus (b) the aggregate amount of any bonuses, sale bonuses, change of control payments, retention payments or similar payments due or payable by any Acquired Company to any Person resulting from the Closing (other than any such payment arising from an agreement proposed by Buyer or one of its Affiliates or an action taken or directed by Buyer or one of its Affiliates). “Confidential Information” has the meaning set forth in Section 4.2(b). “Consideration Percentage” means, with respect to each Seller, the applicable percentage set forth opposite such Seller’s name under the heading “Consideration Percentage” included as part of the Consideration Schedule required to be delivered pursuant to Section 1.2. “Consideration Schedule” has the meaning set forth in Section 1.2. “Convenantors” has the meaning set forth in the Preamble. “Coronavirus Pandemic” means as declared by the World Health Organization on March 11, 2020, the 2020 Coronavirus Pandemic caused by COVID-19. “Counsel” has the meaning set forth in Section 8.14(a). “Data Protection Laws” means Laws concerning the collection, processing, use, disclosure, retention, privacy and/or security of Personal Information or data breach notification. “Deductible” means $975,000; provided that when and if the retention amount under the R&W Insurance Policy is reduced in accordance with the terms thereof, the “Deductible” shall be reduced to an amount equal to 50% of the then-effective retention amount. “Designated Person” has the meaning set forth in Section 8.14(a). “DFARS” means Defense Federal Acquisition Regulation Supplement. “Direct Claim” has the meaning set forth in Section 5.4(c). “Dispute Notice” has the meaning set forth in Section 1.6(b). “Dollars or $” means the lawful currency of the United States. “Double Recovery Amount” has the meaning set forth in Section 5.5(c). “Earn-Out Cap” has the meaning set forth in Section 1.11(a). “Earn-Out Objection” has the meaning set forth in Section 1.11(c).
A-vi HIGHLY CONFIDENTIAL “Earn-Out Payment” has the meaning set forth in Section 1.11(a). “Earn-Out Payment Statement” has the meaning set forth in Section 1.11(b). “Effective Date” has the meaning set forth in the Preamble. “Employees” means those Persons employed by the Acquired Business immediately prior to the Closing. “Employment Agreements” has the meaning set forth in Section 1.3(b)(iv). “Encumbrance” means any title defect, lien, interest, pledge, defect, exclusive license, conditional sales contract, mortgage, deed of trust, security interest, charge, claim, easement, restriction, encroachment, preemptive right, or option of any kind or nature whatsoever or other similar encumbrance (whether known or unknown, secured or unsecured or in the nature of setoff or recoupment, choate or inchoate, filed or unfiled, scheduled or unscheduled, noticed or unnoticed, recorded or unrecorded, perfected or unperfected, allowed or disallowed, contingent or non-contingent, liquidated or unliquidated, matured or unmatured, material or nonmaterial, disputed or undisputed, whenever arising, and whether imposed by agreement, understanding, Law, equity, or otherwise). “Enforceability Exceptions” has the meaning set forth in Section 2.1. “Environmental Claim” means any legal proceeding, lawsuit, administrative proceeding, claim, action, arbitration, audit, investigation, charge, demand, complaint, mediation, grievance, right, cause of action, Governmental Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, made, commenced, conducted or pending by, from or before any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials, or the use of explosives or the conducting of blasting activities; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit. “Environmental Law” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes, without limitation, the following, including any state law analogs, and any of their respective implementing regulations: CERCLA; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances
A-vii HIGHLY CONFIDENTIAL Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq. “Environmental Notice” means any written directive, notice of violation or infraction, notice of potential penalty, responsibility or liability, notice of intent to sue, warning letter, request for information, objection or other written notice, in any such case respecting any Environmental Claim or relating to any actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit. “Environmental Permit” means any Permit required by or under, or issued pursuant to, any Environmental Law. “EPA” means the U.S. Environmental Protection Agency. “Equity” has the meaning set forth in the Recitals. “Equity Interests” means any share, capital stock, partnership, membership, unit, joint venture or similar interest in any Person, and any option, warrant, right or security (including debt securities) convertible, exchangeable or exercisable therefor. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder. “ERISA Affiliate” means any trade or business, whether or not incorporated, that would be required to be aggregated with one or more of the Acquired Companies and treated as a “single employer” within the meaning of Section 4001 of ERISA. “Escrow Account” has the meaning set forth in Section 1.3(f). “Escrow Agent” means JPMorgan Chase Bank, N.A. or its successor, in its capacity as such pursuant to the Escrow Agreement. “Escrow Agreement” has the meaning set forth in Section 1.3(b)(iii). “Estimated Closing Balance Sheet” has the meaning set forth in Section 1.2. “Estimated Closing Cash” has the meaning set forth in Section 1.2. “Estimated Closing Company Indebtedness” has the meaning set forth in Section 1.2. “Estimated Company Transaction Expenses” has the meaning set forth in Section 1.2. “Estimated Net Working Capital Amount” has the meaning set forth in Section 1.2. “Excess Buyer Recovery Amount” has the meaning set forth in Section 1.7(b).
A-viii HIGHLY CONFIDENTIAL “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time. “Expiration Time” has the meaning set forth in Section 7.1(b)(i). “Export Control Laws” means all applicable Laws in respect of customs and export and import control including economic sanctions, anti-terrorism, anti-boycott and related measures, including the U.S. Arms Export Control Act (22 U.S.C. § 2778 et seq. ), as amended, the Export Administration Act (50 U.S.C. App. §§ 2401 et seq. ), as amended and continued in force by presidential order, any applicable international sanctions law and programs, including those promulgated under the International Emergency Economic Powers Act (50 U.S.C. §§ 1701-1706), the National Emergencies Act (50 U.S.C. §§ 1601-1651), the Trading with the Enemy Act (50 U.S.C. App. §§ 5, 16), any additional international sanctions programs administered by the Department of Treasury Office of Foreign Assets Control, any regulations promulgated under each such act, including, without limitation the Export Administration Regulations (15 C.F.R. §749.9), the Sudanese Sanctions Regulations (31 C.F.R. Part 538), and the Iranian transactions and Sanctions Regulations (31 C.F.R. Part 560), and comparable foreign laws, ordinances, rules and regulations. “Family Members” has the meaning set forth in Section 2.21. “FAR” means the Federal Acquisition Regulation. “Financial Statements” has the meaning set forth in Section 2.6. “Firm” has the meaning set forth in Section 1.6(d). “FLSA” has the meaning set forth in Section 2.16(a). “Fraud” means a misrepresentation or omission made by a party with knowledge that such misrepresentation or omission was false or with reckless indifference to the truth, with the intent to induce a party to rely thereon and upon which such party reasonably relied, and as a result of which such party suffered damages. For the avoidance of doubt, “Fraud” will not include any fraud claim based on constructive knowledge or negligent misrepresentation. “GAAP” means United States generally accepted accounting principles as in effect on December 31, 2020. “Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority, or any arbitrator, court or tribunal of competent jurisdiction. “Government Bid” means any quotation, bid or proposal by any of the Acquired Companies that, if accepted or awarded, would result in a Government Contract.
A-ix HIGHLY CONFIDENTIAL “Government Contract” means any Contract, including any prime contract, subcontract, letter contract, purchase order or delivery order, (a) by or between any of the Acquired Companies and any Governmental Authority (including any facilities contract or lease for the use of government-owned facilities) or (b) by or between any of the Acquired Companies, as a subcontractor at any tier, and any other Person, including resellers and distributors, in connection with any Contract with a Governmental Authority. “Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority. “Grant” means any grant, incentive, subsidy, funding, benefit or privilege, including any application therefor, whether pending, approved, or made available, directly or indirectly, by or on behalf of or under the authority of any Governmental Authority. “Gross-up Amount” means an amount equal to the excess of (a) the aggregate amount of Taxes imposed upon Seller Parties attributable to Buyer’s purchase of the Equity (including any Taxes payable by Sellers Parties attributable to Sellers’ receipt of the Gross-up Amount) over (b) the aggregate amount of Taxes that would have been imposed upon Covenantors with respect to the sale of the equity of Sellers if Buyer had purchased the equity of Sellers from Covenanters, rather than the Equity from Sellers, without making an election under Section 338(h)(10) with respect to such purchase. For the avoidance of doubt, the calculation of the Gross-up Amount shall be made utilizing the assumption that all representations and warranties of Seller Parties made herein (taking into account any disclosures with respect thereto) are accurate and complete in all respects and that the Reorganizations were completed as set forth in this Agreement. “Hazardous Materials” means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or man-made, that is defined or regulated as a hazardous, acutely hazardous, or toxic waste or substance, or words of similar import or regulatory effect, or otherwise regulated, under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation, polychlorinated biphenyls, per- and polyflourinated alkyl substances, perflourooctanoid acid substances, and perflourooctane sulfonate substances. “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder. “IFO Threshold” has the meaning set forth in Section 1.11(a). “Indebtedness” means, with respect to any Person, all liabilities in respect of: (a) borrowed money; (b) indebtedness evidenced by bonds, notes, debentures, letters of credit (to the extent drawn) or similar instruments; (c) capitalized lease obligations under GAAP; and (d) interest, premium, penalties and other amounts accrued and/or owing in respect of the items described in the foregoing clauses (a) through (c). For avoidance of doubt, and notwithstanding the foregoing, (i) Indebtedness does not include obligations related to leases that are or should be (in accordance with GAAP) accounted for as operating leases, and (ii) Indebtedness as of 11:59 p.m. on December
A-x HIGHLY CONFIDENTIAL 31, 2021 shall not include any trade payables and expenses that are taken into account in the calculation of the Closing Net Working Capital Amount. “Indemnification Escrow Amount” means an aggregate amount equal to the Sellers’ Retention Amount. “Indemnified Party” has the meaning set forth in Section 5.4(a). “Indemnifying Party” has the meaning set forth in Section 5.4(a). “Intellectual Property” means any and all of the following in any jurisdiction throughout the world: (a) trademarks, trade names, trade dress, logos and service marks, including all applications and registrations and the goodwill connected with the use of and symbolized by the foregoing; (b) copyrights, including all applications and registrations related to the foregoing; (c) trade secrets, know-how, manufacturing and production processes, inventions, improvements, methods, techniques, formula, compositions, software, data, databases, and other confidential information, in each case, that derive independent economic value from not being generally known to, and not being readily ascertainable by proper means by, other Persons who can obtain economic value from their disclosure and use; (d) patents and patent applications; (e) internet domain name registrations; and (f) social media accounts. “Interim Financial Statements” has the meaning set forth in Section 2.6. “Interim Period” has the meaning set forth in Section 4.12. “Internet Accounts” has the meaning set forth in Section 2.11(e). “IRS” has the meaning set forth in Section 2.15(b). “Issued Shares” has the meaning set forth in Section 1.3(h). “Key Employees” means Mr. Petillo, Robert Ginda, Ron Kollar, Christopher Erb, Michael Castaldi and Luis Soares. “Knowledge of Sellers” means the actual knowledge of Mr. Petillo, Robert Ginda and Christopher Erb, in each case after reasonable inquiry of such individual’s direct reports. “Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, principle of common law, judgment, decree, or other rule of law of any Governmental Authority. “Lease” has the meaning set forth in Section 2.10(c). “Leased Real Property” has the meaning set forth in Section 2.10(c). “Lock-Up Agreements” has the meaning set forth in Section 1.3(b)(v).
A-xi HIGHLY CONFIDENTIAL “Losses” means losses, damages, liabilities, Taxes, claims, penalties, assessments, fines, sanctions, judgments, costs and expenses, including reasonable attorneys’ and consultants’ fees, in each case, without duplication. “Malicious Code” has the meaning set forth in Section 2.11(f). “Material Adverse Effect” means any event, occurrence, fact, condition or change, individually or in the aggregate with other such events, occurrences, facts, conditions or changes, that is materially adverse to (a) the results of operations, financial condition or assets of the Acquired Business, taken as a whole or (b) the ability of the Seller Parties or the Acquired Companies to consummate the transactions contemplated by this Agreement; provided, however, that none of the following shall constitute, or shall be considered in determining whether there has occurred, a Material Adverse Effect: (i) any effect arising out of or resulting from actions contemplated by the parties in connection with this Agreement, the execution of this Agreement or the announcement, pendency or expected consummation of the transactions contemplated by this Agreement, including any effect on any Acquired Company’s relationships with licensors, licensees, customers, vendors, partners, suppliers, employees or any other Person having a business relationship with any Acquired Company; (ii) changes in Law or GAAP, or the interpretation or method of enforcement of any of the foregoing; (iii) general changes in any Acquired Company’s industry; (iv) changes in general economic or political conditions or the financing or capital markets in general, or changes in currency exchange rates; (v) any action taken pursuant to or in accordance with this Agreement or at the request of or with the consent of the Buyer; (vi) any earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters, (vii) any terrorism, military action or war (whether or not declared), as well as any U.S. governmental or general industry responses thereto; (viii) any change in connection with any Pandemic Matter or Pandemic Measure; or (ix) any failure by any Acquired Company or the Acquired Business to meet any internal or published projections, estimates or expectations of revenues, earnings or any other financial performance or results of operations for any period, or any failure by any Acquired Company or the Acquired Business to meet its internal budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations, in and of itself (provided that the underlying causes of such failures (subject to the other provisions of this definition) shall not be excluded); provided, however, that with respect to clauses (ii)-(iv), (vi), (vii) and (viii), any event, occurrence, fact, condition or change that has had a disproportionate impact on any Acquired Company compared to other businesses operating in the industries in which such Acquired Company operates will be considered for purposes of determining whether a “Material Adverse Effect” has occurred, but only to the extent of the disproportionate impact. “Material Contracts” has the meaning set forth in Section 2.9. “Material Customers” has the meaning set forth in Section 2.20. “Material Suppliers” has the meaning set forth in Section 2.20. “MD Contribution” has the meaning set forth in the Recitals. “MD Reorganization” has the meaning set forth in the Recitals.
A-xii HIGHLY CONFIDENTIAL “MD Seller” has the meaning set forth in the Preamble. “Mr. Petillo” has the meaning set forth in the Preamble. “Multiemployer Plan” has the meaning set forth in Section 2.15(d). “Multiple Employer Plan” has the meaning set forth in Section 2.15(d). “NJ Contribution” has the meaning set forth in the Recitals. “NJ Merger” has the meaning set forth in the Recitals. “NJ Reorganization” has the meaning set forth in the Recitals. “NJ Seller” has the meaning set forth in the Preamble. “NY Contribution” has the meaning set forth in the Recitals. “NY Merger” has the meaning set forth in the Recitals. “NY Reorganization” has the meaning set forth in the Recitals. “NY Seller” has the meaning set forth in the Preamble. “Ordinary Course of Business” of an Acquired Company or of the Acquired Business means the ordinary day-to-day business activity of such Acquired Company or the Acquired Business, conducted in a commercially reasonable manner, consistent with past practice. “Organizational Documents” means, as to any corporation, limited liability company, partnership or other business entity, such Person’s articles of organization, operating agreement, certificate of incorporation, by-laws, or other organizational or governing documents, in each case as amended. “Pandemic Matter” means any outbreak, epidemic, pandemic, health crisis or public health event, including with respect to the Coronavirus Pandemic, or any variation, adaption or mutation of any of the foregoing. “Pandemic Measures” means any quarantine, “shelter in place,” “stay at home,” mandatory workforce reduction, social distancing, mandatory closure, sequester or any other law, rule, regulation, order, decree or directive issued by any Governmental Authority in connection with or in response to any Pandemic Matter. “Party” and “Parties” have the respective meanings set forth in the Preamble. “Paycheck Protection Program” means the “paycheck protection program” set forth in subsection 36 of Section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as implemented, modified and amended by the Paycheck Protection Program Laws.
A-xiii HIGHLY CONFIDENTIAL “Paycheck Protection Program Laws” means (i) Title I of the Coronavirus Aid, Relief, and Economic Security Act, as amended and modified, including by the Paycheck Protection Program and Health Care Enhancement Act (Pub. L. 116-139) and the Paycheck Protection Program Flexibility Act of 2020 (Pub. L. 116-142) and (ii) all rules issued by the U.S. Small Business Administration, the U.S. Treasury Department or any other Governmental Authority, in each case, in connection with, relating to, implementing or modifying the Paycheck Protection Program, as in effect on the date hereof. “Permits” means any permit, license, franchise, approval, authorization or consent required to be obtained from or otherwise made available by or under the authority of any Governmental Authority. “Permitted Encumbrances” means (a) Encumbrances for Taxes not yet due and payable or being contested in good faith by appropriate procedures for which adequate reserves have been established in accordance with GAAP; (b) mechanics, materialmens’, carriers’, workmen’s, repairmen’s, landlords’ or similar Encumbrances arising or incurred in the Ordinary Course of Business that secure either amounts not yet due and payable or being contested in good faith by appropriate proceedings (and, with respect to those being contested, which have been disclosed to Buyer in writing prior to the date of this Agreement); (c) easements, rights of way, zoning ordinances and other similar Encumbrances and affecting Leased Real Property, which easements, rights of way, zoning ordinances and other similar Encumbrances individually or in the aggregate do not have a material impact on any Leased Real Property or on the operation of the Acquired Business; (d) Encumbrances arising under obligations related to leases that are or should be (in accordance with GAAP) accounted for as operating leases, (e) Encumbrances arising under applicable securities laws; and (f) Encumbrances with respect to Company Closing Indebtedness that will be satisfied in full prior to the Closing. “Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity. “Personal Information” means (a) any information that identifies, or, in combination with other information, may identify, be linked to, or relate to an individual in an identifiable manner, or is reasonably capable of being associated with an individual, and (b) any information that is governed, regulated or protected by one or more Data Protection Laws, including, without limitation, any “personal information” or “personally identifiable information” as defined under such Laws or data breach notification. “Petillo” has the meaning set forth in the Preamble. “Petillo Equity” has the meaning set forth in the Recitals. “Petillo LLC” has the meaning set forth in the Preamble. “Petillo Employment Agreement” means the Employment Agreement between Mr. Petillo and Petillo, dated as of the Closing Date, as may be amended from time to time. “Petillo MD” has the meaning set forth in the Preamble.
A-xiv HIGHLY CONFIDENTIAL “Petillo MD Equity” has the meaning set forth in the Recitals. “Petillo MD Shares” has the meaning set forth in the Recitals. “Petillo NY” has the meaning set forth in the Recitals. “Petillo NY LLC” has the meaning set forth in the Preamble. “Petillo NY Equity” has the meaning set forth in the Recitals. “Petillo NY Shares” has the meaning set forth in the Recitals. “Petillo Properties” means Petillo Properties L.L.C., a New Jersey limited liability company wholly owned by Mr. Petillo. “Petillo Shares” has the meaning set forth in the Recitals. “Post-Closing Tax Period” means any taxable period beginning after the Closing Date. “PPP Loan” means all payment obligations pursuant to that certain Promissory Note, dated as of April 15, 2020, from the PPP Lender to Petillo in the principal amount of $6,739,007. “PPP Lender” means Manufacturers and Traders Trust Company. “Pre-Closing Representation” has the meaning set forth in Section 8.14(b). “Pre-Closing Tax Period” means any taxable period (or portion of a Straddle Period) ending on or before the Closing Date. “Pre-Closing Tax Return” has the meaning set forth in Section 4.6(a). “Privileged Communications” has the meaning set forth in Section 8.14(b). “Proposed Asset Allocation” has the meaning set forth in Section 1.9(a). “Proposed Gross-Up Amount” has the meaning set forth in Section 1.9(a). “Purchase Price” means the Base Purchase Price, as adjusted by the Adjustment Amount (as finally determined pursuant to Section 1.6), any payments made pursuant to Section 1.11, and for any indemnification payments made pursuant to Article 5. “Purchase Price Allocation” has the meaning set forth in Section 1.8(a). “Qualified Benefit Plan” has the meaning set forth in Section 2.15(c). “RCAs” has the meaning set forth in Section 1.3(b)(ii). “Release” means the release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, migration, or leaching of a Hazardous Material into the environment.
A-xv HIGHLY CONFIDENTIAL “Remedial Action” means any action to (a) clean up, remediate, remove, or treat Hazardous Materials in the environment, (b) prevent the release of Hazardous Materials so that they do not migrate, endanger or threaten to endanger public health or the environment, or (c) perform remedial investigations, feasibility studies, corrective actions, closures and post-remedial or post- closure studies, investigations, monitoring and operations and maintenance under Environmental Laws. “Reorganization Agreements” has the meaning set forth in Section 4.15. “Reorganization Review” has the meaning set forth in Section 4.15. “Reorganizations” has the meaning set forth in the Recitals. “Representative” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, financing sources, counsel, accountants and other agents of such Person. In the case of Buyer, Representatives shall also include the insurance carrier under the R&W Insurance Policy. “Restricted Shares” means all shares of Buyer Common Stock issuable hereunder; provided that, such shares of Buyer Common Stock shall cease to be “Restricted Shares” upon the earliest to occur of the date on which such shares(a) have been registered under a registration statement pursuant to the Securities Act and sold thereunder, (b) are disposed of in reliance on and in accordance with Rule 144 (or any successor provision) under the Securities Act, or (c) may be disposed of by the holder, (i) in the opinion of counsel in form and substance reasonably satisfactory to Buyer, which shall have been delivered to Buyer by counsel reasonably satisfactory to Buyer, or (ii) under a “no action” letter from the SEC delivered to Buyer, in either case to the effect that subsequent transfers of such shares of Buyer Common Stock may be effected without registration under the Securities Act pursuant to Rule 144 under the Securities Act without any limitation as to volume or manner of sale restrictions or pursuant to another available exemption under the Securities Act and the rules and regulations thereunder. “Review Period” has the meaning set forth in Section 1.6(b). “Revised Statements” has the meaning set forth in Section 1.8(b). “R&W Insurer” means the insurer or insurers offering coverage under the R&W Insurance Policy. “R&W Insurance Policy” has the meaning set forth in Section 4.8. “Sample Net Working Capital Calculation” has the meaning set forth in Section 1.2. “SEC” means the United States Securities and Exchange Commission. “Securities Act” has the meaning set forth in Section 3.3. “Seller Disclosure Schedule” means the Seller Disclosure Schedule delivered by Sellers and Buyer concurrently with the execution and delivery of this Agreement.
A-xvi HIGHLY CONFIDENTIAL “Seller Accounting Principles” has the meaning set forth in Section 1.2. “Seller Fundamental Representations” means the representations and warranties contained in Section 2.1 (Organization and Authority of Covenantors), Section 2.2 (Organization and Authority of the Acquired Companies), Section 2.3 (Capitalization) and Section 2.18 (Brokers). “Seller Related Party” means Seller Representative, each Seller and each of their respective affiliates and their and their respective affiliates’ stockholders, partners, members, officers, directors, employees, controlling persons, agents and representatives. “Seller Special Representations” means the representations and warranties contained in Section 2.14 (Environmental), Section 2.17 (Taxes) and Section 2.30 (Coronavirus Pandemic Matters). “Seller Standard Representations” means all of the representations and warranties contained in Article 2, other than Seller Fundamental Representations and Seller Special Representations. “Seller Indemnified Parties” has the meaning set forth in Section 5.3(a). “Seller Parties” means Sellers and the Covenantors. “Sellers” has the meaning set forth in the Preamble. “Sellers’ Asset Allocation Notice” has the meaning set forth in Section 1.9(a). “Sellers Representative” has the meaning set forth in the Preamble. “Sellers’ Retention Amount” means $975,000; provided when and if the retention amount under the R&W Insurance Policy is reduced in accordance with terms thereof, “Sellers’ Retention Amount” shall be reduced to an amount equal to 50% of the then-effective retention amount (any such reduction, a “Sellers’ Retention Amount Deduction”). “Software” means computer programs, operating systems, applications, firmware and other code, including, without limitation, all source code, object code, application programming interfaces, data files, databases, protocols, specifications, and other documentation thereof. “Straddle Period” means any taxable period that includes (but does not end on) the Closing Date. “Subsidiary” of any specified Person means any other Person of which such first Person owns (either directly or through one or more other Subsidiaries) a majority of the outstanding equity securities or securities carrying a majority of the voting power in the election of the board of directors or other governing body of such Person, and with respect to which entity such first Person is not otherwise prohibited contractually or by other legally binding authority from exercising control. “Survival Date” has the meaning set forth in Section 5.1.
A-xvii HIGHLY CONFIDENTIAL “Target Net Working Capital Amount” means $16,000,000. “Tax Return” means any return, estimates, declaration, report, claim for refund, information return or statement or other document required to be filed with respect to Taxes, including any schedule, election or attachment thereto, any amendment thereof, any claim for refund and, where permitted or required, any combined, consolidated or unitary returns for any group of entities that includes any Acquired Company. “Taxes” means all federal, state, local, or foreign taxes, charges, fees, levies, imposts, duties and other assessments in the nature of a tax, including income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, contractor, estimated, excise, severance, environmental, documentary, stamp, occupation, real or personal property (including general and special real estate taxes and assessments, special service area charges, tax increment financing, payments in lieu of taxes and similar charges and assessments), environmental, real property gains, windfall profits, value added, disability, alternative, customs, duties or other taxes, fees, assessments or charges, together with any interest, additions or penalties imposed thereon or with respect thereto and any interest in respect of such additions or penalties. “Third Party Claim” means any claim, demand, action, suit, or proceeding made or brought by any Person who or that is not a party to this Agreement. “Trusts” has the meaning set forth in the Preamble. “WARN Act” means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses. “Working Capital Escrow Amount” means $500,000. B. Construction. The division of this Agreement into articles, Sections and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof. Unless otherwise indicated, all references to an “Article” or “Section” followed by a number or a letter refer to the specified Article or Section of this Agreement. The Exhibits and schedules (including the Seller Disclosure Schedule) attached to this Agreement are hereby incorporated by reference into this Agreement and form part hereof. Unless otherwise indicated, all references to a “Schedule” or an “Exhibit” followed by a number or a letter refer to the specified Exhibit or Schedule to this Agreement. The terms “this Agreement”, “hereof”, “herein” and “hereunder” and similar expressions refer to this Agreement (including the Preamble, Seller Disclosure Schedule, the Exhibits and Annexes) and not to any particular Article, Section or other portion hereof. Unless otherwise specifically indicated or the context otherwise requires: • all references to “dollars” or “$” mean United States dollars;
A-xviii HIGHLY CONFIDENTIAL • words importing the singular shall include the plural and vice versa, and words importing any gender shall include all genders; • “include”, “includes” and “including” shall be deemed to be followed by the words “without limitation”; • references to times of the day are to U.S. Eastern Time unless otherwise stated and references to a day are to a period of 24 hours running from midnight to midnight; • except where expressly provided to the contrary, references to statute or statutory provisions shall be construed as references to that statute or those provisions as respectively amended, consolidated, extended or re-enacted from time to time and shall include the corresponding provisions of any earlier legislation (whether repealed or not) and any orders, regulations, instruments or other subordinate legislation made from time to time under the statute concerned; • general words shall not be given a restrictive meaning by reason of their being preceded or followed by words indicating a particular class or examples of acts, matters or things; • references to “writing” or “written” include any modes of reproducing words in a legible, non-transitory form but do not include writing on the screens of visual displays or devices; • if any date on which any action is required to be taken hereunder by any of the parties is not a Business Day, such action shall be required to be taken on the next succeeding day that is a Business Day; • where any number of days or Business Days is prescribed in this Agreement, those days shall be reckoned exclusively of the first and inclusively of the last day or Business Day (as applicable), unless (in the case of days) the last day falls on a day not being a Business Day, in which event the last day shall be the next succeeding Business Day; • reference to any Party is also a reference to such Party’s permitted successors and assigns; • reference to any document referred to in this Agreement is a reference to that other document as amended, revised, varied, novated or supplemented at any time; and • references in this Agreement to any document or other information being “made available” or “provided” to Buyer shall mean that such document or information was either included in the virtual data room of Sellers hosted by Datasite (and for which access was granted to Buyer and its representatives) or otherwise delivered electronically to Buyer or its legal counsel at least two (2) Business Days prior to the date of this Agreement. The parties have participated jointly in the negotiation and drafting of this Agreement. No provision of this Agreement shall be interpreted in favor of, or against, any of the parties by reason
A-xix HIGHLY CONFIDENTIAL of the extent to which any such Party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft of this Agreement, and no rule of strict construction shall be applied against any Party. This Agreement shall not be interpreted or construed to require any Person to take any action, or fail to take any action, if to do so would violate any applicable Law.
Execution Version THIRD AMENDMENT TO CREDIT AGREEMENT THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of December 29, 2021, is entered into by and among STERLING CONSTRUCTION COMPANY, INC., a Delaware corporation (the “Borrower”), the Guarantors party hereto, the Lenders party hereto and BMO HARRIS BANK N.A., a national banking association, as administrative agent for the Lenders (in such capacity, the “Administrative Agent”). Unless otherwise specified herein, capitalized and/or initially capitalized terms used in this Amendment shall have the meanings ascribed to them in the Amended Credit Agreement (as hereinafter defined). A. WHEREAS, Borrower, the Guarantors, certain financial institutions parties thereto (the “Lenders”) and the Administrative Agent are parties to that certain Credit Agreement, dated as of October 2, 2019 (as has been and may be further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”); B. WHEREAS, on the Closing Date, the Lenders extended credit to the Borrower consisting of (a) Term A Loans (the “Term A-1 Loans”) in the aggregate principal amount of $400,000,000 (of which $310,943,750 is outstanding as of the date hereof) and (b) Revolving Credit Commitments in an aggregate principal amount of $75,000,000; C. WHEREAS, the Borrower and the Guarantors have requested that Administrative Agent and each Lender with a Term A-2 Loan Commitment on Schedule 1 to the Amended Credit Agreement (each a “Term A-2 Loan Lender” and, collectively, the “Term A-2 Loan Lenders”), subject to the terms and conditions set forth herein, (i) extend the Term A-2 Loans to the Borrower in an amount equal to $140,000,000, which shall be added to, and become a part of, the Term Loans, such that the aggregate principal amount of all Term Loans after giving effect to the Term A-2 Loans shall be $450,943,750, and (ii) effectuate certain additional modifications to the Credit Agreement as more fully set forth herein; D. WHEREAS, the Borrower intends to, among other things, use the proceeds of the Term A-2 Loans to (i) finance the purchase of Petillo LLC, a Delaware limited liability company (“Petillo”), Petillo Maryland Incorporated, a Maryland corporation (“Petillo MD”), Petillo NY LLC, a Delaware limited liability company (“Petillo NY”; and together with Petillo and Petillo MD, the “Petillo Targets”) (the “Petillo Acquisition”) pursuant to that certain Stock Purchase Agreement, to be dated as of or around December 30, 2021, substantially in the form delivered to the Lenders on December 29, 2021 (the “Petillo Purchase Agreement”), by and among Michael V. Petillo, an individual resident of the State of New Jersey, 2020 Audrey Petillo Family Trust and the Michael V. Petillo Family Trust, as sellers, the Petillo Targets, Michael V. Petillo, solely in his capacity as the representative of such sellers, and Borrower, as buyer, (ii) finance the purchase of certain assets of Kimes & Stone Construction Co., Inc., a Tennessee corporation (“Kimes”) (the “Kimes Acquisition”; and together with the Petillo Acquisition, collectively the “Third Amendment Acquisitions”) pursuant to that certain Asset Purchase Agreement, dated as of December 29, 2021 (the “Kimes Purchase Agreement”; and together with the Petillo Purchase Agreement, each a “Third Amendment Purchase Agreement” and, collectively, the “Third Amendment Purchase Agreements”), by and among Kimes & Stone Construction, LLC, a Delaware limited liability company (“Kimes Purchaser”), as purchaser, Kimes, as seller, and the shareholders of Kimes party thereto, or to replenish cash of the Borrower used to finance such purchase and (iii) pay fees and expenses incurred in connection with the Third Amendment Acquisitions and this Amendment; and E. WHEREAS, subject to the terms and conditions herein, the Administrative Agent and the Lenders party hereto, which constitute Required Lenders, are willing to (i) extend the Term A-2 Loans to the Borrower and (ii) to further amend the Credit Agreement, in each case as set forth herein. 744966207.10
2 NOW, THEREFORE, for and in consideration of the premises and mutual agreements herein contained and for the purposes of setting forth the terms and conditions of this Amendment and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be bound, hereby agree as follows: 1. Amendments to Credit Agreement. Subject to the terms and conditions of this Amendment, the Credit Agreement is hereby amended as follows: (a) the Credit Agreement (exclusive of all Exhibits and Schedules thereto, except as otherwise described in this Section 1) is hereby amended and restated in its entirety as set forth in Exhibit A attached hereto (the “Amended Credit Agreement”). (b) Schedule 1 to the Credit Agreement is deleted in its entirety and Exhibit B hereto is hereby substituted therefor. 2. Term A-2 Loan Lenders. Each Term A-2 Loan Lender party hereto hereby acknowledges and agrees that it has a Term A-2 Loan Commitment in the amount set forth opposite such Term A-2 Loan Lender’s name on Exhibit B attached to this Amendment and severally and not jointly agrees to commit to make to the Borrower a Term A-2 Loan on the Term A-2 Loan Funding Date, in US Dollars, in an aggregate amount not in excess of such Term A-2 Loan Lender’s Term A-2 Loan Commitment under the Amended Credit Agreement. From and after the Third Amendment Effective Date until the Term A-2 Loan Commitment Termination Date, the Term A-2 Loan Commitment of each Lender with a Term A-2 Loan Commitment party hereto shall be a Commitment for all purposes under the Credit Agreement and the other Loan Documents. The Term A-2 Loan Commitment of each Term A- 2 Loan Lender shall automatically terminate on the Term A-2 Loan Commitment Termination Date. 3. Conditions Precedent to Third Amendment. This Amendment shall become effective upon the Administrative Agent receiving copies, in form and substance reasonably satisfactory to the Administrative Agent, of (a) this Amendment duly executed by the Borrower, the Guarantors, the Administrative Agent, the Required Lenders and each Term A-2 Loan Lender and (b) that certain fee letter, dated as of the date hereof, between the Administrative Agent and the Borrower (the “Third Amendment Fee Letter”). 4. Conditions Precedent to Term A-2 Loans. The obligation of the Term A-2 Loan Lenders to make the Term A-2 Loans shall become effective as of the date (the “Term A-2 Loan Funding Date”) on which the following conditions precedent have been satisfied, in case in form and substance reasonably satisfactory to Administrative Agent: (a) If requested by any Lender, such Lender shall receive duly executed Notes of Borrower dated the date hereof and otherwise in compliance with the provisions of Section 2.11 of the Amended Credit Agreement; (b) The Administrative Agent shall have received each of the following: (i) copies of each Loan Party’s articles of incorporation and bylaws (or comparable organizational documents) and any amendments thereto (or certification that there have been no amendments, changes or other modification to such articles of incorporation and bylaws (or comparable organizational documents) and any amendments thereto that were delivered to the Administrative Agent on the Closing Date), certified in each instance by its Secretary or Assistant Secretary or other duly authorized officer;
3 (ii) copies of resolutions of each Loan Party’s Board of Directors (or similar governing body) authorizing the execution, delivery and performance of this Amendment and the other Loan Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby, together with specimen signatures of the persons authorized to execute such documents on each Loan Party’s behalf, all certified in each instance by its Secretary or Assistant Secretary or other duly authorized officer; and (iii) copies of the certificates of good standing for each Loan Party (dated no earlier than 30 days prior to the date hereof) from the office of the secretary of the state (or equivalent body) of its incorporation or organization and of each state in which it is qualified to do business as a foreign corporation or organization (except for such foreign jurisdictions to the extent that failure to be so qualified would not have a Material Adverse Effect); (c) The Administrative Agent shall have received financing statement, tax, and judgment lien search results against the Property of the Borrower and each Third Amendment Target and (ii) financing statement lien search results against the Property of the each Guarantor, in each case evidencing the absence of Liens on its Property except as permitted by Section 7.2 of the Amended Credit Agreement; (d) The Administrative Agent shall have received a solvency certificate of a Responsible Officer substantially in the form attached as Exhibit J to the Amended Credit Agreement; (e) The Administrative Agent shall have received the favorable written opinions of counsel to each Loan Party, in form and substance reasonably satisfactory to the Administrative Agent; (f) The transactions contemplated by the (i) Petillo Acquisition and (ii) Kimes Acquisition shall have been or, substantially concurrently with the funding of the Term A-2 Loans, shall be consummated in accordance with the terms of the applicable Third Amendment Purchase Agreement and each Third Amendment Purchase Agreement (without any amendment, modification or waiver of any of the provisions thereof that would be materially adverse to the Lenders without the consent of the Administrative Agent), along with all material documents, agreements and instruments delivered in connection therewith, shall have been delivered to Administrative Agent; (g) The Administrative Agent shall have received payoff letters with respect to Indebtedness for Borrowed Money, other than Indebtedness for Borrowed Money permitted pursuant to Section 7.1 of the Amended Credit Agreement, in respect of the Third Amendment Targets or any Persons related thereto; (h) With respect to any capital stock of any direct and indirect Subsidiary of Borrower (other than any Excluded Subsidiary) acquired by a Loan Party pursuant to the Third Amendment Acquisitions (each, a “Third Amendment Target” and, collectively, the “Third Amendment Targets”), Borrower and each other Loan Party shall have complied with the requirements of Section 6.12 of the Amended Credit Agreement in connection therewith; (i) The Administrative Agent shall have received evidence of insurance with respect to each Third Amendment Target required to be maintained under the Loan Documents;
4 (j) Administrative Agent shall have received at least five (5) days prior to the Term A-2 Loan Funding Date, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act that has been reasonably requested by any Lender at least seven (7) Business Days in advance of the Term A-2 Loan Funding Date; (k) Administrative Agent shall have received payment of (i) all fees and compensation required to be paid on the Term A-2 Loan Funding Date (including those fees described in Section 5 hereof) and (ii) expenses required to be paid on the Term A-2 Loan Funding Date to the extent invoiced at least two (2) Business Days prior to the Term A-2 Loan Funding Date (which amounts may be offset against the proceeds of the Term A-2 Loans funded in connection herewith); (l) The Administrative Agent shall have received a closing certificate, dated the Term A-2 Loan Funding Date, containing the attestation of a Responsible Officer of the Borrower that (i) no Default or Event of Default shall have occurred and be continuing on the Term A-2 Loan Funding Date both immediately before and after the funding of the Term A-2 Loans, (ii) both before and after giving effect to the making of the Term A-2 Loans, the representations and warranties of the Loan Parties set forth in this Amendment and the other Loan Documents are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) with the same effect as if made on the Term A-2 Loan Funding Date (except to the extent stated to relate to a specific earlier date, in which case that representation or warranty is true and correct in all material respect or in all respects, as applicable, as of that earlier date), and (iii) both before and after giving effect to the Third Amendment Acquisitions and all debt and other liabilities (including earnouts) to be incurred in connection therewith, (A) Borrower shall be in compliance with Section 7.12 of the Amended Credit Agreement as of the fiscal quarter ended September 30, 2021 on a pro forma basis, and (B) the (1) Total Leverage Ratio does not on a pro forma basis as of the fiscal quarter ended September 30, 2021 exceed the lesser of (x) 3.00 to 1.00 and (y) 0.25 to 1.00 less than the applicable covenant level in Section 7.12(a) of the Amended Credit Agreement and (2) Senior Secured Leverage Ratio does not on a pro forma basis as of the fiscal quarter ended September 30, 2021 exceed 2.50 to 1.00; provided that the conditions set forth in this clause (B) shall be deemed to have been satisfied as of the Term A-2 Loan Funding Date after giving pro forma effect to the making of the Term A-2 Loans and the consummation of the Third Amendment Acquisitions; and (m) The Borrower shall have taken each such other action and delivered each such other agreement, instrument, document, certificates and/or opinion as the Administrative Agent may reasonably request. Notwithstanding the foregoing, in the event that the Term A-2 Loan Funding Date has not occurred by the Term A-2 Loan Commitment Termination Date, the Term A-2 Loan Commitments shall automatically terminate and the Term A-2 Loan Funding Date shall not occur. 5. Fees and Expenses. The Borrower agrees to pay (a) the fees set forth in the Third Amendment Fee Letter on the dates set forth therein and (b) all costs and expenses of or incurred by the Administrative Agent, including but not limited to, reasonable fees and disbursements of counsel to the Administrative Agent, in connection with the preparation, negotiation, execution and delivery of this Amendment on the Term A-2 Loan Commitment Termination Date.
5 6. Representations. Borrower and each Guarantor hereby represents and warrants that: (a) it has all necessary power and authority to execute and deliver this Amendment and perform its obligations hereunder, (b) no Default or Event of Default exists both before and after giving effect to this Amendment, (c) this Amendment and the Loan Documents, as amended hereby, constitute the legal, valid and binding obligations of Borrower and Guarantors and are enforceable against Borrower and Guarantors in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors’ rights generally and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law), (d) all Liens created under the Loan Documents continue to be first priority (subject only to Permitted Encumbrances) perfected Liens, and (e) all representations and warranties of Borrower and Guarantors contained in the Amended Credit Agreement and all other Loan Documents are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as though made on and as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct in all material respects as of such date). 7. Ratification. Except as expressly modified in this Amendment, all of the terms, provisions and conditions of the Credit Agreement, as heretofore amended, shall remain unchanged and in full force and effect. Except as herein specifically agreed, the Credit Agreement and each other Loan Document are hereby ratified and confirmed and shall remain in full force and effect according to their terms. Except as specifically set forth herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent, the Lenders or the L/C Issuer under the Credit Agreement or any of the other Loan Documents, or constitute a waiver of any provision of the Credit Agreement or any of the other Loan Documents. This Amendment shall not constitute a course of dealing with the Administrative Agent, the Lenders or the L/C Issuer at variance with the Credit Agreement or the other Loan Documents such as to require further notice by such Person to require strict compliance with the terms of the Amended Credit Agreement and the other Loan Documents in the future. Borrower and the Guarantors acknowledge and expressly agree that the Administrative Agent, each Lender and the L/C Issuer reserves the right to, and does in fact, require strict compliance with all terms and provisions of the Credit Agreement and the other Loan Documents. Each of Borrower and the Guarantors hereby: (i) affirms that it is indebted to the Lenders under the terms and conditions of the Credit Agreement and the other Loan Documents, each of which constitutes the valid and binding obligation of Borrower and the Guarantors, enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors’ rights generally and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law), and that no offsets, expenses or counterclaims to its obligations thereunder exist; and (ii) affirmatively waives any right to challenge the liens and security interests granted in favor of the Administrative Agent under the Credit Agreement, the other Loan Documents or hereunder. 8. Governing Law. This Amendment and any claim, controversy, dispute or cause of action (whether in contract, tort or otherwise) based upon, arising out of or relating to this Amendment, and the rights and duties of the parties hereto, shall be governed by and construed and determined in accordance with the internal laws of the State of New York. 9. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AMENDMENT OR ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
6 10. Miscellaneous. (a) Counterparts. This Amendment may be executed in any number of counterparts, and by the different parties hereto on separate counterpart signature pages, each of which shall constitute an original, and all such counterparts taken together shall be deemed to constitute one and the same instrument. Each of the parties hereto agrees that a signature transmitted to the other parties hereto or their respective counsel by telecopier or other electronic transmission shall be as effective to bind the party whose signature was transmitted as a duly executed and delivered original. (b) Severability of Provisions. Any provision of this Amendment which is unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. All rights, remedies and powers provided in this Amendment and the other Loan Documents may be exercised only to the extent that the exercise thereof does not violate any applicable mandatory provisions of law, and all the provisions of this Amendment and other Loan Documents are intended to be subject to all applicable mandatory provisions of law which may be controlling and to be limited to the extent necessary so that they will not render this Amendment or the other Loan Documents invalid or unenforceable. (c) Incorporation. This Amendment shall form a part of the Credit Agreement, and all references to the Credit Agreement shall mean that document as hereby modified. Upon the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of similar import shall mean and be a reference to the Credit Agreement as amended hereby. 11. Post-Closing Obligations. The Borrower agrees that it shall, and shall cause each Guarantor to, execute and deliver or to take such action, in form and substance reasonably satisfactory to the Administrative Agent, in each case as follows: (a) Within thirty (30) days following the Third Amendment Effective Date (or such longer time as Administrative Agent may otherwise agree in writing in its sole discretion), cause each of Sterling Procurement Company, LLC, a Louisiana limited liability company, Kimes Purchaser and each Petillo Target to amend its respective operating agreement (or equivalent document) in a manner reasonably satisfactory to the Administrative Agent to include language that gives full effect to the pledge of such company’s membership interests to Administrative Agent under the Loan Documents; (b) Within sixty (60) days following the Third Amendment Effective Date (or such longer time as Administrative Agent may otherwise agree in writing in its sole discretion), cause each of Kimes Purchaser and each Petillo Target to maintain each of its operating accounts other than Excluded Accounts at Administrative Agent, an Affiliate thereof or other financial institution that enters into a control agreement with the Administrative Agent; and (c) Cause each of Kimes Purchaser and each Petillo Target to use commercially reasonable efforts to deliver to the Administrative Agent, within ninety (90) days following the Third Amendment Effective Date (or such longer time as Administrative Agent may otherwise agree in writing in its sole discretion), collateral access agreements with respect to any Premises leased by such Loan Party as of the Third Amendment Effective Date (i) constituting such Loan
7 Party’s corporate headquarters or chief executive office or (ii) holding Collateral with a fair market value equal to or in excess of $5,000,000. [Signatures Immediately Follow]
{N4494323.1} Signature Page to Third Amendment to Credit Agreement
Signature Page to Third Amendment to Credit Agreement BMO HARRIS BANK N.A., as Administrative Agent, L/C Issuer and a Lender By: Name: John Armstrong Title: Managing Director
Signature Page to Third Amendment to Credit Agreement KEYBANK NATIONAL ASSOCIATION, as Co- Documentation Agent and as a Lender
Signature Page to Third Amendment to Credit Agreement SIEMENS FINANCIAL SERVICES, INC., as a Lender By: Name: Annie Schorr Title: Duly Authorized Signatory By: Name: Title:
Signature Page to Third Amendment to Credit Agreement BANCALLIANCE INC., as a Lender By: Alliance Partners LLC, its attorney-in-fact By: Name: John Gray Title: Executive Vice President
EXHIBIT A Amended Credit Agreement [See attached.]
Exhibit A to Third Amendment to Credit Agreement 744965794 CREDIT AGREEMENT dated as of October 2, 2019, as amended by that certain First Amendment to Credit Agreement, dated as of December 2, 2019, that certain Second Amendment to Credit Agreement, dated as of June 28, 2021, and that certain Third Amendment to Credit Agreement, dated as of December 29, 2021 among STERLING CONSTRUCTION COMPANY, INC., the Guarantors from time to time parties hereto, the Lenders from time to time parties hereto, and BMO HARRIS BANK N.A., as Administrative Agent BANK OF AMERICA, N.A. as Syndication Agent BMO CAPITAL MARKETS CORP. and BOFA SECURITIES, INC., as Joint Lead Arrangers and Joint Book Runners KEYBANK NATIONAL ASSOCIATION, REGIONS BANK and UMB BANK, as Co-Documentation Agents
-i- 744965794 Table of Contents SECTION 1. DEFINITIONS; INTERPRETATION. .................................................................... 1 Section 1.1 Definitions.................................................................................................. 1 Section 1.2 Interpretation ............................................................................................ 31 Section 1.3 Change in Accounting Principles............................................................. 32 Section 1.4 Pro Forma Calculations............................................................................ 32 Section 1.5 Divisions. ................................................................................................. 32 SECTION 2. THE CREDIT FACILITIES. ......................................................................... 33 Section 2.1 Term Loan Commitments. ....................................................................... 33 Section 2.2 Revolving Credit Commitments. ............................................................. 33 Section 2.3 Letters of Credit. ...................................................................................... 34 Section 2.4 Applicable Interest Rates. ........................................................................ 37 Section 2.5 Minimum Borrowing Amounts; Maximum Eurodollar Loans. ............... 38 Section 2.6 Manner of Borrowing Loans and Designating Applicable Interest Rates ......................................................................................................... 38 Section 2.7 Swing Loans............................................................................................. 40 Section 2.8 Maturity of Loans .................................................................................... 41 Section 2.9 Prepayments ............................................................................................. 43 Section 2.10 Default Rate. ............................................................................................ 45 Section 2.11 Evidence of Indebtedness ........................................................................ 46 Section 2.12 Fees .......................................................................................................... 47 Section 2.13 Place and Application of Payments. ........................................................ 47 Section 2.14 Account Debit. ......................................................................................... 49 Section 2.15 Commitment Terminations ...................................................................... 49 Section 2.16 Substitution of Lenders. ........................................................................... 50 Section 2.17 Defaulting Lenders................................................................................... 50 Section 2.18 Incremental Loans. ................................................................................... 51 SECTION 3. TAXES; CHANGE IN CIRCUMSTANCES. ....................................................... 52 Section 3.1 Withholding Taxes ................................................................................... 52 Section 3.2 Documentary Taxes. ................................................................................ 53 Section 3.3 Funding Indemnity. .................................................................................. 54 Section 3.4 Change in Law. ........................................................................................ 54
-ii- 744965794 Section 3.5 Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR ................................................................................................ 54 Section 3.6 Increased Cost and Reduced Return ........................................................ 56 Section 3.7 Lending Offices ....................................................................................... 57 Section 3.8 Discretion of Lender as to Manner of Funding. ....................................... 57 SECTION 4. CONDITIONS PRECEDENT. .............................................................................. 58 Section 4.1 Initial Credit Event. .................................................................................. 58 Section 4.2 All Credit Events...................................................................................... 61 SECTION 5. REPRESENTATIONS AND WARRANTIES. ..................................................... 62 Section 5.1 Organization and Qualification. ............................................................... 62 Section 5.2 Subsidiaries; Capitalization. .................................................................... 62 Section 5.3 Authority and Validity of Obligations. .................................................... 62 Section 5.4 Use of Proceeds; Margin Stock................................................................ 63 Section 5.5 Financial Reports. .................................................................................... 63 Section 5.6 No Material Adverse Change................................................................... 64 Section 5.7 Full Disclosure. ........................................................................................ 64 Section 5.8 Intellectual Property, Franchises, and Licenses. ...................................... 64 Section 5.9 Governmental Authority and Licensing................................................... 64 Section 5.10 Good Title. ............................................................................................... 64 Section 5.11 Litigation and Other Controversies. ......................................................... 64 Section 5.12 Taxes. ....................................................................................................... 65 Section 5.13 Approvals. ................................................................................................ 65 Section 5.14 Affiliate Transactions............................................................................... 65 Section 5.15 Investment Company. .............................................................................. 65 Section 5.16 ERISA. ..................................................................................................... 65 Section 5.17 Compliance with Laws ............................................................................ 65 Section 5.18 Sanctions; Anti-Money Laundering; Anti-Corruption Laws ................... 66 Section 5.19 Other Agreements. ................................................................................... 67 Section 5.20 Solvency. .................................................................................................. 67 Section 5.21 No Default. ............................................................................................... 67 Section 5.22 No Broker Fees. ....................................................................................... 67 Section 5.23 Insurance. ................................................................................................. 67 Section 5.24 Senior Indebtedness. ................................................................................ 67
-iii- 744965794 Section 5.25 Labor Matters. .......................................................................................... 67 Section 5.26 Perfection Matters. ................................................................................... 67 Section 5.27 EEA Financial Institutions. ...................................................................... 68 SECTION 6. AFFIRMATIVE COVENANTS............................................................................ 68 Section 6.1 Maintenance of Business. ........................................................................ 68 Section 6.2 Maintenance of Properties. ...................................................................... 68 Section 6.3 Taxes and Assessments. ........................................................................... 68 Section 6.4 Insurance. ................................................................................................. 69 Section 6.5 Financial Reports. .................................................................................... 69 Section 6.6 Inspection. ................................................................................................ 71 Section 6.7 ERISA. ..................................................................................................... 71 Section 6.8 Compliance with Laws. ........................................................................... 72 Section 6.9 [Reserved]. ............................................................................................... 73 Section 6.10 Formation of Subsidiaries. ....................................................................... 73 Section 6.11 Use of Proceeds; Margin Stock................................................................ 73 Section 6.12 Guaranties and Collateral ......................................................................... 73 Section 6.13 Senior Indebtedness. ................................................................................ 74 Section 6.14 Hedging Agreements. .............................................................................. 74 Section 6.15 Cash Management. ................................................................................... 74 Section 6.16 Collateral Access Agreements. ................................................................ 74 Section 6.17 Bonding Obligations. ............................................................................... 74 SECTION 7. NEGATIVE COVENANTS. ................................................................................. 75 Section 7.1 Borrowings and Guaranties...................................................................... 75 Section 7.2 Liens. ........................................................................................................ 76 Section 7.3 Investments, Acquisitions, Loans and Advances. .................................... 78 Section 7.4 Mergers, Consolidations and Sales. ......................................................... 80 Section 7.5 Maintenance of Subsidiaries. ................................................................... 80 Section 7.6 Dividends and Certain Other Restricted Payments. ................................. 81 Section 7.7 Transactions With Affiliates. ................................................................... 81 Section 7.8 No Changes in Fiscal Year. ..................................................................... 81 Section 7.9 Change in the Nature of Business. ........................................................... 81 Section 7.10 No Restrictions......................................................................................... 82 Section 7.11 Amendment to Organizational and Other Documents. ............................ 82
-iv- 744965794 Section 7.12 Financial Covenants. ................................................................................ 82 Section 7.13 Use of Proceeds........................................................................................ 83 Section 7.14 Payment of Subordinated Debt. ............................................................... 83 SECTION 8. EVENTS OF DEFAULT AND REMEDIES. ....................................................... 83 Section 8.1 Events of Default. .................................................................................... 83 Section 8.2 Non Bankruptcy Defaults ........................................................................ 85 Section 8.3 Bankruptcy Defaults ................................................................................ 85 Section 8.4 Collateral for Undrawn Letters of Credit ................................................. 85 Section 8.5 Notice of Default...................................................................................... 86 SECTION 9. ADMINISTRATIVE AGENT. .............................................................................. 86 Section 9.1 Appointment and Authorization of Administrative Agent. ..................... 86 Section 9.2 Administrative Agent and its Affiliates. .................................................. 86 Section 9.3 Action by Administrative Agent. ............................................................. 87 Section 9.4 Consultation with Experts. ....................................................................... 87 Section 9.5 Liability of Administrative Agent; Credit Decision. ............................... 87 Section 9.6 Indemnity. ................................................................................................ 88 Section 9.7 Resignation of Administrative Agent and Successor Administrative Agent. ....................................................................................................... 88 Section 9.8 L/C Issuer and Swing Line Lender. ......................................................... 89 Section 9.9 Hedging Liability and Funds Transfer and Deposit Account Liability Arrangements. ........................................................................... 89 Section 9.10 Designation of Additional Agents. .......................................................... 90 Section 9.11 Authorization to Release or Subordinate or Limit Liens. ........................ 90 Section 9.12 Authorization to Enter into, and Enforcement of, the Collateral Documents. .............................................................................................. 90 Section 9.13 Recovery of Erroneous Payments. ........................................................... 91 SECTION 10. THE GUARANTEES. ......................................................................................... 91 Section 10.1 The Guarantees ........................................................................................ 91 Section 10.2 Guarantee Unconditional. ........................................................................ 92 Section 10.3 Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances. ......................................................................................... 93 Section 10.4 Subrogation. ............................................................................................. 93 Section 10.5 Waivers. ................................................................................................... 93 Section 10.6 Limit on Recovery. .................................................................................. 93
-v- 744965794 Section 10.7 Stay of Acceleration. ................................................................................ 94 Section 10.8 Benefit to Guarantors. .............................................................................. 94 Section 10.9 Guarantor Covenants. .............................................................................. 94 SECTION 11. MISCELLANEOUS. ........................................................................................... 94 Section 11.1 No Waiver, Cumulative Remedies. ......................................................... 94 Section 11.2 Non-Business Days. ................................................................................. 94 Section 11.3 Survival of Representations. .................................................................... 94 Section 11.4 Survival of Indemnity and Certain Other Provisions. .............................. 94 Section 11.5 Sharing of Set Off. ................................................................................... 95 Section 11.6 Notices. .................................................................................................... 95 Section 11.7 Counterparts. ............................................................................................ 96 Section 11.8 Successors and Assigns............................................................................ 96 Section 11.9 Participants. .............................................................................................. 96 Section 11.10 Assignments ............................................................................................. 97 Section 11.11 Amendments. ......................................................................................... 101 Section 11.12 Headings. ............................................................................................... 101 Section 11.13 Costs and Expenses; Indemnification .................................................... 101 Section 11.14 Set off. .................................................................................................... 103 Section 11.15 Entire Agreement. .................................................................................. 103 Section 11.16 Governing Law. ..................................................................................... 103 Section 11.17 Severability of Provisions. ..................................................................... 103 Section 11.18 Excess Interest. ...................................................................................... 104 Section 11.19 Construction. .......................................................................................... 104 Section 11.20 Lender’s and L/C Issuer’s Obligations Several. .................................... 104 Section 11.21 Submission to Jurisdiction; Waiver of Venue; Service of Process ........ 105 Section 11.22 Waiver of Jury Trial. .............................................................................. 105 Section 11.23 USA Patriot Act. .................................................................................... 106 Section 11.24 Time is of the Essence. .......................................................................... 106 Section 11.25 Confidentiality. ...................................................................................... 106 Section 11.26 Acknowledgement Regarding any Supported QFCs. ............................ 107 Section 11.27 No Advisory or Fiduciary Responsibility. ............................................. 108 Section 11.28 Acknowledgement and Consent to Bail-In of Affected Financial Institutions.............................................................................................. 108
-vi- 744965794 EXHIBITS Exhibit A – Notice of Payment Request Exhibit B – Notice of Borrowing Exhibit C – Notice of Continuation/Conversion Exhibit D-1 – Term Note Exhibit D-2 – Revolving Note Exhibit D-3 – Swing Note Exhibit E – [Reserved] Exhibit F – Compliance Certificate Exhibit G – Addition Guarantor Supplement Exhibit H – Assignment and Acceptance Exhibit I –Work-in-Progress Report Exhibit J – Solvency Certificate Exhibit K – Security Agreement SCHEDULES Schedule 1 – Commitments Schedule 5.2 – Subsidiaries Schedule 5.14 – Affiliate Transactions Schedule 5.16 – Plans Schedule 5.25 – Collective Bargaining Agreements and Multiemployer Plans Schedule 7.1 – Permitted Indebtedness Schedule 7.2 – Permitted Liens
744965794 CREDIT AGREEMENT This CREDIT AGREEMENT is entered into as of October 2, 2019, by and among STERLING CONSTRUCTION COMPANY, INC., a Delaware corporation (the “Borrower”), the direct and indirect Subsidiaries of Borrower from time to time party to this Agreement, as Guarantors, the several financial institutions from time to time party to this Agreement, as Lenders, and BMO HARRIS BANK N.A., a national banking association, as Administrative Agent as provided herein. All capitalized terms used herein without definition shall have the same meanings ascribed thereto in Section 1.1. PRELIMINARY STATEMENT Borrower has requested, and the Lenders have agreed to extend, certain credit facilities on the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the mutual agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. DEFINITIONS; INTERPRETATION. Section 1.1 Definitions. The following terms when used herein shall have the following meanings: “Acquired Business” means the entity or assets acquired by Borrower or a Subsidiary in an Acquisition, whether before or after the date hereof. “Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of any business or division of a Person, (b) the acquisition of in excess of 50% of the equity interests of any Person (other than a Person that is a Subsidiary), or otherwise causing any Person to become a Subsidiary, or the acquisition by the Borrower or any Subsidiary of additional Equity Interests of any Affiliated Entity, or (c) a merger or consolidation or any other combination with another Person (other than a Person that is a Subsidiary) provided that Borrower or the Subsidiary is the surviving entity. “Adjusted LIBOR” means, for any Borrowing of Eurodollar Loans, a rate per annum determined in accordance with the following formula: Adjusted LIBOR = LIBOR 1 - Eurodollar Reserve Percentage “Administrative Agent” means BMO Harris Bank N.A., in its capacity as Administrative Agent hereunder, and any successor in such capacity pursuant to Section 9.7. “Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by Administrative Agent.
-2- 744965794 “Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution. “Affiliate” means any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, another Person. A Person shall be deemed to control another Person for purposes of this definition if such Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of the other Person, whether through the ownership of voting securities, common directors, trustees or officers, by contract or otherwise; provided that, in any event for purposes of this definition, any Person that owns, directly or indirectly, 20% or more of the securities having the ordinary voting power for the election of directors or governing body of a corporation or 20% or more of the partnership or other ownership interest of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person. “Agreement” means this Credit Agreement, as the same may be amended, restated, supplemented, or otherwise modified from time to time pursuant to the terms hereof. “All-in Yield” means, as to any Indebtedness for Borrowed Money, the yield thereon as reasonably determined by Administrative Agent taking into account the interest rate (including any eurocurrency rate or base rate floor), margin, original issue discount and all fees, including upfront or similar fees and; provided that original issue discount and upfront fees shall be equated to interest based on the shorter of the original stated life of such Indebtedness for Borrowed Money and a 4-year life to maturity; provided, further, that “All-in Yield” shall not include arrangement, underwriting, structuring or similar fees paid to arrangers or fees that are not paid generally to the holders of such Indebtedness for Borrowed Money with respect to such Indebtedness for Borrowed Money. “Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to Borrower, any Guarantor or any of their Subsidiaries from time to time concerning or relating to bribery or corruption. “Anti-Money Laundering Laws” means any and all laws, statutes, regulations or obligatory government orders, decrees, ordinances or rules applicable to Borrower, any Guarantor, or any of their respective Subsidiaries related to terrorism financing or money laundering, including any applicable provision of the Patriot Act. “Applicable Margin” means, with respect to Loans, Reimbursement Obligations, and the commitment fees and letter of credit fees payable under Section 2.12, (a) until the first Pricing Date following the Closing Date (the “Initial Pricing Date”), the rates per annum shown opposite Level III below, (b) from and after the Initial Pricing Date until the Third Amendment Effective Date, the rates per annum determined in accordance with the schedule below, (c) from the Third Amendment Effective Date until the first Pricing Date after the fiscal quarter ended March 31, 2022, the rates per annum shown opposite Level III below and (d) thereafter, from one Pricing Date to the next, the rates per annum determined in accordance with the following schedule:
-3- 744965794 Level Total Leverage Ratio Applicable Margin for Base Rate Loans under Revolving Credit and Term Credit and Reimbursement Obligations shall be: Applicable Margin for Eurodollar Loans under Revolving Credit and Term Credit and Letter of Credit Fee shall be: Applicable Margin for Commitment Fee shall be: IV Greater than or equal to 3.00 to 1.0 2.00% 3.00% 0.35% III Less than 3.00 to 1.0, but greater than or equal to 2.25 to 1.0 1.50% 2.50% 0.30% II Less than 2.25 to 1.0, but greater than or equal to 1.50 to 1.0 1.00% 2.00% 0.25% I Less than 1.50 to 1.0 0.50% 1.50% 0.20%; provided that the Applicable Margin for Letter of Credit fees in respect of performance letters of credit shall be 67% of the applicable rates per annum set forth above. For purposes hereof, the term “Pricing Date” means, for any fiscal quarter of Borrower ending on or after September 30, 2021, the date on which Administrative Agent is in receipt of Borrower’s most recent financial statements (and, in the case of the year-end financial statements, audit report) for the fiscal quarter then ended, pursuant to Section 6.5. The Applicable Margin shall be established based on the Total Leverage Ratio for the most recently completed fiscal quarter and the Applicable Margin established on a Pricing Date shall remain in effect until the next Pricing Date. If Borrower has not delivered its financial statements by the date such financial statements (and, in the case of the year-end financial statements, audit report) are required to be delivered under Section 6.5, until such financial statements and audit report are delivered, the Applicable Margin shall be the highest Applicable Margin (i.e., Level IV shall apply). If Borrower subsequently delivers such financial statements before the next Pricing Date, the Applicable Margin established by such late delivered financial statements shall take effect from the date of delivery until the next Pricing Date. In all other circumstances, the Applicable Margin established by such financial statements shall be in effect from the Pricing Date that occurs immediately after the end of the fiscal quarter covered by such financial statements until the next Pricing Date. Each determination of the Applicable Margin made by Administrative Agent in accordance with the foregoing shall be conclusive and binding on Borrower and the Lenders absent manifest error. If, as a result of any restatement of or other adjustment to the financial statements of the Borrower or for any other reason, the Borrower or the Administrative Agent determines that (i) the Total Leverage Ratio as calculated by the Borrower as of any applicable date was inaccurate and (ii) a proper calculation of the Total Leverage Ratio would have resulted in higher pricing for such period, the Borrower shall immediately and retroactively be obligated to pay to the Administrative Agent for the account of the applicable Lenders or the L/C Issuer, as the case may be, promptly on
-4- 744965794 demand by the Administrative Agent (or, after the occurrence of any Event of Default described in Section 8.1(j) or (k) with respect to Borrower has occurred and is continuing, automatically and without further action by the Administrative Agent, any Lender or the L/C Issuer), an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period. This paragraph shall not limit the rights of the Administrative Agent, any Lender or the L/C Issuer, as the case may be, under any other provision of the Loan Documents. The Borrower’s obligations under this paragraph shall survive the termination of the Commitments and the repayment of all other Obligations hereunder. “Application” is defined in Section 2.3(b). “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. “Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 11.10), and accepted by Administrative Agent, in substantially the form of Exhibit H or any other form approved by Administrative Agent. “Authorized Representative” means those persons shown on the list of officers provided by Borrower pursuant to Section 4.1 or on any update of any such list provided by Borrower to Administrative Agent, or any further or different officers of Borrower so named by any Authorized Representative of Borrower in a written notice to Administrative Agent. “Available Amount” means, at any date of determination, an amount equal to, without duplication, (x) the sum of (i) $15,000,000 plus (ii) a cumulative amount equal to 50% of Net Income (which amount shall not be less than zero) for all fiscal quarters of the Borrower completed after the Closing Date (commencing with the fiscal quarter ending December 31, 2019) minus (y) the aggregate amount of Restricted Payments made pursuant to Section 7.6(d) (to the extent funded with the Available Amount in accordance with such Section) after the Closing Date and on or prior to the date of determination. “Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution. “Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule. “Base Rate” means, for any day, the rate per annum equal to the greatest of: (a) the rate of interest announced or otherwise established by Administrative Agent from time to time as its prime commercial rate as in effect on such day, with any change in the Base Rate resulting from a change in said prime commercial rate to be effective as of the date of the relevant change in said prime commercial rate (it being acknowledged and agreed that such rate may not be Administrative Agent’s best or lowest rate), (b) the sum of (i) the rate determined by Administrative Agent to be
-5- 744965794 the average (rounded upward, if necessary, to the next higher 1/100 of 1%) of the rates per annum quoted to Administrative Agent at approximately 10:00 a.m. (or as soon thereafter as is practicable) on such day (or, if such day is not a Business Day, on the immediately preceding Business Day) by two or more Federal funds brokers selected by Administrative Agent for sale to Administrative Agent at face value of Federal funds in the secondary market in an amount equal or comparable to the principal amount for which such rate is being determined, plus (ii) 1/2 of 1%, and (c) LIBOR for such day plus 1.00%. “Base Rate Loan” means a Loan bearing interest at a rate specified in Section 2.4(a). “Benchmark Replacement” means the sum of: (a) the alternate benchmark rate (which may include Term SOFR) that has been selected by the Administrative Agent and the Borrower giving due consideration to (i) any selection or recommendation of a replacement rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a rate of interest as a replacement to LIBOR for U.S. dollar-denominated syndicated credit facilities and (b) the Benchmark Replacement Adjustment; provided that, if the Benchmark Replacement as so determined would be less than zero, the Benchmark Replacement will be deemed to be zero for the purposes of this Agreement. “Benchmark Replacement Adjustment” means, with respect to any replacement of LIBOR with an Unadjusted Benchmark Replacement for each applicable Interest Period, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of LIBOR with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of LIBOR with the applicable Unadjusted Benchmark Replacement for U.S. dollar denominated syndicated credit facilities at such time. “Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest and other administrative matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement). “Benchmark Replacement Date” means the earlier to occur of the following events with respect to LIBOR: (1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of LIBOR permanently or indefinitely ceases
-6- 744965794 to provide LIBOR; or (2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein. “Benchmark Transition Event” means the occurrence of one or more of the following events with respect to LIBOR: (1) a public statement or publication of information by or on behalf of the administrator of LIBOR announcing that such administrator has ceased or will cease to provide LIBOR, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide LIBOR; (2) a public statement or publication of information by the regulatory supervisor for the administrator of LIBOR, the U.S. Federal Reserve System, an insolvency official with jurisdiction over the administrator for LIBOR, a resolution authority with jurisdiction over the administrator for LIBOR or a court or an entity with similar insolvency or resolution authority over the administrator for LIBOR, which states that the administrator of LIBOR has ceased or will cease to provide LIBOR permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide LIBOR; or (3) a public statement or publication of information by the regulatory supervisor for the administrator of LIBOR announcing that LIBOR is no longer representative. “Benchmark Transition Start Date” means (a) in the case of a Benchmark Transition Event, the earlier of (i) the applicable Benchmark Replacement Date and (ii) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the ninetieth (90th) day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than ninety (90) days after such statement or publication, the date of such statement or publication) and (b) in the case of an Early Opt-in Election, the date specified by the Administrative Agent or the Required Lenders, as applicable, by notice to the Borrower, the Administrative Agent (in the case of such notice by the Required Lenders) and the Lenders. “Benchmark Unavailability Period” means, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to LIBOR and solely to the extent that LIBOR has not been replaced with a Benchmark Replacement, the period (x) beginning at the time that such Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced LIBOR for all purposes hereunder in accordance with Section 3.5(b) and (y) ending at the time that a Benchmark Replacement has replaced LIBOR for all purposes hereunder pursuant to Section 3.5(b). “Beneficial Ownership Certification” means a certification regarding beneficial ownership of the Borrower as required by the Beneficial Ownership Regulation. “Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230. “Bonding Agreement” means, collectively, all contractual arrangements entered into by Borrower or any of its Subsidiaries with providers of surety, bid, appeal, indemnity, performance or payment bonds or other similar obligations. “Borrower” is defined in the introductory paragraph of this Agreement.
-7- 744965794 “Borrowing” means the total of Loans of a single type advanced, continued for an additional Interest Period, or converted from a different type into such type by the Lenders under a Credit on a single date and, in the case of Eurodollar Loans, for a single Interest Period. Borrowings of Loans are made and maintained ratably from each of the Lenders under a Credit according to their Percentages of such Credit. A Borrowing is “advanced” on the day Lenders advance funds comprising such Borrowing to Borrower, is “continued” on the date a new Interest Period for the same type of Loans commences for such Borrowing, and is “converted” when such Borrowing is changed from one type of Loans to the other, all as determined pursuant to Section 2.6. Borrowings of Swing Loans are made by the Swing Line Lender in accordance with the procedures set forth in Section 2.7. “Business Day” means any day (other than a Saturday or Sunday) on which banks are not authorized or required to close in Chicago, Illinois, New York, New York or Houston, Texas. If the applicable Business Day relates to the determination of the LIBOR Index Rate, then Business Day means any day on which banks on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in London, England. “Capital Expenditures” means, with respect to any Person for any period, the aggregate amount of all expenditures (whether paid in cash or accrued as a liability) by such Person during that period for the acquisition or leasing (pursuant to a Capital Lease) of fixed or capital assets or additions to property, plant, or equipment (including replacements, capitalized repairs, and improvements) which should be capitalized on the balance sheet of such Person in accordance with GAAP. “Capital Lease” means any lease of Property which in accordance with GAAP is required to be capitalized on the balance sheet of the lessee. “Capitalized Lease Obligation” means, for any Person, the amount of the liability shown on the balance sheet of such Person in respect of a Capital Lease determined in accordance with GAAP. “Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any preferred stock and limited liability or partnership interests (whether general or limited), but excluding any debt securities convertible into such equity. “CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act and applicable rules and regulations, as amended from time to time. “Cash Collateralize” means to pledge and deposit with or deliver to Administrative Agent, as collateral for L/C Obligations, cash to be held in a Collateral Account, or, if Administrative Agent shall agree in its sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to Administrative Agent, in an amount equal to 103% of the aggregate L/C Obligations (or such greater amount as Administrative Agent may determine is necessary to pay the face amount thereof plus all fees and expenses expected to accrue with respect to all outstanding Letters of Credit through the expiration date of such Letters of Credit).
-8- 744965794 “CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§9601 et seq., and any future amendments. “Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any Law, (b) any change in any Law or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline, interpretation or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued. “Change of Control” means any of (a) the acquisition by any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) at any time of beneficial ownership of 35% or more of the outstanding capital stock or other equity interests of Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully diluted basis, (b) the failure of individuals who are members of the board of directors (or similar governing body) of Borrower on the Closing Date (together with any new or replacement directors whose initial nomination for election was approved by a majority of the directors who were either directors on the Closing Date or previously so approved) to constitute a majority of the board of directors (or similar governing body) of Borrower, or (c) any “Change of Control” (or words of like import), as defined in any agreement or indenture relating to any issue of Indebtedness for Borrowed Money of Borrower or any Subsidiary shall occur. “Closing Date” means the date of this Agreement or such later Business Day upon which each condition described in Section 4.1 shall be satisfied or waived in a manner acceptable to Administrative Agent in its discretion. “Closing Date Acquisition” means the transactions contemplated by the Closing Date Acquisition Agreement. “Closing Date Acquisition Agreement” means that certain Equity Purchase Agreement, dated as of August 13, 2019, between Greg K. Rogers, Philip T. Travis, as trustee of the Lorin L. Rogers 2018 Trust, Kimberlin Rogers 2018 Trust, Gregory K. Rogers 2018 Trust and Mary K. Rogers 2018 Trust, LK Gregory Construction, Inc., Plateau Excavation, Inc., DeWitt Excavation, LLC and the Borrower, as the same may be amended, restated, supplemented, or otherwise modified from time to time pursuant to the terms thereof and hereof. “Closing Date Target” means the “Acquired Companies” as defined in the Closing Date Acquisition Agreement. “Code” means the Internal Revenue Code of 1986, as amended, and any successor statute thereto.
-9- 744965794 “Collateral” means all properties, rights, interests, and privileges from time to time subject to the Liens granted to Administrative Agent, or any security trustee therefor, by the Collateral Documents. “Collateral Account” is defined in Section 8.4(b). “Collateral Documents” means the Security Agreement, any Intercreditor Agreement, and all other security agreements, pledge agreements, assignments, financing statements, control agreements, landlord waivers, collateral access agreements, bailee waivers and other documents as shall from time to time secure or relate to the Obligations, the Hedging Liability, and the Funds Transfer and Deposit Account Liability or any part thereof. “Commitments” means the Revolving Credit Commitments and the Term Loan Commitments. “Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended, and any successor statute thereto. “Credit” means any of the Revolving Credit or the Term Credit. “Credit Event” means the advancing of any Loan, or the issuance of, or extension of the expiration date or increase in the amount of, any Letter of Credit. “Default” means any event or condition the occurrence of which would, with the passage of time or the giving of notice, or both, constitute an Event of Default. “Defaulting Lender” means any Lender that (a) has failed to fund any portion of the Loans, participations in L/C Obligations or participations in Swing Loans required to be funded by it hereunder (herein, a “Defaulted Loan”) within two (2) Business Days of the date required to be funded by it hereunder unless such failure has been cured or such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, in each case unless such failure has been cured, (b) has otherwise failed to pay over to Administrative Agent or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due, unless the subject of a good faith dispute or unless such failure has been cured, (c) has notified the Borrower, the Administrative Agent, the L/C Issuer or the Swing Line Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (d) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or
-10- 744965794 (e) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding or a receiver or conservator has been appointed for such Lender. “Defaulting Lender Excess” means, with respect to any Defaulting Lender, the excess, if any, of such Defaulting Lender’s Percentage of the aggregate outstanding principal amount of Loans of all Lenders (calculated as if all Defaulting Lenders other than such Defaulting Lender had funded all of their respective Defaulted Loans) over the aggregate outstanding principal amount of all Loans of such Defaulting Lender. “Defaulting Lender Period” means, with respect to any Defaulting Lender, the period commencing on the date upon which such Lender first became a Defaulting Lender and ending on the earliest of the following dates: (i) the date on which all Commitments are cancelled or terminated and/or the Obligations are declared or become immediately due and payable and (ii) the date on which (a) such Defaulting Lender is no longer insolvent, the subject of a bankruptcy or insolvency proceeding or, if applicable, under the direction of a receiver or conservator, (b) the Defaulting Lender Excess with respect to such Defaulting Lender shall have been reduced to zero (whether by the funding by such Defaulting Lender of any Defaulted Loans of such Defaulting Lender or otherwise), and (c) such Defaulting Lender shall have delivered to Borrower and Administrative Agent a written reaffirmation of its intention to honor its obligations hereunder with respect to its Commitments. “Designated Disbursement Account” means the account of Borrower maintained with Administrative Agent or its Affiliate and designated in writing to Administrative Agent as Borrower’s Designated Disbursement Account (or such other account as Borrower and Administrative Agent may otherwise agree). “Designated Jurisdiction” means, at any time, a country, region or territory which is itself the subject or target of comprehensive Sanctions. “Disposition” means the sale, lease, conveyance or other disposition of Property, other than sales or other dispositions expressly permitted under Sections 7.4(a), 7.4(b), 7.4(c), 7.4(d), 7.4(e), 7.4(f) or 7.4(g). “Disqualified Institution” means (a) any Person that is a competitor of the Borrower and its Subsidiaries designated in writing by the Borrower to the Administrative Agent from time to time and (b) Affiliates of any such Persons described in clause (a) (other than any such Affiliates that are primarily engaged in making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit or securities in the ordinary course) that are either (x) clearly identifiable as Affiliates of such Persons on the basis of such Affiliate’s name or (y) designated in writing by the Borrower to the Administrative Agent from time to time; provided that, for the avoidance of doubt, any such additional designation shall not apply retroactively to any prior assignment to any Lender permitted hereunder at the time of such assignment. “Domestic Subsidiary” means a Subsidiary that is not a Foreign Subsidiary. “Early Opt-in Election” means the occurrence of: (1) (i) a determination by the Administrative Agent or (ii) a notification by the Required Lenders to the Administrative Agent (with a copy to the Borrower) that the Required Lenders have determined that U.S. dollar-
-11- 744965794 denominated syndicated credit facilities being executed at such time, or that include language similar to that contained in Section 3.5(b), are being executed or amended, as applicable, to incorporate or adopt a new benchmark interest rate to replace LIBOR, and (2) (i) the election by the Administrative Agent or (ii) the election by the Required Lenders to declare that an Early Opt- in Election has occurred and the provision, as applicable, by the Administrative Agent of written notice of such election to the Borrower and the Lenders or by the Required Lenders of written notice of such election to the Administrative Agent. “EBITDA” means, with reference to any period, the sum of: (a) Net Income for such period; plus (b) all amounts deducted in arriving at such Net Income amount (and not added back) for, without duplication: (i) Interest Expense for such period; (ii) federal, state, and local income taxes for such period; (iii) depreciation of fixed assets and amortization of intangible assets for such period; (iv) any fees, costs and expenses related to any investment, Acquisition (including the Closing Date Acquisition), disposition or recapitalization permitted hereunder or the incurrence of indebtedness permitted to be incurred hereunder (including a refinancing thereof) (whether or not successful), provided that the aggregate amount to be added back pursuant to this clause (iv) for any period of four consecutive fiscal quarters shall not exceed 15% of the aggregate EBITDA for such period (determined after giving effect to such increase in EBITDA for such period on account of this clause (iv)); (v) non-cash expenses resulting from any employee benefit or management or director compensation plan or the grant of stock and stock options and other equity and equity-based interests to employees, directors or other service providers of Borrower or any Subsidiary pursuant to a written plan or agreement; (vi) any non-cash losses realized upon the disposition of Property (including abandoned or discontinued operations or product lines); and (vii) any non-cash losses, charges or write-offs in connection with heavy civil contract no. 1409, provided that the aggregate amount to be added back pursuant to this clause (vii) for all periods from and after the fiscal quarter ending September 30, 2019 shall not exceed $7,500,000; minus (c) any non-cash gains realized upon the disposition of Property (including abandoned or discontinued operations or product lines). Notwithstanding anything to the contrary in this Agreement, for the purposes of determining EBITDA for any period that includes the September 30, 2018, December 31, 2018,
-12- 744965794 March 31, 2019 and June 30, 2019 fiscal quarters, EBITDA for such fiscal quarters shall be deemed to be $44,563,000, $27,236,000, $26,861,000 and $38,276,000, respectively, in each case, as may be subject to pro forma adjustments or other adjustments contemplated in Section 1.3. “ECF Percentage” means, as of any date of determination, (a) if Borrower’s Total Leverage Ratio is greater than or equal to 2.50 to 1.00, 50%, (b) if Borrower’s Total Leverage Ratio is greater than or equal to 2.00 to 1.00 but less than 2.50 to 1.00, 25%, and (c) if Borrower’s Total Leverage Ratio is less than 2.00 to 1.00, 0%. “EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time. “EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent. “EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway. “EEA Resolution Authority” means any public administrative authority or any person entrusted with the public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution. “Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, and (d) any other Person (other than a natural person) approved by (i) Administrative Agent, (ii) in the case of any assignment of a Revolving Credit Commitment, the L/C Issuer, and (iii) unless an Event of Default has occurred and is continuing, Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include Borrower or any Guarantor or any of Borrower’s or such Guarantor’s Affiliates or Subsidiaries, any Defaulting Lender or any Affiliate of a Defaulting Lender. “Eligible Line of Business” means any business engaged in as of the date of this Agreement by Borrower or any of its Subsidiaries or any business complementary thereto. “Environmental Claim” means any investigation, notice, violation, demand, action, suit, injunction, judgment, order, consent decree, penalty, fine, lien, proceeding or claim (whether administrative, judicial or private in nature) arising (a) pursuant to, or in connection with an actual or alleged violation of, any Environmental Law, (b) in connection with any Hazardous Material, (c) from any abatement, removal, remedial, corrective or response action in connection with a Hazardous Material, Environmental Law or order of a Governmental Authority under Environmental Law or (d) from any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment. “Environmental Law” means any current or future Legal Requirement pertaining to (a) the protection of health, safety and the indoor or outdoor environment, (b) the conservation,
-13- 744965794 management or use of natural resources and wildlife, (c) the protection or use of surface water or groundwater, (d) the management, manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, Release, threatened Release, abatement, removal, remediation or handling of, or exposure to, any Hazardous Material or (e) pollution (including any Release to air, land, surface water or groundwater), and any amendment, rule, regulation, order or directive issued thereunder. “Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock, but excluding any debt security that is convertible into, or exchangeable for, Capital Stock. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute thereto. “ERISA Affiliate” means (a) any Person subject to ERISA whose employees are treated as employed by the same employer as the employees of the Borrower under Code Section 414(b), (b) any trade or business subject to ERISA whose employees are treated as employed by the same employer as the employees of the Borrower under Code Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412 of the Code, any organization subject to ERISA that is a member of an affiliated service group of which the Borrower is a member under Code Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of the Code, any Person subject to ERISA that is a party to an arrangement with the Borrower and whose employees are aggregated with the employees of the Borrower under Code Section 414(o). “ERISA Event” means (a) any “reportable event,” as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the determination that any Plan is considered an at-risk plan or that any Multiemployer Plan is endangered or is in critical status within the meaning of Sections 430 or 432 of the IRC or Sections 303 or 305 of ERISA, as applicable; (c) the incurrence by the Borrower or any ERISA Affiliate of any liability under Title IV of ERISA, other than for PBGC premiums not yet due; (d) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or to appoint a trustee to administer any Plan or the occurrence of any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan; (e) the appointment of a trustee to administer any Plan; (f) the withdrawal of the Borrower or any ERISA Affiliate from a Plan subject to Section 4063 of ERISA during a plan year in which such entity was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or the cessation of operations by the Borrower or any ERISA Affiliate that would be treated as a withdrawal from a Plan under Section 4062(e) of ERISA; (g) the partial or complete withdrawal by the Borrower or any ERISA Affiliate from any Multiemployer Plan, the receipt by Borrower or any ERISA Affiliate of any notice of any claim for or demand for Withdrawal Liability, or a notification that a Multiemployer Plan is insolvent, or (h) the taking of any action to terminate any Plan or Multiemployer Plan under Section 4041 or 4041A of ERISA. “EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
-14- 744965794 “Eurodollar Loan” means a Loan bearing interest at the rate specified in Section 2.4(b). “Eurodollar Reserve Percentage” means the maximum reserve percentage, expressed as a decimal, at which reserves (including any emergency, marginal, special, and supplemental reserves) are imposed by the Board of Governors of the Federal Reserve System (or any successor) on “eurocurrency liabilities”, as defined in such Board’s Regulation D (or any successor thereto), subject to any amendments of such reserve requirement by such Board or its successor, taking into account any transitional adjustments thereto. For purposes of this definition, the relevant Loans shall be deemed to be “eurocurrency liabilities” as defined in Regulation D without benefit or credit for any prorations, exemptions or offsets under Regulation D. The Eurodollar Reserve Percentage shall be adjusted automatically on and as of the effective date of any change in any such reserve percentage. “Event of Default” means any event or condition identified as such in Section 8.1. “Event of Loss” means, with respect to any Property, any of the following: (a) any loss, destruction or damage of such Property which results in the receipt by any Loan Party or Subsidiary or Project Specific JV of any cash insurance proceeds (other than any such receipt by an Affiliated Entity or Project Specific JV constituting an Excluded Subsidiary, except to the extent such proceeds are distributed to the Borrower or any Subsidiary (other than an Affiliated Entity)) or (b) any condemnation, seizure, or taking, by exercise of the power of eminent domain or otherwise, of such Property, or confiscation of such Property or the requisition of the use of such Property which results in the receipt by any Loan Party or Subsidiary of a condemnation award payable by reason thereof (other than any such receipt by an Affiliated Entity or Project Specific JV constituting an Excluded Subsidiary, except to the extent such proceeds are distributed to the Borrower or any Subsidiary (other than an Affiliated Entity)). “Excess Cash Flow” means, with respect to any period, the amount (if any) by which (a) EBITDA (but determined for such purposes without giving effect to any extraordinary gains or losses) during such period exceeds (b) the sum (without duplication) of (i) Interest Expense payable in cash during such period, plus (ii) federal, state and local income taxes payable in cash during such period by the Borrower and its Subsidiaries, including any such payments made by the Borrower or any Subsidiary with the proceeds of distributions from any Affiliated Entity or Project Specific JV and attributable to the taxable income of such Affiliated Entity or Project Specific JV or any of its Subsidiaries, plus (iii) the aggregate amount of payments required to be made, and actually made, by Borrower and its Subsidiaries during such period in respect of all principal on all Indebtedness for Borrowed Money (whether at maturity, as a result of mandatory sinking fund redemption, mandatory prepayment, acceleration or otherwise, but excluding payments made under the Revolving Credit and excluding prepayments of the Term Loans made under Section 2.9), plus (iv) the aggregate amount of Capital Expenditures made by Borrower and its Subsidiaries during such period to the extent permitted by this Agreement and not financed with proceeds of Indebtedness for Borrowed Money (but excluding credit extended under the Revolving Credit), plus (v) the aggregate amount of payments made in cash by the Borrower and its Subsidiaries during such period in respect of Permitted Acquisitions, plus (vi) cash losses, charges, expenses, costs and fees deducted in the calculation of Net Income and added back in the calculation of EBITDA for such period, plus (vii) the aggregate amount of Restricted Payments made by Borrower during such period and permitted under Section 7.6 plus (viii) any increases in
-15- 744965794 non-debt, non-cash working capital of Borrower and its Subsidiaries for such period, minus (ix) any decreases in non-debt, non-cash working capital of Borrower and its Subsidiaries for such period. “Excluded Account” means (i) payroll accounts, (ii) petty cash accounts, (iii) each account which is used solely as an escrow account, fiduciary account or trust account for the benefit of third parties, (iv) accounts used solely to cash collateralize letter of credit obligations, (v) accounts used solely as cash management accounts for Project Specific JVs to fund the initial capitalization of project costs or the ongoing operational costs of the project for which such Project Specific JV was created or formed, and (vi) withholding tax accounts; provided, that aggregate amount on deposit in any Excluded Accounts pursuant to clauses (ii), (iii) and (iv) shall not at any time exceed $10,000,000. “Excluded Subsidiary” means (a) any Foreign Subsidiary, and (b) any Project Specific JV or Domestic Subsidiary (including, as of the Closing Date, (i) Myers & Sons Construction, L.P., a California limited partnership, (ii) Myers & Sons Construction, LLC, a California limited liability company, (iii) Road and Highway Builders, LLC, a Nevada limited liability company, (iv) Road and Highway Builders, Inc., a Nevada corporation, (v) Sterling Hawaii Asphalt, LLC, a Hawaii limited liability company (clauses (i) - (v) being collectively, the “Affiliated Entities”)) solely to the extent that such Project Specific JV or Domestic Subsidiary is prohibited by the Organizational Documents of such Person in effect at the time such Subsidiary is acquired or created after the Closing Date or by requirement of Law from guaranteeing the Obligations; provided, in each case, that such contractual obligation was not entered into in contemplation of permitting such Domestic Subsidiary not to become a Guarantor and this clause (b) shall not be applicable if consent has been obtained to provide such guarantee and for so long as such contractual obligation or replacement or renewal thereof is in effect. “Excluded Swap Obligation” means any Swap Obligation of a Loan Party (other than the direct counterparty of such Swap Obligation) if, and to the extent that, all or a portion of the Guaranty of such Loan Party of, or the grant by such Loan Party of a security interest to secure, such Swap Obligation (or any Guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Loan Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act at the time the Guaranty of such Loan Party or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guaranty or security interest is or becomes illegal. “Federal Funds Rate” means the fluctuating interest rate per annum described in part (i) of clause (b) of the definition of Base Rate. “Federal Reserve Bank of New York’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.
-16- 744965794 “Fixed Charge Coverage Ratio” means, with reference to any period of four consecutive fiscal quarters, the ratio of (a) (i) EBITDA for the four fiscal quarter period then ended, less (ii) unfinanced Capital Expenditures made by Borrower and its Subsidiaries during such period (but excluding any Capital Expenditures made with Net Cash Proceeds from any Disposition or Event of Loss that are reinvested pursuant to Section 2.9(b)(i) or Capital Expenditures constituting any portion of the purchase price of a Permitted Acquisition which is accounted for as a Capital Expenditure), to (b) the sum of (i) Interest Expense paid in cash during such period, (ii) scheduled payments of principal in respect of Indebtedness for Borrowed Money made during such period, (iii) all federal, state, and local income taxes paid in cash by Borrower and its Subsidiaries during such period and (iv) the aggregate amount of Restricted Payments during such period. “Foreign Subsidiary” means each Subsidiary which (a) is organized under the laws of a jurisdiction other than the United States of America or any state thereof or the District of Columbia, (b) conducts substantially all of its business outside of the United States of America, and (c) has substantially all of its assets outside of the United States of America. “Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business. “Funds Transfer and Deposit Account Liability” means the liability of Borrower or any Subsidiary owing to any of the Lenders, or any Affiliates of such Lenders (or any Person that was a Lender or an Affiliate of a Lender at the time of the entering into such agreement or arrangement), arising out of (a) the execution or processing of electronic transfers of funds by automatic clearing house transfer, wire transfer or otherwise to or from deposit accounts of Borrower and/or any Subsidiary now or hereafter maintained with any of the Lenders or their Affiliates (or any Person that was a Lender or an Affiliate of a Lender at the time of the entering into such agreement or arrangement), (b) the acceptance for deposit or the honoring for payment of any check, draft or other item with respect to any such deposit accounts, and (c) any other deposit, disbursement, and cash management services afforded to Borrower or any Subsidiary by any of such Lenders or their Affiliates (or any Person that was a Lender or an Affiliate of a Lender at the time of the entering into such agreement or arrangement), and (d) any debit cards and credit cards maintained with any Lender or any of its Affiliates (or any Person that was a Lender or an Affiliate of a Lender at the time of the entering into such agreement or arrangement). “GAAP” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination. “Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to
-17- 744965794 government (including any supra-national bodies such as the European Union or the European Central Bank). “Guarantor” and “Guarantors” each is defined in Section 6.12(a). “Guaranty” and “Guaranties” each is defined in Section 6.12(a). “Hazardous Material” means any substance, chemical, compound, product, solid, gas, liquid, waste, byproduct, pollutant, contaminant or material which is hazardous or toxic, and includes (a) asbestos, polychlorinated biphenyls and petroleum (including crude oil or any fraction thereof) and (b) any material classified or regulated as “hazardous” or “toxic” or words of like import pursuant to an Environmental Law. “Hazardous Material Activity” means any activity, event or occurrence involving a Hazardous Material, including the manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, Release, threatened Release, abatement, removal, remediation, handling of or corrective or response action to any Hazardous Material. “Hedging Agreement” means any agreement with respect to any Hedging Liability. “Hedging Liability” means the liability of Borrower or any Subsidiary to any of the Lenders, or any Affiliates of such Lenders (or any Person that was a Lender or an Affiliate of a Lender at the time of the entering into such agreement or arrangement), in respect of any interest rate, foreign currency, and/or commodity swap, exchange, cap, collar, floor, forward, future or option agreement, or any other similar interest rate, currency or commodity hedging arrangement, as Borrower or such Subsidiary, as the case may be, may from time to time enter into with any one or more of the Lenders party to this Agreement or their Affiliates (or any Person that was a Lender or an Affiliate of a Lender at the time of the entering into such agreement or arrangement); provided, that Hedging Liability shall not include Excluded Swap Obligations. “Hostile Acquisition” means the acquisition of the capital stock or other equity interests of a Person through a tender offer or similar solicitation of the owners of such capital stock or other equity interests which has not been approved (prior to such acquisition) by resolutions of the Board of Directors of such Person or by similar action if such Person is not a corporation, or as to which such approval has been withdrawn. “Indebtedness for Borrowed Money” means for any Person (without duplication) (a) all indebtedness created, assumed or incurred in any manner by such Person representing money borrowed (including by the issuance of debt securities), (b) all indebtedness for the deferred purchase price of property or services (other than trade accounts payable arising in the ordinary course of business), (c) all indebtedness secured by any Lien upon Property of such Person, whether or not such Person has assumed or become liable for the payment of such indebtedness, but limited to the lesser of (1) the fair market value of the Property subject to such Lien and (2) the aggregate amount of the obligations so secured, (d) all Capitalized Lease Obligations of such Person, and (e) all obligations of such Person on or with respect to letters of credit, bankers’ acceptances and other extensions of credit whether or not representing obligations for borrowed money.
-18- 744965794 “Intercreditor Agreement” means any intercreditor agreement in form and substance reasonably satisfactory to the Administrative Agent entered into from time to time between the Administrative Agent and any counterparty under any Bonding Agreements. “Interest Expense” means, with reference to any period, the sum of all interest charges (including imputed interest charges with respect to Capitalized Lease Obligations and all amortization of debt discount and expense) of Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP. “Interest Payment Date” means (a) with respect to any Eurodollar Loan, the last day of each Interest Period with respect to such Eurodollar Loan and on the maturity date and, if the applicable Interest Period is longer than (3) three months, on each day occurring every three (3) months after the commencement of such Interest Period, (b) with respect to any Base Rate Loan (other than Swing Loans), the last day of every calendar quarter) and on the maturity date, and (c) as to any Swing Loan, (i) bearing interest by reference to the Base Rate, the last day of every calendar month, and on the maturity date and (ii) bearing interest by reference to the Swing Line Lender’s Quoted Rate, the last day of the Interest Period with respect to such Swing Loan, and on the maturity date. “Interest Period” means the period commencing on the date a Borrowing of Eurodollar Loans or Swing Loans (bearing interest at the Swing Line Lender’s Quoted Rate) is advanced, continued, or created by conversion and ending (a) in the case of Eurodollar Loans, 1, 2, 3, 6 or, if available to each applicable Lender, 12 months thereafter and (b) in the case of Swing Loans bearing interest at the Swing Line Lender’s Quoted Rate, on the date one (1) to ten (10) Business Days thereafter as mutually agreed by Borrower and the Swing Line Lender, provided, that: i. no Interest Period shall extend beyond the final maturity date of the relevant Loans; ii. no Interest Period with respect to any portion of the Term Loans shall extend beyond a date on which Borrower is required to make a scheduled payment of principal on the Term Loans unless the sum of (a) the aggregate principal amount of Term Loans that are Base Rate Loans plus (b) the aggregate principal amount of Term Loans that are Eurodollar Loans with Interest Periods expiring on or before such date equals or exceeds the principal amount to be paid on the Term Loans on such payment date; iii. whenever the last day of any Interest Period would otherwise be a day that is not a Business Day, the last day of such Interest Period shall be extended to the next succeeding Business Day, provided that, if such extension would cause the last day of an Interest Period for a Borrowing of Eurodollar Loans to occur in the following calendar month, the last day of such Interest Period shall be the immediately preceding Business Day; and iv. for purposes of determining an Interest Period for a Borrowing of Eurodollar Loans, a month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month; provided, that if there is no numerically corresponding day in the month in which such an Interest Period is
-19- 744965794 to end or if such an Interest Period begins on the last Business Day of a calendar month, then such Interest Period shall end on the last Business Day of the calendar month in which such Interest Period is to end. “Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law. “L/C Issuer” means BMO Harris Bank N.A. or any other Lender that, at the request of Borrower and with the consent of the Administrative Agent (such consent not to be unreasonably withheld), agrees to issue Letters of Credit, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.3(h). “L/C Obligations” means the aggregate undrawn face amounts of all outstanding Letters of Credit and all unpaid Reimbursement Obligations. “L/C Sublimit” means $75,000,000, as reduced pursuant to the terms hereof. “Lead Arrangers” means BMO Capital Markets Corp. and BofA Securities, Inc., in their capacities as joint lead arrangers and joint book runners hereunder. “Left Lead Arranger” means BMO Capital Markets Corp., in its capacity as left lead arranger and book runner hereunder. “Legal Requirement” means any treaty, convention, statute, law, regulation, ordinance, license, permit, governmental approval, injunction, judgment, order, consent decree or other requirement of any Governmental Authority, whether federal, state, or local. “Lenders” means and includes BMO Harris Bank N.A. and the other financial institutions from time to time party to this Agreement, including each assignee Lender pursuant to Section 11.10 and, unless the context otherwise requires, the Swing Line Lender. “Lending Office” is defined in Section 3.7. “Letter of Credit” is defined in Section 2.3(a). “LIBOR” means, for an Interest Period for a Borrowing of Eurodollar Loans, (a) the LIBOR Index Rate for such Interest Period, if such rate is available, and (b) if the LIBOR Index Rate cannot be determined, the arithmetic average of the rates of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) at which deposits in U.S. Dollars in immediately available funds are offered to Administrative Agent at 11:00 a.m. (London, England time) two (2) Business Days before the beginning of such Interest Period by three (3) or more major banks in the interbank eurodollar market selected by Administrative Agent for delivery on the first day of and for a period equal to such Interest Period and in an amount equal or comparable to the principal
-20- 744965794 amount of the Eurodollar Loan scheduled to be made as part of such Borrowing, provided that in no event shall “LIBOR” be less than 0.00%. “LIBOR Index Rate” means, for any Interest Period, the rate per annum (rounded upwards, if necessary, to the next higher one hundred thousandth of a percentage point) for deposits in U.S. Dollars for a period equal to such Interest Period, as reported on the applicable Bloomberg screen page (or such other commercially available source providing such quotations as may be designated by Administrative Agent from time to time) as of 11:00 a.m. (London, England time) on the day two (2) Business Days before the commencement of such Interest Period. “Lien” means any mortgage, lien, security interest, pledge, charge or encumbrance of any kind in respect of any Property, including the interests of a vendor or lessor under any conditional sale, Capital Lease or other title retention arrangement. “Liquidity” means, as of any date of determination, the sum of (i) the amount of unrestricted cash of Borrower and its Subsidiaries on such date and unrestricted investments of Borrower and its Subsidiaries permitted under Section 7.3(a), (b), (c), (d) and (e) on such date and (ii) the Unused Revolving Credit Commitments. For purposes of determining clause (ii) above, the Unused Revolving Credit Commitments shall for purposes of this definition exclude any amounts that would cause the Borrower to not be in compliance with the Total Leverage Ratio set forth in Section 7.12 hereof, calculated on a pro forma basis as if such amounts were drawn. “Loan” means any Revolving Loan, Swing Loan or Term Loan, whether outstanding as a Base Rate Loan or Eurodollar Loan or otherwise, each of which is a “type” of Loan hereunder. “Loan Documents” means this Agreement, the Notes (if any), the Applications, the Collateral Documents, the Guaranties, and each other instrument or document to be delivered hereunder or thereunder or otherwise in connection therewith. “Loan Parties” means Borrower and each Guarantor, collectively. “Material Adverse Effect” means (a) a material adverse change in, or material adverse effect upon, the operations, business, Property, condition (financial or otherwise) or prospects of Borrower and its Subsidiaries taken as a whole, (b) a material impairment of the ability of the Loan Parties taken as a whole to perform their material obligations under any Loan Document or (c) a material adverse effect upon (i) the legality, validity, binding effect or enforceability against Borrower or any Subsidiary of any Loan Document or the rights and remedies of Administrative Agent and the Lenders thereunder or (ii) the perfection or priority of any Lien granted under any Collateral Document. “Moody’s” means Moody’s Investors Service, Inc. “Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate contributes, is obligated to contribute, or has any liability (contingent or otherwise). “Net Cash Proceeds” means, as applicable, (a) with respect to any Disposition by a Person, cash and cash equivalent proceeds received by or for such Person’s account, net of (i) attorneys’
-21- 744965794 fees, accountants’ fees, investment banking fees, amounts required to be applied to the repayment of indebtedness secured by a Lien expressly permitted hereunder on any asset that is the subject of such Disposition and other customary and reasonable costs, fees and expenses actually incurred in connection with such Disposition and (ii) sale, use or other transactional taxes paid or payable by such Person as a result of such Disposition, (b) with respect to any Event of Loss of a Person, cash and cash equivalent proceeds received by or for such Person’s account (whether as a result of payments made under any applicable insurance policy therefor or in connection with condemnation proceedings or otherwise), net of attorneys’ fees, accountants’ fees, amounts required to be applied to the repayment of indebtedness secured by a Lien expressly permitted hereunder on any asset that is the subject of such Disposition and other customary and reasonable costs, fees and expenses actually incurred in connection with the collection of such proceeds, awards or other payments, and (c) with respect to any offering of equity securities of a Person or the issuance of any Indebtedness for Borrowed Money by a Person, cash and cash equivalent proceeds received by or for such Person’s account, net of the legal, underwriting, investment banking and accountants’ fees, underwriting discounts and commissions and other customary and reasonable costs, fees and expenses actually incurred in connection therewith. “Net Income” means, with reference to any period, the net income (or net loss) of Borrower and its Subsidiaries for such period computed on a consolidated basis in accordance with GAAP, which shall be set forth in the Borrower’s publicly filed financial statements as the “Net Income” or “Net Loss”; provided that there shall be excluded from Net Income (a) the net income (or net loss) of any Person accrued prior to the date it becomes a Subsidiary of, or has merged into or consolidated with, Borrower or another Subsidiary, (b) the net income (or net loss) of any Affiliated Entity or any other Subsidiary (other than a Project Specific JV) that is not a Loan Party to the extent that such Person has discontinued the payment of dividends or other distributions, or decreased the amount of such dividends or other distributions in a manner not consistent with historical practices by such Person (or shall fail to pay such dividends or other distributions on at least an annual basis), or failed to pay such dividends or other distributions to the extent required under such Person’s Organizational Documents, except to the extent of the amount of dividends or other distributions actually paid to Borrower or any other Loan Party by such Person during such period and (c) the forgiveness of any portion of any SBA PPP Loan; provided further that the amount of any such net income (or loss) attributable to any such Person that is not wholly owned (directly or indirectly) by the Borrower shall be limited to the percentage of the total Equity Interests of such Person owned (directly or indirectly) by the Borrower. “Net Worth” means, for any Person and at any time that same is to be determined, total shareholder’s equity (including capital stock, additional paid-in capital, and retained earnings after deducting treasury stock) which would appear on the balance sheet of such Person in accordance with GAAP. “Note” and “Notes” each is defined in Section 2.11. “Obligations” means all obligations of Borrower to pay principal and interest on the Loans, all Reimbursement Obligations owing under the Applications, all fees and charges payable hereunder, and all other payment obligations of Borrower or any of its Subsidiaries arising under or in relation to any Loan Document, and all Funds Transfer and Deposit Account Liability and Hedging Liability, in each case whether now existing or hereafter arising, due or to become due,
-22- 744965794 direct or indirect, absolute or contingent, and howsoever evidenced, held or acquired; provided, that Obligations shall not include Excluded Swap Obligations. “OCM Warrants” means the (i) warrant dated April 3, 2017 bearing certificate no. W-001 issued by Borrower to OCM Sterling NE Holdings, LLC to purchase certain capital stock of the Borrower, and (ii) warrant dated April 3, 2017 bearing certificate no. W-002 issued by Borrower to OCM Sterling E Holdings, LLC to purchase certain capital stock of the Borrower, each as amended, restated, amended and restated, modified or supplemented from time to time. “OFAC” means the United States Department of Treasury Office of Foreign Assets Control. “OFAC SDN List” means the list of the Specially Designated Nationals and Blocked Persons maintained by OFAC. “Organizational Documents” means, with respect to any Person (other than an individual), such Person’s Articles or Certificate of Incorporation, operating agreement or equivalent formation documents, such Person’s bylaws, regulations, trust agreement or equivalent governing documents and any similar organizational documents of such Person. “Participating Interest” is defined in Section 2.3(e). “Participating Lender” is defined in Section 2.3(e). “Patriot Act” is defined in Section 11.23. “PBGC” means the Pension Benefit Guaranty Corporation or any Person succeeding to any or all of its functions under ERISA. “Percentage” means for any Lender its Revolver Percentage or, Term Loan Percentage, as applicable; and where the term “Percentage” is applied on an aggregate basis (including Section 9.6), such aggregate percentage shall be calculated by aggregating the separate components of the Revolver Percentage and Term Loan Percentage, and expressing such components on a single percentage basis. “Permitted Acquisition” means (x) the Third Amendment Acquisitions and (y) any other Acquisition with respect to which all of the following conditions shall have been satisfied: (a) the Acquired Business is in an Eligible Line of Business and has its primary operations within the United States of America or Canada; (b) the Acquisition shall not be a Hostile Acquisition; (c) the financial statements of the Acquired Business shall have been audited by a nationally recognized accounting firm or such financial statements shall have undergone review of a scope satisfactory to Administrative Agent;
-23- 744965794 (d) the Total Consideration for the Acquired Business (other than in the case of the Third Amendment Acquisitions) shall not exceed $150,000,000; (e) after giving effect to the Acquisition and any Credit Event in connection therewith, no Default or Event of Default shall exist; (f) the Acquired Business has positive EBITDA for the immediately preceding four- quarter period; (g) Borrower shall have delivered to Administrative Agent, at least five (5) Business Days prior to such Acquisition, or such shorter period as Administrative Agent may consent to in its sole discretion, (i) written notice of such Acquisition, which notice shall be accompanied by (i) current drafts of the applicable acquisition documents (and final copies thereof as and when executed) and (ii) a due diligence package reasonably requested by Administrative Agent, which package shall include the following with regard to the Acquisition in the case of an Acquired Business: (A) a pro forma balance sheet (after giving effect to such Acquisition) for Borrower and its Subsidiaries; (B) pro forma financial projections (after giving effect to such Acquisition) for Borrower and its Subsidiaries for the greater of (x) the twelve (12) month period following such Acquisition and (y) the later of the Term Loan Maturity Date or Revolving Credit Termination Date then in effect; (C) historical financial statements of the Person to be (or whose assets are to be) acquired for the three (3) fiscal years prior to such Acquisition (or for such shorter period that financial statements have been made available to Borrower), together with financial statements of such Person for the most recent fiscal quarter and the fiscal year to date period for which financial statements are available; and (D) solely for any Permitted Acquisition for a Total Consideration equal to or greater than $50,000,000, a quality of earnings report or audit to the extent one is prepared, and in any event with respect to the quality of earnings report or similar report from a nationally recognized accounting firm (or another third party firm reasonably acceptable to the Administrative Agent); (h) Borrower shall have delivered to Administrative Agent a certificate of a Responsible Officer (i) demonstrating, to the satisfaction of Administrative Agent, on a pro forma basis as of the most recently completed calendar quarter for which financial statements have been prepared and finalized by Borrower (and attaching the relevant financial statements), compliance with clause (i) below and (ii) certifying that all requirements for a Permitted Acquisition will be satisfied prior to the closing of such Acquisition; (i) both before and after giving effect to such Acquisition and all debt and other liabilities (including earnouts) to be incurred in connection therewith, (i) Borrower shall be in compliance with Section 7.12 on a pro forma basis, (ii) the (A) Total Leverage Ratio shall not on a pro forma basis exceed the lesser of (1) 3.00 to 1.00 and (2) 0.25 to 1.00 less than the applicable covenant level at such time in Section 7.12(a) and (B) Senior Secured Leverage Ratio shall not on a pro forma basis exceed 2.50 to 1.00 and (y) Liquidity shall be at least $40,000,000; (j) Such Acquisition shall be made by Borrower or a Guarantor and structured as (i) an asset acquisition of all or substantially all of the assets of the applicable target (or all or substantially all of a line or line of business of target), (ii) a merger of a target into Borrower or a
-24- 744965794 Guarantor, with Borrower or such Guarantor as the surviving entity, or (iii) a purchase of all or substantially all of the capital stock of the applicable target; and (k) if a new Subsidiary is formed or acquired as a result of or in connection with the Acquisition, Borrower shall have complied with the requirements of Section 6.12 in connection therewith. “Permitted Encumbrances” is defined in Section 7.2. “Permitted Refinancing Indebtedness” means, with respect to any indebtedness, any extension, refinancing, modification, amendment or restatement of such indebtedness; provided that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the indebtedness so extended, refinanced, modified, amended or restated except by an amount equal to unpaid accrued interest and premium thereon plus other reasonable amounts paid, and fees and expenses reasonably incurred, in connection with such extension, refinancing, modification, amendment or restatement, (b) such extension, refinancing, modification, amendment or restatement has a final maturity date equal to or later than the final maturity date of, and has a weighted average life to maturity equal to or greater than the weighted average life to maturity of, the indebtedness being extended, refinanced, modified, amended or restated, (c) at the time thereof, no Default or Event of Default shall have occurred and be continuing, (d) to the extent such indebtedness being so extended, refinanced, modified, amended or restated is secured by a Lien, the Lien securing such indebtedness as extended, refinanced, modified, amended or restated shall not be senior in priority to the Lien securing the Indebtedness being extended, refinanced, modified, amended or restated or attach to any additional property, (e) if such indebtedness being extended, refinanced, modified, amended or restated is Subordinated Debt, such extension, refinancing, modification, amendment or restatement is Subordinated Debt on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being so extended, refinanced, modified, amended or restated, (f) the terms and conditions (excluding as to interest rate and redemption premium) of any such extended, refinanced, modified, amended or restated indebtedness, taken as a whole, are not materially less favorable to the Loan Parties or the Lenders than the terms and conditions of the Indebtedness being extended, refinanced, modified, amended or restated and (g) such extension, refinancing, modification, amendment or restatement is incurred by a Person who is the obligor of the indebtedness being so extended, refinanced, modified, amended or restated. “Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization or any other entity or organization, including a government or agency or political subdivision thereof. “Plan” means any employee pension benefit plan as defined in Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or the minimum funding standards under Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
-25- 744965794 “Premises” means the real property owned or leased by Borrower or any Subsidiary, including the real property and improvements thereon owned by Borrower or any Subsidiary subject to the Lien of any of the Collateral Documents. “Project Specific JVs” shall mean any project-specific joint ventures, whether created through a contractual arrangement or the ownership of Equity Interests, by a Loan Party or any of its Subsidiaries, including any such project-specific joint ventures described in the Borrower’s filings with the Securities and Exchange Commission pursuant to which a partner of such Project Specific JV acts as a sponsor or manager but may not hold Equity Interests in such Project Specific JV. “Property” means, as to any Person, all types of real, personal, tangible, intangible or mixed property owned by such Person whether or not included in the most recent balance sheet of such Person and its subsidiaries under GAAP. “Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Loan Party that has total assets exceeding $10,000,000 at the time the relevant Guaranty or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act. “RCRA” means the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq., and any future amendments. “Reimbursement Obligation” is defined in Section 2.3(c). “Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates. “Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, migration, dumping, or disposing into the indoor or outdoor environment, including the abandonment or discarding of barrels, drums, containers, tanks or other receptacles containing or previously containing any Hazardous Material. “Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto. “Required Lenders” means, as of the date of determination thereof, at least two Lenders whose combined outstanding Loans and interests in Letters of Credit and Unused Revolving Credit Commitments constitute more than 50% of the sum of the total outstanding Loans, interests in Letters of Credit, and Unused Revolving Credit Commitments of the Lenders. “Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
-26- 744965794 “Responsible Officer” shall mean the chief executive officer, president, vice president, chief financial officer, treasurer, controller or comptroller or other similar officer of the Borrower, but in any event, with respect to financial matters, the chief financial officer, treasurer, controller, comptroller, vice president finance or other similar officer of the Borrower. “Revolver Percentage” means, for each Lender, the percentage of the Revolving Credit Commitments represented by such Lender’s Revolving Credit Commitment or, if the Revolving Credit Commitments have been terminated, the percentage held by such Lender (including through participation interests in Reimbursement Obligations) of the aggregate principal amount of all Revolving Loans and L/C Obligations then outstanding. “Revolving Credit” means the credit facility for making Revolving Loans and Swing Loans and issuing Letters of Credit described in Sections 2.2, 2.3 and 2.7. “Revolving Credit Commitment” means, as to any Lender, the obligation of such Lender to make Revolving Loans and to participate in Swing Loans and Letters of Credit issued for the account of Borrower hereunder in an aggregate principal or face amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 1 attached hereto and made a part hereof, as the same may be reduced or modified at any time or from time to time pursuant to the terms hereof. Borrower and the Lenders acknowledge and agree that the Revolving Credit Commitments of the Lenders aggregate $75,000,000 on the date hereof. “Revolving Credit Termination Date” means the fifth anniversary of the Closing Date, or such earlier date on which the Revolving Credit Commitments are terminated in whole pursuant to Section 2.15, 8.2 or 8.3. “Revolving Loan” is defined in Section 2.2 and, as so defined, includes a Base Rate Loan or a Eurodollar Loan, each of which is a “type” of Revolving Loan hereunder. “Revolving Note” is defined in Section 2.11. “S&P” means Standard & Poor’s Ratings Services Group, a division of The McGraw Hill Companies, Inc. “Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC (including the OFAC SDN List), the United States Department of State or any other relevant sanctions authority, (b) any Person located, organized or resident in a Designated Jurisdiction or (c) any Person owned or controlled by any such Person or Persons described in clauses (a) or (b) above. “Sanctions” means all economic or financial sanctions, sectoral sanctions, secondary sanctions or trade embargoes imposed, administered or enforced from time to time by the United States government (including those administered by OFAC or the United States Department of State), or any other relevant sanctions authority with jurisdiction over Borrower, any Guarantor or any of their respective Subsidiaries or Affiliates or any other party to this Agreement. “SBA PPP Loans” means loans incurred by certain Subsidiaries of the Borrower under 15 U.S.C. 636(a)(36) (as added to the Small Business Act by Section 11.02 of the CARES Act).
-27- 744965794 “SBA PPP Loan Date” means the date on which the applicable Subsidiary of the Borrower receives the proceeds of the applicable SBA PPP Loan. “Secured Parties” means (a) Administrative Agent, (b) each Lender (including the Swing Line Lender), (c) the L/C Issuer, (d) each Affiliate of a Lender (or any Person that was a Lender or an Affiliate of a Lender at the time of the entering into such agreement or arrangement) to which any Loan Party is obligated in respect of Hedging Liability and/or Funds Transfer and Deposit Account Liability, and (e) each Related Party entitled to indemnification under Section 11.13. “Security Agreement” means that certain Pledge and Security Agreement dated the date of this Agreement among Borrower and the Guarantors and Administrative Agent, in the form attached hereto as Exhibit K, as the same may be amended, modified, supplemented or restated from time to time. “Seller Note” means that certain Subordinated Seller Note, dated as of the date hereof, by Borrower in favor of the holder thereof in the form attached as Exhibit B to the Closing Date Acquisition Agreement, as in effect on the date hereof, the obligations of Borrower under which shall constitute Subordinated Debt. “Senior Secured Funded Debt” means, at any time the same is to be determined, the portion of Total Funded Debt outstanding at the time which is secured by a Lien on any assets of the Borrower or any of its Subsidiaries. “Senior Secured Leverage Ratio” means, as of the last day of any fiscal quarter of Borrower, the ratio of Senior Secured Funded Debt as of the last day of such fiscal quarter to EBITDA of Borrower and its Subsidiaries for the period of four fiscal quarters then ended. “Small Business Act” means the Small Business Act (15 U.S. Code Chapter 14A – Aide to Small Business). “SOFR” with respect to any day means the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark, (or a successor administrator) on the Federal Reserve Bank of New York’s Website. “Specified Acquisition Agreement Representations” means such of the representations made by, or with respect to, the Closing Date Target and its Subsidiaries in the Closing Date Acquisition Agreement (as in effect on the date of execution thereof) as are material to the interests of the Lenders, but only to the extent that the Borrower or any of its Subsidiaries have the right to terminate their obligations under the Closing Date Acquisition Agreement as a result of a breach of such representations in such Closing Date Acquisition Agreement or the failure of which representation to be true results in the failure of a condition precedent to the Borrower’s (or any of its Subsidiaries’) obligations to consummate the Closing Date Acquisition in accordance with the Closing Date Acquisition Agreement to be satisfied. “Subordinated Debt” means Indebtedness for Borrowed Money which is subordinated in right of payment to the prior payment of the Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability pursuant to subordination provisions approved in writing by Administrative Agent and is otherwise pursuant to documentation that is, which is in an amount
-28- 744965794 that is, and which contains interest rates, payment terms, maturities, amortization schedules, covenants, defaults, remedies and other material terms that are, in each case, in form and substance satisfactory to Administrative Agent. “Subsidiary” means, (i) as to any particular parent corporation or organization, any other corporation or organization more than 50% of the outstanding Voting Stock of which is at the time directly or indirectly owned by such parent corporation or organization or by any one or more other entities which are themselves subsidiaries of such parent corporation or organization, and (ii) any Person, whether majority- or minority-owned, required by GAAP to be consolidated in the financial reporting of Borrower or any of its Subsidiaries. Unless otherwise expressly noted herein, the term “Subsidiary” means a Subsidiary of Borrower or of any of its direct or indirect Subsidiaries and shall include, for the avoidance of doubt, the Affiliated Entities and the Project Specific JVs. “Swap Obligation” means, with respect to any Loan Party, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act. “Swing Line Lender” means BMO Harris Bank N.A., acting in its capacity as the Lender of Swing Loans hereunder, or any successor Lender acting in such capacity appointed pursuant to Section 11.10. “Swing Line Lender’s Quoted Rate” is defined in Section 2.7(c). “Swing Line Sublimit” means $15,000,000, as reduced pursuant to the terms hereof. “Swing Loan” and “Swing Loans” each is defined in Section 2.7. “Swing Note” is defined in Section 2.11. “Tealstone Acquisition Agreement” means that certain Stock Purchase Agreement dated as of March 8, 2017 among Borrower, the sellers identified on Exhibit A therein and the Sellers’ Representative (as defined therein), providing for the acquisition of all of the issued and outstanding shares of common stock of each of Tealstone Residential Concrete, Inc., a Texas corporation, and Tealstone Commercial, Inc., a Texas corporation. “Tealstone Deferred Payments” mean the “Deferred Payments” as defined in the Tealstone Acquisition Agreement. “Tealstone Seller Notes” mean the “Promissory Notes” as defined in the Tealstone Acquisition Agreement. “Term A-1 Loan” is defined in Section 2.1. “Term A-1 Loan Commitment” means, as to any Lender, the obligation of such Lender to make its Term A-1 Loan on the Closing Date, which such Term A-1 Loan Commitments expired on the Closing Date immediately following the funding of the Term A-1 Loans.
-29- 744965794 “Term A-1 Loan Percentage” means, for each Lender, the percentage of the Term A-1 Loan Commitments represented by such Lender’s Term A-1 Loan Commitment or, if the Term A- 1 Loan Commitments have been terminated or have expired, the percentage held by such Lender of the aggregate principal amount of all Term A-1 Loans then outstanding. “Term A-2 Loan” is defined in Section 2.1. “Term A-2 Loan Commitment” means, as to any Lender, the obligation of such Lender to make its Term A-2 Loan on the Term A-2 Loan Funding Date in the principal amount not to exceed the amount set forth opposite such Lender’s name on Schedule 1 attached hereto and made a part hereof. Borrower and the Lenders acknowledge and agree that the Term A-2 Loan Commitments of the Lenders aggregate $140,000,000 on the Third Amendment Effective Date. “Term A-2 Loan Commitment Termination Date” means, the earlier of (a) the Term A-2 Loan Funding Date and (b) December 31, 2021. “Term A-2 Loan Funding Date” has the meaning ascribed to such term in the Third Amendment. “Term A-2 Loan Percentage” means, for each Lender, the percentage of the Term A-2 Loan Commitments represented by such Lender’s Term A-2 Loan Commitment or, if the Term A- 2 Loan Commitments have been terminated or have expired, the percentage held by such Lender of the aggregate principal amount of all Term A-2 Loans then outstanding. “Term Credit” means the credit facility for the Term Loans described in Section 2.1. “Term Loan” is defined in Section 2.1 and, as so defined, includes a Base Rate Loan or a Eurodollar Loan, each of which is a “type” of Term Loan hereunder. “Term Loan Commitment” means, with respect to any Lender, the aggregate amount of such Lender’s (a) Term A-1 Loan Commitment and (b) Term A-2 Loan Commitment. “Term Loan Maturity Date” means the fifth anniversary of the Closing Date. “Term Loan Percentage” means, for each Lender, the percentage of the Term Loan Commitments represented by such Lender’s Term Loan Commitment or, if the Term Loan Commitments have been terminated or have expired, the percentage held by such Lender of the aggregate principal amount of all Term Loans then outstanding. “Term Note” is defined in Section 2.11. “Term SOFR” means the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body. “Third Amendment” means that certain Third Amendment to Credit Agreement, dated as of the Third Amendment Effective Date, by and among the Borrower, the Guarantors party thereto, the Lenders party thereto and the Administrative Agent.
-30- 744965794 “Third Amendment Acquisitions” has the meaning ascribed to such term in the Third Amendment. “Third Amendment Effective Date” means December 29, 2021. “Total Consideration” means, with respect to an Acquisition, the sum (but without duplication) of (a) cash paid in connection with any Acquisition, (b) indebtedness payable to the seller in connection with such Acquisition, (c) the fair market value of any equity securities, including any warrants or options therefor, delivered in connection with any Acquisition, (d) the present value of covenants not to compete entered into in connection with such Acquisition or other future payments (including earn-outs and other contingent obligations of Borrower or its Subsidiaries) which are required to be made over a period of time (exclusive of salaries paid in the ordinary course of business) (discounted at the Base Rate), but only to the extent not included in clause (a), (b) or (c) above, and (e) the amount of indebtedness assumed in connection with such Acquisition. “Total Funded Debt” means, at any time the same is to be determined, the sum (but without duplication) of (a) all Indebtedness for Borrowed Money of Borrower and its Subsidiaries outstanding at such time, and (b) all Indebtedness for Borrowed Money outstanding of any other Person which is directly or indirectly guaranteed by Borrower or any of its Subsidiaries or which Borrower or any of its Subsidiaries has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which Borrower or any of its Subsidiaries has otherwise assured a creditor against loss; provided that any amounts outstanding under the Seller Note and, unless the Borrower shall have received notice that any SBA PPP Loan will not be forgiven, such SBA PPP Loan, shall be excluded from Total Funded Debt. “Total Leverage Ratio” means, as of the last day of any fiscal quarter of Borrower, the ratio of Total Funded Debt as of the last day of such fiscal quarter to EBITDA of Borrower and its Subsidiaries for the period of four fiscal quarters then ended. “Trade Date” is defined in Section 11.10(d). “Tranche” is defined in Section 2.18(c). “UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution. “Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment. “Unused Revolving Credit Commitments” means, at any time, the difference between the Revolving Credit Commitments then in effect and the aggregate outstanding principal amount of Revolving Loans and L/C Obligations. For the avoidance of doubt, the outstanding amount of Swingline Loans shall not be counted towards or considered usage of the Revolving Credit Commitments for purposes of this definition. “U.S. Dollars” and “$” each means the lawful currency of the United States of America.
-31- 744965794 “Voting Stock” of any Person means capital stock or other equity interests of any class or classes (however designated) having ordinary power for the election of directors or other similar governing body of such Person, other than stock or other equity interests having such power only by reason of the happening of a contingency. “Welfare Plan” means a “welfare plan” as defined in Section 3(1) of ERISA. “Wholly owned Subsidiary” means a Subsidiary of which all of the issued and outstanding shares of capital stock (other than directors’ qualifying shares as required by law) or other equity interests are owned by Borrower and/or one or more Wholly owned Subsidiaries within the meaning of this definition. “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part 1 of Subtitle E of Title IV of ERISA. “Work-in-Progress Report” means the report in the form of Exhibit I hereto, or in such other form acceptable to Administrative Agent, to be delivered to Administrative Agent and the Lenders pursuant to Section 6.5(h). “Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers. Section 1.2 Interpretation. The foregoing definitions are equally applicable to both the singular and plural forms of the terms defined. The words “hereof”, “herein”, and “hereunder” and words of like import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All references to time of day herein are references to Chicago, Illinois, time unless otherwise specifically provided. Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, it shall be done in accordance with GAAP except where such principles are inconsistent with the specific provisions of this Agreement. Unless otherwise expressly provided herein, references to agreements (including this Agreement), other contractual instruments and organizational documents shall be deemed to include all subsequent amendments, restatements and other modifications thereto, but only to the extent such amendments, restatements and other modifications are not prohibited by the terms of any Loan Document and references to any statute or regulation are to be construed as including all statutory and regulatory provisions
-32- 744965794 consolidating, amending, replacing, supplementing or interpreting such statute or regulation from time to time. Section 1.3 Change in Accounting Principles. If, after the date of this Agreement, there shall occur any change in GAAP from those used in the preparation of the financial statements referred to in Section 5.5 and such change shall result in a change in the method of calculation of any financial covenant, standard or term found in this Agreement, either Borrower or the Required Lenders may by notice to the Lenders and Borrower, respectively, require that the Lenders and Borrower negotiate in good faith to amend such covenants, standards, and terms so as equitably to reflect such change in accounting principles, with the desired result being that the criteria for evaluating the financial condition of Borrower and its Subsidiaries shall be the same as if such change had not been made. No delay by Borrower or the Required Lenders in requiring such negotiation shall limit their right to so require such a negotiation at any time after such a change in accounting principles. Until any such covenant, standard, or term is amended in accordance with this Section 1.3, financial covenants shall be computed and determined in accordance with GAAP in effect prior to such change in accounting principles. Without limiting the generality of the foregoing, Borrower shall neither be deemed to be in compliance with any financial covenant hereunder nor out of compliance with any financial covenant hereunder if such state of compliance or noncompliance, as the case may be, would not exist but for the occurrence of a change in accounting principles after the date hereof. Section 1.4 Pro Forma Calculations. To the extent the Borrower or any Subsidiary makes any Acquisition permitted hereunder or disposition of material assets outside the ordinary course of business not prohibited hereunder during the period of four fiscal quarters of the Borrower most recently ended, if the Borrower is required to make pro forma disclosures relating to such Acquisition or disposition pursuant to Article 11 of Regulation S-X of the Securities Act of 1933, as amended, then the Total Leverage Ratio, the Senior Secured Leverage Ratio and the Fixed Charge Coverage Ratio shall be calculated after giving pro forma effect thereto (including pro forma adjustments arising out of events which are directly attributable to the acquisition or the disposition of assets, are factually supportable and are expected to have a continuing impact, in each case as determined on a basis consistent with Article 11 of Regulation S-X of the Securities Act of 1933, as amended, as interpreted by the Securities and Exchange Commission, and as certified by a Responsible Officer), as if such acquisition or such disposition (and any related incurrence, repayment or assumption of indebtedness) had occurred in the first day of such four- quarter period. With respect to any provision in this Agreement which would require the Total Leverage Ratio, the Senior Secured Leverage Ratio or the Fixed Charge Coverage Ratio to be calculated on a pro forma basis, such calculation shall be made in accordance with the foregoing sentence and giving pro forma effect to the transaction for which such calculation is being made (together with any related transaction) based on the most recent financial statements of the Borrower delivered hereunder. Notwithstanding anything to the contrary in this Agreement, only those leases that would constitute capital leases or financing leases in conformity with GAAP prior to December 31, 2018 shall be considered Capital Leases, and all calculations and deliverables under this Agreement or any other Loan Document shall be made or delivered, as applicable, in accordance therewith. Section 1.5 Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different
-33- 744965794 jurisdiction’s laws), (i) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (ii) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its equity interests at such time. SECTION 2. THE CREDIT FACILITIES. Section 2.1 Term Loan Commitments. Each Lender with a Term A-1 Loan Commitment as of the Closing Date made a loan (individually, a “Term A-1 Loan” and collectively for all Lenders, the “Term A-1 Loans”) in the amount of its Term A-1 Loan Percentage as of the Closing Date of the Term A-1 Loan Commitment in U.S. Dollars to the Borrower on the Closing Date, at which time the Term A-1 Loan Commitments expired. Borrower and the Lenders acknowledge and agree that the aggregate principal balance of the Term A-1 Loans on the Third Amendment Effective Date equals $310,943,750, and the aggregate principal amount of Term A- 1 Loans held by each Lender on the Third Amendment Effective Date is as set forth opposite such Lender’s name on Schedule 1 attached hereto and made a part hereof. Subject to the terms and conditions hereof and of the Third Amendment, each Lender with a Term A-2 Loan Commitment, by its acceptance hereof and of the Third Amendment, severally agrees to make a loan (individually a “Term A-2 Loan” and collectively for all the Lenders the “Term A-2 Loans”; and together with the Term A-1 Loans, each individually a “Term Loan” and collectively for all the Lenders the “Term Loans”) in U.S. Dollars to Borrower in the amount of such Lender’s Term A-2 Loan Commitment. The Term A-2 Loans shall be advanced in a single Borrowing on the Term A-2 Loan Funding Date, at which time the Term A-2 Loan Commitments shall expire. Notwithstanding the foregoing, in the event that the Term A-2 Loan Funding Date has not occurred by the Term A-2 Loan Commitment Termination Date, the Term A-2 Loan Commitments shall automatically terminate and the Term A-2 Loan Funding Date shall not occur. As provided in Section 2.6(a), Borrower may elect that the Term Loans be outstanding as Base Rate Loans or Eurodollar Loans. No amount repaid or prepaid on any Term Loan may be borrowed again. Section 2.2 Revolving Credit Commitments. Subject to the terms and conditions hereof, each Lender, by its acceptance hereof, severally agrees to make a loan or loans (individually a “Revolving Loan” and collectively for all the Lenders the “Revolving Loans”) in U.S. Dollars to Borrower from time to time on a revolving basis up to the amount of such Lender’s Revolving Credit Commitment, subject to any reductions thereof pursuant to the terms hereof, before the Revolving Credit Termination Date; provided that the aggregate amount of Revolving Loans made on the Closing Date shall not exceed $30,000,000. The sum of the aggregate principal amount of Revolving Loans, Swing Loans, and L/C Obligations at any time outstanding shall not exceed the Revolving Credit Commitments in effect at such time. Each Borrowing of Revolving Loans shall be made ratably by the Lenders in proportion to their respective Revolver Percentages. As provided in Section 2.6(a), Borrower may elect that each Borrowing of Revolving Loans be either Base Rate Loans or Eurodollar Loans. Revolving Loans may be repaid and the principal amount thereof reborrowed before the Revolving Credit Termination Date, subject to the terms and conditions hereof.
-34- 744965794 Section 2.3 Letters of Credit. (a) General Terms. Subject to the terms and conditions hereof, as part of the Revolving Credit, the L/C Issuer shall issue standby and commercial letters of credit (each a “Letter of Credit”) for the account of Borrower or for the account of Borrower and one or more of its Subsidiaries in an aggregate undrawn face amount up to the L/C Sublimit. Each Letter of Credit shall be issued by the L/C Issuer, but each Lender shall be obligated to reimburse the L/C Issuer for such Lender’s Revolver Percentage of the amount of each drawing thereunder and, accordingly, each Letter of Credit shall constitute usage of the Revolving Credit Commitment of each Lender pro rata in an amount equal to its Revolver Percentage of the L/C Obligations then outstanding. (b) Applications. At any time before the Revolving Credit Termination Date, the L/C Issuer shall, at the request of Borrower, issue one or more Letters of Credit in U.S. Dollars, in a form satisfactory to the L/C Issuer, with expiration dates no later than the earlier of 12 months from the date of issuance (or which are cancelable not later than 12 months from the date of issuance and each renewal) or five (5) days prior to the Revolving Credit Termination Date unless Borrower shall have backstopped such Letter of Credit in a manner reasonably satisfactory to the L/C Issuer or shall have Cash Collateralized the applicable Letter of Credit, in an aggregate face amount as set forth above, upon the receipt of an application duly executed by Borrower and, if such Letter of Credit is for the account of one of its Subsidiaries, such Subsidiary for the relevant Letter of Credit in the form then customarily prescribed by the L/C Issuer for the Letter of Credit requested (each an “Application”). Notwithstanding anything contained in any Application to the contrary: (i) Borrower shall pay fees in connection with each Letter of Credit as set forth in Section 2.12, (ii) except as otherwise provided in Section 2.9 or Section 2.17, unless an Event of Default exists, the L/C Issuer will not call for the funding by Borrower of any amount under a Letter of Credit before being presented with a drawing thereunder, and (iii) if the L/C Issuer is not timely reimbursed for the amount of any drawing under a Letter of Credit on the date such drawing is paid, Borrower’s obligation to reimburse the L/C Issuer for the amount of such drawing shall bear interest (which Borrower hereby promises to pay) from and after the date such drawing is paid at a rate per annum equal to the sum of the Applicable Margin plus the Base Rate from time to time in effect (computed on the basis of a year of 365 or 366 days, as the case may be, and the actual number of days elapsed). If the L/C Issuer issues any Letter of Credit with an expiration date that is automatically extended unless the L/C Issuer gives notice that the expiration date will not so extend beyond its then scheduled expiration date, unless Administrative Agent or the Required Lenders instruct the L/C Issuer otherwise, the L/C Issuer will give such notice of non-renewal before the time necessary to prevent such automatic extension if before such required notice date: (i) the expiration date of such Letter of Credit if so extended would be after the date that is five (5) days prior to the Revolving Credit Termination Date unless Borrower shall have Cash Collateralized the applicable Letter of Credit or backstopped such Letter of Credit in a manner reasonably satisfactory to the L/C Issuer, (ii) the Revolving Credit Commitments have been terminated, or (iii) a Default or an Event of Default exists and the Required Lenders (or the Administrative Agent at their direction) have given the L/C Issuer instructions not to so permit the extension of the expiration date of such Letter of Credit. The L/C Issuer agrees to issue amendments to the Letter(s) of Credit increasing the amount, or extending the expiration date, thereof at the request of Borrower subject to the conditions of Section 4 and the other terms of this Section 2.3. Notwithstanding anything contained herein to the contrary, the L/C Issuer shall be under no obligation to issue, extend or amend any Letter of Credit if a default of any Lender’s
-35- 744965794 obligations to fund under Section 2.3(c) exists or any Lender is at such time a Defaulting Lender hereunder, unless the L/C Issuer has entered into arrangements with Borrower or such Lender satisfactory to the L/C Issuer to eliminate the L/C Issuer’s risk with respect to such Lender. (c) The Reimbursement Obligations. Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall promptly notify the Borrower and the Administrative Agent thereof. Subject to Section 2.3(b), the obligation of Borrower to reimburse the L/C Issuer for all drawings under a Letter of Credit (a “Reimbursement Obligation”) shall be governed by the Application related to such Letter of Credit, except that reimbursement shall be made by no later than 12:00 Noon on the date when each drawing is to be paid if Borrower has been informed of such drawing by the L/C Issuer on or before 11:00 a.m. on the date when such drawing is to be paid or, if notice of such drawing is given to Borrower after 11:00 a.m. on the date when such drawing is to be paid, by no later than 12:00 Noon on the following Business Day, in immediately available funds at Administrative Agent’s principal office in Chicago, Illinois, or such other office as Administrative Agent may designate in writing to Borrower (who shall thereafter cause to be distributed to the L/C Issuer such amount(s) in like funds). If Borrower does not make any such reimbursement payment on the date due and the Participating Lenders fund their participations therein in the manner set forth in Section 2.3(e) below, then all payments thereafter received by Administrative Agent in discharge of any of the relevant Reimbursement Obligations shall be distributed in accordance with Section 2.3(e) below. (d) Obligations Absolute. Borrower’s obligation to reimburse L/C Obligations as provided in subsection (c) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement and the relevant Application under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the L/C Issuer under a Letter of Credit against presentation of a draft or other document that does not strictly comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, Borrower’s obligations hereunder. None of Administrative Agent, the Lenders, or the L/C Issuer shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the L/C Issuer; provided that the foregoing shall not be construed to excuse the L/C Issuer from liability to Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by Borrower to the extent permitted by applicable law) suffered by Borrower that are caused by the L/C Issuer’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence, bad faith or willful misconduct on the part of the L/C Issuer (as finally
-36- 744965794 determined by a court of competent jurisdiction), the L/C Issuer shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the L/C Issuer may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit. (e) The Participating Interests. Each Lender (other than the Lender acting as L/C Issuer in issuing the relevant Letter of Credit), by its acceptance hereof, severally agrees to purchase from the L/C Issuer, and the L/C Issuer hereby agrees to sell to each such Lender (a “Participating Lender”), an undivided percentage participating interest (a “Participating Interest”), to the extent of its Revolver Percentage, in each Letter of Credit issued by, and each Reimbursement Obligation owed to, the L/C Issuer. Upon any failure by Borrower to pay any Reimbursement Obligation at the time required on the date the related drawing is to be paid, as set forth in Section 2.3(c) above, or if the L/C Issuer is required at any time to return to Borrower or to a trustee, receiver, liquidator, custodian or other Person any portion of any payment of any Reimbursement Obligation, each Participating Lender shall, not later than the Business Day it receives a certificate in the form of Exhibit A hereto from the L/C Issuer (with a copy to Administrative Agent) to such effect, if such certificate is received before 1:00 p.m., or not later than 1:00 p.m. the following Business Day, if such certificate is received after such time, pay to Administrative Agent for the account of the L/C Issuer an amount equal to such Participating Lender’s Revolver Percentage of such unpaid or recaptured Reimbursement Obligation together with interest on such amount accrued from the date the related payment was made by the L/C Issuer to the date of such payment by such Participating Lender at a rate per annum equal to: (i) from the date the related payment was made by the L/C Issuer to the date two (2) Business Days after payment by such Participating Lender is due hereunder, the Federal Funds Rate for each such day and (ii) from the date two (2) Business Days after the date such payment is due from such Participating Lender to the date such payment is made by such Participating Lender, the Base Rate in effect for each such day. Each such Participating Lender shall thereafter be entitled to receive its Revolver Percentage of each payment received in respect of the relevant Reimbursement Obligation and of interest paid thereon, with the L/C Issuer retaining its Revolver Percentage thereof as a Lender hereunder. The several obligations of the Participating Lenders to the L/C Issuer under this Section 2.3 shall be absolute, irrevocable, and unconditional under any and all circumstances whatsoever and shall not be subject to any set off, counterclaim or defense to payment which any Participating Lender may have or have had against Borrower, the L/C Issuer, Administrative Agent, any Lender or any other Person whatsoever. Without limiting the generality of the foregoing, such obligations shall not be affected by any Default or Event of Default or by any reduction or termination of any Commitment of any Lender, and each payment by a Participating Lender under this Section 2.3 shall be made without any offset, abatement, withholding or reduction whatsoever. (f) Indemnification. The Participating Lenders shall, to the extent of their respective Revolver Percentages, indemnify the L/C Issuer (to the extent not reimbursed by Borrower) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such L/C Issuer’s gross negligence, bad faith or willful
-37- 744965794 misconduct) that the L/C Issuer may suffer or incur in connection with any Letter of Credit issued by it. The obligations of the Participating Lenders under this Section 2.3(f) and all other parts of this Section 2.3 shall survive termination of this Agreement and of all Applications, Letters of Credit, and all drafts and other documents presented in connection with drawings thereunder. (g) Manner of Requesting a Letter of Credit. Borrower shall provide at least five (5) Business Days’ advance written notice to Administrative Agent of each request for the issuance of a Letter of Credit, such notice in each case to be accompanied by an Application for such Letter of Credit properly completed and executed by Borrower and, in the case of an extension or amendment or an increase in the amount of a Letter of Credit, a written request therefor, in a form acceptable to Administrative Agent and the L/C Issuer, in each case, together with the fees called for by this Agreement. Administrative Agent shall promptly notify the L/C Issuer of Administrative Agent’s receipt of each such notice (and the L/C Issuer shall be entitled to assume that the conditions precedent to any such issuance, extension, amendment or increase have been satisfied unless notified to the contrary by Administrative Agent or the Required Lenders) and the L/C Issuer shall promptly notify Administrative Agent and the Lenders of the issuance of the Letter of Credit so requested. (h) Replacement of the L/C Issuer. The L/C Issuer may be replaced at any time by written agreement among Borrower, Administrative Agent, the replaced L/C Issuer and the successor L/C Issuer. Administrative Agent shall notify the Lenders of any such replacement of the L/C Issuer. At the time any such replacement shall become effective, Borrower shall pay all unpaid fees accrued for the account of the replaced L/C Issuer. From and after the effective date of any such replacement (i) the successor L/C Issuer shall have all the rights and obligations of the L/C Issuer under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “L/C Issuer” shall be deemed to refer to such successor or to any previous L/C Issuer, or to such successor and all previous L/C Issuers, as the context shall require. After the replacement of a L/C Issuer hereunder, the replaced L/C Issuer shall remain a party hereto and shall continue to have all the rights and obligations of a L/C Issuer under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit. Section 2.4 Applicable Interest Rates. Base Rate Loans. Each Base Rate Loan made or maintained by a Lender shall bear interest (computed on the basis of a year of 365 or 366 days, as the case may be, and the actual days elapsed) on the unpaid principal amount thereof from the date such Loan is advanced, or created by conversion from a Eurodollar Loan, until maturity (whether by acceleration or otherwise) at a rate per annum equal to the sum of the Applicable Margin plus the Base Rate from time to time in effect, payable by Borrower on each Interest Payment Date and at maturity (whether by acceleration or otherwise). (b) Eurodollar Loans. Each Eurodollar Loan made or maintained by a Lender shall bear interest during each Interest Period it is outstanding (computed on the basis of a year of 360 days and actual days elapsed) on the unpaid principal amount thereof from the date such Loan is advanced or continued, or created by conversion from a Base Rate Loan, until maturity (whether by acceleration or otherwise) at a rate per annum equal to the sum of the Applicable Margin plus the Adjusted LIBOR applicable for such Interest Period, payable by Borrower on each Interest Payment Date and at maturity (whether by acceleration or otherwise).
-38- 744965794 (c) Rate Determinations. Administrative Agent shall determine each interest rate applicable to the Loans and the Reimbursement Obligations hereunder, and its determination thereof shall be conclusive and binding except in the case of manifest error. Section 2.5 Minimum Borrowing Amounts; Maximum Eurodollar Loans. Each Borrowing of Base Rate Loans advanced under a Credit shall be in an amount not less than $100,000 or such greater amount which is an integral multiple of $50,000. Each Borrowing of Eurodollar Loans advanced, continued or converted under a Credit shall be in an amount equal to $1,000,000 or such greater amount which is an integral multiple of $500,000. Without Administrative Agent’s consent, there shall not be more than twelve (12) Borrowings of Eurodollar Loans outstanding hereunder at any one time. Section 2.6 Manner of Borrowing Loans and Designating Applicable Interest Rates. Notice to Administrative Agent. Borrower shall give notice to Administrative Agent by no later than 10:00 a.m.: (i) at least three (3) Business Days before the date on which Borrower requests the Lenders to advance a Borrowing of Eurodollar Loans and (ii) on the date Borrower requests the Lenders to advance a Borrowing of Base Rate Loans. The Loans included in each Borrowing shall bear interest initially at the type of rate specified in such notice of a new Borrowing. Thereafter, subject to the terms and conditions hereof, Borrower may from time to time elect to change or continue the type of interest rate borne by each Borrowing or, subject to the minimum amount requirement for each outstanding Borrowing set forth in Section 2.5, a portion thereof, as follows: (i) if such Borrowing is of Eurodollar Loans, on the last day of the Interest Period applicable thereto, Borrower may continue part or all of such Borrowing as Eurodollar Loans or convert part or all of such Borrowing into Base Rate Loans or (ii) if such Borrowing is of Base Rate Loans, on any Business Day, Borrower may convert all or part of such Borrowing into Eurodollar Loans for an Interest Period or Interest Periods specified by Borrower. Borrower shall give all such notices requesting the advance, continuation or conversion of a Borrowing to Administrative Agent by telephone, telecopy, or other telecommunication device acceptable to Administrative Agent (which notice shall be irrevocable once given and, if by telephone, shall be promptly confirmed in writing), substantially in the form attached hereto as Exhibit B (Notice of Borrowing) or Exhibit C (Notice of Continuation/Conversion), as applicable, or in such other form acceptable to Administrative Agent. Notice of the continuation of a Borrowing of Eurodollar Loans for an additional Interest Period or of the conversion of part or all of a Borrowing of Base Rate Loans into Eurodollar Loans must be given by no later than 10:00 a.m. at least three (3) Business Days before the date of the requested continuation or conversion. All such notices concerning the advance, continuation or conversion of a Borrowing shall specify the date of the requested advance, continuation or conversion of a Borrowing (which shall be a Business Day), the amount of the requested Borrowing to be advanced, continued or converted, the type of Loans to comprise such new, continued or converted Borrowing and, if such Borrowing is to be comprised of Eurodollar Loans, the Interest Period applicable thereto. No Borrowing of Eurodollar Loans shall be advanced, continued, or created by conversion if any Default or Event of Default then exists. Borrower agrees that Administrative Agent may rely on any such telephonic, telecopy or other telecommunication notice given by any person Administrative Agent in good faith believes is an Authorized Representative without the necessity of independent investigation, and in the event any such notice by telephone conflicts with any written confirmation such telephonic notice shall govern if Administrative Agent has acted in reliance thereon.
-39- 744965794 (b) Notice to the Lenders. Administrative Agent shall give prompt telephonic, telecopy or other telecommunication notice to each Lender of any notice from Borrower received pursuant to Section 2.6(a) above and, if such notice requests the Lenders to make Eurodollar Loans, Administrative Agent shall give notice to Borrower and each Lender by like means of the interest rate applicable thereto promptly after Administrative Agent has made such determination. (c) Borrower’s Failure to Notify. If Borrower fails to give notice pursuant to Section 2.6(a) above of the continuation or conversion of any outstanding principal amount of a Borrowing of Eurodollar Loans before the last day of its then current Interest Period within the period required by Section 2.6(a) and such Borrowing is not prepaid in accordance with Section 2.9(a), such Borrowing shall automatically be converted into a Borrowing of Base Rate Loans. In the event Borrower fails to give notice pursuant to Section 2.6(a) above of a Borrowing equal to the amount of a Reimbursement Obligation and has not notified Administrative Agent by 12:00 noon on the day such Reimbursement Obligation becomes due that it intends to repay such Reimbursement Obligation through funds not borrowed under this Agreement, Borrower shall be deemed to have requested a Borrowing of Base Rate Loans under the Revolving Credit (or, at the option of the Swing Line Lender, under the Swing Line) on such day in the amount of the Reimbursement Obligation then due, which Borrowing shall be applied to pay the Reimbursement Obligation then due. (d) Disbursement of Loans. Not later than 1:00 p.m. on the date of any requested advance of a new Borrowing, subject to Section 4, each Lender shall make available its Loan comprising part of such Borrowing in funds immediately available at the principal office of Administrative Agent in Chicago, Illinois (or at such other location as Administrative Agent shall designate). Administrative Agent shall make the proceeds of each new Borrowing available to Borrower at Administrative Agent’s principal office in Chicago, Illinois (or at such other location as Administrative Agent shall designate), by depositing or wire transferring such proceeds to the credit of Borrower’s Designated Disbursement Account or as Borrower and Administrative Agent may otherwise agree. (e) Administrative Agent Reliance on Lender Funding. Unless Administrative Agent shall have been notified by a Lender prior to (or, in the case of a Borrowing of Base Rate Loans, by 1:00 p.m. on the date on which such Lender is scheduled to make payment to Administrative Agent of the proceeds of a Loan (which notice shall be effective upon receipt) that such Lender does not intend to make such payment, Administrative Agent may assume that such Lender has made such payment when due and Administrative Agent may in reliance upon such assumption (but shall not be required to) make available to Borrower the proceeds of the Loan to be made by such Lender and, if any Lender has not in fact made such payment to Administrative Agent, such Lender shall, on demand, pay to Administrative Agent the amount made available to Borrower attributable to such Lender together with interest thereon in respect of each day during the period commencing on the date such amount was made available to Borrower and ending on (but excluding) the date such Lender pays such amount to Administrative Agent at a rate per annum equal to: (i) from the date the related advance was made by Administrative Agent to the date two (2) Business Days after payment by such Lender is due hereunder, the Federal Funds Rate for each such day and (ii) from the date two (2) Business Days after the date such payment is due from such Lender to the date such payment is made by such Lender, the Base Rate in effect for each such day. If such amount is not received from such Lender by Administrative Agent immediately upon
-40- 744965794 demand, Borrower will, on demand, repay to Administrative Agent the proceeds of the Loan attributable to such Lender with interest thereon at a rate per annum equal to the interest rate applicable to the relevant Loan, but without such payment being considered a payment or prepayment of a Loan under Section 3.3 so that Borrower will have no liability under such Section with respect to such payment. Section 2.7 Swing Loans. Generally. Subject to the terms and conditions hereof, as part of the Revolving Credit, the Swing Line Lender may, in its discretion, make loans in U.S. Dollars to Borrower under the Swing Line (individually a “Swing Loan” and collectively the “Swing Loans”) which shall not in the aggregate at any time outstanding exceed the Swing Line Sublimit. Swing Loans may be availed of from time to time and borrowings thereunder may be repaid and used again during the period ending on the Revolving Credit Termination Date. Each Swing Loan shall be in a minimum amount of $250,000 or such greater amount which is an integral multiple of $100,000. (b) Interest on Swing Loans. Each Swing Loan shall bear interest until maturity (whether by acceleration or otherwise) at a rate per annum equal to (i) the sum of the Base Rate plus the Applicable Margin for Base Rate Loans under the Revolving Credit as from time to time in effect (computed on the basis of a year of 365 or 366 days, as the case may be, for the actual number of days elapsed) or (ii) the Swing Line Lender’s Quoted Rate (computed on the basis of a year of 360 days for the actual number of days elapsed). Interest on each Swing Loan shall be due and payable by Borrower on each Interest Payment Date and at maturity (whether by acceleration or otherwise). (c) Requests for Swing Loans. Borrower shall give Administrative Agent prior notice (which may be written or oral) no later than 12:00 Noon on the date upon which Borrower requests that any Swing Loan be made, of the amount and date of such Swing Loan, and, if applicable, the Interest Period requested therefor. Administrative Agent shall promptly advise the Swing Line Lender of any such notice received from Borrower. After receiving such notice, the Swing Line Lender shall in its discretion quote an interest rate to Borrower at which the Swing Line Lender would be willing to make such Swing Loan available to Borrower for the Interest Period so requested (the rate so quoted for a given Interest Period being herein referred to as “Swing Line Lender’s Quoted Rate”). Borrower acknowledges and agrees that the interest rate quote is given for immediate and irrevocable acceptance. If Borrower does not so immediately accept the Swing Line Lender’s Quoted Rate for the full amount requested by Borrower for such Swing Loan, the Swing Line Lender’s Quoted Rate shall be deemed immediately withdrawn and such Swing Loan shall bear interest at the rate per annum determined by adding the Applicable Margin for Base Rate Loans under the Revolving Credit to the Base Rate as from time to time in effect. Subject to the terms and conditions hereof, the proceeds of each Swing Loan extended to Borrower shall be deposited or otherwise wire transferred to Borrower’s Designated Disbursement Account or as Borrower, Administrative Agent, and the Swing Line Lender may otherwise agree. Anything contained in the foregoing to the contrary notwithstanding, the undertaking of the Swing Line Lender to make Swing Loans shall be subject to all of the terms and conditions of this Agreement (provided that the Swing Line Lender shall be entitled to assume that the conditions precedent to an advance of any Swing Loan have been satisfied unless notified to the contrary by Administrative Agent or the Required Lenders).
-41- 744965794 (d) Refunding Loans. In its sole and absolute discretion, the Swing Line Lender may at any time, on behalf of Borrower (which hereby irrevocably authorizes the Swing Line Lender to act on its behalf for such purpose) and with notice to Borrower and Administrative Agent, request each Lender to make a Revolving Loan in the form of a Base Rate Loan in an amount equal to such Lender’s Revolver Percentage of the amount of the Swing Loans outstanding on the date such notice is given. Unless an Event of Default described in Section 8.1(j) or 8.1(k) exists with respect to Borrower, regardless of the existence of any other Event of Default, each Lender shall make the proceeds of its requested Revolving Loan available to Administrative Agent for the account of the Swing Line Lender), in immediately available funds, at Administrative Agent’s office in Chicago, Illinois (or such other location designated by Administrative Agent), before 12:00 Noon on the Business Day following the day such notice is given. Administrative Agent shall promptly remit the proceeds of such Borrowing to the Swing Line Lender to repay the outstanding Swing Loans. (e) Participations. If any Lender refuses or otherwise fails to make a Revolving Loan when requested by the Swing Line Lender pursuant to Section 2.7(d) (because an Event of Default described in Section 8.1(j) or 8.1(k) exists with respect to Borrower or otherwise), such Lender will, by the time and in the manner such Revolving Loan was to have been funded to the Swing Line Lender, purchase from the Swing Line Lender an undivided participating interest in the outstanding Swing Loans in an amount equal to its Revolver Percentage of the aggregate principal amount of Swing Loans that were to have been repaid with such Revolving Loans. Each Lender that so purchases a participation in a Swing Loan shall thereafter be entitled to receive its Revolver Percentage of each payment of principal received on the Swing Loan and of interest received thereon accruing from the date such Lender funded to the Swing Line Lender its participation in such Loan. The several obligations of the Lenders under this Section shall be absolute, irrevocable, and unconditional under any and all circumstances whatsoever and shall not be subject to any set off, counterclaim or defense to payment which any Lender may have or have had against Borrower, any other Lender, or any other Person whatsoever. Without limiting the generality of the foregoing, such obligations shall not be affected by any Default or Event of Default or by any reduction or termination of the Commitments of any Lender, and each payment made by a Lender under this Section shall be made without any offset, abatement, withholding, or reduction whatsoever. Section 2.8 Maturity of Loans. Scheduled Payments of Term Loans. (i) Borrower shall make principal payments on the Term A-1 Loans in installments on the last day of each March, June, September, and December in each year, commencing with the calendar quarter ending December 31, 2021, with the amount of each such principal installment to equal the amount set forth in Column B below shown opposite of the relevant due date as set forth in Column A below: Column A Payment Date Column B Scheduled Principal Payment on Term A-1 Loans 12/31/2021 $4,056,250 03/31/2022 $4,056,250
-42- 744965794 Column A Payment Date Column B Scheduled Principal Payment on Term A-1 Loans 06/30/2022 $4,056,250 09/30/2022 $4,056,250 12/31/2022 $4,056,250 03/31/2023 $4,056,250 06/30/2023 $6,084,375 09/30/2023 $6,084,375 12/31/2023 $6,084,375 03/31/2024 $6,084,375 06/30/2024 $6,084,375 09/30/2024 $6,084,375 , it being agreed that a final payment comprised of all principal and interest then outstanding on the Term A-1 Loans shall be due and payable on the Term Loan Maturity Date. Each such principal payment shall be applied to the Lenders holding the Term A-1 Loans pro rata based upon their Term A-1 Loan Percentages. (ii) Borrower shall make principal payments on the Term A-2 Loans in installments on the last day of each March, June, September, and December in each year, commencing with the calendar quarter ending March 31, 2022, with the amount of each such principal installment to equal the amount set forth in Column B below shown opposite of the relevant due date as set forth in Column A below: Column A Payment Date Column B Scheduled Principal Payment on Term A-2 Loans 03/31/2022 $1,750,000 06/30/2022 $1,750,000 09/30/2022 $1,750,000 12/31/2022 $1,750,000 03/31/2023 $1,750,000 06/30/2023 $2,625,000 09/30/2023 $2,625,000 12/31/2023 $2,625,000 03/31/2024 $2,625,000 06/30/2024 $2,625,000 09/30/2024 $2,625,000 , it being agreed that a final payment comprised of all principal and interest then outstanding on the Term A-2 Loans shall be due and payable on the Term Loan Maturity
-43- 744965794 Date. Each such principal payment shall be applied to the Lenders holding the Term A-2 Loans pro rata based upon their Term A-2 Loan Percentages. (b) Revolving Loans. Each Revolving Loan, both for principal and interest then outstanding, shall mature and be due and payable by Borrower on the Revolving Credit Termination Date. (c) Swing Loans. Each Swing Loan, both for principal and interest not sooner paid, shall mature and be due and payable by Borrower on the Revolving Credit Termination Date. Section 2.9 Prepayments. Optional Prepayments. Borrower may prepay in whole or in part (but, if in part, then: (i) if such Borrowing is of Base Rate Loans, in an amount not less than $100,000, (ii) if such Borrowing is of Eurodollar Loans, in an amount not less than $500,000, and (iii) in each case, in an amount such that the minimum amount required for a Borrowing pursuant to Section 2.5 and 2.7 remains outstanding) any Borrowing of Eurodollar Loans at any time upon three (3) Business Days prior notice by Borrower to Administrative Agent or, in the case of a Borrowing of Base Rate Loans, notice delivered by Borrower to Administrative Agent no later than 10:00 a.m. on the date of prepayment (or, in any case, such shorter period of time then agreed to by Administrative Agent), such prepayment, in each case, to be made by the payment of the principal amount to be prepaid and, in the case of any Term Loans or Eurodollar Loans or Swing Loans, accrued interest thereon to the date fixed for prepayment plus any amounts due the Lenders under Section 3.3. All voluntary prepayments of Term A-1 Loans and Term A-2 Loans shall be applied to the Lenders holding such Term Loans on a pro rata basis. (b) Mandatory Prepayments. (i) Borrower or any Subsidiary or Project Specific JV shall at any time or from time to time make or agree to make a Disposition or shall suffer an Event of Loss with respect to any Property (except that with respect to any Affiliated Entity or Project Specific JV constituting, in either case, an Excluded Subsidiary, only to the extent of the Net Cash Proceeds received by the Loan Parties), then Borrower shall promptly notify Administrative Agent of such proposed Disposition or Event of Loss (including the amount of the estimated Net Cash Proceeds to be received by Borrower or such Subsidiary in respect thereof) and, promptly upon receipt by Borrower or such Subsidiary of the Net Cash Proceeds of such Disposition or Event of Loss, Borrower shall prepay the Obligations in an aggregate amount equal to 100% of the amount of all such Net Cash Proceeds; provided that (x) this subsection shall not require any such prepayment with respect to Net Cash Proceeds received on account of Dispositions during any fiscal year of Borrower not exceeding $2,500,000 in the aggregate or any Events of Loss during any fiscal year of Borrower not exceeding $2,500,000 in the aggregate, in each case so long as no Default or Event of Default then exists, and (y) in the case of any Disposition or Event of Loss not covered by clause (x) above, so long as no Default or Event of Default then exists, if Borrower states in its notice of such event that Borrower or the relevant Subsidiary intends to reinvest, within 360 days of the date of receipt thereof, the Net Cash Proceeds thereof in assets useful to the business of the Borrower and its Subsidiaries, then Borrower shall not be required to make a mandatory prepayment under this subsection in respect of such Net Cash Proceeds to the extent such Net Cash Proceeds are actually so reinvested within such
-44- 744965794 360 day period; provided that if Borrower or any relevant Subsidiary shall have contractually committed to so reinvest such Net Cash Proceeds within such 360-day period, such period for reinvestment shall be extended for an additional 180 days. Promptly after the end of such reinvestment period, Borrower shall notify Administrative Agent whether Borrower or such Subsidiary has reinvested such Net Cash Proceeds in such similar assets, and, to the extent such Net Cash Proceeds have not been so reinvested, Borrower shall promptly prepay the Obligations in the amount of such Net Cash Proceeds not so reinvested. The amount of each such prepayment shall be applied, subject to Section 2.9(b)(vi), first to the outstanding Term Loans until paid in full and then to the Revolving Credit (with no reduction of Revolving Credit Commitments). If Administrative Agent or the Required Lenders so request, all proceeds of such Disposition or Event of Loss shall be deposited with Administrative Agent (or its agent) and held by it in the Collateral Account. So long as no Default or Event of Default exists, Administrative Agent is authorized to disburse amounts representing such proceeds from the Collateral Account to or at Borrower’s direction for application to or reimbursement for the costs of replacing, rebuilding or restoring such Property. (ii) If, after the Closing Date, Borrower or any Subsidiary (except that with respect to any Affiliated Entity or Project Specific JV constituting, in either case, an Excluded Subsidiary, only to the extent of the Net Cash Proceeds received by the Loan Parties) shall issue any Indebtedness for Borrowed Money not permitted by Section 7.1 (other than Section 7.1(o), except to the extent contemplated by clause (v) thereof)), Borrower shall promptly notify Administrative Agent of the estimated Net Cash Proceeds of such issuance to be received by or for the account of Borrower or such Subsidiary in respect thereof. Promptly upon receipt by Borrower or such Subsidiary of Net Cash Proceeds of such issuance, Borrower shall prepay the Obligations in an aggregate amount equal to 100% of the amount of such Net Cash Proceeds. The amount of each such prepayment shall be applied, subject to Section 2.9(b)(vi), first to the outstanding Term Loans until paid in full and then to the Revolving Credit; provided that each Lender holding Term Loans shall have the right to elect, by notice to the Administrative Agent at or prior to the time and in the manner specified by the Administrative Agent, to decline all or a portion of its pro rata share of any prepayment pursuant this clause (ii) (such declined amounts, the “Declined Proceeds”), in which case such Declined Proceeds shall be applied on a pro rata basis to the Term Loans of Lenders which did not decline to receive their pro rata share of such prepayment until paid in full and then to the Revolving Credit. Borrower acknowledges that its performance hereunder shall not limit the rights and remedies of the Lenders for any breach of Section 7.1 or any other terms of the Loan Documents. (iii) Within five (5) days after receipt of Borrower’s year end audited financial statements, and in any event within 125 days after the end of each fiscal year of Borrower (commencing with the fiscal year ending December 31, 2022), Borrower shall prepay the Obligations by an amount equal to (x) the ECF Percentage of Excess Cash Flow of Borrower and its Subsidiaries for such fiscal year minus (y) the aggregate amount of voluntary prepayments of Loans hereunder (in the case of the Revolving Credit, to the extent accompanied by a reduction of Revolving Credit Commitments) during such fiscal year or after year-end and prior to the date such Excess Cash Flow prepayment is due (without duplication of any amounts deducted pursuant to this clause (y) in the prior fiscal
-45- 744965794 year). The amount of each such prepayment shall be applied, subject to Section 2.9(b)(vi), first to the outstanding Term Loans until paid in full and then to the Revolving Credit. (iv) Borrower shall, on each date the Revolving Credit Commitments are reduced pursuant to Section 2.15, prepay the Revolving Loans, Swing Loans, and, if necessary, prefund the L/C Obligations by the amount, if any, necessary to reduce the sum of the aggregate principal amount of Revolving Loans, Swing Loans, and L/C Obligations then outstanding to the amount to which the Revolving Credit Commitments have been so reduced. (v) If at any time the sum of the unpaid principal balance of the Revolving Loans, Swing Loans, and the L/C Obligations then outstanding shall be in excess of the Revolving Credit Commitment, Borrower shall immediately and without notice or demand pay over the amount of the excess to Administrative Agent for the account of the Lenders as and for a mandatory prepayment on such Obligations, with each such prepayment first to be applied to the Revolving Loans and Swing Loans until paid in full with any remaining balance to be held by Administrative Agent in the Collateral Account as security for the Obligations owing with respect to the Letters of Credit. (vi) Unless Borrower otherwise directs, prepayments of Loans under this Section 2.9(b) shall be applied first to Borrowings of Base Rate Loans until payment in full thereof with any balance applied to Borrowings of Eurodollar Loans in the order in which their Interest Periods expire. Each prepayment of Loans under this Section 2.9(b) shall be made by the payment of the principal amount to be prepaid and, in the case of any Term Loans or Eurodollar Loans or Swing Loans, accrued interest thereon to the date of prepayment together with any amounts due the Lenders under Section 3.3. Each prefunding of L/C Obligations shall be made in accordance with Section 8.4. (c) Any amount of Revolving Loans and Swing Loans paid or prepaid before the Revolving Credit Termination Date may, subject to the terms and conditions of this Agreement, be borrowed, repaid and borrowed again. No amount of the Term Loans paid or prepaid may be reborrowed, and, in the case of any partial prepayment, such prepayment shall be applied to the remaining amortization payments, including the payment due on the Term Loan Maturity Date, on the relevant Term Loans on a ratable, weighted basis among all such remaining payments based on the principal amounts thereof. Section 2.10 Default Rate. Notwithstanding anything to the contrary contained herein, while any Event of Default exists or after acceleration, Borrower shall pay interest (after as well as before entry of judgment thereon to the extent permitted by law) on the principal amount of all Loans and Reimbursement Obligations, letter of credit fees and interest on any other amounts owing hereunder or under the other Loan Documents at a rate per annum equal to: (a) for any Base Rate Loan or any Swing Loan bearing interest based on the Base Rate, the sum of 2.0% plus the Applicable Margin plus the Base Rate from time to time in effect; (b) for any Eurodollar Loan or any Swing Loan bearing interest at Adjusted LIBOR or the Swing Line Lender’s Quoted Rate, as applicable, the sum of 2.0% plus the rate of interest in
-46- 744965794 effect thereon at the time of such default until the end of the Interest Period applicable thereto and, thereafter, at a rate per annum equal to the sum of 2.0% plus the Applicable Margin for Base Rate Loans plus the Base Rate from time to time in effect; (c) for any Reimbursement Obligation, the sum of 2.0% plus the amounts due under Section 2.3 with respect to such Reimbursement Obligation; (d) for any Letter of Credit, the sum of 2.0% plus the letter of credit fee due under Section 2.12 with respect to such Letter of Credit; and (e) for any other overdue amounts, the sum of 2.0% plus the Applicable Margin plus the Base Rate from time to time in effect; provided, that in the absence of acceleration, any adjustments pursuant to this Section shall be made at the election of Administrative Agent, acting at the request or with the consent of the Required Lenders, with written notice to Borrower. While any Event of Default exists or after acceleration, interest shall be paid on demand of Administrative Agent at the request or with the consent of the Required Lenders. Section 2.11 Evidence of Indebtedness. Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (b) Administrative Agent shall also maintain accounts in which it will record (i) the amount of each Loan made hereunder, the type thereof and the Interest Period with respect thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from Borrower to each Lender hereunder and (iii) the amount of any sum received by Administrative Agent hereunder from Borrower and each Lender’s share thereof. (c) The entries maintained in the accounts maintained pursuant to paragraphs (a) and (b) above shall be prima facie evidence of the existence and amounts of the Obligations therein recorded; provided, that the failure of Administrative Agent or any Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of Borrower to repay the Obligations in accordance with their terms. (d) Any Lender may request that its Loans be evidenced by a promissory note or notes in the forms of Exhibit D-1 (in the case of its Term Loan and referred to herein as a “Term Note”), Exhibit D-2 (in the case of its Revolving Loans and referred to herein as a “Revolving Note”), or Exhibit D-3 (in the case of its Swing Loans and referred to herein as a “Swing Note”), as applicable (the Term Notes, Revolving Notes, and Swing Note being hereinafter referred to collectively as the “Notes” and individually as a “Note”). In such event, Borrower shall prepare, execute and deliver to such Lender a Note payable to such Lender or its registered assigns in the amount of the relevant Term Loan, Commitment, or Swing Line Sublimit, as applicable. Thereafter, the Loans evidenced by such Note or Notes and interest thereon shall at all times (including after any assignment pursuant to Section 11.10) be represented by one or more Notes payable to the order of the payee named therein or any assignee pursuant to Section 11.10, except to the extent that any
-47- 744965794 such Lender or assignee subsequently returns any such Note for cancellation and requests that such Loans once again be evidenced as described in subsections (a) and (b) above. Section 2.12 Fees. (a) Revolving Credit Commitment Fee. Borrower shall pay to Administrative Agent for the ratable account of the Lenders in accordance with their Revolver Percentages a commitment fee at the rate per annum equal to the Applicable Margin (computed on the basis of a year of 360 days and the actual number of days elapsed) on the average daily Unused Revolving Credit Commitments. Such commitment fee shall be payable quarterly in arrears on the last day of each March, June, September, and December in each year (commencing on the first such date occurring after the date hereof) and on the Revolving Credit Termination Date, unless the Revolving Credit Commitments are terminated in whole on an earlier date, in which event the commitment fee for the period to the date of such termination in whole shall be paid on the date of such termination. (b) Letter of Credit Fees. On the date of issuance or extension, or increase in the amount, of any Letter of Credit pursuant to Section 2.3 hereof, Borrower shall pay to the L/C Issuer for its own account a fronting fee equal to 0.125% of the face amount of (or of the increase in the face amount of) such Letter of Credit. Quarterly in arrears, on the last day of each March, June, September, and December, commencing on the first such date occurring after the date hereof, Borrower shall pay to Administrative Agent, for the ratable benefit of the Lenders in accordance with their Revolver Percentages, a letter of credit fee at a rate per annum equal to the Applicable Margin (computed on the basis of a year of 360 days and the actual number of days elapsed) in effect during each day of such quarter applied to the daily average face amount of Letters of Credit outstanding during such quarter. In addition, Borrower shall pay to the L/C Issuer for its own account the L/C Issuer’s standard issuance, drawing, negotiation, amendment, assignment, and other fees and charges for each Letter of Credit as established by the L/C Issuer from time to time. (c) Administrative Agent Fees. Borrower shall pay to Administrative Agent, for its own use and benefit, the fees agreed to between Administrative Agent and Borrower in a fee letter dated as of the Closing Date, or as otherwise agreed to in writing between them. (d) Audit Fees. Borrower shall pay to Administrative Agent for its own use and benefit charges for audits of the Collateral performed by Administrative Agent or its agents or representatives in such amounts as Administrative Agent may from time to time request (Administrative Agent acknowledging and agreeing that such charges shall be computed in the same manner as it at the time customarily uses for the assessment of charges for similar collateral audits); provided, that in the absence of any Default or Event of Default, Borrower shall not be required to pay Administrative Agent for more than one (1) such audit per calendar year. Section 2.13 Place and Application of Payments. All payments of principal of and interest on the Loans and the Reimbursement Obligations, and of all other Obligations payable by Borrower under this Agreement and the other Loan Documents, shall be made by Borrower to Administrative Agent by no later than 12:00 Noon on the due date thereof at the office of Administrative Agent in Chicago, Illinois (or such other location as Administrative Agent may designate to Borrower), for the benefit of the Lender(s) or L/C Issuer entitled thereto. Any payments received after such time shall be deemed to have been received by Administrative Agent
-48- 744965794 on the next Business Day. All such payments shall be made in U.S. Dollars, in immediately available funds at the place of payment, in each case without set off or counterclaim. Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest on Loans and on Reimbursement Obligations in which the Lenders have purchased Participating Interests ratably to the Lenders and like funds relating to the payment of any other amount payable to any Lender to such Lender, in each case to be applied in accordance with the terms of this Agreement. Unless Administrative Agent shall have received notice from Borrower prior to the date on which any payment is due to Administrative Agent for the account of the Lenders or the L/C Issuer hereunder that Borrower will not make such payment, Administrative Agent may assume that Borrower has made such payment on such date in accordance herewith and may (but shall not be required to) in reliance upon such assumption, distribute to the applicable Lenders or the L/C Issuer, as the case may be, the amount due. With respect to any payment that Administrative Agent makes to any Lender, L/C Issuer or other Secured Party as to which Administrative Agent determines (in its sole and absolute discretion) that any of the following applies (such payment referred to as the “Rescindable Amount”): (1) Borrower has not in fact made the corresponding payment to Administrative Agent; (2) Administrative Agent has made a payment in excess of the amount(s) received by it from Borrower either individually or in the aggregate (whether or not then owed); or (3) Administrative Agent has for any reason otherwise erroneously made such payment; then each of the Secured Parties severally agrees to repay to Administrative Agent forthwith on demand the Rescindable Amount so distributed to such Secured Party, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by Administrative Agent in accordance with banking industry rules on interbank compensation. Anything contained herein to the contrary notwithstanding (including Section 2.9(b)), all payments and collections received in respect of the Obligations and all proceeds of the Collateral received, in each instance, by Administrative Agent or any of the Lenders after acceleration or the final maturity of the Obligations or termination of the Commitments as a result of an Event of Default shall be remitted to Administrative Agent and distributed as follows: (a) first, to the payment of any outstanding costs and expenses incurred by Administrative Agent, and any security trustee therefor, in monitoring, verifying, protecting, preserving or enforcing the Liens on the Collateral, in protecting, preserving or enforcing rights under the Loan Documents, and in any event including all costs and expenses of a character which Borrower has agreed to pay Administrative Agent under Section 11.13 (such funds to be retained by Administrative Agent for its own account unless it has previously been reimbursed for such costs and expenses by the Lenders, in which event such amounts shall be remitted to the Lenders to reimburse them for payments theretofore made to Administrative Agent); (b) second, to the payment of the Swing Loans, both for principal and accrued but unpaid interest; (c) third, to the payment of any outstanding interest and fees due under the Loan Documents to be allocated pro rata in accordance with the aggregate unpaid amounts owing to each holder thereof;
-49- 744965794 (d) fourth, to the payment of principal on the Loans (other than Swing Loans), unpaid Reimbursement Obligations, together with amounts to be held by Administrative Agent as collateral security for any outstanding L/C Obligations pursuant to Section 8.4 (until Administrative Agent is holding an amount of cash equal to the then outstanding amount of all such L/C Obligations), Funds Transfer and Deposit Account Liability and Hedging Liability (provided that funds from, and proceeds of Collateral owned by, any Person directly or indirectly liable for a Swap Obligation and that was not an “eligible contract participant” as defined in the Commodity Exchange Act at the time such Swap Obligation was incurred may not be used to satisfy such Swap Obligation), the aggregate amount paid to, or held as collateral security for, the Lenders and L/C Issuer and, in the case of Hedging Liability, their Affiliates (and any Person that was a Lender or an Affiliate of a Lender at the time of the entering into such agreement or arrangement) to be allocated pro rata in accordance with the aggregate unpaid amounts owing to each holder thereof; (e) fifth, to the payment of all other unpaid Obligations and all other indebtedness, obligations, and liabilities of Borrower and its Subsidiaries secured by the Loan Documents (provided that funds from, and proceeds of Collateral owned by, any Person directly or indirectly liable for a Swap Obligation and that was not an “eligible contract participant” as defined in the Commodity Exchange Act at the time such Swap Obligation was incurred may not be used to satisfy such Swap Obligation) to be allocated pro rata in accordance with the aggregate unpaid amounts owing to each holder thereof; and (f) finally, to Borrower or whoever else may be lawfully entitled thereto. Section 2.14 Account Debit. Borrower hereby irrevocably authorizes Administrative Agent to charge any of Borrower’s deposit accounts maintained with Administrative Agent for the amounts from time to time necessary to pay any then due Obligations; provided that Borrower acknowledges and agrees that Administrative Agent shall not be under an obligation to do so and Administrative Agent shall not incur any liability to Borrower or any other Person for Administrative Agent’s failure to do so. Section 2.15 Commitment Terminations. Borrower shall have the right at any time and from time to time, upon three (3) Business Days’ prior written notice to Administrative Agent (or such shorter period of time agreed to by Administrative Agent), to terminate the Revolving Credit Commitments without premium or penalty and in whole or in part, any partial termination to be (i) in an amount of than $5,000,000 or any increment of $5,000,000 thereof and (ii) allocated ratably among the Lenders in proportion to their respective Revolver Percentages, provided that the Revolving Credit Commitments may not be reduced to an amount less than the sum of the aggregate principal amount of Revolving Loans, Swing Loans, and L/C Obligations then outstanding. Any termination of the Revolving Credit Commitments below the L/C Sublimit or the Swing Line Sublimit then in effect shall reduce the L/C Sublimit and Swing Line Sublimit, as applicable, by a like amount. Administrative Agent shall give prompt notice to each Lender of any such termination of the Revolving Credit Commitments. (b) Any termination of the Commitments pursuant to this Section 2.15 may not be reinstated.
-50- 744965794 Section 2.16 Substitution of Lenders. In the event (a) Borrower receives a claim from any Lender for compensation under Section 3.6 or 3.1, (b) Borrower receives notice from any Lender of any illegality pursuant to Section 3.4, (c) any Lender is then a Defaulting Lender or such Lender is a Subsidiary or Affiliate of a Person who has been deemed insolvent or becomes the subject of a bankruptcy or insolvency proceeding or a receiver or conservator has been appointed for any such Person, or (d) a Lender fails to consent to an amendment or waiver requested under Section 11.11 at a time when the Required Lenders have approved such amendment or waiver (any such Lender referred to in clause (a), (b), (c), or (d) above being hereinafter referred to as an “Affected Lender”), Borrower may, in addition to any other rights Borrower may have hereunder or under applicable law, require, at its expense, any such Affected Lender to assign, at par, without recourse, all of its interest, rights, and obligations hereunder (including all of its Commitments and the Loans and participation interests in Letters of Credit and other amounts at any time owing to it hereunder and the other Loan Documents) to an Eligible Assignee specified by Borrower, provided that (i) such assignment shall not conflict with or violate any law, rule or regulation or order of any court or other Governmental Authority, (ii) Borrower shall have paid to the Affected Lender all monies (together with amounts due such Affected Lender under Section 3.3 as if the Loans owing to it were prepaid rather than assigned) other than such principal owing to it hereunder, and (iii) the assignment is entered into in accordance with, and subject to the consents required by, Section 11.10 (provided any assignment fees and reimbursable expenses due thereunder shall be paid by Borrower). Section 2.17 Defaulting Lenders. Anything contained herein to the contrary notwithstanding, in the event that any Lender at any time is a Defaulting Lender, then (a) during any Defaulting Lender Period with respect to such Defaulting Lender, such Defaulting Lender shall be deemed not to be a “Lender” for purposes of voting on any matters (including the granting of any consents or waivers) with respect to any of the Loan Documents and such Defaulting Lender’s Commitments shall be excluded for purposes of determining “Required Lenders” (provided that the foregoing shall not permit an increase in such Lender’s Commitments or an extension of the maturity date of such Lender’s Loans or other Obligations without such Lender’s consent); (b) to the extent permitted by applicable law, until such time as the Defaulting Lender Excess with respect to such Defaulting Lender shall have been reduced to zero, any voluntary prepayment of the Loans shall, if Administrative Agent so directs at the time of making such voluntary prepayment, be applied to the Loans of other Lenders as if such Defaulting Lender had no Loans outstanding; (c) such Defaulting Lender’s Commitments and outstanding Loans shall be excluded for purposes of calculating any commitment fee payable to Lenders pursuant to Section 2.12 in respect of any day during any Defaulting Lender Period with respect to such Defaulting Lender, and such Defaulting Lender shall not be entitled to receive any fee pursuant to Section 2.12 with respect to such Defaulting Lender’s Commitment in respect of any Defaulting Lender Period with respect to such Defaulting Lender (and any Letter of Credit fee otherwise payable to a Lender who is a Defaulting Lender shall instead be paid to the L/C Issuer for its use and benefit); (d) the utilization of Commitments as at any date of determination shall be calculated as if such Defaulting Lender had funded all Loans of such Defaulting Lender; and (e) if so requested by the L/C Issuer at any time during the Defaulting Lender Period with respect to such Defaulting Lender, Borrower shall deliver to Administrative Agent cash collateral in an amount equal to such Defaulting Lender’s Percentage of L/C Obligations then outstanding (to be, held by Administrative Agent as set forth in Section 8.4). No Commitment of any Lender shall be increased or otherwise affected, and, except as otherwise expressly provided in this Section 2.17, performance by
-51- 744965794 Borrower of its obligations hereunder and the other Loan Documents shall not be excused or otherwise modified as a result of the operation of this Section 2.17. The rights and remedies against a Defaulting Lender under this Section 2.17 are in addition to other rights and remedies which Borrower may have against such Defaulting Lender and which Administrative Agent or any Lender may have against such Defaulting Lender. Section 2.18 Incremental Loans. (a) Borrower may from time to time, on not less than five (5) Business Days’ notice request the establishment of (x) one or more term loan commitments, which may be in the form of a new tranche of term loans or an increase in the amount of the Term Loans (such new term loan commitments or increase, the “New Term Loan Commitments”) or (y) one or more revolving loan commitments, which shall be an increase in the amount of the Revolving Credit Commitments (such increased commitments, the “New Revolving Loan Commitments” and together with the New Term Loan Commitments, the “New Loan Commitments”), provided, in each case, that at the time of any such request and on the date the New Loan Commitments shall be effective (the “Increased Amount Date”) (and after giving effect thereto and the use of the proceeds thereof), (i) no Default or Event of Default exists and (ii) Borrower shall have a (A) Total Leverage Ratio (on a pro forma basis as of the most recently completed calendar quarter for which financial statements have been prepared and finalized by Borrower) of less than the lesser of 3.00 to 1.00 and 0.25 to 1.00 less than the applicable covenant level and (B) Senior Secured Leverage Ratio (on a pro forma basis as of the most recently completed calendar quarter for which financial statements have been prepared and finalized by Borrower) of less than 2.50 to 1.00. Each New Loan Commitment shall be in an aggregate principal amount of at least $10,000,000 and in integral multiples of at least $5,000,000 and the aggregate principal amount of all New Loan Commitments after the Third Amendment Effective Date (and excluding for the avoidance of doubt the Term A- 2 Loan Commitments) shall not exceed $100,000,000.Each request for a New Loan Commitment shall set forth the requested amount and proposed terms of the relevant New Loan Commitment and the Lenders or other Persons willing to provide such New Loan Commitments. New Loan Commitments may be made by any existing Lender or if necessary to achieve the full amount of the requested New Loan Commitment, any other Person that qualifies as an Eligible Assignee (any such Person, an “New Lender”), provided that no Person shall be a New Lender without the consent of Administrative Agent (which consent shall not be unreasonably withheld). (c) The making of any Loan under this Section 2.18 (a “New Term Loan” or a “New Revolving Loan”, as applicable, and collectively, the “New Loans”) shall (i) be subject to each condition set forth in Section 4.2 and such other conditions as Borrower, the applicable Lenders and Administrative Agent shall agree (including delivery of any legal opinions or other documents reasonably requested by Administrative Agent in connection with any such transaction); and (ii) be documented pursuant to a supplement or joinder to this Agreement executed by Borrower, each applicable New Lender and Administrative Agent. Any New Loan Commitments shall be designated in the applicable supplement or joinder either as a separate tranche (in the case of term loans) or an increase to the existing Term Loans or Revolving Credit Commitments, as applicable (in each case a “Tranche”), for all purposes of this Agreement. (d) The terms and provisions of the New Loans and New Loan Commitments shall, except as otherwise set forth herein or in the applicable supplement, be identical to those applicable
-52- 744965794 to the Term Loans or Revolving Loans, as the case may be. In any event, (i) such New Loans shall (x) rank pari passu in right of payment and of security with all other Loans and (y) in the case of New Term Loans, be entitled to share in prepayments pro rata with the other Term Loans (unless the applicable New Term Lenders agree to take a lesser share of certain prepayments), (ii) with respect to each New Term Loan, the weighted average life to maturity of all New Term Loans shall be no shorter than the weighted average life to maturity of any existing Term Loans, (iii) with respect to any New Term Loan, the maturity date for any New Term Loan shall not be earlier than the maturity date with respect to the Term Loans, as applicable, (iv) the amortization schedule applicable to any Tranche of New Loans shall be determined by Borrower and the applicable New Lenders, (v) the interest rates, fees (including any original issue discount), other pricing-related provisions and yield applicable to any New Loans shall be determined by Borrower and the applicable New Lenders and shall be set forth in each applicable supplement; provided that the All-in Yield for any New Term Loans shall not be more than 0.50% higher than the All-in Yield for any Term Loans outstanding on the date of the issuance of such New Term Loans unless the interest rate on such outstanding Term Loans is increased so that the All-in Yield on such outstanding Term Loans is not less than the All-in Yield for the New Term Loans minus 0.50%, and (vi) will constitute “Senior Debt” or similar terms under and as such terms of defined in each Subordination Agreement. Notwithstanding anything to the contrary in Section 11.11, each applicable supplement or joinder may, without the consent of any other Lender, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of Administrative Agent, to effect the provisions of this Section 2.18. (e) On each Increased Amount Date, each New Lender with a New Revolving Loan Commitment shall make a Revolving Loan to Borrower the proceeds of which will be used to prepay the Revolving Loans of the other Lenders immediately prior to such Increased Amount Date, so that, after giving effect thereto and to any other borrowings and prepayments being made on such date, the Revolving Loans outstanding are held by the Lenders pro rata based on their Revolving Credit Commitments after giving effect to such Increased Amount Date. SECTION 3. TAXES; CHANGE IN CIRCUMSTANCES. Section 3.1 Withholding Taxes. (a) Payments Free of Withholding. Except as otherwise required by law and subject to Section 3.1(b), each payment by Borrower and the Guarantors under this Agreement or the other Loan Documents shall be made without withholding for or on account of any present or future taxes (other than overall net income taxes on the recipient) imposed by or within the jurisdiction in which Borrower or such Guarantor is domiciled, any jurisdiction from which Borrower or such Guarantor makes any payment, or (in each case) any political subdivision or taxing authority thereof or therein. If any such withholding is so required, Borrower or such Guarantor shall make the withholding, pay the amount withheld to the appropriate Governmental Authority before penalties attach thereto or interest accrues thereon, and forthwith pay such additional amount as may be necessary to ensure that the net amount actually received by each Lender, the L/C Issuer, and Administrative Agent free and clear of such taxes (including such taxes on such additional amount) is equal to the amount which that Lender, L/C Issuer, or Administrative Agent (as the case may be) would have received had such withholding not been made. If Administrative Agent, the L/C Issuer, or any Lender pays any amount in respect of any such taxes, penalties or interest,
-53- 744965794 Borrower or such Guarantor shall reimburse Administrative Agent, the L/C Issuer or such Lender for that payment on demand in the currency in which such payment was made. If Borrower or such Guarantor pays any such taxes, penalties or interest, it shall deliver official tax receipts evidencing that payment or certified copies thereof to the Lender, the L/C Issuer or Administrative Agent on whose account such withholding was made (with a copy to Administrative Agent if not the recipient of the original) on or before the thirtieth day after payment. (b) U.S. Withholding Tax Exemptions. Each Lender or L/C Issuer that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) shall submit to Borrower and Administrative Agent on or before the date the initial Credit Event is made hereunder or, if later, the date such financial institution becomes a Lender or L/C Issuer hereunder, two duly completed and signed copies of (i) either Form W 8 BEN (relating to such Lender or L/C Issuer and entitling it to a complete exemption from withholding under the Code on all amounts to be received by such Lender or L/C Issuer, including fees, pursuant to the Loan Documents and the Obligations) or Form W 8 ECI (relating to all amounts to be received by such Lender or L/C Issuer, including fees, pursuant to the Loan Documents and the Obligations) of the United States Internal Revenue Service or (ii) solely if such Lender is claiming exemption from United States withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a Form W 8 BEN, or any successor form prescribed by the Internal Revenue Service, and a certificate representing that such Lender is not a bank for purposes of Section 881(c) of the Code, is not a 10 percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of Borrower and is not a controlled foreign corporation related to Borrower (within the meaning of Section 864(d)(4) of the Code). Thereafter and from time to time, each Lender and L/C Issuer shall submit to Borrower and Administrative Agent such additional duly completed and signed copies of one or the other of such Forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) and such other certificates as may be (i) requested by Borrower in a written notice, directly or through Administrative Agent, to such Lender or L/C Issuer and (ii) required under then current United States law or regulations to avoid or reduce United States withholding taxes on payments in respect of all amounts to be received by such Lender or L/C Issuer, including fees, pursuant to the Loan Documents or the Obligations. Upon the request of Borrower or Administrative Agent, each Lender and L/C Issuer that is a United States person (as such term is defined in Section 7701(a)(30) of the Code) shall submit to Borrower and Administrative Agent a certificate to the effect that it is such a United States person. (c) Inability of Lender to Submit Forms. If any Lender or L/C Issuer determines, as a result of any change in applicable law, regulation or treaty, or in any official application or interpretation thereof, that it is unable to submit to Borrower or Administrative Agent any form or certificate that such Lender or L/C Issuer is obligated to submit pursuant to subsection (b) of this Section 3.1 or that such Lender or L/C Issuer is required to withdraw or cancel any such form or certificate previously submitted or any such form or certificate otherwise becomes ineffective or inaccurate, such Lender or L/C Issuer shall promptly notify Borrower and Administrative Agent of such fact and the Lender or L/C Issuer shall to that extent not be obligated to provide any such form or certificate and will be entitled to withdraw or cancel any affected form or certificate, as applicable. Section 3.2 Documentary Taxes. Borrower agrees to pay on demand any documentary, stamp or similar taxes payable in respect of this Agreement or any other Loan Document, including
-54- 744965794 interest and penalties, in the event any such taxes are assessed, irrespective of when such assessment is made and whether or not any credit is then in use or available hereunder. Section 3.3 Funding Indemnity. If any Lender shall incur any loss, cost or expense (including any loss, cost or expense incurred by reason of the liquidation or re-employment of deposits or other funds acquired by such Lender to fund or maintain any Eurodollar Loan or Swing Loan or the relending or reinvesting of such deposits or amounts paid or prepaid to such Lender) as a result of: (a) any payment, prepayment or conversion of a Eurodollar Loan or Swing Loan on a date other than the last day of its Interest Period, (b) any failure (because of a failure to meet the conditions of Section 4 or otherwise) by Borrower to borrow or continue a Eurodollar Loan or Swing Loan, or to convert a Base Rate Loan into a Eurodollar Loan or Swing Loan on the date specified in a notice given pursuant to Section 2.6(a) or 2.7, (c) any failure by Borrower to make any payment of principal on any Eurodollar Loan or Swing Loan when due (whether by acceleration or otherwise), or (d) any acceleration of the maturity of a Eurodollar Loan or Swing Loan as a result of the occurrence of any Event of Default hereunder, then, Borrower shall pay to such Lender such amount as will reimburse such Lender for such loss, cost or expense within ten (10) days after receipt of the certificate described in the next sentence. If any Lender makes such a claim for compensation, it shall provide to Borrower, with a copy to Administrative Agent, a certificate setting forth the amount of such loss, cost or expense in reasonable detail (including an explanation of the basis for and the computation of such loss, cost or expense) and the amounts shown on such certificate shall be conclusive and binding on Borrower absent manifest error. Section 3.4 Change in Law. Notwithstanding any other provisions of this Agreement or any other Loan Document, if at any time any Change in Law or regulation or in the interpretation thereof makes it unlawful for any Lender to make or continue to maintain any Eurodollar Loans or to perform its obligations as contemplated hereby, such Lender shall promptly give notice thereof to Borrower and such Lender’s obligations to make or maintain Eurodollar Loans under this Agreement shall be suspended until it is no longer unlawful for such Lender to make or maintain Eurodollar Loans. Borrower shall prepay on demand the outstanding principal amount of any such affected Eurodollar Loans, together with all interest accrued thereon and all other amounts then due and payable to such Lender under this Agreement; provided, that, subject to all of the terms and conditions of this Agreement, Borrower may then elect to borrow the principal amount of the affected Eurodollar Loans from such Lender by means of Base Rate Loans from such Lender, which Base Rate Loans shall not be made ratably by the Lenders but only from such affected Lender. Section 3.5 Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR. If on or prior to the first day of any Interest Period for any Borrowing of Eurodollar Loans:
-55- 744965794 (i) Administrative Agent determines that deposits in U.S. Dollars (in the applicable amounts) are not being offered to it in the interbank eurodollar market for such Interest Period, or that by reason of circumstances affecting the interbank eurodollar market adequate and reasonable means do not exist for ascertaining the applicable LIBOR, or (ii) the Required Lenders advise Administrative Agent that (i) LIBOR as determined by Administrative Agent will not adequately and fairly reflect the cost to such Lenders of funding their Eurodollar Loans for such Interest Period or (ii) that the making or funding of Eurodollar Loans become impracticable, then Administrative Agent shall forthwith give notice thereof to Borrower and the Lenders, whereupon until Administrative Agent notifies Borrower that the circumstances giving rise to such suspension no longer exist, the obligations of the Lenders to make, continue, or effect by conversion Eurodollar Loans shall be suspended. (b) Notwithstanding anything to the contrary herein or in any other Loan Document, upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, the Administrative Agent and the Borrower may amend this Agreement to replace LIBOR with a Benchmark Replacement. Any such amendment with respect to a Benchmark Transition Event will become effective at 5:00 p.m. on the fifth (5th) Business Day after the Administrative Agent has posted such proposed amendment to all Lenders and the Borrower so long as the Administrative Agent has not received, by such time, written notice of objection to such amendment from Lenders comprising the Required Lenders. Any such amendment with respect to an Early Opt-in Election will become effective on the date that Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders accept such amendment. No replacement of LIBOR with a Benchmark Replacement pursuant to this Section 3.5(b) will occur prior to the applicable Benchmark Transition Start Date. (c) In connection with the implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement. (d) The Administrative Agent will promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date and Benchmark Transition Start Date, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes and (iv) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or Lenders pursuant to this Section 3.5(b) including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 3.5(b).
-56- 744965794 (e) Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Eurodollar Loan of, conversion to or continuation of Eurodollar Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to Base Rate Loans. During any Benchmark Unavailability Period, the component of Base Rate based upon LIBOR will not be used in any determination of Base Rate. Section 3.6 Increased Cost and Reduced Return. If any Change in Law: (i) shall subject any Lender (or its Lending Office) or the L/C Issuer to any tax, duty or other charge with respect to its Eurodollar Loans, its Notes, its Letter(s) of Credit, or its participation in any thereof, any Reimbursement Obligations owed to it or its obligation to make Eurodollar Loans, issue a Letter of Credit, or to participate therein, or shall change the basis of taxation of payments to any Lender (or its Lending Office) or the L/C Issuer of the principal of or interest on its Eurodollar Loans, Letter(s) of Credit, or participations therein or any other amounts due under this Agreement or any other Loan Document in respect of its Eurodollar Loans, Letter(s) of Credit, any participation therein, any Reimbursement Obligations owed to it, or its obligation to make Eurodollar Loans, or issue a Letter of Credit, or acquire participations therein (except for changes in the rate of tax on the overall net income of such Lender or its Lending Office or the L/C Issuer imposed by the jurisdiction in which such Lender’s or the L/C Issuer’s principal executive office or Lending Office is located); or (ii) shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding with respect to any Eurodollar Loans any such requirement included in an applicable Eurodollar Reserve Percentage) against assets of, deposits with or for the account of, or credit extended by, any Lender (or its Lending Office) or the L/C Issuer or shall impose on any Lender (or its Lending Office) or the L/C Issuer or on the interbank market any other condition affecting its Eurodollar Loans, its Notes, its Letter(s) of Credit, or its participation in any thereof, any Reimbursement Obligation owed to it, or its obligation to make Eurodollar Loans, or to issue a Letter of Credit, or to participate therein; and the result of any of the foregoing is to increase the cost to such Lender (or its Lending Office) or the L/C Issuer of making or maintaining any Eurodollar Loan, issuing or maintaining a Letter of Credit, or participating therein, or to reduce the amount of any sum received or receivable by such Lender (or its Lending Office) or the L/C Issuer under this Agreement or under any other Loan Document with respect thereto, by an amount deemed by such Lender or L/C Issuer to be material, then, within 15 days after demand by such Lender or L/C Issuer (with a copy to Administrative Agent), Borrower shall be obligated to pay to such Lender or L/C Issuer such additional amount or amounts as will compensate such Lender or L/C Issuer for such increased cost or reduction. (b) If, after the date hereof, any Lender, the L/C Issuer, or Administrative Agent shall have determined that any Change in Law has had the effect of reducing the rate of return on such
-57- 744965794 Lender’s or L/C Issuer ‘s or such corporation’s capital as a consequence of its obligations hereunder to a level below that which such Lender or L/C Issuer or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or L/C Issuer ‘s or such corporation’s policies with respect to liquidity and capital adequacy) by an amount deemed by such Lender or L/C Issuer to be material, then from time to time, within 15 days after demand by such Lender or L/C Issuer (with a copy to Administrative Agent), Borrower shall pay to such Lender or L/C Issuer, as applicable, such additional amount or amounts as will compensate such Lender or L/C Issuer for such reduction. (c) A certificate of a Lender or L/C Issuer claiming compensation under this Section 3.6 and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive absent manifest error. In determining such amount, such Lender or L/C Issuer may use any reasonable averaging and attribution methods. (d) Failure or delay on the part of any Lender, L/C Issuer or the Administrative Agent to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s, L/C Issuer’s or Administrative Agent’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender, L/C Issuer or Administrative Agent pursuant to this Section for any increased costs incurred or reductions suffered more than 180 days prior to the date that such Lender, L/C Issuer or Administrative Agent, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions, and of such Lender’s, L/C Issuer’s or Administrative Agent’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof). Section 3.7 Lending Offices. Each Lender may, at its option, elect to make its Loans hereunder at the branch, office or affiliate specified on the appropriate signature page hereof (each a “Lending Office”) for each type of Loan available hereunder or at such other of its branches, offices or affiliates as it may from time to time elect and designate in a written notice to Borrower and Administrative Agent. To the extent reasonably possible, a Lender shall designate an alternative branch or funding office with respect to its Eurodollar Loans to reduce any liability of Borrower to such Lender under Section 3.6 or to avoid the unavailability of Eurodollar Loans under Section 3.5, so long as such designation is not otherwise disadvantageous to the Lender. Section 3.8 Discretion of Lender as to Manner of Funding. Notwithstanding any other provision of this Agreement, each Lender shall be entitled to fund and maintain its funding of all or any part of its Loans in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder with respect to Eurodollar Loans shall be made as if each Lender had actually funded and maintained each Eurodollar Loan through the purchase of deposits in the interbank eurodollar market having a maturity corresponding to such Loan’s Interest Period, and bearing an interest rate equal to LIBOR for such Interest Period.
-58- 744965794 SECTION 4. CONDITIONS PRECEDENT. Section 4.1 Initial Credit Event. The obligation of each Lender and the L/C Issuer to participate in the initial Credit Event hereunder is subject to satisfaction or waiver by the applicable party of the following conditions precedent: (a) The transactions contemplated by the Closing Date Acquisition Agreement shall be consummated substantially concurrently with the initial funding under the Credits in accordance with the terms of the draft Closing Date Acquisition Agreement (without any amendment, modification or waiver of any of the provisions thereof that would be materially adverse to the Lenders without the consent of Administrative Agent); provided that (i) a reduction in the purchase price under the Closing Date Acquisition Agreement shall not be deemed to be materially adverse to the Lenders or the Administrative Agent so long as such decrease is allocated to reduce the Term Loan Commitments, (ii) any purchase price adjustment expressly contemplated by the Closing Date Acquisition Agreement (including any working capital purchase price adjustment) shall not be considered an amendment or waiver of the Closing Date Acquisition Agreement and (iii) (A) any change to the definition of “Material Adverse Effect” contained in the Closing Date Acquisition Agreement shall be deemed to be materially adverse to Lenders, (B) any amendment of the minimum inside date for the “Closing Date” as defined and set forth in the Closing Date Acquisition Agreement shall be deemed to be materially adverse to the interests of the Lenders and the Administrative Agent, and (C) any amendment or modification to any of the provisions relating to the liability, jurisdiction or status as a third party beneficiary under the Closing Date Acquisition Agreement of the Lenders or the Administrative Agent shall be deemed to be materially adverse to the interests of the Lenders and the Administrative Agent; and there shall be no injunction, temporary restraining order, or other legal action in effect which prohibits the closing of the Closing Date Acquisition or the closing and funding of the Credits; (b) The Administrative Agent shall have received a Solvency Certificate of a Responsible Officer substantially in the form attached hereto as Exhibit J; (c) The Administrative Agent shall have received (a) five (5)-year projected financial statements (the “Financial Model”) which gives pro forma effect to the Closing Date Acquisition and is otherwise acceptable to the Administrative Agent and (b) audited consolidated balance sheets and related statements of income and cash flows of the Borrower and its Subsidiaries for the last three (3) fiscal years ended at least ninety (90) days prior to the Closing Date, (c) unaudited consolidated balance sheets and related statements of income of the Borrower and its Subsidiaries for each fiscal quarter ended after the close of its most recent fiscal year and at least forty-five (45) days prior to the Closing Date, (d) a pro forma unaudited consolidated balance sheet and related statements of income and cash flows of the Borrower as of and for the 12-month period ending on the last day of the most recently completed twelve consecutive month period ended as of June 30, 2019, prepared after giving effect to the Transactions as if the Transactions had occurred at the beginning of such period, and (e) evidence of either an audit by a nationally recognized accounting firm or review (which may be in the form of a buy-side quality of earnings report) of the Closing Date Target by an accounting firm reasonably acceptable to the Administrative Agent; (d) (i) Since December 31, 2018, with respect to the Loan Parties, there shall not have occurred any change or event that has resulted in, or would reasonably be expected to have a
-59- 744965794 material adverse change in any of the condition (financial or otherwise), business, performance, operations or property of the Borrower and its Subsidiaries, taken as a whole; and (ii) since December 31, 2018, with respect to the Closing Date Target, there shall not have occurred any change or event that has resulted in, or would reasonably be expected to have, a “Material Adverse Effect” (as defined in the Closing Date Acquisition Agreement); (e) Administrative Agent shall have received each of the following, in each case, (i) duly executed by all applicable parties, (ii) dated a date satisfactory to Administrative Agent, and (iii) in form and substance satisfactory to Administrative Agent: (i) this Agreement duly executed by the Loan Parties and the Lenders; (ii) if requested by any Lender, such Lender’s duly executed Notes of Borrower dated the date hereof and otherwise in compliance with the provisions of Section 2.11; (iii) the Security Agreement duly executed by the Loan Parties, together with, and subject to Section 4.1(j) below, (i) original stock certificates or other similar instruments or securities representing all of the issued and outstanding equity interests in each Subsidiary (other than any Affiliated Entity or Project Specific JV constituting, in either case, an Excluded Subsidiary, limited in the case of any first tier Foreign Subsidiary to 65% of the Voting Stock and 100% of any other equity interests as provided in the Security Agreement) as of the Closing Date that are required to be pledged pursuant to the Security Agreement, (ii) stock powers for the Collateral consisting of the equity interest in each Subsidiary required to be pledged pursuant to the Security Agreement executed in blank and undated, (iii) UCC financing statements to be filed against each Loan Party, as debtor, in favor of Administrative Agent, as secured party, and (iv) to the extent applicable, patent, trademark, and copyright collateral agreements, in form and substance satisfactory to the Administrative Agent, to the extent requested by Administrative Agent; (iv) evidence of insurance required to be maintained under the Loan Documents; (v) copies of each Loan Party’s articles of incorporation and bylaws (or comparable organizational documents) and any amendments thereto, certified in each instance by its Secretary or Assistant Secretary or other duly authorized officer; (vi) copies of resolutions of each Loan Party’s Board of Directors (or similar governing body) authorizing the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby, together with specimen signatures of the persons authorized to execute such documents on each Loan Party’s behalf, all certified in each instance by its Secretary or Assistant Secretary or other duly authorized officer; (vii) copies of the certificates of good standing for each Loan Party (dated no earlier than 30 days prior to the date hereof) from the office of the secretary of the state of its incorporation or organization and of each state in which it is qualified to do business as a foreign corporation or organization (except for such foreign jurisdictions to the extent that failure to be so qualified would not have a Material Adverse Effect);
-60- 744965794 (viii) financing statement, tax, and judgment lien search results against the Property of each Loan Party evidencing the absence of Liens on its Property except as permitted by Section 7.2; (ix) evidence that the Borrower has entered into Bonding Agreements necessary for the conduct of its business in the ordinary course of its operations; (x) the favorable written opinions of counsels to each Loan Party, in form and substance reasonably satisfactory to Administrative Agent; and (xi) an Intercreditor Agreement in respect of any Bonding Agreements of the Borrower or any other Loan Party in effect on the Closing Date to the extent reasonably requested by the Administrative Agent. (f) The representations and warranties set forth in this Agreement (other than in Section 5.6) and in the other Loan Documents shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on the date of such extension of credit under the Credits (except to the extent such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date); (g) The Specified Acquisition Agreement Representations shall be true and correct in all respects; (h) Administrative Agent shall have received (i) at least five (5) days prior to the Closing Date, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act that has been reasonably requested by any Lender at least ten (10) business days in advance of the Closing Date and (ii) to the extent the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, at least five days prior to the Closing Date, a Beneficial Ownership Certification in relation to the Borrower; (i) Payment of (i) all fees and compensation required to be paid on the Closing Date and (ii) expenses required to be paid on the Closing Date to the extent invoiced at least two (2) Business Days prior to the Closing Date shall, in each case, have been paid (which amounts may be offset against the proceeds of the initial borrowing of Credits hereunder); (j) All documents and instruments required to create and perfect the security interests of the Administrative Agent in the Collateral of the Loan Parties shall have been executed and delivered and, if applicable, be in proper form for filing, except to the extent any Collateral (other than to the extent that a lien on such Collateral may be perfected by (x) the filing of a financing statement under the Uniform Commercial Code or (y) the delivery of stock certificates (together with a stock power or similar instrument of transfer endorsed in blank for the relevant certificate) which are required to be delivered (and with respect to the Closing Date Target and its Subsidiaries, so long as the Loan Parties have used commercially reasonable efforts to obtain such certificates, solely to the extent such stock certificates are received from the Closing Date Target on or prior to the Closing Date)) is not or cannot be provided or the security interests in favor of the
-61- 744965794 Administrative Agent are not or cannot be perfected on the Closing Date after the Loan Parties’ use of commercially reasonable efforts to do so; (k) The Seller Note shall have been issued in an aggregate principal amount not to exceed $10,000,000; (l) On the Closing Date, on a pro forma basis, and giving effect to the initial extension of credit and closing of the Closing Date Acquisition on the Closing Date, the Total Leverage Ratio shall not be greater than 3.30 to 1.00; (m) Borrower shall have delivered to the Administrative Agent a certificate of a Responsible Officer certifying as to the matters described in clauses (d), (f), (g) and (l) above (with reasonably detailed calculations in the case of clause (l)); and (n) Administrative Agent shall have received the notice required by Section 2.6 for any Borrowing to be made on the Closing Date, and in the case of the issuance of any Letter of Credit the L/C Issuer shall have received a duly completed Application for such Letter of Credit together with any fees called for by Section 2.12. Section 4.2 All Credit Events. The obligation of each Lender and the L/C Issuer to participate in any Credit Event hereunder after the Closing Date is subject to the following conditions precedent: (a) each of the representations and warranties set forth herein and in the other Loan Documents shall be and remain true and correct in all material respects as of said time (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof), except to the extent the same expressly relate to an earlier date, in which case such representations and warranties shall be and remain true and correct in all material respects as of such earlier date; (b) no Default or Event of Default shall have occurred and be continuing or would occur as a result of such Credit Event; and (c) in the case of a Borrowing, Administrative Agent shall have received the notice required by Section 2.6, in the case of the issuance of any Letter of Credit the L/C Issuer shall have received a duly completed Application for such Letter of Credit together with any fees called for by Section 2.12, and, in the case of an extension or increase in the amount of a Letter of Credit, a written request therefor in a form acceptable to the L/C Issuer together with fees called for by Section 2.12. Each request for a Borrowing hereunder and each request for the issuance of, increase in the amount of, or extension of the expiration date of, a Letter of Credit shall be deemed to be a representation and warranty by Borrower on the date on such Credit Event as to the facts specified in subsections (a) through (c), both inclusive, of this Section; provided, that the Lenders may continue to make advances under the Revolving Credit, in the sole discretion of the Lenders with Revolving Credit Commitments, notwithstanding the failure of Borrower to satisfy one or more of the conditions set forth above and any such advances so made shall not be deemed a waiver of any Default or Event of Default or other condition set forth above that may then exist.
-62- 744965794 SECTION 5. REPRESENTATIONS AND WARRANTIES. Borrower and each Guarantor, jointly and severally, represents and warrants to Administrative Agent, the Lenders, and the L/C Issuer as follows: Section 5.1 Organization and Qualification. Borrower is (a) duly organized, validly existing, and in good standing as a corporation under the laws of the State of Delaware, (b) has full and adequate power to own its Property and conduct its business as now conducted, and (c) is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business conducted by it or the nature of the Property owned or leased by it requires such licensing or qualifying, except, with respect to this clause (c), where the failure to do so would not have a Material Adverse Effect. Section 5.2 Subsidiaries; Capitalization. (a) Each Subsidiary (i) is duly organized, validly existing, and in good standing under the laws of the jurisdiction in which it is organized, (ii) has full and adequate power to own its Property and conduct its business as now conducted, and (iii) is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business conducted by it or the nature of the Property owned or leased by it requires such licensing or qualifying, except, with respect to this clause (c), where the failure to do so would not have a Material Adverse Effect. (b) Schedule 5.2 hereto identifies each Subsidiary, the jurisdiction of its organization, the percentage of issued and outstanding shares of each class of its capital stock or other equity interests owned by Borrower and the other Subsidiaries and, if such percentage is not 100% (excluding directors’ qualifying shares as required by law), a description of each class of its authorized capital stock and other equity interests and the number of shares of each class issued and outstanding. All of the outstanding shares of capital stock and other equity interests of each Subsidiary are validly issued and outstanding and fully paid and non-assessable and all such shares and other equity interests indicated on Schedule 5.2 as owned by Borrower or another Subsidiary are owned, beneficially and of record, by Borrower or such Subsidiary free and clear of all Liens other than the Liens granted in favor of Administrative Agent pursuant to the Collateral Documents and restrictions on transfer arising under applicable federal and state securities laws. Other than as set forth on Schedule 5.2, there are no outstanding commitments or other obligations of any Subsidiary to issue, and no options, warrants or other rights of any Person to acquire, any shares of any class of capital stock or other equity interests of any Subsidiary. Section 5.3 Authority and Validity of Obligations. (a) Borrower has full right and authority to enter into this Agreement and the other Loan Documents executed by it, to make the borrowings herein provided for, to grant to Administrative Agent the Liens described in the Collateral Documents executed by Borrower, and to perform all of its obligations hereunder and under the other Loan Documents executed by it. (b) Each Loan Party has full right and authority to enter into the Loan Documents executed by it, to guarantee the Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability, to grant to Administrative Agent the Liens described in the Collateral
-63- 744965794 Documents executed by such Person, and to perform all of its obligations under the Loan Documents executed by it. (c) The Loan Documents delivered by Borrower and the Loan Parties have been duly authorized, executed, and delivered by such Persons and constitute valid and binding obligations of Borrower and the Guarantors enforceable against them in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors’ rights generally and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law). (d) This Agreement and the other Loan Documents do not, nor does the performance or observance by Borrower or any other Loan Party of any of the matters and things herein or therein provided for, (i) contravene or constitute a default under any provision of law or any judgment, injunction, order or decree binding upon Borrower or any other Loan Party, (ii) contravene or constitute a default under any provision of the Organizational Documents of Borrower or any other Loan Party, (iii) conflict with, contravene or constitute a default under any material covenant, indenture or agreement of or affecting Borrower or any other Loan Party or any of their Property, or (iv) result in the creation or imposition of any Lien on any Property of Borrower or any Subsidiary other than the Liens granted in favor of Administrative Agent pursuant to the Collateral Documents. Section 5.4 Use of Proceeds; Margin Stock. Borrower shall use the proceeds of the Term Loans (a) to finance a portion of the purchase price for the acquisition of all of the issued and outstanding shares of the Closing Date Targets, (b) to refinance existing indebtedness of the Borrower, (c) to finance certain Capital Expenditures, (d) for its general working capital purposes, (e) to finance Permitted Acquisitions, including the Third Amendment Acquisitions, or, with respect to the Term A-2 Loans, to replenish balance sheet cash used for such purposes, (f) to finance other general corporate purposes and (g) to fund certain fees and expenses in connection with the foregoing; and Borrower shall use the proceeds of the Revolving Credit for its general working capital purposes and for such other legal and proper purposes as are consistent with all applicable laws. Neither Borrower nor any Subsidiary is engaged, principally or as one of its important activities, in the business of purchasing or carrying margin stock or in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no part of the proceeds of any Loan or any other extension of credit made hereunder will be used to purchase or carry any such margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock. Margin stock (as hereinabove defined) constitutes less than 25% of the assets of Borrower and its Subsidiaries which are subject to any limitation on sale, pledge or other restriction hereunder. Section 5.5 Financial Reports. The consolidated balance sheet of Borrower and its Subsidiaries as at December 31, 2020, and the related consolidated statements of income, retained earnings and cash flows of Borrower and its Subsidiaries for the fiscal year then ended, and accompanying notes thereto, which financial statements are accompanied by the audit report of Grant Thornton LLP, independent public accountants, and the unaudited interim consolidated balance sheet of Borrower and its Subsidiaries as at September 30, 2021, and the related consolidated statements of income, retained earnings and cash flows of Borrower and its
-64- 744965794 Subsidiaries for the quarterly period then ended, heretofore furnished to Administrative Agent and the Lenders, fairly present the consolidated financial condition of Borrower and its Subsidiaries as at said dates and the consolidated results of their operations and cash flows for the periods then ended in conformity with GAAP applied on a consistent basis. Neither Borrower nor any Subsidiary has contingent liabilities which are material to it other than as indicated on such financial statements or, with respect to future periods, on the financial statements furnished pursuant to Section 6.5. Section 5.6 No Material Adverse Change. There has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have, since December 31, 2020, a Material Adverse Effect. Section 5.7 Full Disclosure. The written statements and written information (excluding projections, forward-looking statements and information of a general economic or industry nature) furnished by any Loan Party to Administrative Agent and the Lenders in connection with the negotiation of this Agreement and the other Loan Documents and the commitments by the Lenders to provide all or part of the financing contemplated hereby, taken as a whole, do not contain any untrue statements of a material fact or omit a material fact necessary to make the material statements contained herein or therein, taken as a whole, not misleading. Administrative Agent and the Lenders acknowledge that as to any projections furnished to Administrative Agent and the Lenders by Borrower, Borrower only represents that the same were prepared on the basis of information and estimates Borrower believed to be reasonable at the time of preparation. The information included in the Beneficial Ownership Certification (if any) is true and correct in all respects as of the Closing Date. Section 5.8 Intellectual Property, Franchises, and Licenses. Borrower and its Subsidiaries own, possess, or have the right to use all necessary patents, licenses, franchises, trademarks, trade names, trade styles, copyrights, trade secrets, know how, and confidential commercial and proprietary information to conduct their businesses as now conducted, without known conflict with any patent, license, franchise, trademark, trade name, trade style, copyright or other proprietary right of any other Person. Section 5.9 Governmental Authority and Licensing. Borrower and its Subsidiaries have received all licenses, permits, and approvals of all Governmental Authorities, if any, necessary to conduct their businesses, in each case, except where the failure to obtain or maintain the same could not reasonably be expected to have a Material Adverse Effect. No investigation or proceeding is pending or, to the knowledge of Borrower, threatened, before or by any Governmental Authority that could reasonably be expected to have a Material Adverse Effect. Section 5.10 Good Title. Borrower and its Subsidiaries have good and defensible title (or valid leasehold interests) to their assets as reflected on the most recent consolidated balance sheet of Borrower and its Subsidiaries furnished to Administrative Agent and the Lenders (except for sales of assets in the ordinary course of business), subject to no Liens other than Permitted Encumbrances. Section 5.11 Litigation and Other Controversies. There is no litigation or governmental or arbitration proceeding or labor controversy pending, nor to the knowledge of Borrower
-65- 744965794 threatened, against Borrower or any Subsidiary or any of their Property which if adversely determined, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Section 5.12 Taxes. All tax returns required to be filed by Borrower or any Subsidiary in any jurisdiction have, in fact, been filed, and all taxes, assessments, fees, and other governmental charges upon Borrower or any Subsidiary or upon any of its Property, income or franchises, which are shown to be due and payable in such returns, have been paid, except such taxes, assessments, fees and governmental charges, if any, as are being contested in good faith and by appropriate proceedings which prevent enforcement of the matter under contest and as to which adequate reserves established in accordance with GAAP have been provided. Borrower does not know of any proposed additional tax assessment against it or its Subsidiaries for which adequate provisions in accordance with GAAP have not been made on their accounts. Adequate provisions in accordance with GAAP for taxes on the books of Borrower and each Subsidiary have been made for all open years, and for its current fiscal period. Section 5.13 Approvals. No authorization, consent, license or exemption from, or filing or registration with, any Governmental Authority, nor any approval or consent of any other Person, is or will be necessary to the valid execution, delivery or performance by Borrower or any Subsidiary of any Loan Document, except for such approvals which have been obtained prior to the date of this Agreement and remain in full force and effect. Section 5.14 Affiliate Transactions. Other than as set forth on Schedule 5.14, neither Borrower nor any Subsidiary is a party to any contracts or agreements with any of its Affiliates (other than any such contracts or agreements between or among the Loan Parties or with Wholly owned Subsidiaries) on terms and conditions which are less favorable to Borrower or such Subsidiary than would be usual and customary in similar contracts or agreements between Persons not affiliated with each other. Section 5.15 Investment Company. Neither Borrower nor any Subsidiary is an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended. Section 5.16 ERISA. (a) Except as set forth on Schedule 5.16, neither Borrower nor any ERISA Affiliate sponsors has adopted, contributes to, has any obligation to contribute, or any liability (contingent or otherwise) to any Plan. (b) No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. (c) Neither Borrower nor any Subsidiary has any contingent liabilities with respect to any post-retirement benefits under a Welfare Plan, other than liability for continuation coverage described in Article 6 of Title I of ERISA. Section 5.17 Compliance with Laws.
-66- 744965794 (a) Borrower and its Subsidiaries are in compliance with all Legal Requirements applicable to or pertaining to their Property or business operations (including the Occupational Safety and Health Act of 1970, the Americans with Disabilities Act of 1990, and laws and regulations establishing quality criteria and standards for air, water, land and toxic or hazardous wastes and substances), where any such noncompliance, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. (b) Without limiting the representations and warranties set forth in Section 6.8(a) below, except for such matters, individually or in the aggregate, which could not reasonably be expected to result in a Material Adverse Effect, Borrower represents and warrants that: (i) Borrower and its Subsidiaries, and each of the Premises, comply in all material respects with all applicable Environmental Laws; (ii) Borrower and its Subsidiaries have obtained all governmental approvals required for their operations and each of the Premises by any applicable Environmental Law; (iii) Borrower and its Subsidiaries have not, and Borrower has no knowledge of any other Person who has, caused any Release, threatened Release or disposal of any Hazardous Material at, on, about, or off any of the Premises in any material quantity and, to the knowledge of Borrower, none of the Premises are adversely affected by any Release, threatened Release or disposal of a Hazardous Material originating or emanating from any other property; (iv) none of the Premises contain and have contained any: (1) underground storage tank, (2) material amounts of asbestos containing building material, (3) landfills or dumps, (4) hazardous waste management facility as defined pursuant to RCRA or any comparable state law, or (5) site on or nominated for the National Priority List promulgated pursuant to CERCLA or any state remedial priority list promulgated or published pursuant to any comparable state law; (v) except in the ordinary course of business and in material compliance with Environmental Law, Borrower and its Subsidiaries have not used a material quantity of any Hazardous Material and have conducted no Hazardous Material Activity at any of the Premises; (vi) Borrower and its Subsidiaries have no material liability for response or corrective action, natural resource damage or other harm pursuant to CERCLA, RCRA or any comparable state law; (vii) Borrower and its Subsidiaries are not subject to, have no notice or knowledge of and are not required to give any notice of any Environmental Claim involving Borrower or any Subsidiary or any of the Premises, and there are no conditions or occurrences at any of the Premises which could reasonably be anticipated to form the basis for an Environmental Claim against Borrower or any Subsidiary or such Premises; (viii) none of the Premises are subject to any, and Borrower has no knowledge of any imminent restriction on the ownership, occupancy, use or transferability of the Premises in connection with any (1) Environmental Law or (2) Release, threatened Release or disposal of a Hazardous Material; and (ix) there are no conditions or circumstances at any of the Premises which pose an unreasonable risk to the environment or the health or safety of Persons. Section 5.18 Sanctions; Anti-Money Laundering; Anti-Corruption Laws. (a) Borrower, each of its Subsidiaries, each of Borrower’s and its Subsidiaries’ (other than Affiliated Entities’ and Project Specific JVs’) respective directors, officers and employees, and, to the knowledge of Borrower, each of Borrower’s and its Subsidiaries’ respective agents and representatives and each Affiliated Entity’s and Project Specific JV’s respective directors, officers and employees, is in compliance with all applicable Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions.
-67- 744965794 (b) None of (i) Borrower or any Subsidiary, or (ii) to the knowledge of Borrower, any directors or officers of Borrower or any Subsidiary, or any Affiliate of Borrower or any Subsidiary or any of their respective employees or agents that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No Borrowing, Letter of Credit, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions. (c) Borrower and its Subsidiaries have instituted and maintain in effect policies and procedures reasonably designed to ensure compliance by Borrower, its Subsidiaries, and Borrower’s and its Subsidiaries’ respective directors, officers, employees and agents with all applicable Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions. Section 5.19 Other Agreements. Neither Borrower nor any Subsidiary is in default under the terms of any covenant, indenture or agreement of or affecting such Person or any of its Property, which default if uncured could reasonably be expected to have a Material Adverse Effect. Section 5.20 Solvency. Borrower and each of its Subsidiaries, taken in the aggregate, are solvent, able to pay their debts as they become due, and have sufficient capital to carry on their business. Section 5.21 No Default. No Default or Event of Default has occurred and is continuing. Section 5.22 No Broker Fees. No broker’s or finder’s fee or commission will be payable with respect hereto or any of the transactions contemplated hereby; and Borrower hereby agrees to indemnify Administrative Agent and the Lenders against, and agrees that it will hold Administrative Agent and the Lenders harmless from, any claim, demand, or liability for any such broker’s or finder’s fees alleged to have been incurred in connection herewith or therewith and any expenses (including reasonable attorneys’ fees) arising in connection with any such claim, demand, or liability. Section 5.23 Insurance. Borrower and each Subsidiary insures with financially sound, reputable and responsible insurance companies all insurable Property owned by it which is of a character usually insured by Persons similarly situated and operating like Properties against loss or damage from such hazards and risks, and in such amounts, as are insured by Persons similarly situated and operating like Properties. Section 5.24 Senior Indebtedness. The Obligations are and will be direct, unconditional and unsubordinated obligations, and do rank and will rank at least pari passu with all other present and future senior Indebtedness for Borrowed Money of each Loan Party and senior to all Subordinated Debt of each Loan Party. Section 5.25 Labor Matters. Except as set forth on Schedule 5.25, there are no collective bargaining agreements or Multiemployer Plans covering the employees of the Borrower or any of its Subsidiaries as of the Closing Date and neither the Borrower nor any Subsidiary has suffered any strikes, walkouts, work stoppages or other material labor difficulty within the last five years. Section 5.26 Perfection Matters. The Security Agreement is effective to create in favor of the Administrative Agent acting for the benefit of the holders of Obligations, legal, valid and
-68- 744965794 enforceable Liens on, and security interests in, the Collateral (as defined in the Security Agreement) and, (i) when financing statements and other filings in appropriate form are filed in the appropriate offices, and (ii) upon the taking of possession or control by the Administrative Agent of the Collateral (as defined in the Security Agreement) with respect to which a security interest may be perfected only by possession or control, the Liens created by the Security Agreement shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the grantors thereunder in the Collateral (as defined in the Security Agreement) (other than (A) patents, trademarks, trade styles, copyrights, and other intellectual property rights (including all registrations and applications therefor) and (B) such Collateral (as defined in the Security Agreement) in which a security interest cannot be perfected under the Uniform Commercial Code as in effect at the relevant time in the relevant jurisdiction or in respect of which perfection is not required at such time by this Agreement or the Security Agreement), in each case subject to no Liens other than Permitted Encumbrances. Section 5.27 EEA Financial Institutions. No Loan Party is an EEA Financial Institution or a Covered Entity. SECTION 6. AFFIRMATIVE COVENANTS. Borrower and each Guarantor, jointly and severally, covenants and agrees that, so long as any credit is available to or in use by Borrower hereunder, except to the extent compliance in any case or cases is waived in writing pursuant to the terms of Section 11.11: Section 6.1 Maintenance of Business. Borrower shall, and shall cause each Subsidiary to, preserve and maintain its existence, except as otherwise provided in Section 7.4(c); provided, however, that nothing in this Section shall prevent the Borrower from dissolving any of its Subsidiaries if such action is, in the reasonable business judgment of the Borrower, desirable in the conduct of its business and is not disadvantageous in any material respect to the Lenders. Borrower shall, and shall cause each Subsidiary to, preserve and keep in force and effect all licenses, permits, franchises, approvals, patents, trademarks, trade names, trade styles, copyrights, and other proprietary rights necessary to the proper conduct of its business where the failure to do so could reasonably be expected to have a Material Adverse Effect. Section 6.2 Maintenance of Properties. Borrower shall, and shall cause each Subsidiary (other than any Affiliated Entity or Project Specific JV that is an Excluded Subsidiary) to, maintain, preserve, and keep its property, plant, and equipment in good repair, working order and condition (ordinary wear and tear excepted), and shall from time to time make all needful and proper repairs, renewals, replacements, additions, and betterments thereto so that at all times the efficiency thereof shall be fully preserved and maintained, except to the extent that, in the reasonable business judgment of such Person, any such Property is no longer necessary for the proper conduct of the business of such Person. Section 6.3 Taxes and Assessments. Borrower shall duly pay and discharge, and shall cause each Subsidiary to duly pay and discharge, all taxes, rates, assessments, fees, and governmental charges upon or against it or its Property, in each case before the same become delinquent and before penalties accrue thereon, unless and to the extent that the same are being
-69- 744965794 contested in good faith and by appropriate proceedings which prevent enforcement of the matter under contest and adequate reserves are provided therefor. Section 6.4 Insurance. Borrower shall insure and keep insured, and shall cause each Subsidiary to insure and keep insured, with financially sound, reputable and responsible insurance companies all insurable Property owned by it which is of a character usually insured by Persons similarly situated and operating like Properties against loss or damage from such hazards and risks, and in such amounts, as are insured by Persons similarly situated and operating like Properties; and Borrower shall insure, and shall cause each Subsidiary to insure, such other hazards and risks with financially sound, reputable and responsible insurance companies as and to the extent usually insured by Persons similarly situated and conducting similar businesses. Borrower shall in any event maintain, and cause each Subsidiary to maintain, insurance on the Collateral to the extent required by the Collateral Documents. Borrower shall, upon the request of Administrative Agent, furnish to Administrative Agent and the Lenders a certificate setting forth in summary form the nature and extent of the insurance maintained pursuant to this Section. The Administrative Agent shall be named as an additional insured and lender’s loss payee, as applicable, with respect to each liability and property insurance policy, in each case, required under this Section 6.4 and in form and substance acceptable to the Administrative Agent. Section 6.5 Financial Reports. Borrower shall, and shall cause each Subsidiary to, maintain a standard system of accounting in accordance with GAAP and shall furnish to Administrative Agent, each Lender, the L/C Issuer and each of their duly authorized representatives such information respecting the business and financial condition of Borrower and each Subsidiary as Administrative Agent or such Lender may reasonably request; and without any request, shall furnish to Administrative Agent, the Lenders, and L/C Issuer: (a) (i) as soon as available, and in any event no later than forty-five (45) days after the last day of each fiscal quarter of each fiscal year of Borrower (commencing with the fiscal quarter ended September 30, 2019), a copy of the consolidated and combined balance sheets of Borrower and its Subsidiaries (including reasonably detailed information regarding the Affiliated Entities) as of the last day of such fiscal quarter and the consolidated and combined statements of income, retained earnings, and cash flows of Borrower and its Subsidiaries (including reasonably detailed information demonstrating the results of the Affiliated Entities) for the fiscal quarter and for the fiscal year to date period then ended, each in reasonable detail showing in comparative form the figures for the corresponding date and period in the previous fiscal year, prepared by Borrower in accordance with GAAP (subject to the absence of footnote disclosures and year end audit adjustments) and certified to by a Responsible Officer; and (ii) as soon as available, and in any event no later than forty-five (45) days after the last day of the fiscal quarter of the Closing Date Target ended September 30, 2019, a copy of the consolidated balance sheet of the Closing Date Target as of the last day of such fiscal quarter and the consolidated statements of income, retained earnings, and cash flows of the Closing Date Target for the fiscal quarter and for the fiscal year to date period then ended, each in reasonable detail showing in comparative form the figures for the corresponding date and period in the previous fiscal year, prepared by Borrower or the Closing Date Target in accordance with GAAP (subject to the absence of footnote disclosures and year end audit adjustments) and certified to by a Responsible Officer;
-70- 744965794 (b) as soon as available, and in any event no later than ninety (90) days after the last day of each fiscal year of Borrower, a copy of the consolidated and combined balance sheets of Borrower and its Subsidiaries (including reasonably detailed information regarding the Affiliated Entities) as of the last day of the fiscal year then ended and the consolidated and combined statements of income, retained earnings, and cash flows of Borrower and its Subsidiaries (including reasonably detailed information demonstrating the results of the Affiliated Entities) for the fiscal year then ended, and accompanying notes thereto, each in reasonable detail showing in comparative form the figures for the previous fiscal year, accompanied by an unqualified opinion of Grant Thornton LLP or another firm of independent public accountants of recognized national standing, selected by Borrower and reasonably satisfactory to Administrative Agent and the Required Lenders, to the effect that the financial statements have been prepared in accordance with GAAP and present fairly in accordance with GAAP the consolidated financial condition of Borrower and its Subsidiaries as of the close of such fiscal year and the results of their operations and cash flows for the fiscal year then ended and that an examination of such accounts in connection with such financial statements has been made in accordance with generally accepted auditing standards and, accordingly, such examination included such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances; (c) promptly after receipt thereof, any additional written reports or management letters given to it by its independent public accountants; (d) promptly after the sending or filing thereof, copies of each financial statement, report, notice or proxy statement sent by Borrower or any Subsidiary to its stockholders or other equity holders, and copies of each regular, periodic or special report, registration statement or prospectus (including all Form 10 K, Form 10 Q and Form 8 K reports) filed by Borrower or any Subsidiary with any securities exchange or the Securities and Exchange Commission or any successor agency; (e) promptly after receipt thereof, a copy of each audit made by any regulatory agency of the books and records of Borrower or any Subsidiary or of notice of any material noncompliance with any applicable law, regulation or guideline relating to Borrower or any Subsidiary, or its business; (f) as soon as available, and in any event no later than forty-five (45) days after the last day of each fiscal year of Borrower, a copy of Borrower’s and its Subsidiaries’ annual financial projections for the following fiscal year; (g) promptly after knowledge thereof shall have come to the attention of any Responsible Officer, written notice of (i) any threatened in writing or pending litigation or governmental or arbitration proceeding or labor controversy against Borrower or any Subsidiary or any of their Property which, if adversely determined, could reasonably be expected to have a Material Adverse Effect, (ii) the occurrence of any Default or Event of Default hereunder, (iii) the occurrence of any Material Adverse Effect, (iv) the formation or acquisition of any Subsidiary pursuant to Section 6.10 or (v) any material change in the financial reporting practices of Borrower and its Subsidiaries;
-71- 744965794 (h) with each of the financial statements delivered pursuant to subsections (a) and (b) above, (i) a written certificate in the form attached hereto as Exhibit F signed by a Responsible Officer or another officer of Borrower acceptable to Administrative Agent to the effect that to the best of such officer’s knowledge and belief no Default or Event of Default has occurred during the period covered by such statements or, if any such Default or Event of Default has occurred during such period, setting forth a description of such Default or Event of Default and specifying the action, if any, taken by Borrower or any Subsidiary to remedy the same, and (ii) a Work-in- Progress Report with respect to such fiscal quarter. Such certificate described in clause (i) above shall also set forth the calculations supporting the financial covenants set forth in Section 7.12; (i) promptly upon request of Administrative Agent or any Lender through the Administrative Agent, (i) such other information and reports of the Borrower or any Subsidiary as Administrative Agent or such Lender may from time to time reasonably request to evaluate the Borrower’s continuing financial obligations and compliance under the Credits, which information shall be submitted in form and detail reasonably satisfactory to Administrative Agent and, if requested, shall be certified by an authorized office of Borrower and (ii) information and documentation reasonably requested by Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation; and (j) upon the occurrence and continuation thereof, notice of any material modification, default or waiver of or to a Bonding Agreement. Section 6.6 Inspection. Borrower shall, and shall cause each Subsidiary (other than any Affiliated Entity or Project Specific JV that is an Excluded Subsidiary) to, permit Administrative Agent, each Lender, the L/C Issuer, and each of their duly authorized representatives and agents to visit and inspect any of its Property, corporate books, and financial records, to examine and make copies of its books of accounts and other financial records, and to discuss its affairs, finances, and accounts with, and to be advised as to the same by, its officers, employees and independent public accountants (and by this provision Borrower hereby authorizes such accountants to discuss with Administrative Agent, such Lenders, and L/C Issuer the finances and affairs of Borrower and its Subsidiaries) at such reasonable times and intervals as Administrative Agent or any such Lender or L/C Issuer may designate and, so long as no Default or Event of Default exists, with reasonable prior notice to Borrower; provided, however, that in the absence of a Default or Event of Default, the Borrower shall not be required to reimburse the Administrative Agent, such Lender or the L/C Issuer for more than one (1) such inspection or audit per fiscal year. Section 6.7 ERISA. Neither Borrower nor any ERISA Affiliate sponsors, has (i) adopted, contributes to, has any obligation to contribute to, or has any liability to any Plan, or (ii) any liability to the PBGC under Title IV of ERISA. Borrower shall, and shall cause each Subsidiary (other than any Affiliated Entity or Project Specific JV that is an Excluded Subsidiary) to, promptly pay and discharge all obligations and liabilities arising under ERISA of a character which if unpaid or unperformed could reasonably be expected to result in the imposition of a Lien against any of its Property. Borrower shall, and shall cause each Subsidiary (other than any Affiliated Entity or Project Specific JV that is an Excluded Subsidiary) to, promptly notify Administrative Agent and each Lender of: (a) the occurrence of any reportable event (as defined in ERISA) with respect to a Plan, (b) receipt of any notice from the PBGC of its intention to seek
-72- 744965794 termination of any Plan or appointment of a trustee therefor, (c) its intention to terminate or withdraw from any Plan, and (d) the occurrence of any event with respect to any Plan which would result in the incurrence by Borrower or any Subsidiary (other than any Affiliated Entity or Project Specific JV that is an Excluded Subsidiary) of any material liability, fine or penalty, or any material increase in the contingent liability of Borrower or any Subsidiary (other than any Affiliated Entity or Project Specific JV that is an Excluded Subsidiary) with respect to any post retirement Welfare Plan benefit. Section 6.8 Compliance with Laws. (a) Borrower shall, and shall cause each Subsidiary to, comply in all respects with all Legal Requirements applicable to or pertaining to its Property or business operations, where any such non-compliance, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or result in a Lien upon any of its Property. (b) Without limiting the agreements set forth in Section 6.8(a) above, Borrower shall, and shall cause each Subsidiary to, at all times, do the following to the extent the failure to do so, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect: (i) comply in all material respects with, and maintain each of the Premises in compliance in all material respects with, all applicable Environmental Laws; (ii) require that each tenant and subtenant, if any, of any of the Premises or any part thereof comply in all material respects with all applicable Environmental Laws; (iii) obtain and maintain in full force and effect all material governmental approvals required by any applicable Environmental Law for operations at each of the Premises; (iv) cure any material violation by it or at any of the Premises of applicable Environmental Laws; (v) not allow the presence or operation at any of the Premises of any (1) landfill or dump or (2) hazardous waste management facility or solid waste disposal facility as defined pursuant to RCRA or any comparable state law; (vi) not manufacture, use, generate, transport, treat, store, release, dispose or handle any Hazardous Material at any of the Premises except in the ordinary course of its business and in de minimis amounts; (vii) within ten (10) Business Days notify Administrative Agent in writing of and provide any reasonably requested documents upon learning of any of the following in connection with Borrower or any Subsidiary (other than any Affiliated Entity or Project Specific JV that is an Excluded Subsidiary) or any of the Premises: (1) any material liability for response or corrective action, natural resource damage or other harm pursuant to CERCLA, RCRA, the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq., or any comparable state law; (2) any material Environmental Claim; (3) any material violation of an Environmental Law or material Release, threatened Release or disposal of a Hazardous Material; (4) any restriction on the ownership, occupancy, use or transferability arising pursuant to any (x) Release, threatened Release or disposal of a Hazardous Material or (y) Environmental Law; or (5) any environmental, natural resource, health or safety condition, which could reasonably be expected to have a Material Adverse Effect; (viii) conduct at its expense any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any material Release, threatened Release or disposal of a Hazardous Material as required by any applicable Environmental Law, (ix) abide by and observe any restrictions on the use of the Premises imposed by any Governmental Authority as set forth in a deed or other instrument affecting Borrower’s or any Subsidiary’s (other than any Affiliated Entity or Project Specific JV that is an Excluded Subsidiary) interest therein; (x) promptly provide or otherwise make available
-73- 744965794 to Administrative Agent any reasonably requested environmental record concerning the Premises which Borrower or any Subsidiary (other than any Affiliated Entity or Project Specific JV that is an Excluded Subsidiary) possesses or can reasonably obtain; and (xi) perform, satisfy, and implement any operation or maintenance actions required by any Governmental Authority or Environmental Law, or included in any no further action letter or covenant not to sue issued by any Governmental Authority under any Environmental Law. Section 6.9 [Reserved]. Section 6.10 Formation of Subsidiaries. Promptly upon the formation or acquisition of any Domestic Subsidiary (other than an Excluded Subsidiary), Borrower shall provide Administrative Agent and the Lenders notice thereof and timely comply with the requirements of Section 6.12 (at which time Schedule 5.2 shall be deemed amended to include reference to such Subsidiary). Borrower shall not, nor shall it permit any Subsidiary to, form or acquire any Foreign Subsidiary. Section 6.11 Use of Proceeds; Margin Stock. Borrower shall use the credit extended under this Agreement solely for the purposes set forth in, or otherwise permitted by, Section 5.4. Neither Borrower nor any Subsidiary will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock or in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no part of the proceeds of any Loan or any other extension of credit made hereunder will be used to purchase or carry any such margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock. Section 6.12 Guaranties and Collateral. (a) Guaranties. The payment and performance of the Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability shall at all times be guaranteed by each direct and indirect Subsidiary of Borrower other than any Excluded Subsidiary pursuant to Section 10 or pursuant to one or more guaranty agreements in form and substance reasonably acceptable to Administrative Agent, as the same may be amended, modified or supplemented from time to time (individually a “Guaranty” and collectively the “Guaranties” and each such Subsidiary executing and delivering this Agreement as a Guarantor (including any Subsidiary hereafter executing and delivering an Additional Guarantor Supplement in the form called for by Section 10) or a separate Guaranty being referred to herein as a “Guarantor” and collectively the “Guarantors”). (b) Collateral. The Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability shall be secured by valid, perfected, and enforceable Liens on all right, title, and interest of Borrower and each Guarantor in all of their personal Property. Borrower and the other Loan Parties acknowledge and agree that the Liens on the Collateral shall be granted to Administrative Agent for the benefit of the holders of the Obligations, the Hedging Liability, and the Funds Transfer and Deposit Account Liability and shall be valid and perfected first priority Liens, in each case pursuant to one or more Collateral Documents from such Persons, each in form and substance satisfactory to Administrative Agent.
-74- 744965794 (c) Further Assurances. Borrower agrees that it shall, and shall cause each Guarantor to, from time to time at the request of Administrative Agent or the Required Lenders, execute and deliver such documents (including, for the avoidance of doubt, mortgages and similar documents) and do such acts and things as Administrative Agent or the Required Lenders may reasonably request in order to provide for or perfect or protect such Liens on the Collateral. In the event Borrower or any Guarantor forms or acquires any other Subsidiary (other than an Excluded Subsidiary) after the date hereof, except as otherwise provided in Sections 6.12(a) and 6.12(b) above, Borrower shall promptly upon such formation or acquisition cause such newly formed or acquired Subsidiary to execute a Guaranty and such Collateral Documents as Administrative Agent may then require, and Borrower shall also deliver to Administrative Agent, or cause such Subsidiary to deliver to Administrative Agent, at Borrower’s cost and expense, such other instruments, documents, mortgages, certificates, and opinions reasonably required by Administrative Agent in connection therewith. Section 6.13 Senior Indebtedness. Borrower shall ensure, and shall cause each other Loan Party to ensure, that the Obligations are and will be direct, unconditional and unsubordinated obligations, and do rank and will rank at least pari passu with all other present and future senior Indebtedness for Borrowed Money of each Loan Party and senior to all Subordinated Debt of each Loan Party. Section 6.14 Hedging Agreements. Within ninety (90) days following the Closing Date (or such longer time as Administrative Agent may otherwise agree in writing in its sole discretion), Borrower shall enter into one or more interest rate protection agreements with financially sound counterparties effectively fixing or capping the interest rates with respect to a notional amount of at least 50% of the then-outstanding principal amount of the Term Loans for a period of at least three (3) years. Section 6.15 Cash Management. Within one hundred twenty (120) days following the Closing Date (or such longer time as Administrative Agent may otherwise agree in writing in its sole discretion), and at all times thereafter, Borrower and each of the other Loan Parties shall maintain each of its operating accounts other than Excluded Accounts at Administrative Agent, an Affiliate thereof or other financial institution that enters into a control agreement with the Administrative Agent in form and substance reasonably satisfactory to the Administrative Agent and Borrower. Section 6.16 Collateral Access Agreements. Within one hundred twenty (120) days following the Closing Date (or such longer time as Administrative Agent may otherwise agree in writing in its sole discretion), each Loan Party shall use commercially reasonable efforts to deliver to the Administrative Agent collateral access agreements, in form and substance reasonably acceptable to the Administrative Agent, with respect to any Premises leased by such Loan Party as of the Closing Date (i) constituting such Loan Party’s corporate headquarters or chief executive office or (ii) holding Collateral with a fair market value equal to or in excess of $5,000,000 but excluding any temporary Premises of any Project Specific JV utilized to store project-related materials, inventory and equipment related to such project on a temporary basis. Section 6.17 Bonding Obligations. Borrower shall maintain, and shall cause each Subsidiary to maintain, each of its Bonding Agreements necessary for the conduct of its business
-75- 744965794 in the ordinary course of its operations and in a manner reasonably satisfactory to the Administrative Agent. SECTION 7. NEGATIVE COVENANTS. Section 7.1 Borrowings and Guaranties. Borrower shall not, nor shall it permit any Subsidiary (other than any Affiliated Entity or Project Specific JV constituting, in either case, an Excluded Subsidiary) to, issue, incur, assume, create or have outstanding any Indebtedness for Borrowed Money, incur, create or have outstanding other contingent obligations (including earn- outs) or incur liabilities for interest rate, currency, or commodity cap, collar, swap, or similar hedging arrangements, or be or become liable as endorser, guarantor, surety or otherwise for any debt, obligation or undertaking of any other Person, or otherwise agree to provide funds for payment of the obligations of another, or supply funds thereto or invest therein or otherwise assure a creditor of another against loss, or apply for or become liable to the issuer of a letter of credit which supports an obligation of another, or subordinate any claim or demand it may have to the claim or demand of any other Person; provided, that the foregoing shall not restrict nor operate to prevent: (a) the Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability of Borrower and its Subsidiaries owing to Administrative Agent and the Lenders (and their Affiliates), including any extensions, refinancings, modifications, amendments and restatements thereof; (b) purchase money indebtedness and Capitalized Lease Obligations of Borrower and its Subsidiaries in an amount not to exceed $30,000,000 in the aggregate at any one time outstanding; (c) obligations of Borrower or any Subsidiary arising out of interest rate, foreign currency, and commodity hedging agreements entered into with financial institutions in connection with bona fide hedging activities in the ordinary course of business and not for speculative purposes; (d) endorsement of items for deposit or collection of commercial paper received in the ordinary course of business; (e) intercompany advances from time to time owing by any Subsidiary to Borrower or another Subsidiary or by Borrower to a Subsidiary in the ordinary course of business; (f) Subordinated Debt in respect of the Seller Note; (g) unsecured Subordinated Debt of Borrower and its Subsidiaries in an amount not to exceed $45,000,000 in the aggregate at any one time outstanding; (h) indebtedness existing on the Closing Date and disclosed on Schedule 7.1 hereto, and any Permitted Refinancing Indebtedness in respect thereof; (i) indebtedness (i) incurred under the Tealstone Seller Notes up to an aggregate principal amount that does not exceed $5,000,000 outstanding at any time and (ii) consisting of
-76- 744965794 amounts in respect of the Tealstone Deferred Payments up to an aggregate amount that does not exceed $7,500,000 outstanding at any time; (j) indebtedness not constituting Indebtedness for Borrowed Money incurred for the acquisition of supplies or inventory on normal trade credit; (k) indebtedness arising in the ordinary course of business with respect to Bonding Agreements; (l) amounts in respect of any “Adjustment Amount” as defined in the Closing Date Acquisition Agreement and owed by Borrower thereunder; (m) other indebtedness of Borrower and its Subsidiaries not otherwise permitted by this Section in an amount not to exceed $25,000,000 in the aggregate at any one time outstanding; (n) earnout obligations incurred in connection with Permitted Acquisitions; and (o) subject to no Event of Default existing or resulting therefrom and the Borrower shall be in pro forma compliance with Section 7.12 after giving effect thereto, other unsecured Indebtedness of the Borrower or any Subsidiary incurred after the Closing Date; provided that (i) such indebtedness shall not mature earlier than the latest maturity of any Loans outstanding at the time of incurrence of such indebtedness, (ii) such Indebtedness shall have a weighted average life to maturity not shorter than the remaining weighted average life to maturity of then-existing Loans, (iii) representations, warranties, covenants and events of default set forth in the documentation governing such Indebtedness are either (A) substantially identical to those hereunder, or (B) not more favorable to the lenders or holders providing such indebtedness than those hereunder (except for (x) provisions applicable only to periods after the latest maturity of any Loans outstanding at the time of incurrence of such Indebtedness or (y) provisions that are more favorable to the lenders or holders providing such indebtedness or the agents in respect of such Indebtedness and are added hereunder (it being understood that no consent of any Lender shall be required to add any such more favorable provision to this Agreement but such amendment documentation shall be reasonably satisfactory to the Administrative Agent), (iv) there shall be no borrower, issuer or subsidiary guarantor in respect of such Indebtedness that is not a Loan Party, (v) except in the case of Permitted Refinancing Indebtedness incurred to refinance indebtedness previously incurred pursuant to this clause (o) and so long as the Senior Secured Leverage Ratio shall not exceed 2.50 to 1.00 on a pro forma basis after giving effect thereto, the Borrower shall have repaid Term Loans pursuant to Section 2.9 with the Net Cash Proceeds of such indebtedness and (vi) the Borrower has delivered to the Administrative Agent a certificate of a Responsible Officer certifying compliance with this clause (o). Section 7.2 Liens. Borrower shall not, nor shall it permit any Subsidiary (other than any Affiliated Entity or Project Specific JV constituting, in either case, an Excluded Subsidiary) to, create, incur or permit to exist any Lien of any kind on any Property owned by any such Person; provided, that the foregoing shall not apply to nor operate to prevent (the following being collectively referred to as “Permitted Encumbrances”): (a) Liens arising by statute in connection with worker’s compensation, unemployment insurance, old age benefits, social security obligations, taxes, assessments, statutory obligations or
-77- 744965794 other similar charges (other than Liens arising under ERISA), good faith cash deposits in connection with tenders, contracts or leases to which Borrower or any Subsidiary is a party or other cash deposits required to be made in the ordinary course of business, provided in each case that the obligation is not for borrowed money and that the obligation secured is not overdue or, if overdue, is being contested in good faith by appropriate proceedings which prevent enforcement of the matter under contest and adequate reserves have been established therefor; (b) mechanics’, workmen’s, materialmen’s, landlords’, carriers’ or other similar Liens arising in the ordinary course of business with respect to obligations which are not due or which are being contested in good faith by appropriate proceedings which prevent enforcement of the matter under contest; (c) judgment liens and judicial attachment liens not constituting an Event of Default under Section 8.1(g) and the pledge of assets for the purpose of securing an appeal, stay or discharge in the course of any legal proceeding; provided that the aggregate amount of such judgment liens and attachments and liabilities of Borrower and its Subsidiaries secured by a pledge of assets permitted under this subsection, including interest and penalties thereon, if any, shall not be in excess of $15,000,000 at any one time outstanding; (d) Liens on Property of Borrower or any Subsidiary created solely for the purpose of securing indebtedness permitted by Section 7.1(b), representing or incurred to finance the purchase price of such Property; provided that no such Lien shall extend to or cover other Property of Borrower or such Subsidiary other than the respective Property so acquired, and the principal amount of indebtedness secured by any such Lien shall at no time exceed the purchase price of such Property, as reduced by repayments of principal thereon; (e) any interest or title of a lessor under any operating lease; (f) easements, rights of way, restrictions, and other similar encumbrances against real property incurred in the ordinary course of business which, in the aggregate, are not substantial in amount and which do not materially detract from the value of the Property subject thereto or materially interfere with the ordinary conduct of the business of Borrower or any Subsidiary; (g) Liens granted in favor of Administrative Agent pursuant to the Collateral Documents, including Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by such Liens; (h) Liens existing on the Closing Date and disclosed on Schedule 7.2 hereto, including Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by such Liens; provided that any extension, renewal or replacement Lien shall be limited to the Property encumbered by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase; (i) non-exclusive licenses and sublicenses granted by a Loan Party and their respective Subsidiaries and leases or subleases (by a Loan Party or any of its Subsidiaries as lessor or sublessor) to third parties in the ordinary course of business not interfering in any material respect with the business of the Loan Parties and their respective Subsidiaries;
-78- 744965794 (j) restrictions on transfer or other Liens contained in the Organizational Documents of a Loan Party; (k) restrictions on transfer under applicable federal and state securities laws; (l) Liens arising in the ordinary course of business securing obligations under Bonding Agreements; provided, that such Liens shall either (i) secure solely any accounts receivable relating to such Bonding Agreements and any proceeds thereof, and not any other assets or (ii) be reasonably acceptable to the Administrative Agent and if requested by Administrative Agent, subject to an Intercreditor Agreement; (m) Liens existing on property at the time of its acquisition or existing on the property of any Person at the time such Person becomes a Subsidiary, in each case after the Closing Date; provided that (i) such Lien was not created in contemplation of such acquisition or such Person becoming a Subsidiary, and (ii) such Lien does not extend to or cover any other assets or property; and (n) other Liens not otherwise permitted by this Section securing obligations in an amount not to exceed $10,000,000 in the aggregate at any one time outstanding. Section 7.3 Investments, Acquisitions, Loans and Advances. Borrower shall not, nor shall it permit any Subsidiary (other than any Affiliated Entity or Project Specific JV constituting, in either case, an Excluded Subsidiary) to, directly or indirectly, make, retain or have outstanding any investments (whether through purchase of equity interests or obligations or otherwise) in, or loans or advances to (other than for travel advances and other similar cash advances made to employees in the ordinary course of business), any other Person, or acquire all or any substantial part of the assets or business of any other Person or division thereof; provided, that the foregoing shall not apply to nor operate to prevent: (a) investments in direct obligations of the United States of America or of any agency or instrumentality thereof whose obligations constitute full faith and credit obligations of the United States of America, provided that any such obligations shall mature within one year of the date of issuance thereof; (b) investments in commercial paper rated at least P 1 by Moody’s and at least A 1 by S&P maturing within one year of the date of issuance thereof; (c) investments in certificates of deposit issued by any Lender or by any United States commercial bank having capital and surplus of not less than $100,000,000 which have a maturity of one year or less; (d) investments in repurchase obligations with a term of not more than 7 days for underlying securities of the types described in subsection (a) above entered into with any bank meeting the qualifications specified in subsection (c) above, provided all such agreements require physical delivery of the securities securing such repurchase agreement, except those delivered through the Federal Reserve Book Entry System;
-79- 744965794 (e) investments in money market funds that invest solely, and which are restricted by their respective charters to invest solely, in investments of the type described in the immediately preceding subsections (a), (b), (c), and (d) above; (f) investments consisting of (i) travel advances, employee relocation loans and other employee loans and advances in the ordinary course of business in an amount not to exceed $1,000,000 outstanding at any time, (ii) non-cash loans to employees, officers or directors relating to the purchase of Equity Interests of Borrower pursuant to employee stock purchase plans or arrangements approved by Borrower’s board of directors in an amount not to exceed $1,000,000 outstanding at any time and (iii) advances in the form of progress payments, prepaid rent or security deposits with respect to operating leases and other similar deposits, in each case, made in the ordinary course of business and in an amount not to exceed $1,000,000 outstanding at any time; (g) investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business; (h) investments consisting of notes receivable of, or prepaid royalties from and other credit obligations of, customers, suppliers and debtors of the Loan Parties, who are not Affiliates, in the ordinary course of business; (i) intercompany investments made by, or the holding of Equity Interests of, (i) a Loan Party or any of its respective Subsidiaries in a Loan Party and (ii) a Subsidiary that is not a Loan Party in or to any other Subsidiary that is not a Loan Party; (j) investments in the ordinary course of business consisting of endorsements of negotiable instruments for collection or deposit; (k) investments by any Loan Party or any other Subsidiary in the Affiliated Entities in an aggregate amount not to exceed $25,000,000 in the aggregate outstanding at any time; (l) Permitted Acquisitions; (m) investments by any Loan Party in Project Specific JVs solely for the purpose of forming or capitalizing such Project Specific JVs for the limited purpose of performing construction work on a specific project in an aggregate amount not to exceed the greater of (x) $35,000,000 and (y) twenty percent (20%) of the Net Worth outstanding at any time; and (n) other investments, loans, and advances in addition to those otherwise permitted by this Section in an amount not to exceed $30,000,000 in the aggregate at any one time outstanding. In determining the amount of investments, acquisitions, loans, and advances permitted under this Section, investments and acquisitions shall always be taken at the original cost thereof (regardless of any subsequent appreciation or depreciation therein), and loans and advances shall be taken at the principal amount thereof then remaining unpaid.
-80- 744965794 Section 7.4 Mergers, Consolidations and Sales. Borrower shall not, nor shall it permit any Subsidiary (other than any Affiliated Entity or Project Specific JV constituting, in either case, an Excluded Subsidiary) to, be a party to any merger or consolidation, or sell, transfer, lease or otherwise dispose of all or any part of its Property, including any disposition of Property as part of a sale and leaseback transaction, or in any event sell or discount (with or without recourse) any of its notes or accounts receivable; provided, that this Section shall not apply to nor operate to prevent: (a) the sale or lease of inventory in the ordinary course of business; (b) the sale, transfer, lease or other disposition of Property of Borrower and its Subsidiaries to one another in the ordinary course of its business; (c) the merger of any Subsidiary with and into Borrower or any other Subsidiary; provided that, in the case of any merger involving Borrower, Borrower is the corporation surviving the merger; (d) the sale, transfer, liquidation or dissolution of any Subsidiary no longer used in the ordinary course of business; (e) the sale of delinquent notes or accounts receivable in the ordinary course of business for purposes of collection only (and not for the purpose of any bulk sale or securitization transaction); (f) the sale, transfer or other disposition of any obsolete, surplus, used or worn out tangible personal property, whether now owned or hereafter acquired, in the ordinary course of business and the sale, transfer or other disposition of tangible personal property no longer used or useful or economically practical to maintain in the conduct of the business Borrower or its Subsidiary; (g) the sale, transfer or other disposition of accounts receivable relating to any Bonding Agreements and any proceeds thereof; and (h) the sale, transfer, lease or other disposition of Property of Borrower or any Subsidiary (including any disposition of Property as part of a sale and leaseback transaction) aggregating for Borrower and its Subsidiaries not more than $25,000,000 during any fiscal year of Borrower. Section 7.5 Maintenance of Subsidiaries. Borrower shall not assign, sell or transfer, nor shall it permit any Subsidiary (other than any Affiliated Entity or Project Specific JV constituting, in either case, an Excluded Subsidiary) to issue, assign, sell or transfer, any shares of capital stock or other equity interests of a Subsidiary held by a Loan Party; provided, that the foregoing shall not operate to prevent (a) Liens on the capital stock or other equity interests of Subsidiaries granted to Administrative Agent pursuant to the Collateral Documents, (b) the issuance, sale, and transfer to any person of any shares of capital stock of a Subsidiary solely for the purpose of qualifying, and to the extent legally necessary to qualify, such person as a director of such Subsidiary, and (c) any transaction permitted by Section 7.4(c) above.
-81- 744965794 Section 7.6 Dividends and Certain Other Restricted Payments. Borrower shall not, nor shall it permit any Subsidiary (other than any Affiliated Entity or Project Specific JV constituting, in either case, an Excluded Subsidiary) to, (i) declare or pay any dividends on or make any other distributions in respect of any class or series of its capital stock or other equity interests (other than dividends or distributions payable solely in its capital stock or other equity interests) or (ii) directly or indirectly purchase, redeem, or otherwise acquire or retire any of its capital stock or other equity interests or any warrants, options, or similar instruments to acquire the same (collectively referred to herein as “Restricted Payments”); provided, that the foregoing shall not operate to prevent: (a) the making of dividends or distributions by any Subsidiary to Borrower or any Guarantor that is its respective parent entity; (b) the making of dividends or distributions by any Subsidiary that is not a Loan Party to any other Subsidiary that is not a Loan Party; (c) the Borrower’s issuance of common stock upon the exercise, and to the registered holders, of the OCM Warrants in accordance with their terms; (d) repurchases by the Borrower pursuant to the terms of employee stock purchase plans, employee restricted stock agreements or similar arrangements in an aggregate amount not to exceed $2,000,000 in any fiscal year; and (e) other Restricted Payments in an amount not to exceed the Available Amount so long as both before and after giving effect to such Restricted Payment (i) Borrower shall be in compliance with Section 7.12 on a pro forma basis, (ii) the (A) Total Leverage Ratio shall not on a pro forma basis exceed 2.50 to 1.00 and (B) Senior Secured Leverage Ratio shall not on a pro forma basis exceed 2.00 to 1.00, (iii) Liquidity shall be at least $40,000,000 and (iv) no Default or Event of Default shall have occurred and be continuing. Section 7.7 Transactions With Affiliates. Borrower shall not, nor shall it permit any Subsidiary to, enter into any contract, agreement or business arrangement with any of its Affiliates on terms and conditions which are less favorable to Borrower or such Subsidiary than would be usual and customary in similar contracts, agreements or business arrangements between Persons not affiliated with each other; provided that the foregoing restriction shall not apply to (i) any transaction between any Loan Party or any of its Subsidiaries (other than Excluded Subsidiaries) or between any Excluded Subsidiaries and (ii) compensation arrangements and benefit plans for officers and other employees of the Loan Parties and their respective Subsidiaries entered into or maintained in the ordinary course of business and consistent with such Loan Parties’ and such Subsidiaries’ historical practices, which are, in each case, approved by such Loan Parties’ or such Subsidiaries’ board of directors (or equivalent governing body). Section 7.8 No Changes in Fiscal Year. The fiscal year of Borrower and its Subsidiaries ends on December 31 of each year; and Borrower shall not, nor shall it permit any Subsidiary to, change its fiscal year from its present basis. Section 7.9 Change in the Nature of Business. Borrower shall not, nor shall it permit any Subsidiary to, engage in any business or activity if as a result the general nature of the business
-82- 744965794 of Borrower or any Subsidiary would be changed in any material respect from the general nature of the business engaged in by it as of the Closing Date or an Eligible Line of Business. Section 7.10 No Restrictions. Except as provided herein, Borrower shall not, nor shall it permit any Subsidiary (other than any Affiliated Entity or Project Specific JV constituting, in either case, an Excluded Subsidiary) to, directly or indirectly create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of Borrower or any Subsidiary (other than any Affiliated Entity or Project Specific JV constituting, in either case, an Excluded Subsidiary) to: (a) pay dividends or make any other distribution on any Subsidiary’s capital stock or other equity interests owned by Borrower or any other Subsidiary, (b) pay any indebtedness owed to Borrower or any other Subsidiary, (c) make loans or advances to Borrower or any other Subsidiary, (d) transfer any of its Property to Borrower or any other Subsidiary, or (e) guarantee the Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability and/or grant Liens on its assets (including, for the avoidance of doubt, real estate) to Administrative Agent as required by the Loan Documents. Section 7.11 Amendment to Organizational and Other Documents. Borrower shall not, nor shall it permit any Subsidiary (other than any Affiliated Entity or Project Specific JV constituting, in either case, an Excluded Subsidiary) to: (a) amend its Organizational Documents (i) to change its name or jurisdiction of organization without 30 days’ prior written notice to Administrative Agent (which such 30 days may be waived by Administrative Agent in its sole discretion); or (ii) in any manner materially adverse, or that could reasonably be expected to be materially adverse, to Administrative Agent or the Lenders without the prior written consent of Administrative Agent; or (b) (i) amend or modify any of the terms or conditions relating to Subordinated Debt, including the Seller Note, (ii) make any voluntary prepayment of Subordinated Debt, including the Seller Note, or effect any voluntary redemption thereof, or (iii) make any payment on account of Subordinated Debt, including the Seller Note, which is prohibited under the terms of any instrument or agreement subordinating the same to the Obligations. Notwithstanding the foregoing, Borrower may agree to a decrease in the interest rate applicable thereto or to a deferral of repayment of any of the principal of or interest on the Subordinated Debt, including the Seller Note, beyond the current due dates therefor. Section 7.12 Financial Covenants. (a) Total Leverage Ratio. As of the last day of each fiscal quarter of Borrower ending during the relevant period set forth below, Borrower shall not permit the Total Leverage Ratio to be greater than the corresponding ratio set forth opposite such period: Period(s) Ending Total Leverage Ratio shall not be greater than: Fiscal quarters ending on or about 12/31/2021 through and including 6/30/2022 3.25 to 1.00 Fiscal quarters ending on or about 9/30/2022 or thereafter 3.00 to 1.00
-83- 744965794 (b) Fixed Charge Coverage Ratio. As of the last day of each fiscal quarter of Borrower, commencing with the fiscal quarter ending December 31, 2019, Borrower shall maintain a Fixed Charge Coverage Ratio of not less than 1.20 to 1.00. Section 7.13 Use of Proceeds. Borrower shall not use, and shall ensure that its Subsidiaries and Affiliates, and its or their respective directors, officers, employees and agents not use, the proceeds of any Loan or Letter of Credit, directly or indirectly, (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (ii) to fund, finance or facilitate any activities, business or transaction of or with any Sanctioned Person or in any Designated Jurisdiction, or (iii) in any other manner that would result in the violation of any Sanctions applicable to any party hereto. Section 7.14 Payment of Subordinated Debt. The Borrower shall not, and shall not permit any Subsidiary (other than any Affiliated Entity or Project Specific JV constituting, in either case, an Excluded Subsidiary) to make any payment or other distribution on account of Subordinated Debt, including the Seller Note, unless before and after giving effect to such payment, (i) no Default or Event of Default exists or would result, (ii) Borrower is in compliance with Section 7.12 on a pro forma basis and (iii) in the case of any such payment of principal, the Total Leverage Ratio shall not exceed 2.00 to 1.00 on a pro forma basis. SECTION 8. EVENTS OF DEFAULT AND REMEDIES. Section 8.1 Events of Default. Any one or more of the following shall constitute an “Event of Default” hereunder: (a) default in the payment when due of all or any part of the principal of any Loan (whether at the stated maturity thereof or at any other time provided for in this Agreement) or of any Reimbursement Obligation, or default for a period of five (5) Business Days in the payment when due of any interest, fee or other Obligation payable hereunder or under any other Loan Document; (b) default in the observance or performance of any covenant set forth in Sections 6.1, 6.4, 6.5(a), 6.5(b), 6.5(g), 6.11, or 7; (c) default in the observance or performance of any other provision hereof or of any other Loan Document which is not remedied within 30 days after the earlier of (i) the date on which such failure shall first become known to any Responsible Officer or (ii)receipt of written notice of such default by the Borrower from the Administrative Agent; (d) any representation or warranty made herein or in any other Loan Document or in any certificate furnished to Administrative Agent or the Lenders pursuant hereto or thereto or in connection with any transaction contemplated hereby or thereby proves untrue in any respect (or in any material respect if such representation, warranty, certification or statement is not by its terms already qualified as to materiality) as of the date of the issuance or making or deemed making thereof;
-84- 744965794 (e) any event occurs or condition exists (other than those described in subsections (a) through (d) above) which is specified as an event of default under any of the other Loan Documents, or any of the Loan Documents shall for any reason not be or shall cease to be in full force and effect or is declared to be null and void, or any of the Collateral Documents shall for any reason fail to create a valid and perfected first priority Lien in favor of Administrative Agent in any Collateral purported to be covered thereby except as expressly permitted by the terms thereof, or any Subsidiary takes any action for the purpose of terminating, repudiating or rescinding any Loan Document executed by it or any of its obligations thereunder; (f) default shall occur under any Indebtedness for Borrowed Money issued, assumed or guaranteed by Borrower or any Subsidiary aggregating in excess of $15,000,000, or under any indenture, agreement or other instrument under which the same may be issued, and such default shall continue for a period of time sufficient to permit the acceleration of the maturity of any such Indebtedness for Borrowed Money (whether or not such maturity is in fact accelerated), or any such Indebtedness for Borrowed Money shall not be paid when due (whether by demand, lapse of time, acceleration or otherwise); (g) any final judgment or judgments for the payment of money, writ or writs or warrant or warrants of attachment, or any similar process or processes, shall be entered or filed against Borrower or any Loan Party, or against any of its Property, in an aggregate amount in excess of $15,000,000 (except to the extent fully covered by insurance pursuant to which the insurer has accepted liability therefor in writing), and which remains undischarged, unvacated, unbonded or unstayed for a period of 30 days; (h) an ERISA Event shall occur, that, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower, its Subsidiaries or its ERISA Affiliates in an aggregate amount in excess of $15,000,000; (i) any Change of Control shall occur; (j) Borrower or any Subsidiary shall (i) have entered involuntarily against it an order for relief under the United States Bankruptcy Code, as amended, (ii) not pay, or admit in writing its inability to pay, its debts generally as they become due, (iii) make an assignment for the benefit of creditors, (iv) apply for, seek, consent to or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property, (v) institute any proceeding seeking to have entered against it an order for relief under the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution (except as expressly permitted hereunder), winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take any corporate, limited liability, or other applicable organizational action in furtherance of any matter described in parts (i) through (v) above, or (vii) fail to contest in good faith any appointment or proceeding described in Section 8.1(k); (k) a custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for Borrower or any Subsidiary, or any substantial part of any of its Property, or a
-85- 744965794 proceeding described in Section 8.1(j)(v) shall be instituted against Borrower or any Subsidiary, and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 60 days; or (l) any Loan Party or any Subsidiary defaults in the payment when due of any amount due under any Bonding Agreement or breaches or defaults with respect to any other term of any Bonding Agreement, (x) if the effect of such failure to pay, default or breach is to cause the related surety to take possession of the work under any of the bonded contracts of such Borrower or any of its Subsidiaries and value of the contract or project that has been taken over by the related surety exceeds $15,000,000 or (y) if the effect of such failure to pay, default or breach is to result in a “Trigger Date”, “Trigger Event” or similar term under any Intercreditor Agreement. Section 8.2 Non Bankruptcy Defaults. When any Event of Default (other than those described in Section 8.1(j) or (k) with respect to Borrower) has occurred and is continuing, Administrative Agent shall, by written notice to Borrower: (a) if so directed by the Required Lenders, terminate the remaining Commitments and all other obligations of the Lenders hereunder on the date stated in such notice (which may be the date thereof); (b) if so directed by the Required Lenders, declare the principal of and the accrued interest on all outstanding Loans to be forthwith due and payable and thereupon all outstanding Loans, including both principal and interest thereon, shall be and become immediately due and payable together with all other amounts payable under the Loan Documents without further demand, presentment, protest or notice of any kind; and (c) if so directed by the Required Lenders, demand that Borrower immediately Cash Collateralize the L/C Obligations, and Borrower agrees to immediately make such payment and acknowledges and agrees that the Lenders would not have an adequate remedy at law for failure by Borrower to honor any such demand and that Administrative Agent, for the benefit of the Lenders, shall have the right to require Borrower to specifically perform such undertaking whether or not any drawings or other demands for payment have been made under any Letter of Credit. Administrative Agent, after giving notice to Borrower pursuant to Section 8.1(c) or this Section 8.2, shall also promptly send a copy of such notice to the other Lenders, but the failure to do so shall not impair or annul the effect of such notice. Section 8.3 Bankruptcy Defaults. When any Event of Default described in Section 8.1(j) or (k) with respect to Borrower has occurred and is continuing, then all outstanding Loans shall immediately become due and payable together with all other amounts payable under the Loan Documents without presentment, demand, protest or notice of any kind, the obligation of the Lenders to extend further credit pursuant to any of the terms hereof shall immediately terminate and Borrower shall immediately Cash Collateralize the L/C Obligations, Borrower acknowledging and agreeing that the Lenders would not have an adequate remedy at law for failure by Borrower to honor any such demand and that the Lenders, and Administrative Agent on their behalf, shall have the right to require Borrower to specifically perform such undertaking whether or not any draws or other demands for payment have been made under any of the Letters of Credit. Section 8.4 Collateral for Undrawn Letters of Credit. If the prepayment of the amount available for drawing under any or all outstanding Letters of Credit is required under Section 2.9(b), Section 2.17, Section 8.2 or Section 8.3 above, Borrower shall forthwith pay the amount required to be so prepaid, to be held by Administrative Agent as provided in subsection (b) below.
-86- 744965794 (b) All amounts prepaid pursuant to subsection (a) above shall be held by Administrative Agent in one or more separate collateral accounts (each such account, and the credit balances, properties, and any investments from time to time held therein, and any substitutions for such account, any certificate of deposit or other instrument evidencing any of the foregoing and all proceeds of and earnings on any of the foregoing being collectively called the “Collateral Account”) as security for, and for application by Administrative Agent (to the extent available) to, the reimbursement of any payment under any Letter of Credit then or thereafter made by the L/C Issuer, and to the payment of the unpaid balance of all other Obligations (and to all Hedging Liability and Funds Transfer and Deposit Account Liability). The Collateral Account shall be held in the name of and subject to the exclusive dominion and control of Administrative Agent for the benefit of Administrative Agent, the Lenders, and the L/C Issuer. If and when requested by Borrower, Administrative Agent shall invest funds held in the Collateral Account from time to time in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America with a remaining maturity of one year or less, provided that Administrative Agent is irrevocably authorized to sell investments held in the Collateral Account when and as required to make payments out of the Collateral Account for application to amounts due and owing from Borrower to the L/C Issuer, Administrative Agent or the Lenders; provided, that (i) if Borrower shall have made payment of all obligations referred to in subsection (a) above required under Section 2.9(b) and Section 2.17, if any, at the request of Borrower Administrative Agent shall release to Borrower amounts held in the Collateral Account so long as at the time of the release and after giving effect thereto no Default or Event of Default exists and, in the case of Section 2.17, the Defaulting Lender Period with respect to the relevant Defaulting Lender has terminated, and (ii) if Borrower shall have made payment of all obligations referred to in subsection (a) above required under Section 8.2 or 8.3, so long as no Letters of Credit, Commitments, Loans or other Obligations, Hedging Liability, or Funds Transfer and Deposit Account Liability remain outstanding, at the request of Borrower Administrative Agent shall release to Borrower any remaining amounts held in the Collateral Account. Section 8.5 Notice of Default. Administrative Agent shall give notice to Borrower under Section 8.1(c) promptly upon being requested to do so by any Lender and shall thereupon notify all the Lenders thereof. SECTION 9. ADMINISTRATIVE AGENT. Section 9.1 Appointment and Authorization of Administrative Agent. Each Lender and the L/C Issuer hereby appoints BMO Harris Bank N.A. as Administrative Agent under the Loan Documents and hereby authorizes Administrative Agent to take such action as Administrative Agent on its behalf and to exercise such powers under the Loan Documents as are delegated to Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto. The Lenders and L/C Issuer expressly agree that Administrative Agent is not acting as a fiduciary of the Lenders or the L/C Issuer in respect of the Loan Documents, Borrower or otherwise, and nothing herein or in any of the other Loan Documents shall result in any duties or obligations on Administrative Agent or any of the Lenders or L/C Issuer except as expressly set forth herein. Section 9.2 Administrative Agent and its Affiliates. Administrative Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any other Lender
-87- 744965794 and may exercise or refrain from exercising such rights and power as though it were not Administrative Agent, and Administrative Agent and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with Borrower or any Affiliate of Borrower as if it were not Administrative Agent under the Loan Documents. The term “Lender” as used herein and in all other Loan Documents, unless the context otherwise clearly requires, includes Administrative Agent in its individual capacity as a Lender (if applicable). Section 9.3 Action by Administrative Agent. If Administrative Agent receives from Borrower a written notice of an Event of Default pursuant to Section 8.5, Administrative Agent shall promptly give each of the Lenders and L/C Issuer written notice thereof. The obligations of Administrative Agent under the Loan Documents are only those expressly set forth therein. Without limiting the generality of the foregoing, Administrative Agent shall not be required to take any action hereunder with respect to any Default or Event of Default, except as expressly provided in Sections 8.2 and 8.5. Upon the occurrence of an Event of Default, Administrative Agent shall take such action to enforce its Lien on the Collateral and to preserve and protect the Collateral as may be directed by the Required Lenders. Unless and until the Required Lenders give such direction, Administrative Agent may (but shall not be obligated to) take or refrain from taking such actions as it deems appropriate and in the best interest of all the Lenders and L/C Issuer. In no event, however, shall Administrative Agent be required to take any action in violation of applicable law or of any provision of any Loan Document, and Administrative Agent shall in all cases be fully justified in failing or refusing to act hereunder or under any other Loan Document unless it first receives any further assurances of its indemnification from the Lenders that it may require, including prepayment of any related expenses and any other protection it requires against any and all costs, expense, and liability which may be incurred by it by reason of taking or continuing to take any such action. Administrative Agent shall be entitled to assume that no Default or Event of Default exists unless notified in writing to the contrary by a Lender, the L/C Issuer, or Borrower. In all cases in which the Loan Documents do not require Administrative Agent to take specific action, Administrative Agent shall be fully justified in using its discretion in failing to take or in taking any action thereunder. Any instructions of the Required Lenders, or of any other group of Lenders called for under the specific provisions of the Loan Documents, shall be binding upon all the Lenders and the holders of the Obligations. Section 9.4 Consultation with Experts. Administrative Agent may consult with legal counsel, independent public accountants, and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. Section 9.5 Liability of Administrative Agent; Credit Decision. Neither Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection with the Loan Documents: (i) with the consent or at the request of the Required Lenders or (ii) in the absence of its own gross negligence, bad faith or willful misconduct. Neither Administrative Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify: (i) any statement, warranty or representation made in connection with this Agreement, any other Loan Document or any Credit Event; (ii) the performance or observance of any of the covenants or agreements of any Loan Party contained herein or in any other Loan Document; (iii) the satisfaction of any condition specified in Section 4, except receipt of items required to be delivered to Administrative Agent; or
-88- 744965794 (iv) the validity, effectiveness, genuineness, enforceability, perfection, value, worth or collectability hereof or of any other Loan Document or of any other documents or writing furnished in connection with any Loan Document or of any Collateral; and Administrative Agent makes no representation of any kind or character with respect to any such matter mentioned in this sentence. Administrative Agent may execute any of its duties under any of the Loan Documents by or through employees, agents, and attorneys in fact and shall not be answerable to the Lenders, the L/C Issuer, Borrower, or any other Person for the default or misconduct of any such agents or attorneys in fact selected with reasonable care. Administrative Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, other document or statement (whether written or oral) believed by it to be genuine or to be sent by the proper party or parties. In particular and without limiting any of the foregoing, Administrative Agent shall have no responsibility for confirming the accuracy of any compliance certificate or other document or instrument received by it under the Loan Documents. Administrative Agent may treat the payee of any Obligation as the holder thereof until written notice of transfer shall have been filed with Administrative Agent signed by such payee in form satisfactory to Administrative Agent. Each Lender and L/C Issuer acknowledges that it has independently and without reliance on Administrative Agent or any other Lender or L/C Issuer, and based upon such information, investigations and inquiries as it deems appropriate, made its own credit analysis and decision to extend credit to Borrower in the manner set forth in the Loan Documents. It shall be the responsibility of each Lender and L/C Issuer to keep itself informed as to the creditworthiness of Borrower and its Subsidiaries, and Administrative Agent shall have no liability to any Lender or L/C Issuer with respect thereto. Section 9.6 Indemnity. The Lenders shall ratably, in accordance with their respective Percentages, indemnify and hold Administrative Agent, and its directors, officers, employees, agents, and representatives harmless from and against any liabilities, losses, costs or expenses suffered or incurred by it under any Loan Document or in connection with the transactions contemplated thereby, regardless of when asserted or arising, except to the extent they are promptly reimbursed for the same by Borrower and except to the extent that any event giving rise to a claim was caused by the gross negligence, bad faith or willful misconduct of the party seeking to be indemnified. The obligations of the Lenders under this Section shall survive termination of this Agreement. Administrative Agent shall be entitled to offset amounts received for the account of a Lender under this Agreement against unpaid amounts due from such Lender to Administrative Agent, any L/C Issuer, or Swing Line Lender hereunder (whether as fundings of participations, indemnities or otherwise, and with any amounts offset for the benefit of Administrative Agent to be held by it for its own account and with any amounts offset for the benefit of a L/C Issuer or Swing Line Lender to be remitted by Administrative Agent to or for the account of such L/C Issuer or Swing Line Lender, as applicable), but shall not be entitled to offset against amounts owed to Administrative Agent, any L/C Issuer or Swing Line Lender by any Lender arising outside of this Agreement and the other Loan Documents. Section 9.7 Resignation of Administrative Agent and Successor Administrative Agent. Administrative Agent may resign at any time by giving written notice thereof to the Lenders, the L/C Issuer, and Borrower. Upon any such resignation of Administrative Agent, the Required Lenders shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation then the retiring Administrative Agent may, on behalf of the Lenders, appoint
-89- 744965794 a successor Administrative Agent, which may be any Lender hereunder or any commercial bank, or an Affiliate of a commercial bank, having an office in the United States of America and having a combined capital and surplus of at least $200,000,000. Upon the acceptance of its appointment as Administrative Agent hereunder, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Administrative Agent under the Loan Documents, and the retiring Administrative Agent shall be discharged from its duties and obligations thereunder. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Section 9 and all protective provisions of the other Loan Documents shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent, but no successor Administrative Agent shall in any event be liable or responsible for any actions of its predecessor. If Administrative Agent resigns and no successor is appointed, the rights and obligations of such Administrative Agent shall be automatically assumed by the Required Lenders and (i) Borrower shall be directed to make all payments due each Lender and L/C Issuer hereunder directly to such Lender or L/C Issuer and (ii) Administrative Agent’s rights in the Collateral Documents shall be assigned without representation, recourse or warranty to the Lenders and L/C Issuer as their interests may appear. Section 9.8 L/C Issuer and Swing Line Lender. The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the Swing Line Lender shall act on behalf of the Lenders with respect to the Swing Loans made hereunder. The L/C Issuer and the Swing Line Lender shall each have all of the benefits and immunities (i) provided to Administrative Agent in this Section 9 with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and the Applications pertaining to such Letters of Credit or by the Swing Line Lender in connection with Swing Loans made or to be made hereunder as fully as if the term “Administrative Agent”, as used in this Section 9, included the L/C Issuer and the Swing Line Lender with respect to such acts or omissions and (ii) as additionally provided in this Agreement with respect to such L/C Issuer or Swing Line Lender, as applicable. Section 9.9 Hedging Liability and Funds Transfer and Deposit Account Liability Arrangements. By virtue of a Lender’s execution of this Agreement or an assignment agreement pursuant to Section 11.10, as the case may be, any Affiliate of such Lender (and any Person that was a Lender or an Affiliate of a Lender at the time of the entering into such agreement or arrangement) with whom Borrower or any Guarantor has entered into an agreement creating Hedging Liability or Funds Transfer and Deposit Account Liability shall be deemed a Lender party hereto for purposes of any reference in a Loan Document to the parties for whom Administrative Agent is acting, it being understood and agreed that the rights and benefits of such Affiliate (or such Person that was a Lender or an Affiliate of a Lender at the time of the entering into such agreement or arrangement) under the Loan Documents consist exclusively of such Affiliate’s (or such Person’s) right to share in payments and collections out of the Collateral and the Guaranties as more fully set forth in Section 2.13. Each such Affiliate of a Lender shall, for the avoidance of doubt, be deemed to have agreed to the provisions of Section 9.13. In connection with any such distribution of payments and collections, or any request for the release of the Guaranties and Administrative Agent’s Liens in connection with the termination of the Commitments and the payment in full of the Obligations, Administrative Agent shall be entitled to assume no amounts are due to any Lender or its Affiliate (or any Person that was a Lender or an Affiliate of a Lender at the time of the entering into such agreement or arrangement) with respect to Hedging Liability
-90- 744965794 or Funds Transfer and Deposit Account Liability unless such Lender has notified Administrative Agent in writing of the amount of any such liability owed to it or its Affiliate (or such other Person) prior to such distribution or payment or release of Guaranties and Liens. Section 9.10 Designation of Additional Agents. Administrative Agent shall have the continuing right, for purposes hereof, at any time and from time to time to designate one or more of the Lenders (and/or its or their Affiliates) as “syndication agents,” “documentation agents,” “book runners,” “lead arrangers,” “arrangers,” or other designations for purposes hereto, but such designation shall have no substantive effect, and such Lenders and their Affiliates shall have no additional powers, duties or responsibilities as a result thereof. Section 9.11 Authorization to Release or Subordinate or Limit Liens. Administrative Agent is hereby irrevocably authorized by each of the Lenders and the L/C Issuer to (a) release any Lien covering any Collateral that is sold, transferred, or otherwise disposed of in accordance with the terms and conditions of this Agreement and the relevant Collateral Documents (including a sale, transfer, or disposition permitted by the terms of Section 7.4 or which has otherwise been consented to in accordance with Section 11.11), (b) release or subordinate any Lien on Collateral consisting of goods financed with purchase money indebtedness or under a Capital Lease to the extent such purchase money indebtedness or Capitalized Lease Obligation, and the Lien securing the same, are permitted by Sections 7.1(b) and 7.2(d), (c) reduce or limit the amount of the indebtedness secured by any particular item of Collateral to an amount not less than the estimated value thereof to the extent necessary to reduce mortgage registry, filing and similar tax, (d) release Liens on the Collateral following termination or expiration of the Commitments and payment in full in cash of the Obligations and, if then due, Hedging Liability and Funds Transfer and Deposit Account Liability and (e) subordinate any Lien on Collateral contemplated by clause (i) of the proviso to Section 7.2(l) to the extent required under the applicable Bonding Agreement or by the counterparty thereto in accordance with the terms of such Bonding Agreement. Section 9.12 Authorization to Enter into, and Enforcement of, the Collateral Documents. Administrative Agent is hereby irrevocably authorized by each of the Lenders and the L/C Issuer to execute and deliver the Collateral Documents (including any Intercreditor Agreement contemplated hereunder) on behalf of each of the Lenders and their Affiliates and the L/C Issuer and to take such action and exercise such powers under the Collateral Documents as Administrative Agent considers appropriate, provided Administrative Agent shall not amend the Collateral Documents unless such amendment is agreed to in writing by the Required Lenders. Each Lender and L/C Issuer acknowledges and agrees that it will be bound by the terms and conditions of the Collateral Documents upon the execution and delivery thereof by Administrative Agent. Except as otherwise specifically provided for herein, no Lender (or its Affiliates) or L/C Issuer, other than Administrative Agent, shall have the right to institute any suit, action or proceeding in equity or at law for the foreclosure or other realization upon any Collateral or for the execution of any trust or power in respect of the Collateral or for the appointment of a receiver or for the enforcement of any other remedy under the Collateral Documents; it being understood and intended that no one or more of the Lenders (or their Affiliates) or L/C Issuer shall have any right in any manner whatsoever to affect, disturb or prejudice the Lien of Administrative Agent (or any security trustee therefor) under the Collateral Documents by its or their action or to enforce any right thereunder, and that all proceedings at law or in equity shall be instituted, had, and
-91- 744965794 maintained by Administrative Agent (or its security trustee) in the manner provided for in the relevant Collateral Documents for the benefit of the Lenders, the L/C Issuer, and their Affiliates. Section 9.13 Recovery of Erroneous Payments. Notwithstanding anything to the contrary in this Agreement, if at any time Administrative Agent determines (in its sole and absolute discretion) that it has made a payment hereunder in error to any Lender, L/C Issuer or other Secured Party, whether or not in respect of an Obligation due and owing by Borrower at such time, where such payment is a Rescindable Amount, then in any such event, each such Person receiving a Rescindable Amount severally agrees to repay to Administrative Agent forthwith on demand the Rescindable Amount received by such Person in immediately available funds in the currency so received, with interest thereon, for each day from and including the date such Rescindable Amount is received by it to but excluding the date of payment to Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by Administrative Agent in accordance with banking industry rules on interbank compensation. Each Lender, each L/C Issuer and each other Secured Party irrevocably waives any and all defenses, including any “discharge for value” (under which a creditor might otherwise claim a right to retain funds mistakenly paid by a third party in respect of a debt owed by another), “good consideration”, “change of position” or similar defenses (whether at law or in equity) to its obligation to return any Rescindable Amount. Administrative Agent shall inform each Lender, L/C Issuer or other Secured Party that received a Rescindable Amount promptly upon determining that any payment made to such Person comprised, in whole or in part, a Rescindable Amount. Each Person’s obligations, agreements and waivers under this Section 9.13 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender or L/C Issuer, the termination of the Commitments and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Loan Document. SECTION 10. THE GUARANTEES. Section 10.1 The Guarantees. To induce the Lenders and L/C Issuer to provide the credits described herein and in consideration of benefits expected to accrue to Borrower by reason of the Commitments and for other good and valuable consideration, receipt of which is hereby acknowledged, each Subsidiary party hereto (including any Subsidiary executing an Additional Guarantor Supplement in the form attached hereto as Exhibit G or such other form acceptable to Administrative Agent) hereby unconditionally and irrevocably guarantees jointly and severally to Administrative Agent, the Lenders, and the L/C Issuer and their Affiliates (and any Person that was a Lender or an Affiliate of a Lender at the time of the entering into such agreement or arrangement), the due and punctual payment of all present and future Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability, including, but not limited to, the due and punctual payment of principal of and interest on the Loans, the Reimbursement Obligations, and the due and punctual payment of all other Obligations now or hereafter owed by Borrower under the Loan Documents and the due and punctual payment of all Hedging Liability and Funds Transfer and Deposit Account Liability, in each case as and when the same shall become due and payable, whether at stated maturity, by acceleration, or otherwise, according to the terms hereof and thereof (including all interest, costs, fees, and charges after the entry of an order for relief against Borrower or such other obligor in a case under the United States Bankruptcy Code or any similar proceeding, whether or not such interest, costs, fees and charges would be an allowed claim against Borrower or any such obligor in any such proceeding). In case of failure by Borrower or
-92- 744965794 other obligor punctually to pay any Obligations, Hedging Liability, or Funds Transfer and Deposit Account Liability guaranteed hereby, each Guarantor hereby unconditionally agrees to make such payment or to cause such payment to be made punctually as and when the same shall become due and payable, whether at stated maturity, by acceleration, or otherwise, and as if such payment were made by Borrower or such obligor. (b) Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Loan Party to honor all of its obligations under this Guaranty in respect of Swap Obligations. The obligations of each Qualified ECP Guarantor under this Section 10.1(b) shall remain in full force and effect until payment in full of the Hedging Liability, and Funds Transfer and Deposit Account Liability. Each Qualified ECP Guarantor intends that this Section 10.1(b) constitute, and this Section 10.1(b) shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act. Section 10.2 Guarantee Unconditional. The obligations of each Guarantor under this Section 10 shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged, or otherwise affected by: (a) any extension, renewal, settlement, compromise, waiver, or release in respect of any obligation of Borrower or other obligor or of any other guarantor under this Agreement or any other Loan Document or by operation of law or otherwise; (b) any modification or amendment of or supplement to this Agreement or any other Loan Document or any agreement relating to Hedging Liability or Funds Transfer and Deposit Account Liability; (c) any change in the corporate existence, structure, or ownership of, or any insolvency, bankruptcy, reorganization, or other similar proceeding affecting, Borrower or other obligor, any other guarantor, or any of their respective assets, or any resulting release or discharge of any obligation of Borrower or other obligor or of any other guarantor contained in any Loan Document; (d) the existence of any claim, set off, or other rights which Borrower or other obligor or any other guarantor may have at any time against Administrative Agent, any Lender, the L/C Issuer or any other Person, whether or not arising in connection herewith; (e) any failure to assert, or any assertion of, any claim or demand or any exercise of, or failure to exercise, any rights or remedies against Borrower or other obligor, any other guarantor, or any other Person or Property; (f) any application of any sums by whomsoever paid or howsoever realized to any obligation of Borrower or other obligor, regardless of what obligations of Borrower or other obligor remain unpaid; (g) any invalidity or unenforceability relating to or against Borrower or other obligor or any other guarantor for any reason of this Agreement or of any other Loan Document or any agreement relating to Hedging Liability or Funds Transfer and Deposit Account Liability or any
-93- 744965794 provision of applicable law or regulation purporting to prohibit the payment by Borrower or other obligor or any other guarantor of the principal of or interest on any Loan or any Reimbursement Obligation or any other amount payable under the Loan Documents or any agreement relating to Hedging Liability or Funds Transfer and Deposit Account Liability; or (h) any other act or omission to act or delay of any kind by Administrative Agent, any Lender, the L/C Issuer, or any other Person or any other circumstance whatsoever that might, but for the provisions of this paragraph, constitute a legal or equitable discharge of the obligations of any Guarantor under this Section 10. Section 10.3 Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances. Each Guarantor’s obligations under this Section 10 shall remain in full force and effect until the Commitments are terminated, all Letters of Credit have expired, and the principal of and interest on the Loans and all other amounts payable by Borrower and the Guarantors under this Agreement and all other Loan Documents and, if then outstanding and unpaid, all Hedging Liability and Funds Transfer and Deposit Account Liability shall have been paid in full in cash. If at any time any payment of the principal of or interest on any Loan or any Reimbursement Obligation or any other amount payable by Borrower or other obligor or any Guarantor under the Loan Documents or any agreement relating to Hedging Liability or Funds Transfer and Deposit Account Liability is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy, or reorganization of Borrower or other obligor or of any guarantor, or otherwise, each Guarantor’s obligations under this Section 10 with respect to such payment shall be reinstated at such time as though such payment had become due but had not been made at such time. Section 10.4 Subrogation. Each Guarantor agrees it will not exercise any rights which it may acquire by way of subrogation by any payment made hereunder, or otherwise, until all the Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability shall have been paid in full subsequent to the termination of all the Commitments and expiration of all Letters of Credit. If any amount shall be paid to a Guarantor on account of such subrogation rights at any time prior to the later of (x) the payment in full of the Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability and all other amounts payable by Borrower hereunder and the other Loan Documents and (y) the termination of the Commitments and expiration of all Letters of Credit, such amount shall be held in trust for the benefit of Administrative Agent, the Lenders, and the L/C Issuer (and their Affiliates) and shall forthwith be paid to Administrative Agent for the benefit of the Lenders and L/C Issuer (and their Affiliates) or be credited and applied upon the Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability, whether matured or unmatured, in accordance with the terms of this Agreement. Section 10.5 Waivers. Each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest, and any notice not provided for herein, as well as any requirement that at any time any action be taken by Administrative Agent, any Lender, the L/C Issuer, or any other Person against Borrower or other obligor, another guarantor, or any other Person. Section 10.6 Limit on Recovery. Notwithstanding any other provision hereof, the right of recovery against each Guarantor under this Section 10 shall not exceed $1.00 less than the lowest amount which would render such Guarantor’s obligations under this Section 10 void or voidable under applicable law, including fraudulent conveyance law.
-94- 744965794 Section 10.7 Stay of Acceleration. If acceleration of the time for payment of any amount payable by Borrower or other obligor under this Agreement or any other Loan Document, or under any agreement relating to Hedging Liability or Funds Transfer and Deposit Account Liability, is stayed upon the insolvency, bankruptcy or reorganization of Borrower or such obligor, all such amounts otherwise subject to acceleration under the terms of this Agreement or the other Loan Documents, or under any agreement relating to Hedging Liability or Funds Transfer and Deposit Account Liability, shall nonetheless be payable by the Guarantors hereunder forthwith on demand by Administrative Agent made at the request of the Required Lenders. Section 10.8 Benefit to Guarantors. Borrower and the Guarantors are engaged in related businesses and integrated to such an extent that the financial strength and flexibility of Borrower has a direct impact on the success of each Guarantor. Each Guarantor will derive substantial direct and indirect benefit from the extensions of credit hereunder. Section 10.9 Guarantor Covenants. Each Guarantor shall take such action as Borrower is required by this Agreement to cause such Guarantor to take, and shall refrain from taking such action as Borrower is required by this Agreement to prohibit such Guarantor from taking. SECTION 11. MISCELLANEOUS. Section 11.1 No Waiver, Cumulative Remedies. No delay or failure on the part of Administrative Agent, the L/C Issuer, or any Lender, or on the part of the holder or holders of any of the Obligations, in the exercise of any power or right under any Loan Document shall operate as a waiver thereof or as an acquiescence in any default, nor shall any single or partial exercise of any power or right preclude any other or further exercise thereof or the exercise of any other power or right. The rights and remedies hereunder of Administrative Agent, the L/C Issuer, the Lenders, and of the holder or holders of any of the Obligations are cumulative to, and not exclusive of, any rights or remedies which any of them would otherwise have. Section 11.2 Non-Business Days. If any payment hereunder becomes due and payable on a day which is not a Business Day, the due date of such payment shall be extended to the next succeeding Business Day on which date such payment shall be due and payable. In the case of any payment of principal falling due on a day which is not a Business Day, interest on such principal amount shall continue to accrue during such extension at the rate per annum then in effect, which accrued amount shall be due and payable on the next scheduled date for the payment of interest. Section 11.3 Survival of Representations. All representations and warranties made herein or in any other Loan Document or in certificates given pursuant hereto or thereto shall survive the execution and delivery of this Agreement and the other Loan Documents, and shall continue in full force and effect with respect to the date as of which they were made as long as any credit is in use or available hereunder. Section 11.4 Survival of Indemnity and Certain Other Provisions. All indemnity provisions and other provisions relative to reimbursement to the Lenders and L/C Issuer of amounts sufficient to protect the yield of the Lenders and L/C Issuer with respect to the Loans and Letters of Credit, including, but not limited to, Sections 3.3, 3.6, and 11.13, shall survive the
-95- 744965794 payment and satisfaction of all Obligations and the termination of this Agreement and the other Loan Documents, and shall remain in force beyond the expiration of any applicable statute of limitations and payment or satisfaction in full of any single claim thereunder. All such indemnity and other provisions shall be binding upon the successors and assigns of Borrower and shall inure to the benefit of each applicable Indemnitee and its successors and assigns. Section 11.5 Sharing of Set Off. Each Lender agrees with each other Lender a party hereto that if such Lender shall receive and retain any payment, whether by set off or application of deposit balances or otherwise, on any of the Loans or Reimbursement Obligations in excess of its ratable share of payments on all such Obligations then outstanding to the Lenders, then such Lender shall purchase for cash at face value, but without recourse, ratably from each of the other Lenders such amount of the Loans or Reimbursement Obligations, or participations therein, held by each such other Lenders (or interest therein) as shall be necessary to cause such Lender to share such excess payment ratably with all the other Lenders; provided, that if any such purchase is made by any Lender, and if such excess payment or part thereof is thereafter recovered from such purchasing Lender, the related purchases from the other Lenders shall be rescinded ratably and the purchase price restored as to the portion of such excess payment so recovered, but without interest. For purposes of this Section, amounts owed to or recovered by the L/C Issuer in connection with Reimbursement Obligations in which Lenders have been required to fund their participation shall be treated as amounts owed to or recovered by the L/C Issuer as a Lender hereunder. Section 11.6 Notices. Except as otherwise specified herein, all notices hereunder and under the other Loan Documents shall be in writing (including, without limitation, notice by telecopy) and shall be given to the relevant party at its address or telecopier number set forth below, or such other address or telecopier number as such party may hereafter specify by notice to Administrative Agent and Borrower given by courier, by United States certified or registered mail, by telecopy or by other telecommunication device capable of creating a written record of such notice and its receipt. Notices under the Loan Documents to any Lender shall be addressed to its address or telecopier number set forth on its Administrative Questionnaire; and notices under the Loan Documents to Borrower, any Guarantor, Administrative Agent or L/C Issuer shall be addressed to its respective address or telecopier number set forth below:
-96- 744965794 to Borrower or any Guarantor: Sterling Construction Company, Inc. 1800 Hughes Landing Blvd, Suite 250 The Woodlands, TX 77380 Attention: Ronald A. Ballschmiede Telephone: (281) 214-0800 Telecopy: (281) 465-8198 with a copy to: Jones Walker LLP 201 St. Charles Ave., Ste 5100 New Orleans, LA 70170 Attention: Amy G. Scafidel Telephone: (504) 582-8462 Telecopy: (504) 589-8462 to Administrative Agent and L/C Issuer : BMO Harris Bank N.A. 111 West Monroe Street Chicago, Illinois 60603 Attention: John Armstrong Telephone: (312) 461-2962 with a copy to: Mayer Brown LLP 71 South Wacker Chicago, IL 60606 Attention: Frederick C. Fisher Telephone: (312) 701-8545 Telecopy: (312) 706-8179 Each such notice, request or other communication shall be effective (i) if given by telecopier, when such telecopy is transmitted to the telecopier number specified in this Section or in the relevant Administrative Questionnaire and a confirmation of such telecopy has been received by the sender, (ii) if given by mail, 5 days after such communication is deposited in the mail, certified or registered with return receipt requested, addressed as aforesaid or (iii) if given by any other means, when delivered at the addresses specified in this Section or in the relevant Administrative Questionnaire; provided that any notice given pursuant to Section 2 shall be effective only upon receipt. Section 11.7 Counterparts. This Agreement may be executed in any number of counterparts, and by the different parties hereto on separate counterpart signature pages, each of which shall constitute an original, and all such counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page to this Agreement by facsimile transmission or in a pdf or other similar electronic file shall be effective as delivery of a manually executed counterpart hereof Section 11.8 Successors and Assigns. This Agreement shall be binding upon Borrower and the Guarantors and their successors and assigns, and shall inure to the benefit of Administrative Agent, the L/C Issuer, and each of the Lenders, and their respective successors and assigns, including any subsequent holder of any of the Obligations. Borrower and the Guarantors may not assign any of their rights or obligations under any Loan Document without the written consent of all of the Lenders and, with respect to any Letter of Credit or the Application therefor, the L/C Issuer. Section 11.9 Participants. Each Lender shall have the right at its own cost to grant participations (to be evidenced by one or more agreements or certificates of participation) in the Loans made and Reimbursement Obligations and/or Commitments held by such Lender at any time and from time to time to one or more other Persons (other than a natural person, the Borrower,
-97- 744965794 any of the Subsidiaries or any Affiliate the Borrower or its Subsidiaries or, to the extent that the list of Disqualified Institutions is made available to all Lenders, any Disqualified Institution); provided that no such participation shall relieve any Lender of any of its obligations under this Agreement, and, provided, further that no such participant shall have any rights under this Agreement except as provided in this Section, and Administrative Agent shall have no obligation or responsibility to such participant. Any agreement pursuant to which such participation is granted shall provide that the granting Lender shall retain the sole right and responsibility to enforce the obligations of Borrower under this Agreement and the other Loan Documents including the right to approve any amendment, modification or waiver of any provision of the Loan Documents, except that such agreement may provide that such Lender will not agree to any modification, amendment or waiver of the Loan Documents that would reduce the amount of or postpone any fixed date for payment of any Obligation in which such participant has an interest. Any party to which such a participation has been granted shall have the benefits of Section 3.4 and Section 3.6. Section 11.10 Assignments. (a) Any Lender may at any time assign to one or more Eligible Assignees all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions: (i) Minimum Amounts. (A) In the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans and participation interest in L/C Obligations at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and (B) in any case not described in subsection (a)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans and participation interest in L/C Obligations outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans and participation interest in L/C Obligations of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to Administrative Agent or, if “Effective Date” is specified in the Assignment and Acceptance, as of the Effective Date) shall not be less than $5,000,000, in the case of any assignment in respect of the Revolving Credit, or $1,000,000, in the case of any assignment in respect of any Term Loan, unless each of Administrative Agent and, so long as no Event of Default has occurred and is continuing, Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); (ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loan or the Commitment assigned, except that this clause (ii) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate Credits on a non-pro rata basis. (iii) Required Consents. No consent shall be required for any assignment except to the extent required by Section 11.10(a)(i)(B) and, in addition:
-98- 744965794 (A) the consent of Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Default has occurred and is continuing at the time of such assignment or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to Administrative Agent within five (5) Business Days after having received notice thereof; (B) the consent of Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of (i) the Revolving Credit if such assignment is to a Person that is not a Lender with a Commitment in respect of such facility, an Affiliate of such Lender or an Approved Fund with respect to such Lender or (ii) the Term Loans to a Person who is not a Lender, an Affiliate of a Lender or an Approved Fund; (C) the consent of the L/C Issuer (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding); and (D) the consent of the Swing Line Lender (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Swing Loans (whether or not then outstanding). (iv) Assignment and Acceptance. The parties to each assignment shall execute and deliver to Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500, and the assignee, if it is not a Lender, shall deliver to Administrative Agent an Administrative Questionnaire. (v) No Assignment to Certain Persons. No such assignment shall be made to (A) Borrower or any of its Affiliates or Subsidiaries, (B) any Defaulting Lender or any of its Affiliates, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B), or (C) subject to clause (d) below, so long as the list of Disqualified Institutions is made available to each Lender, any Disqualified Institution. (vi) No Assignment to Natural Persons. No such assignment shall be made to a natural person. Subject to acceptance and recording thereof by Administrative Agent pursuant to Section 11.10(b), from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under
-99- 744965794 this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 11.4 and 11.13 with respect to facts and circumstances occurring prior to the effective date of such assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 11.9. (vii) Register. Administrative Agent, acting solely for this purpose as an agent of Borrower, shall maintain at one of its offices in Chicago, Illinois, a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and Borrower, Administrative Agent, and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. Notwithstanding the foregoing, in no event shall the Administrative Agent be obligated to ascertain, monitor or inquire as to whether any Lender is a Disqualified Institution. (b) Any Lender may at any time pledge or grant a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any such pledge or grant to a Federal Reserve Bank, and this Section shall not apply to any such pledge or grant of a security interest; provided that no such pledge or grant of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or secured party for such Lender as a party hereto; provided further, however, the right of any such pledgee or grantee (other than any Federal Reserve Bank) to further transfer all or any portion of the rights pledged or granted to it, whether by means of foreclosure or otherwise, shall be at all times subject to the terms of this Agreement. (c) Notwithstanding anything to the contrary herein, if at any time the Swing Line Lender assigns all of its Revolving Credit Commitments and Revolving Loans pursuant to subsection (a) above, the Swing Line Lender may terminate the Swing Line. In the event of such termination of the Swing Line, Borrower shall be entitled to appoint another Lender to act as the successor Swing Line Lender hereunder (with such Lender’s consent); provided, that the failure of Borrower to appoint a successor shall not affect the resignation of the Swing Line Lender. If the Swing Line Lender terminates the Swing Line, it shall retain all of the rights of the Swing Line Lender provided hereunder with respect to Swing Loans made by it and outstanding as of the effective date of such termination, including the right to require Lenders to make Revolving Loans or fund participations in outstanding Swing Loans pursuant to Section 2.7. (d) Disqualified Institutions. (i) No assignment or participation shall be made to any Person that was a Disqualified Institution as of the date (the “Trade Date”) on which the assigning Lender entered into a binding agreement to sell and assign or grant a participation in all or a portion of its rights and obligations under this Agreement to such Person (unless the Borrower has
-100- 744965794 consented to such assignment or participation in writing in its sole and absolute discretion, in which case such Person will not be considered a Disqualified Institution for the purpose of such assignment or participation). For the avoidance of doubt, with respect to any assignee or Participant that becomes a Disqualified Institution after the applicable Trade Date (including as a result of the delivery of a written supplement to the list of “Disqualified Institutions” referred to in, the definition of “Disqualified Institution”), (x) such assignee or Participant shall not retroactively be disqualified from becoming a Lender or Participant and (y) the execution by a Borrower of an Assignment and Acceptance with respect to such assignee will not by itself result in such assignee no longer being considered a Disqualified Institution. Any assignment or participation in violation of this clause (i) shall not be void, but the other provisions of this clause (i) shall apply. (ii) If any assignment or participation is made to any Disqualified Institution without the Borrower’s prior written consent in violation of clause (i) above, or if any Person becomes a Disqualified Institution after the applicable Trade Date, the Borrower may, at its sole expense and effort, upon notice to the applicable Disqualified Institution and the Administrative Agent, require such Disqualified Institution to assign, without recourse (in accordance with and subject to the restrictions and consent rights contained in this Section 11.9), all of its interest, rights and obligations under this Agreement to one or more Persons at the lesser of (x) the principal amount thereof and (y) the amount that such Disqualified Institution paid to acquire such interests, rights and obligations in each case plus accrued interest, accrued fees and all other amounts (other than principal amounts) payable to it hereunder. (iii) Notwithstanding anything to the contrary contained in this Agreement, Disqualified Institutions to whom an assignment or participation is made in violation of clause (i) above (A) will not have the right to (x) receive information, reports or other materials provided to Lenders by the Loan Parties, the Administrative Agent or any other Lender, (y) attend or participate in meetings attended by the Lenders and the Administrative Agent, or (z) access any electronic site established for the Lenders or confidential communications from counsel to or financial advisors of the Administrative Agent or the Lenders and (B) for purposes of any consent to any amendment, waiver or modification of, or any action under, and for the purpose of any direction to the Administrative Agent or any Lender to undertake any action (or refrain from taking any action) under this Agreement or any other Loan Document, each Disqualified Institution will be deemed to have consented in the same proportion as the Lenders that are not Disqualified Institutions consented to such matter. (iv) The Administrative Agent shall have the right, and the Borrower hereby expressly authorizes the Administrative Agent, to (A) post the list of Disqualified Institutions provided by the Borrower and any updates thereto from time to time (collectively, the “DQ List”) on a Platform, including that portion of such Platform that is designated for “public side” Lenders and/or (B) provide the DQ List to each Lender or potential Lender requesting the same. (v) The Administrative Agent shall not be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the
-101- 744965794 provisions hereof relating to Disqualified Institutions. Without limiting the generality of the foregoing the Administrative Agent shall not have any liability with respect to or arising out of any assignment or participation of Loans, or disclosure of confidential information, by any other Person to any Disqualified Institution. Section 11.11 Amendments. Any provision of this Agreement or the other Loan Documents may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by (a) Borrower, (b) the Required Lenders, and (c) if the rights or duties of Administrative Agent, the L/C Issuer, or the Swing Line Lender are affected thereby, Administrative Agent, the L/C Issuer, or the Swing Line Lender, as applicable; provided that: (i) no amendment or waiver pursuant to this Section 11.11 shall (A) increase any Commitment of any Lender without the consent of such Lender or (B) reduce the amount of or postpone the date for any scheduled payment of any principal of or interest on any Loan or of any Reimbursement Obligation or of any fee payable hereunder without the consent of the Lender to which such payment is owing or which has committed to make such Loan or Letter of Credit (or participate therein) hereunder; (ii) no amendment or waiver pursuant to this Section 11.11 shall, unless signed by each Lender, extend the Revolving Credit Termination Date, change the definition of Required Lenders, change the provisions of this Section 11.11, release any material guarantor or all or substantially all of the Collateral (except as otherwise provided for in the Loan Documents), or affect the number of Lenders required to take any action hereunder or under any other Loan Document; and (iii) no amendment to Section 10 shall be made without the consent of the Guarantor(s) affected thereby. Section 11.12 Headings. Section headings used in this Agreement are for reference only and shall not affect the construction of this Agreement. Section 11.13 Costs and Expenses; Indemnification. Borrower agrees to pay all reasonable out-of-pocket costs and expenses of Administrative Agent and the Left Lead Arranger in connection with the preparation, negotiation, syndication, and administration of the Loan Documents and the due diligence, examinations, appraisals, environmental analysis and other activities and other activities relating thereto, including, without limitation, including the reasonable fees and disbursements of counsel to Administrative Agent and the Left Lead Arranger, in connection with (i) the syndication and administration of the Credits, and (ii) the preparation, negotiation, administration, management, execution and delivery of the Loan Documents and in connection with the transactions contemplated hereby or thereby, and any amendment, waiver or consent related thereto, whether or not the transactions contemplated herein are consummated, together with any fees and charges suffered or incurred by Administrative Agent or the Left Lead Arranger in connection with periodic environmental audits, fixed asset appraisals, title insurance policies, collateral filing fees and lien searches. Borrower agrees to pay to Administrative Agent, Lead Arrangers, the L/C Issuer and each Lender, and any other holder of any Obligations outstanding hereunder, all costs and expenses reasonably incurred or paid by Administrative Agent, Lead Arrangers, the L/C Issuer, such Lender, or any such holder, including reasonable
-102- 744965794 attorneys’ fees (limited to one primary counsel to Administrative Agent, Lead Arrangers, the L/C Issuer and the Lenders and one firm of counsel in any relevant local jurisdiction, plus such additional counsel as may be necessary in the case of an actual or perceived conflict of interest) and disbursements and court costs, in connection with any Default or Event of Default hereunder (including an Event of Default under Section 8.1(j) or 8.1(k)) or in connection with the enforcement of any of the Loan Documents (including all such costs and expenses incurred in connection with any proceeding under the United States Bankruptcy Code involving Borrower or any Guarantor as a debtor thereunder). Borrower further agrees to indemnify Administrative Agent, the Lead Arrangers, the L/C Issuer, each Lender, and any security trustee therefor, and their respective Affiliates, directors, officers, employees, agents, financial advisors, and consultants (each such Person being called an “Indemnitee”) against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all reasonable fees and disbursements of counsel (limited to one primary counsel to Administrative Agent, the Lead Arrangers, the L/C Issuer and the Lenders and one firm of counsel in any relevant local jurisdiction, plus such additional counsel as may be necessary in the case of an actual or perceived conflict of interest) for any such Indemnitee and all reasonable expenses of litigation or preparation therefor, whether or not the Indemnitee is a party thereto, or any settlement arrangement arising from or relating to any such litigation) which any of them may pay or incur arising out of or relating to any Loan Document or any of the transactions contemplated thereby or the direct or indirect application or proposed application of the proceeds of any Loan or Letter of Credit, other than those which arise from the gross negligence, bad faith or willful misconduct of the party claiming indemnification. Borrower, promptly following demand by Administrative Agent, the Lead Arrangers, the L/C Issuer or a Lender or any Affiliate thereof at any time, shall reimburse Administrative Agent, the L/C Issuer, such Lender or such Affiliate for any legal or other expenses (including, without limitation, all reasonable fees and disbursements of counsel for any such Indemnitee, limited to one primary counsel to Administrative Agent, the Lead Arrangers, the L/C Issuer and the Lenders and one firm of counsel in any relevant local jurisdiction, plus such additional counsel as may be necessary in the case of an actual or perceived conflict of interest) incurred in connection with investigating or defending against any of the foregoing (including any settlement costs relating to the foregoing) except if the same is directly due to the gross negligence, bad faith or willful misconduct of the party to be indemnified. To the extent permitted by applicable law, neither Borrower nor any Guarantor shall assert, and each such Person hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or the other Loan Documents or any agreement or instrument contemplated hereby or thereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. The obligations of Borrower under this Section shall survive the termination of this Agreement. (b) Borrower unconditionally agrees to forever indemnify, defend and hold harmless, and covenants not to sue for any claim for contribution against, each Indemnitee for any damages, costs, loss or expense, including without limitation response, remedial or removal costs and all fees and disbursements of counsel for any such Indemnitee, arising out of (i) this Agreement or the other Loan Documents and the transactions contemplated hereby or thereby, (ii) any presence, release, threatened release or disposal of any hazardous or toxic substance or petroleum by Borrower or any Subsidiary or otherwise occurring on or with respect to its Property (whether owned or leased), (iii) the operation or violation of any Environmental Law, whether federal, state,
-103- 744965794 or local, and any regulations promulgated thereunder, by Borrower or any Subsidiary or otherwise occurring on or with respect to its Property (whether owned or leased), (iv) any claim for personal injury or property damage in connection with Borrower or any Subsidiary or otherwise occurring on or with respect to its Property (whether owned or leased), and (v) the inaccuracy or breach of any environmental representation, warranty or covenant by Borrower or any Subsidiary made herein or in any other Loan Document evidencing or securing any Obligations or setting forth terms and conditions applicable thereto or otherwise relating thereto, except for damages arising from the bad faith, willful misconduct or gross negligence of the relevant Indemnitee. This indemnification shall survive the payment and satisfaction of all Obligations and the termination of this Agreement, and shall remain in force beyond the expiration of any applicable statute of limitations and payment or satisfaction in full of any single claim under this indemnification. This indemnification shall be binding upon the successors and assigns of the Borrower and shall inure to the benefit of each Indemnitee and its successors and assigns. Section 11.14 Set off. In addition to any rights now or hereafter granted under the Loan Documents or applicable law and not by way of limitation of any such rights, upon the occurrence of any Event of Default, each Lender, the L/C Issuer, each subsequent holder of any Obligation, and each of their respective affiliates, is hereby authorized by Borrower and each Guarantor at any time or from time to time, without notice to Borrower, any Guarantor or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured, and in whatever currency denominated, but not including trust accounts) and any other indebtedness at any time held or owing by that Lender, L/C Issuer, subsequent holder, or affiliate, to or for the credit or the account of Borrower or such Guarantor, whether or not matured, against and on account of the Obligations of Borrower or such Guarantor to that Lender, L/C Issuer, or subsequent holder under the Loan Documents, including, but not limited to, all claims of any nature or description arising out of or connected with the Loan Documents, irrespective of whether or not (a) that Lender, L/C Issuer, or subsequent holder shall have made any demand hereunder or (b) the principal of or the interest on the Loans and other amounts due hereunder shall have become due and payable pursuant to Section 8 and although said obligations and liabilities, or any of them, may be contingent or unmatured. Section 11.15 Entire Agreement. The Loan Documents constitute the entire understanding of the parties thereto with respect to the subject matter thereof and any prior agreements, whether written or oral, with respect thereto are superseded hereby. Section 11.16 Governing Law. This Agreement and the other Loan Documents (except as otherwise specified therein), and any claim, controversy, dispute or cause of action (whether in contract, tort or otherwise) based upon, arising out of or relating to this Agreement or any Loan Document, and the rights and duties of the parties hereto, shall be governed by and construed and determined in accordance with the internal laws of the State of New York. Section 11.17 Severability of Provisions. Any provision of any Loan Document which is unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. The parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provision with valid provisions the
-104- 744965794 economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. All rights, remedies and powers provided in this Agreement and the other Loan Documents may be exercised only to the extent that the exercise thereof does not violate any applicable mandatory provisions of law, and all the provisions of this Agreement and other Loan Documents are intended to be subject to all applicable mandatory provisions of law which may be controlling and to be limited to the extent necessary so that they will not render this Agreement or the other Loan Documents invalid or unenforceable. Section 11.18 Excess Interest. Notwithstanding any provision to the contrary contained herein or in any other Loan Document, no such provision shall require the payment or permit the collection of any amount of interest in excess of the maximum amount of interest permitted by applicable law to be charged for the use or detention, or the forbearance in the collection, of all or any portion of the Loans or other obligations outstanding under this Agreement or any other Loan Document (“Excess Interest”). If any Excess Interest is provided for, or is adjudicated to be provided for, herein or in any other Loan Document, then in such event (a) the provisions of this Section shall govern and control, (b) neither Borrower nor any guarantor or endorser shall be obligated to pay any Excess Interest, (c) any Excess Interest that Administrative Agent or any Lender may have received hereunder shall, at the option of Administrative Agent, be (i) applied as a credit against the then outstanding principal amount of Obligations hereunder and accrued and unpaid interest thereon (not to exceed the maximum amount permitted by applicable law), (ii) refunded to Borrower, or (iii) any combination of the foregoing, (d) the interest rate payable hereunder or under any other Loan Document shall be automatically subject to reduction to the maximum lawful contract rate allowed under applicable usury laws (the “Maximum Rate”), and this Agreement and the other Loan Documents shall be deemed to have been, and shall be, reformed and modified to reflect such reduction in the relevant interest rate, and (e) neither Borrower nor any guarantor or endorser shall have any action against Administrative Agent or any Lender for any damages whatsoever arising out of the payment or collection of any Excess Interest. Notwithstanding the foregoing, if for any period of time interest on any of Borrower’s Obligations is calculated at the Maximum Rate rather than the applicable rate under this Agreement, and thereafter such applicable rate becomes less than the Maximum Rate, the rate of interest payable on Borrower’s Obligations shall remain at the Maximum Rate until the Lenders have received the amount of interest which such Lenders would have received during such period on Borrower’s Obligations had the rate of interest not been limited to the Maximum Rate during such period. Section 11.19 Construction. The parties acknowledge and agree that the Loan Documents shall not be construed more favorably in favor of any party hereto based upon which party drafted the same, it being acknowledged that all parties hereto contributed substantially to the negotiation of the Loan Documents. The provisions of this Agreement relating to Subsidiaries shall only apply during such times as Borrower has one or more Subsidiaries. Nothing contained herein shall be deemed or construed to permit any act or omission which is prohibited by the terms of any Collateral Document, the covenants and agreements contained herein being in addition to and not in substitution for the covenants and agreements contained in the Collateral Documents. Section 11.20 Lender’s and L/C Issuer’s Obligations Several. The obligations of the Lenders and L/C Issuer hereunder are several and not joint. Nothing contained in this Agreement and no action taken by the Lenders or L/C Issuer pursuant hereto shall be deemed to constitute the Lenders and L/C Issuer a partnership, association, joint venture or other entity.
-105- 744965794 Section 11.21 Submission to Jurisdiction; Waiver of Venue; Service of Process. BORROWER AND GUARANTORS IRREVOCABLY AND UNCONDITIONALLY SUBMIT, FOR THEMSELVES AND THEIR PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ADMINISTRATIVE AGENT, L/C ISSUER, AND LENDERS MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST BORROWER AND GUARANTORS OR THEIR PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. (b) BORROWER AND GUARANTORS IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (a) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. (c) EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.6. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. Section 11.22 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
-106- 744965794 (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. Section 11.23 USA Patriot Act. Each Lender and L/C Issuer that is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107 56 (signed into law October 26, 2001)) (the “Patriot Act”) hereby notifies Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify, and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow such Lender or L/C Issuer to identify Borrower in accordance with the Patriot Act. Section 11.24 Time is of the Essence. Time is of the essence of this Agreement and each of the other Loan Documents. Section 11.25 Confidentiality. Each of Administrative Agent, the Lenders, and the L/C Issuer severally agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors to the extent any such Person has a need to know such Information (it being understood that the Persons to whom such disclosure is made will first be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (A) any assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations under this Agreement or (B) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to Borrower or any Subsidiary and its obligations, in each case other than any Disqualified Institution so long as the list of Disqualified Institutions is made available to each Lender, (g) with the prior written consent of Borrower, (h) to the extent such Information (A) becomes publicly available other than as a result of a breach of this Section or (B) becomes available to Administrative Agent, any Lender or the L/C Issuer on a non-confidential basis from a source other than Borrower or any Subsidiary or any of their directors, officers, employees or agents, including accountants, legal counsel and other advisors, (i) to rating agencies if requested or required by such agencies in connection with a rating relating to the Loans or Commitments hereunder, or (j) to entities which compile and publish information about the syndicated loan market, provided that only basic information about the pricing and structure of the transaction evidenced hereby may be disclosed pursuant to this subsection (j). For purposes of this Section, “Information” means all information received from Borrower or any of the Subsidiaries or from any other Person on behalf of Borrower or any Subsidiary relating to Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to Administrative Agent, any Lender or the L/C Issuer on a non-confidential basis prior to disclosure by Borrower or any of its Subsidiaries or from any other Person on behalf of Borrower or any of the Subsidiaries; provided that, in the case of information received from the
-107- 744965794 Borrower or any Subsidiary, or on behalf of Borrower or any Subsidiary, after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. Section 11.26 Acknowledgement Regarding any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Hedging Agreements or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States): (a) In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support. (b) As used in this Section 11.26, the following terms have the following meanings: (i) “BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party. (ii) “Covered Entity” means any of the following: (A) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
-108- 744965794 (B) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (C) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b). (iii) “Default Right” has the meaning assigned to that term in, an shall be interpreted in accordance with, 12 C.F.R. §§ 252.81,47.2 or 382.1, as applicable. (iv) “QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D). Section 11.27 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each Loan Party acknowledges and agrees that: (i) (A) the arranging and other services regarding this Agreement provided by the Lead Arrangers, the Administrative Agent and the Lenders are arm’s-length commercial transactions between the Loan Parties and their Affiliates, on the one hand, and the Lead Arrangers, the Administrative Agent and the Lenders, on the other hand, (B) each Loan Party has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) each Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) each of the Lead Arrangers, the Administrative Agent and the Lenders is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other Person and (B) neither any Lead Arranger, the Administrative Agent nor any Lender has any obligation to any Loan Party or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) each of the Lead Arrangers, the Administrative Agent and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither any Lead Arranger, the Administrative Agent nor any Lender has any obligation to disclose any of such interests to any Loan Party or its Affiliates. To the fullest extent permitted by law, each Loan Party hereby waives and releases any claims that it may have against each of the Lead Arrangers, the Administrative Agent and the Lenders with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby. Section 11.28 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: (a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and
-109- 744965794 (b) the effects of any Bail-In Action on any such liability, including, if applicable: (i) a reduction in full or in part or cancellation of any such liability; (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or (iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.
EXHIBIT B Schedule 1 to Credit Agreement Commitments Lender Revolving Credit Commitment Term A-1 Loans1 Term A-2 Loan Commitment2 BMO Harris Bank N.A. $17,834,793.49 $73,941,567.62 $27,719,540.05 Bank of America, N.A. $14,549,436.80 $60,320,752.50 $20,000,000.00 KeyBank National Association $7,509,386.73 $31,133,291.61 $16,000,000.00 UMB Bank N.A. $7,509,386.73 $31,133,291.61 $16,000,000.00 Regions Bank $7,509,386.73 $31,133,291.61 $16,000,000.00 BancAlliance Inc. $4,881,101.38 $20,236,639.55 $9,500,000.00 BancorpSouth Bank, a division of Cadence Bank $4,693,366.71 $19,458,307.25 $8,500,000.00 Siemens Financial Services, Inc. $4,317,897.37 $17,901,642.68 $2,780,459.95 Synovus Bank $3,942,428.04 $16,344,978.09 $10,000,000 Bank of Hope $2,252,816.02 $9,339,987.48 $13,500,000.00 Total $75,000,000.00 $310,943,750.00 $140,000,000.00 1 As of the Third Amendment Effective Date. 2 As of the Third Amendment Effective Date.
EXHIBIT 23.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.1
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.2
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On December 30, 2021, Sterling Construction Company, Inc., (“Sterling” or, the “Company”) consummated the acquisition (the “Acquisition”) of Petillo Incorporated and its related entities (collectively, “Petillo”), for a base purchase price of $195.0 million, consisting of $175.0 million in cash and 759,447 Sterling common shares valued at $20.0 million pursuant to the Stock Purchase Agreement. Petillo is a leading site development specialty contractor based in Flatlanders, NJ serving the Mid-Atlantic, which provides large-scale site infrastructure improvement services, including full-service excavation, underground utility construction, environmental remediation, drainage systems for commercial construction, and water management and distribution systems.
The unaudited pro forma condensed combined financial information is presented to illustrate the estimated effects of the Acquisition based on the historical financial position and results of operations of Sterling and Petillo. The unaudited pro forma condensed combined financial information is presented as follows:
•the unaudited pro forma condensed combined balance sheet as of September 30, 2021, prepared based on (i) the historical unaudited consolidated balance sheet of Sterling as of September 30, 2021 and (ii) the historical unaudited combined balance sheet of Petillo as of September 30, 2021.
•the unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2021, prepared based on (i) the historical unaudited condensed consolidated statement of operations of Sterling for the nine months ended September 30, 2021 and (ii) the historical unaudited condensed combined statement of operations of Petillo for the nine months ended September 30, 2021.
•the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020, prepared based on (i) the historical audited consolidated statement of operations of Sterling for the year ended December 31, 2020 and (ii) the historical audited combined statement of operations of Petillo for the year ended December 31, 2020.
The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed combined financial statements to give effect to the pro forma adjustment criteria set forth in S-X Article 11. The pro forma adjustments in S-X Article 11 relate to the following:
•Transaction Accounting Adjustments—These adjustments reflect the application of required accounting for the acquisition, disposition, or other transaction on the registrant’s financial statements.
•Autonomous Entity Adjustments—These adjustments are required to reflect the financial position and results of operations of the registrant as an autonomous entity if the registrant was previously part of another entity.
•Management’s Adjustments—These adjustments depict synergies and dis-synergies of the acquisitions and dispositions for which pro forma effect is being given.
The following unaudited pro forma condensed combined financial statements are prepared for illustrative purposes only and are not necessarily indicative of or intended to represent the results that would have been achieved had the Acquisition been consummated as of the dates indicated or that may be achieved in the future.
The unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting (“Acquisition Accounting”) under existing United States generally accepted accounting principles. The Acquisition Accounting is dependent upon certain valuations that have yet to progress to a stage where there is sufficient information for a definitive measurement. Sterling intends to complete the valuations and finalize the purchase price allocation as soon as practicable within the measurement period, but in no event later than one year following the closing date of the Acquisition. The assets and liabilities of Petillo have been measured based on various preliminary estimates using assumptions that Sterling believes are reasonable, based on information that is currently available.
The unaudited pro forma condensed combined financial information gives effect to the Acquisition, as if the Acquisition had been completed on September 30, 2021 for balance sheet purposes, and on January 1, 2020 for statement of operations purposes. This unaudited pro forma condensed combined financial information was derived from and should be read in conjunction with (i) Sterling’s unaudited financial statements and accompanying notes included in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, (ii) Sterling’s audited financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2020, (iii) Petillo’s unaudited financial statements and accompanying notes for the nine months ended September 30, 2021 included in this Current Report on Form 8-K, and (iv) Petillo’s audited financial statements and accompanying notes for the year ended December 31, 2020 included in this Current Report on Form 8-K.
| STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES | |||||||||||||||||||||||||||||
| UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET | |||||||||||||||||||||||||||||
| AS OF SEPTEMBER 30, 2021 | |||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||
| STERLING | PETILLO | PRO FORMA ADJUSTMENTS | NOTE 4 | PRO FORMA COMBINED | |||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Current assets: | |||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 117,702 | $ | 8,483 | $ | (51,975) | A | $ | 74,210 | ||||||||||||||||||||
| Accounts receivable | 218,683 | 41,195 | — | 259,878 | |||||||||||||||||||||||||
| Contract assets | 85,498 | 14,328 | — | 99,826 | |||||||||||||||||||||||||
| Receivables from and equity in construction joint ventures | 21,656 | — | — | 21,656 | |||||||||||||||||||||||||
| Other current assets | 22,483 | 18,099 | (17,383) | B | 23,199 | ||||||||||||||||||||||||
| Total current assets | 466,022 | 82,105 | (69,358) | 478,769 | |||||||||||||||||||||||||
| Property and equipment, net | 148,444 | 35,243 | — | 183,687 | |||||||||||||||||||||||||
| Operating lease right-of-use assets | 17,470 | — | 3,185 | C | 20,655 | ||||||||||||||||||||||||
| Goodwill | 192,014 | — | 47,037 | D | 239,051 | ||||||||||||||||||||||||
| Other intangibles, net | 236,289 | — | 101,162 | E | 337,451 | ||||||||||||||||||||||||
| Other non-current assets, net | 4,078 | 642 | (132) | B | 4,588 | ||||||||||||||||||||||||
| Total assets | $ | 1,064,317 | $ | 117,990 | $ | 81,894 | $ | 1,264,201 | |||||||||||||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||||||||||||||||
| Current liabilities: | |||||||||||||||||||||||||||||
| Accounts payable | $ | 142,740 | $ | 16,333 | $ | — | $ | 159,073 | |||||||||||||||||||||
| Contract liabilities | 141,236 | 15,127 | — | 156,363 | |||||||||||||||||||||||||
| Current maturities of long-term debt | 21,239 | 12,725 | (5,725) | F | 28,239 | ||||||||||||||||||||||||
| Current portion of long-term lease obligations | 8,314 | — | 1,508 | C | 9,822 | ||||||||||||||||||||||||
| Income taxes payable | 306 | — | — | 306 | |||||||||||||||||||||||||
| Accrued compensation | 34,801 | — | — | 34,801 | |||||||||||||||||||||||||
| Other current liabilities | 9,088 | 6,231 | — | 15,319 | |||||||||||||||||||||||||
| Total current liabilities | 357,724 | 50,416 | (4,217) | 403,923 | |||||||||||||||||||||||||
| Long-term debt | 299,923 | 14,421 | 117,181 | F | 431,525 | ||||||||||||||||||||||||
| Long-term lease obligations | 9,306 | — | 1,677 | C | 10,983 | ||||||||||||||||||||||||
| Members’ interest subject to mandatory redemption and undistributed earnings | 54,766 | — | — | 54,766 | |||||||||||||||||||||||||
| Deferred taxes | 10,287 | — | — | 10,287 | |||||||||||||||||||||||||
| Other long-term liabilities | 9,218 | 1,076 | (1,076) | B | 9,218 | ||||||||||||||||||||||||
| Total liabilities | 741,224 | 65,913 | 113,565 | 920,702 | |||||||||||||||||||||||||
| Stockholders’ equity: | |||||||||||||||||||||||||||||
| Common stock | 288 | — | 8 | G | 296 | ||||||||||||||||||||||||
| Additional paid in capital | 255,313 | — | 20,398 | G | 275,711 | ||||||||||||||||||||||||
| Petillo's equity | — | 52,077 | (52,077) | G | — | ||||||||||||||||||||||||
| Retained earnings | 69,010 | — | — | 69,010 | |||||||||||||||||||||||||
| Accumulated other comprehensive loss | (2,923) | — | — | (2,923) | |||||||||||||||||||||||||
| Total stockholders’ equity | 321,688 | 52,077 | (31,671) | 342,094 | |||||||||||||||||||||||||
| Noncontrolling interests | 1,405 | — | — | 1,405 | |||||||||||||||||||||||||
| Total stockholders’ equity | 323,093 | 52,077 | (31,671) | 343,499 | |||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 1,064,317 | $ | 117,990 | $ | 81,894 | $ | 1,264,201 | |||||||||||||||||||||
| STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES | |||||||||||||||||||||||||||||
| UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS | |||||||||||||||||||||||||||||
| FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 | |||||||||||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||||||||||
| STERLING | PETILLO | PRO FORMA ADJUSTMENTS | NOTE 4 | PRO FORMA COMBINED | |||||||||||||||||||||||||
| Revenues | $ | 1,180,431 | $ | 143,340 | $ | — | $ | 1,323,771 | |||||||||||||||||||||
| Cost of revenues | (1,021,348) | (119,675) | — | (1,141,023) | |||||||||||||||||||||||||
| Gross profit | 159,083 | 23,665 | — | 182,748 | |||||||||||||||||||||||||
| General and administrative expense | (52,565) | (3,785) | (2,250) | H | (58,600) | ||||||||||||||||||||||||
| Intangible asset amortization | (8,598) | — | (3,036) | E | (11,634) | ||||||||||||||||||||||||
| Other operating expense, net | (10,414) | — | — | (10,414) | |||||||||||||||||||||||||
| Operating income | 87,506 | 19,880 | (5,286) | 102,100 | |||||||||||||||||||||||||
| Interest income | 39 | — | — | 39 | |||||||||||||||||||||||||
| Interest expense | (15,660) | — | (3,461) | I | (19,121) | ||||||||||||||||||||||||
| Gain on extinguishment of debt, net | 2,032 | 6,749 | (6,749) | J | 2,032 | ||||||||||||||||||||||||
| Other expense | — | (1,034) | 1,034 | J | — | ||||||||||||||||||||||||
| Income before income taxes | 73,917 | 25,595 | (14,462) | 85,050 | |||||||||||||||||||||||||
| Income tax expense | (20,275) | (1,904) | (1,213) | K | (23,392) | ||||||||||||||||||||||||
| Net income | 53,642 | 23,691 | (15,675) | 61,658 | |||||||||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | (1,905) | — | — | (1,905) | |||||||||||||||||||||||||
| Net income attributable to Sterling common stockholders | $ | 51,737 | $ | 23,691 | $ | (15,675) | $ | 59,753 | |||||||||||||||||||||
| Net income per share attributable to Sterling common stockholders: | |||||||||||||||||||||||||||||
| Basic | $ | 1.81 | $ | 2.04 | |||||||||||||||||||||||||
| Diluted | $ | 1.79 | $ | 2.01 | |||||||||||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||||||||
| Basic | 28,527 | 759 | L | 29,286 | |||||||||||||||||||||||||
| Diluted | 28,927 | 759 | L | 29,686 | |||||||||||||||||||||||||
| STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES | |||||||||||||||||||||||||||||
| UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS | |||||||||||||||||||||||||||||
| FOR THE YEAR ENDED DECEMBER 31, 2020 | |||||||||||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||||||||||
| STERLING | PETILLO | PRO FORMA ADJUSTMENTS | NOTE 4 | PRO FORMA COMBINED | |||||||||||||||||||||||||
| Revenues | $ | 1,427,412 | $ | 222,684 | $ | — | $ | 1,650,096 | |||||||||||||||||||||
| Cost of revenues | (1,236,043) | (181,103) | — | (1,417,146) | |||||||||||||||||||||||||
| Gross profit | 191,369 | 41,581 | — | 232,950 | |||||||||||||||||||||||||
| General and administrative expense | (71,415) | (6,583) | (3,000) | H | (80,998) | ||||||||||||||||||||||||
| Intangible asset amortization | (11,436) | — | (4,047) | E | (15,483) | ||||||||||||||||||||||||
| Acquisition related costs | (1,026) | — | — | (1,026) | |||||||||||||||||||||||||
| Other operating expense, net | (12,600) | — | — | (12,600) | |||||||||||||||||||||||||
| Operating income | 94,892 | 34,998 | (7,047) | 122,843 | |||||||||||||||||||||||||
| Interest income | 161 | — | — | 161 | |||||||||||||||||||||||||
| Interest expense | (29,377) | — | (4,587) | I | (33,964) | ||||||||||||||||||||||||
| Loss on extinguishment of debt | (301) | — | — | (301) | |||||||||||||||||||||||||
| Other expense | — | (1) | 1 | J | — | ||||||||||||||||||||||||
| Income before income taxes | 65,375 | 34,997 | (11,633) | 88,739 | |||||||||||||||||||||||||
| Income tax expense | (22,471) | (1,664) | (4,878) | K | (29,013) | ||||||||||||||||||||||||
| Net income | 42,904 | 33,333 | (16,511) | 59,726 | |||||||||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | (598) | — | — | (598) | |||||||||||||||||||||||||
| Net income attributable to Sterling common stockholders | $ | 42,306 | $ | 33,333 | $ | (16,511) | $ | 59,128 | |||||||||||||||||||||
| Net income per share attributable to Sterling common stockholders: | |||||||||||||||||||||||||||||
| Basic | $ | 1.52 | $ | 2.07 | |||||||||||||||||||||||||
| Diluted | $ | 1.50 | $ | 2.04 | |||||||||||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||||||||
| Basic | 27,859 | 759 | L | 28,618 | |||||||||||||||||||||||||
| Diluted | 28,195 | 759 | L | 28,954 | |||||||||||||||||||||||||
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(in thousands, except share and stock price information)
| NOTE 1 - BASIS OF PRESENTATION | |||||
The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed combined financial statements to give effect to the pro forma adjustment criteria set forth in S-X Article 11.
The unaudited pro forma condensed combined financial information has been prepared assuming the Acquisition was accounted for using Acquisition Accounting with Sterling as the acquiring entity. Accordingly, under Acquisition Accounting, the total purchase price was allocated to the acquired net tangible and identifiable intangible assets of Petillo based on their respective fair values, as described in Note 2.
To the extent identified, certain reclassifications have been reflected in the pro forma adjustments to conform Petillo’s financial statement presentation to that of Sterling’s, as described in Note 4. However, the unaudited pro forma condensed combined financial information may not reflect all adjustments necessary to conform the accounting policies of Petillo to those of Sterling, given the proximity of the closing date of the Acquisition to the filing date of this Current Report on Form 8-K. There were no material transactions between Petillo and Sterling for the periods presented in the unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined financial statements do not necessarily reflect what the combined company’s financial condition or results of operations would have been had the Acquisition occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
The unaudited pro forma condensed combined financial information does not reflect the realization of any expected cost increases or savings or other synergies from the Acquisition, as a result of activities following the completion of the Acquisition. Additionally, within the condensed combined statement of operations there are no acquisition and integration related costs related to the acquisition of Petillo.
| NOTE 2 - PURCHASE CONSIDERATION AND PRELIMINARY PURCHASE PRICE ALLOCATION | |||||
Purchase Consideration – Sterling completed the Acquisition for a purchase price of approximately $202,500, detailed as follows:
| Sterling shares issued for purchase of Petillo | 759,447 | ||||
| Sterling share price on December 29, 2021 market close | $ | 26.87 | |||
| Fair value of equity portion of consideration | $ | 20,406 | |||
| Cash consideration | 175,000 | ||||
| Preliminary target working capital payment | 7,094 | ||||
| Total consideration transferred | $ | 202,500 | |||
Preliminary Purchase Price Allocation – The total purchase price as summarized above was allocated to Petillo’s tangible and intangible assets and liabilities for purposes of this unaudited pro forma condensed combined financial information, based on their estimated relative fair values assuming the Acquisition was completed on the pro forma balance sheet date presented. The final allocation will be based upon valuations and other studies for which there is currently insufficient information to make a definitive allocation. Accordingly, the purchase price allocation adjustments are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed combined financial information. The final purchase price allocation will be determined after completion of a thorough analysis to determine the fair value of Petillo’s tangible assets and liabilities, including fixed assets, and identifiable intangible assets and liabilities. Accordingly, the final Acquisition Accounting adjustments, including those resulting from conforming Petillo’s accounting policies to those of Sterling, could differ materially from the pro forma adjustments presented herein. Any increase or decrease in the fair value of Petillo’s tangible and identifiable intangible assets and liabilities, as compared to the information shown herein, will also change the portion of purchase price allocable to goodwill and could impact the operating results of the combined company following the Acquisition due to differences in amortization related to the assets and liabilities.
The total preliminary purchase price was allocated as follows, based on Petillo’s September 30, 2021 balance sheet:
| September 30, 2021 | |||||
| Net tangible assets: | |||||
| Accounts receivable | $ | 41,195 | |||
| Contract assets | 14,328 | ||||
| Other current assets | 716 | ||||
| Property and equipment, net | 35,243 | ||||
| Other non-current assets, net | 510 | ||||
| Accounts payable | (16,333) | ||||
| Contract liabilities | (15,127) | ||||
| Other current liabilities | (6,231) | ||||
| Total net tangible assets | 54,301 | ||||
| Preliminary identifiable intangible assets | 101,162 | ||||
| Goodwill | 47,037 | ||||
| Total consideration transferred | $ | 202,500 | |||
| NOTE 3 - FINANCING TRANSACTIONS | |||||
To finance the Acquisition, on December 29, 2021 the Company, as borrower, and certain of its subsidiaries, as guarantors, entered into a Third Amendment to Credit Agreement (the “Amendment”) with the financial institutions party thereto as lenders and BMO Harris Bank N.A., as administrative agent. The Amendment amends and restates the credit agreement in order expressly permit the Acquisition and to increase the term loan facility through a new incremental term loan in the aggregate principal amount of $140,000 to be extended with the same maturity as the existing term loan facility.
| NOTE 4 - PRO FORMA ADJUSTMENTS | |||||
The pro forma adjustments are based on Sterling’s preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma condensed combined financial information:
(A) To record the net decrease in cash resulting from the following:
| Borrowings under the Term Loan | $ | 140,000 | |||
| Less: | |||||
| Cash portion of the purchase price | (175,000) | ||||
| Petillo's excluded cash | (8,483) | ||||
| Preliminary target working capital payment | (7,094) | ||||
| Cash portion of Credit Facility costs | (1,398) | ||||
| Total net decrease in cash | $ | (51,975) | |||
(B) To record the exclusion of Petillo’s marketable securities and intercompany balances.
(C) During the initial assessment of the purchase price allocation, Sterling considered the impact of the lease guidance under ASU 2016-2 (ASC 842), and based on the information currently available, $3,185 in operating leases were identified.
(D) To record goodwill associated with the Acquisition (see Note 2).
(E) To record identified intangible assets associated with the Acquisition.
The following table summarizes the estimated fair values of Petillo’s identifiable intangible assets and their estimated useful lives:
| Estimated Fair Value | Estimated Useful Life in Years | Year ended December 31, 2020 Amortization Expense | Nine months ended September 30, 2021 Amortization Expense | ||||||||||||||||||||
| Trade Names | $ | 33,721 | 25 | $ | 1,349 | $ | 1,012 | ||||||||||||||||
| Customer Relationships | 67,441 | 25 | 2,698 | 2,024 | |||||||||||||||||||
| Total | $ | 101,162 | $ | 4,047 | $ | 3,036 | |||||||||||||||||
Because all information required to perform a detailed valuation analysis of Petillo’s intangible assets could not be obtained as of the date of this Current Report on Form 8-K, for purposes of the unaudited pro forma condensed combined financial information, the Company used what it believes to be reasonable estimated fair values and useful lives. These preliminary estimates of fair value and useful lives could differ materially from final amounts the Company will calculate after completing a detailed valuation analysis. A 10% change in the valuation of intangible assets would cause a corresponding increase or decrease in the balance of goodwill and annual amortization expense of approximately $10,116 and $405, respectively.
(F) To record the changes in financing arrangements resulting from the Acquisition. The net increase in debt includes:
| Issuance of additional term debt | $ | 140,000 | |||
| Removal of Petillo's existing debt | (27,146) | ||||
| Capitalization of new debt issuance costs | (1,398) | ||||
| Total pro forma adjustments to debt | $ | 111,456 | |||
| Pro forma adjustments to current maturities of long-term debt | (5,725) | ||||
| Pro forma adjustments to long-term debt | 117,181 | ||||
(G) To record changes in equity resulting from the Acquisition as follows:
| Common Stock | Additional Paid in Capital | Petillo’s Equity | |||||||||||||||||||||
Issuance of 759,447 shares of common stock | $ | 8 | $ | 20,398 | $ | — | |||||||||||||||||
| Elimination of historical equity of Petillo | — | — | (52,077) | ||||||||||||||||||||
| Pro forma adjustments | $ | 8 | $ | 20,398 | $ | (52,077) | |||||||||||||||||
(H) To record compensation expense associated with the employment agreement the Company entered into with Mr. Petillo. The employment agreement provides for cash retention payments in the aggregate amount of $15,000 payable in equal $3,000 installments over a five-year period commencing on the first anniversary of the Closing Date.
(I) To record the net increase in interest expense due to changes resulting from the Acquisition as follows:
| Year ended December 31, 2020 | Nine months ended September 30, 2021 | ||||||||||
| Interest expense on additional term loan | $ | (4,121) | $ | (3,111) | |||||||
| Amortization of new debt issuance costs | (466) | (350) | |||||||||
| Pro forma adjustments | $ | (4,587) | $ | (3,461) | |||||||
(J) To record the exclusion of business activities not acquired.
(K) To record pro forma adjustments for the nine months ended September 30, 2021 and the year ended December 31, 2020 to reflect the incremental income tax expense related to the Acquisition.
(L) To record the increase in the weighted average shares in connection with the issuance of 759,447 common shares to finance the Acquisition.