Team Inc S-3, filed Mar 18, 2022
Team Inc (TISI)
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As filed with the Securities and Exchange Commission on March 18, 2022
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TEAM, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 74-1765729 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 13131 Dairy Ashford, Suite 600 Sugar Land, Texas |
77478 | |
| (Address of Principal Executive Offices) | (Zip Code) |
André C. Bouchard
Executive Vice President, Chief Legal Officer & Secretary
13131 Dairy Ashford, Suite 600
Sugar Land, Texas 77478
(Name and address of agent for service)
(281) 331-6154
(Telephone number, including area code, of agent for service)
With Copy to:
Matthew R. Pacey, P.C.
Bryan D. Flannery
Kirkland & Ellis LLP
609 Main Street
Houston, Texas 77002
Tel: (713) 836-3600
Fax: (713) 836-3601
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective, as determined by market conditions and other factors.
If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ☐
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. ☑
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ☐
If this form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ☐ | Accelerated filer | ☑ | |||
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
| 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 7(a)(2)(B) of the Securities Act. ☐
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The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities nor is it soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MARCH 18, 2022
PROSPECTUS
21,904,761 SHARES OF COMMON STOCK
This prospectus relates to the resale, from time to time, of up to an aggregate of 21,904,761 shares of common stock, par value $0.30 per share, of Team, Inc. by the selling securityholders named in this prospectus, including their transferees, assignees or other successors-in-interest. The 21,904,761 shares of common stock being registered includes (A) 10,000,000 shares of common stock underlying warrants that we issued in certain private placements at an exercise price of $1.50 per share, including (i) 5,000,000 shares of common stock underlying a warrant issued in connection with that certain Term Loan Credit Agreement, dated December 18, 2020 (the “Term Loan Credit Agreement”, and as amended on October 19, 2021, October 29, 2021, November 9, 2021, December 2, 2021, December 7, 2021 and February 11, 2022, the “Amended Term Loan Credit Agreement”) that we entered into with Atlantic Park Strategic Capital Fund, L.P., as agent, and APSC Holdco I, L.P., as lender (collectively, “Atlantic Park”) and (ii) 5,000,000 shares of common stock underlying warrants issued in connection with that certain Subordinated Term Loan Agreement, dated November 9, 2021 (the “Subordinated Term Loan”, and as amended on November 30, 2021, December 6, 2021, December 7, 2021, December 8, 2021 and February 11, 2022, the “Amended Subordinated Term Loan”), that we entered into initially with Corre Credit Fund, LLC (together with its affiliates, “Corre”), as agent (as subsequently succeeded by Cantor Fitzgerald Securities, as agent, the “Corre Agent”), and Corre and the lenders from time to time party thereto, and (B) 11,904,761 shares of common stock (the “PIPE Shares”) issued pursuant to that certain Subscription Agreement, dated February 11, 2022 (the “Subscription Agreement”), that we entered into with Corre Opportunities Qualified Master Fund, LP, Corre Horizon Fund, LP and Corre Horizon II Fund, LP (collectively, the “Corre Holders”).
We are not selling any shares of our common stock under this prospectus and will not receive any proceeds from sales of the shares offered by the selling securityholders, although we will incur expenses in connection with the offering. The registration of the resale of the shares of common stock covered by this prospectus does not necessarily mean that any of the shares will be offered or sold by the selling securityholders. The timing and amount of any sales are within the sole discretion of the selling securityholders.
The shares of common stock offered under this prospectus may be sold by the selling securityholders through public or private transactions, on or off the New York Stock Exchange (the “NYSE”), at prevailing market prices or at privately negotiated prices. For more information on the times and manner in which the selling securityholders may sell the shares of common stock under this prospectus, please see the section entitled “Plan of Distribution,” beginning on page 23 of this prospectus.
Our common stock is traded on NYSE under the symbol “TISI.”
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY REVIEW THE RISKS AND UNCERTAINTIES REFERENCED UNDER THE HEADING “RISK FACTORS” ON PAGE 5 OF THIS PROSPECTUS AS WELL AS THOSE IN ANY SIMILAR SECTION CONTAINED IN THE APPLICABLE PROSPECTUS SUPPLEMENT, AND IN THE OTHER DOCUMENTS THAT ARE INCORPORATED BY REFERENCE INTO THIS PROSPECTUS OR THE APPLICABLE PROSPECTUS SUPPLEMENT.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined whether this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2022
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You should rely only on the information contained in this prospectus, any prospectus supplement, any free writing prospectus and the documents we have incorporated by reference. Neither we nor the selling securityholders have authorized anyone else to give you other information, and we and the selling securityholders take no responsibility for any other information that others may give to you. If you are in a jurisdiction where offers to sell, or solicitations of offers to purchase, the securities offered by this prospectus are unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented by this prospectus does not extend to you. You should not assume that the information contained in or incorporated by reference into this prospectus and any prospectus supplement is accurate as of any date other than their respective dates. Our business, financial condition, results of operations and prospects may have changed since those dates. It is important for you to read and consider all the information contained in this prospectus and in any accompanying prospectus supplement, including the documents incorporated by reference herein or therein, before making your investment decision.
For investors outside the United States: we have not, and the selling securityholders have not, taken any action to permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offer and sale of the common stock and the distribution of this prospectus outside the United States.
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This prospectus is part of a registration statement on Form S-3 (a “Registration Statement”) that we filed with the Securities and Exchange Commission (the “SEC”), under the Securities Act of 1933, as amended (the “Securities Act”). Under this registration process, the selling securityholders named in this prospectus may offer and sell shares of our common stock in one or more offerings from time to time. The Registration Statement that contains this prospectus, including the exhibits to the Registration Statement, contains additional information about us and the securities offered under this prospectus. That Registration Statement can be read at the SEC website mentioned under the heading “Where You Can Find More Information.”
Each time the selling securityholders named in this prospectus (or in any supplement to this prospectus) sell shares of our common stock under the Registration Statement of which this prospectus is a part, such selling securityholders must provide a copy of this prospectus and any applicable prospectus supplement, to a potential purchaser, as required by law. In certain circumstances we may provide a prospectus supplement that may add, update or change information contained in this prospectus. Any statement that we make in this prospectus will be modified or superseded by any inconsistent statement made by us in a prospectus supplement. You should read both this prospectus and any prospectus supplement, together with the information incorporated by reference as described under the heading “Where You Can Find More Information.”
Neither we, nor the selling securityholders, have authorized any other person to provide you with information other than the information contained or incorporated by reference in this prospectus and any accompanying prospectus supplement. If anyone provides you with different or inconsistent information, you should not rely on it. Neither we nor the selling securityholders will make an offer to sell our common stock in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus and any prospectus supplement is accurate as of the date on its respective cover, and that any information incorporated by reference is accurate only as of the date of the document incorporated by reference, unless we indicate otherwise. Our business, financial condition, results of operations and prospects may have changed since those dates.
Unless otherwise indicated, information contained in or incorporated by reference into this prospectus concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market share, is based on information from our own management estimates and research, as well as from industry and general publications and research, surveys and studies conducted by third parties. Management estimates are derived from publicly available information, our knowledge of our industry and assumptions based on such information and knowledge, which we believe to be reasonable. In addition, assumptions and estimates of our and our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, see “Risk Factors” beginning on page 5 of this prospectus, as well as those risk factors described in any applicable prospectus supplement and in the documents we incorporate by reference. These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Cautionary Note Regarding Forward-Looking Statements” beginning on page vi of this prospectus.
Unless otherwise indicated, the terms “Team, Inc.,” “Team,” the “Company,” “we,” “our” and “us” are used in this prospectus to refer to Team, Inc., to one or more of our consolidated subsidiaries or to all of them taken as a whole.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and other reports, proxy statements and other information with the SEC under the Exchange Act, which are available to the public through the SEC’s website at http://www.sec.gov. General information about us, including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as any amendments and exhibits to those reports, are also available free of charge through our website at www.teaminc.com as soon as reasonably practicable after we file them with, or furnish them to, the SEC. Information on our website is not incorporated into this prospectus or our other securities filings and is not a part of this prospectus. Information contained on, or that is or becomes accessible through, our website does not constitute a part of this prospectus. The reference to our website or web address does not constitute incorporation by reference of the information contained at that site.
The SEC allows us to “incorporate by reference” the information we file with it, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, (i) following the date of the Registration Statement that contains this prospectus but prior to the effectiveness of such Registration Statement or (ii) after the date of this prospectus and prior to the time that we sell all the securities offered by this prospectus (in each case, other than portions of those documents that are either (i) described in paragraph (e) of Item 201 of Regulation S-K or paragraphs (d)(1)-(3) and (e)(5) of Item 407 of Regulation S-K or (ii) otherwise deemed to have been furnished and not filed in accordance with SEC rules, including pursuant to Item 2.02 or Item 7.01 of any Current Report on Form 8-K (including any financial statements or exhibits relating thereto furnished pursuant to Item 9.01), unless otherwise indicated therein):
| • | our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed on March 16, 2022 (the “2021 Annual Report”); |
| • | our Definitive Proxy Statement on Schedule 14A filed with the SEC on April 9, 2021, incorporated by reference therein (solely those portions that were incorporated by reference into Part III of our Annual Report on Form 10-K for the year ended December 31, 2020); |
| • | our Current Reports on Form 8-K filed with the SEC on January 18, 2022, February 2, 2022, February 4, 2022 (two filings), February 15, 2022, February 22, 2022 and March 18, 2022; and |
| • | the description of our common stock, par value $0.30 per share, contained in our Registration Statement on Form 8-A (File No 001-08604) filed with the SEC on December 22, 2011, pursuant to Section 12 of the Exchange Act, as updated by Exhibit 4.1 to the 2021 Annual Report and any other amendment or report filed with the SEC for the purpose of updating such description. |
You may obtain a copy of any or all of the documents referred to above which may have been or may be incorporated by reference into this prospectus, except for exhibits to those documents (unless the exhibits are specifically incorporated by reference into those documents), at no cost to you. Any such request should be directed to:
Team, Inc.
13131 Dairy Ashford, Suite 600
Sugar Land, Texas 77478
Attention: Corporate Secretary
Telephone: (281) 331-6154
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, the accompanying prospectus supplement and the documents we incorporate by reference include forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. In addition, other written or oral statements that constitute forward-looking statements may be made by us or on our behalf in other materials we release to the public including all statements, other than statements of historical facts, included therein that address activities, events or developments which we expect or anticipate will or may occur in the future. These statements can be identified by the use of forward-looking terminology including “anticipate,” “believe,” “expect,” “plan,” “intend,” “estimate,” “project,” “projection,” “predict,” “budget,” “forecast,” “goal,” “guidance,” “target,” “will,” “could,” “should,” “may” and similar expressions.
We base our forward-looking statements on our reasonable beliefs and assumptions, and our current expectations, estimates and projections about ourselves and our industry. We caution that these statements are not guarantees of future performance and involve risks, uncertainties and assumptions about events and circumstances that we cannot predict. In addition, we based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, forward-looking statements cannot be relied upon as a guarantee of future results and involve a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements. In addition to the statements under “Risk Factors” included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021 and any subsequent periodic report filed with the SEC, such risks, uncertainties and other important factors may include, among others, risks related to:
| • | our ability to continue as a going concern; |
| • | our ability to manage inflationary pressures in our operating costs; |
| • | the impact to our business, financial condition, results of operations and cash flows due to negative market conditions, including from the impact of the COVID-19 pandemic, and future economic uncertainties, particularly in industries in which we are heavily dependent; |
| • | delays in the commencement of major projects, whether due to the COVID-19 pandemic or other factors; |
| • | our business may be affected by seasonal and other variations, including severe weather conditions and the nature of our clients’ industry; |
| • | our ability to expand into new markets (including low carbon energy transition) and attract clients in new industries may be limited due to our competition’s breadth of service offerings and intellectual property; |
| • | we have significant debt and high leverage which could have a negative impact on our financing options, liquidity position and ability to manage increases in interest rates; |
| • | the timing of new client contracts and termination of existing contracts may result in unpredictable fluctuations in our cash flows and financial results; |
| • | risk of non-payment and/or delays in payment of receivables from our clients; |
| • | our ability to generate sufficient cash from operations for working capital and liquidity needs, access our asset-based lending facility (the “ABL Facility”) under that certain credit agreement dated February 11, 2022 with Eclipse Business Capital, LLC and the other lenders party thereto (the “ABL Credit Agreement”), or maintain our compliance with our ABL Facility, Amended Subordinated Term Loan and Amended Term Loan Credit Agreement covenants; |
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| • | compliance with continued listing standards of the NYSE; |
| • | our financial forecasts are based upon estimates and assumptions that may materially differ from actual results; |
| • | we may incur liabilities and suffer negative financial or reputational impacts relating to occupational health and safety matters, including costs incurred in connection with the implementation of preventative measures required in regard to mitigation of the spread of COVID-19; |
| • | changes in laws or regulations in the local jurisdictions that we conduct our business; |
| • | the inherently uncertain outcome of current and future litigation; |
| • | if we fail to maintain effective internal controls, we may not be able to report our financial results accurately or timely or prevent or detect fraud, which could have a material adverse effect on our business; and |
| • | acts of terrorism, war or political or civil unrest in the United States or elsewhere, including the current events involving Russia and Ukraine, changes in laws and regulations, or the imposition of economic or trade sanctions affecting international commercial transactions. |
We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.
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This summary highlights certain information about us, this offering and selected information contained in this prospectus. This summary is not complete and does not contain all of the information that you should consider before deciding whether to invest in our common stock. For a more complete understanding of the Company and this offering, we encourage you to read and consider the more detailed information included or incorporated by reference in this prospectus, including risk factors, see “Risk Factors” beginning on page 5 of this prospectus, as well as those risk factors described in any applicable prospectus supplement and in the documents we incorporate by reference, and our most recent consolidated financial statements and related notes. Unless otherwise indicated, the terms the “Company,” “we,” “our” and “us” are used in this prospectus to refer to either Team, Inc., to one or more of our consolidated subsidiaries or to all of them taken as a whole.
Team, Inc.
We are a global leading provider of integrated, digitally-enabled asset performance assurance and optimization solutions. We deploy conventional to highly specialized inspection, condition assessment, maintenance and repair services that result in greater safety, reliability and operational efficiency for our clients’ most critical assets. We conduct operations in three segments: Inspection and Heat Treating (“IHT”), Mechanical Services (“MS”) and Quest Integrity. Through the capabilities and resources in these three segments, we believe that we are uniquely qualified to provide integrated solutions involving: inspection to assess condition; engineering assessment to determine fitness for purpose in the context of industry standards and regulatory codes; and mechanical services to repair, rerate or replace based upon the client’s election. In addition, we are capable of escalating with the client’s needs, as dictated by the severity of the damage found and the related operating conditions, from standard services to some of the most advanced services and integrated asset integrity and reliability management solutions available in the industry. We also believe that we are unique in our ability to provide services in three distinct client demand profiles: (i) turnaround or project services, (ii) call-out services and (iii) nested or run-and-maintain services.
IHT provides conventional and advanced non-destructive testing services primarily for the process, pipeline and power sectors, pipeline integrity management services, and field heat treating services, as well as associated engineering and condition assessment services. These services can be offered while facilities are running (on-stream), during facility turnarounds or during new construction or expansion activities. IHT also provides advanced digital imaging including remote digital video imaging, laser scanning and laser profilometry-enabled reformer care services.
MS provides solutions designed to serve clients’ unique needs during both the operational (onstream) and off-line states of their assets. Our onstream services include our range of standard to custom-engineered leak repair and composite solutions; emissions control and compliance; hot tapping and line stopping; and on-line valve insertion solutions, which are delivered while assets are in an operational condition, which maximizes client production time. Asset shutdowns can be planned, such as a turnaround maintenance event, or unplanned, such as those due to component failure or equipment breakdowns. Our specialty maintenance, turnaround and outage services are designed to minimize client downtime and are primarily delivered while assets are off-line and often through the use of cross-certified technicians, whose multi-craft capabilities deliver the production needed to achieve tight time schedules. These critical services include on-site field machining; bolted-joint integrity; vapor barrier plug testing; and valve management solutions.
Quest Integrity provides integrity and reliability management solutions for the process, pipeline and power sectors. These solutions encompass three broadly-defined disciplines: (1) highly specialized in-line inspection services for historically unpiggable process piping and pipelines using proprietary in-line inspection tools and analytical software; and (2) advanced engineering and condition assessment services through a multi-disciplined engineering team and related lab support.
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Corporate Information
Our corporate headquarters is located at 13131 Dairy Ashford, Suite 600, Sugar Land, Texas, 77478 and our telephone number is (281) 331-6154. We are incorporated in the State of Delaware and our company website can be found at www.teaminc.com. We make available on or through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and periodic reports, including any amendments to those reports, that are filed with the SEC in accordance with the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This information is available on our website free of charge as soon as reasonably practicable after we electronically file the information with, or furnish it to, the SEC. The contents of our website are not incorporated by reference into this prospectus and shall not be deemed “filed” under the Exchange Act.
Our Private Placements
In connection with the Term Loan Credit Agreement, we issued to Atlantic Park that certain Common Stock Warrant No. 1 (the “Initial Warrant”) to purchase an aggregate of 3,582,949 shares of our common stock (the “Initial Warrant Shares”) at an exercise price of $7.75 per share. Pursuant to the terms of the Commitment Letter Agreement (as defined below) entered into on November 9, 2021, we agreed to amend the exercise price of the Initial Warrant to $1.50 and issue to Atlantic Park 1,417,051 warrants to purchase shares of our common stock (such that Atlantic Park would hold warrants to purchase 5,000,000 shares of common stock), which were issued in two installments on November 9, 2021 and December 8, 2021. On November 9, 2021 and December 8, 2021, the Initial Warrant was amended and restated (as amended and restated, the “Second A&R AP Warrant”) to, among other things, effectuate the terms of the Commitment Letter Agreement to provide for the purchase in the aggregate of up to 5,000,000 shares of our common stock (including the Initial Warrant Shares). The Second A&R AP Warrant has an exercise price of $1.50 per share and a term of seven years, expiring on December 8, 2028, and is exercisable at the option of Atlantic Park, in whole or in part, at any time and from time to time during the term. The exercise price and the number of shares of common stock issuable on exercise of the Second A&R AP Warrant are subject to certain anti-dilution adjustments, including for stock dividends, stock splits, reclassifications, noncash distributions, cash dividends, certain equity issuances and business combination transactions.
On December 8, 2021, in connection with the Amended Subordinated Term Loan, we issued (i) to Corre Opportunities Qualified Master Fund, LP, that certain Common Stock Purchase Warrant No. 2 to purchase 2,550,578 shares of our common stock, (ii) to Corre Horizon Fund, LP, that certain Common Stock Purchase Warrant No. 3 to purchase 1,160,918 shares of our common stock and (iii) to Corre Horizon II Fund, LP, that certain Common Stock Purchase Warrant No. 4 to purchase 1,288,504 shares of our common stock (collectively, the “Corre Warrants” and, together with the Second A&R AP Warrant, the “Warrants”). The Corre Warrants have an exercise price of $1.50 per share and a term of seven years, expiring December 8, 2028, exercisable at the option of Corre, in whole or in part, at any time and from time to time during the term. The exercise price and the number of shares of common stock issuable on exercise of the warrant are subject to certain anti-dilution adjustments, including for stock dividends, stock splits, reclassifications, noncash distributions, cash dividends, certain equity issuances and business combination transactions. We have not previously registered any shares of our common stock issuable under the Corre Warrants.
On February 11, 2022, we entered into that certain Subscription Agreement with the Corre Holders, under which we issued 11,904,761 PIPE Shares, par value $0.30, at a price of $0.84 per share for $10.0 million. Pursuant to the Subscription Agreement, among other things, the Corre Holders have agreed not to sell their portion of the PIPE Shares until the earliest to occur of (i) the date that is 180 days from the date of the Subscription Agreement, and (ii) such date on which we complete a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property, without our consent.
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The Warrants and PIPE Shares were, and the shares of common stock underlying the Warrants, will be issued in private placements pursuant to Section 4(a)(2) of the Securities Act (or, in the case of the issuance of any shares of common stock upon cashless exercise of any Warrants, in a transaction exempt from registration pursuant to Section 3(a)(9) of the Securities Act).
Pursuant to that certain Second Amended and Restated Registration Rights Agreement, dated February 11, 2022 (the “A&R Registration Rights Agreement”), we entered into with the selling securityholders, we are obligated to register for resale the PIPE Shares and shares of common stock issuable upon the exercise of the Warrants on a registration statement on Form S-3 (or if Form S-3 is not then available, such other form of registration statement as is then available) to be filed with the SEC no later than the earlier of (i) the second business day following the filing of our Annual Report on Form 10-K for the year ended December 31, 2021 and (ii) April 13, 2022. The Registration Statement of which this prospectus is a part has been filed to satisfy this obligation. Under the terms of the A&R Registration Rights Agreement, we have agreed to use commercially reasonable efforts to cause this Registration Statement to be declared effective by the SEC as soon as possible after filing but no later than the earlier of (i) 90th day following the date of the initial filing unless reviewed by the SEC, and (ii) the 30th business day after the date we are notified by the SEC that the Registration Statement will not be “reviewed” or will not be subject to further review. We also agreed, among other things, to indemnify the selling securityholders from certain liabilities and to pay all our fees and expenses incident to our performance of or compliance with the A&R Registration Rights Agreement. The A&R Registration Rights Agreement provides Atlantic Park and the Corre Holders and their permitted transferees certain customary demand and piggyback rights, subject to certain terms and conditions set forth therein.
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| Common stock to be offered by the selling securityholders: |
Up to 21,904,761 shares. |
| Common stock to be outstanding after the offering: |
53,124,362 shares (based on 43,124,362 shares outstanding as of March 11, 2022 and assuming the exercise of the Warrants). |
| Use of proceeds: |
We will not receive any proceeds from the sale of shares in this offering. See “Use of Proceeds” beginning on page 6 of this prospectus. |
| Risk factors: |
You should read the “Risk Factors” beginning on page 5 of this prospectus, as well as those risk factors described in any applicable prospectus supplement and in the documents we incorporate by reference in this prospectus, for a discussion of factors to consider carefully before deciding to invest in shares of our common stock. |
| Stock exchange listing: |
Our common stock is listed on the New York Stock Exchange under the symbol “TISI.” |
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An investment in our securities involves a high degree of risk. Before you decide whether to purchase any of our securities, in addition to the other information, documents or reports included in or incorporated by reference into this prospectus and any accompanying prospectus supplement or other offering materials, you should carefully consider the risk factors in the section entitled “Risk Factors” in any prospectus supplement as well as in our Annual Report on Form 10-K for the year ended December 31, 2021 and any subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, which are incorporated by reference into this prospectus and any prospectus supplement, as the same may be amended, supplemented or superseded from time to time by our filings under the Exchange Act. If any of these risks were to materialize, either individually or in combination, our business, financial condition or results of operations could be adversely affected. In that case, the trading price of our common stock or debt securities could decline and you could lose all or part of your investment. When we offer and sell any securities pursuant to a prospectus supplement, we may include additional risk factors relevant to such securities in the prospectus supplement.
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We are filing the Registration Statement of which this prospectus is a part to permit the holders of the PIPE Shares and the shares common stock issuable upon exercise of the Warrants, as described in the section entitled “Selling Securityholders” of this prospectus, to resell such shares of our common stock from time to time. We are not selling any securities under this prospectus and will not receive any proceeds from the sale of shares by a selling securityholder. We will receive proceeds from any cash paid upon the exercise of the Warrants, which will be used for working capital and general corporate purposes, including to repay borrowings outstanding under the Amended Term Loan Credit Agreement, the Amended Subordinated Term Loan or our asset-based credit agreement. The Warrants may also be exercised on a cashless basis subject to the terms set forth in the Warrants based on the net difference between the exercise price and the market price of our common stock on the last trading day preceding the date of exercise of the Warrants. If the Warrants are exercised on a cashless basis, we would not receive payment from the selling securityholders upon any such exercise of the Warrants.
We will bear all expenses incurred in connection with the performance of our obligations under the A&R Registration Rights Agreement. Pursuant to the A&R Registration Rights Agreement. The selling securityholders shall pay all fees and expenses for their own legal counsel and shall pay any underwriters’ commissions and discounts in connection with this offering.
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The following description of our capital stock is not intended to be complete, does not describe every aspect of our securities, and is subject to, and qualified in its entirety by reference to, all the provisions of our amended and restated certificate of incorporation, as amended (the “Charter”), our Certificate of Designation, as filed with the Delaware Secretary of State on February 2, 2022 (the “Certificate of Designation”), all the provisions of our amended and restated bylaws (the “Bylaws”), and the Section 382 Rights Agreement (the “Rights Agreement”), dated as of February 2, 2022, between us and Computershare Trust Company, N.A., as Rights Agent (the “Rights Agent”). We refer you to the Charter, Bylaws, and Rights Agreement, copies of which have been filed as exhibits to the Registration Statement of which this prospectus is a part.
Authorized Capital Stock
As of March 11, 2022, our authorized capital stock consists of 60,500,000, including (i) 60,000,000 shares of common stock, par value $0.30 per share (“common stock”), and (ii) 500,000 shares of preferred stock, par value $100.00 per share (“preferred stock”), of which we have designated 100,000 shares as “Series A preferred stock.”
Common Stock
As of March 11, 2022, there were 43,124,362 shares of common stock outstanding.
Listing
Our common stock is listed on the New York Stock Exchange under ticker symbol “TISI.”
Dividends
Holders of shares of common stock are entitled to share equally and ratably in any dividends, subject, if preferred stock is then outstanding, to any preferential rights of such preferred stock.
Voting
Under the terms of our Charter, each share of common stock entitles the holder of record to one vote at all meetings of stockholders, and the votes are noncumulative. Except as required by law, holders of common stock vote together as one class.
Preemptive, Conversion or Similar Rights
Each share of our common stock includes a right to purchase from us one one-thousandth of a share of Series A preferred stock (a “Purchase Right”) at a price of $7.00 per one one-thousandth of a share of Series A preferred stock, subject to adjustment as provided in the Rights Agreement. Prior to the occurrence of certain events, the Purchase Rights will not be exercisable or trade separately from our common stock. The Purchase Rights have no value except as reflected in the market price of the shares of the common stock to which they are attached, and can be transferred only with the shares of common stock to which they are attached. Except for the Purchase Rights, holders of our common stock have no preemptive, subscription, redemption or conversion rights.
Liquidation Preference
In the event of our dissolution, liquidation or winding up, whether voluntary or involuntary, the holders of common stock are entitled to share, on a pro rata basis, any assets or funds remaining after payment in full of all creditors and holders of preferred stock.
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Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Computershare Investor Services.
Preferred Stock
Our board of directors (our “Board of Directors”) has the authority, without action by our stockholders, to issue preferred stock and to fix voting powers for each class or series of preferred stock, and to provide that any class or series may be subject to redemption, entitled to receive dividends, entitled to rights upon dissolution, or convertible or exchangeable for shares of any other class or classes of capital stock. The rights with respect to a series or class of preferred stock may be greater than the rights attached to our common stock. Our Board of Directors has designated 100,000 shares of preferred stock as Series A preferred stock which will only be issued if the Purchase Rights are triggered, as discussed in further detail below. The remaining 400,000 shares of preferred stock are undesignated. The effect of issuing preferred stock could include, among other things, one or more of the following:
| • | restricting dividends in respect of our common stock; |
| • | diluting the voting power of our common stock or providing that holders of preferred stock have the right to vote on matters as a class; |
| • | impairing the liquidation rights of our common stock; or |
| • | delaying or preventing a change of control of us. |
Series A Preferred Stock
The Series A preferred stock is reserved for issuance in connection with the Purchase Rights pursuant to the Rights Agreement. Upon issuance, each holder of the Series A preferred stock will be entitled 1,000 votes, subject to adjustment as described in the Certificate of Designation, for each share of Series A preferred stock held on all matters submitted to a vote of stockholders. The Series A preferred stock ranks junior to any other series of our preferred stock.
Subject to any preference rights of holders of any superior stock that we may issue in the future, and upon issuance of any Series A preferred stock, holders of our Series A preferred stock will be entitled to receive quarterly dividends, if any are declared by our Board of Directors out of legally available funds, in an amount per share (rounded to the nearest cent), subject to adjustment as described in the Certificate of Designation, equal to 1,000 multiplied by the aggregate per share amount of all cash dividends, and 1,000 multiplied by the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of common stock or a subdivision of the outstanding shares of common stock (by reclassification or otherwise) declared on the common stock since the immediately preceding quarterly dividend payment date or, with respect to the first quarterly dividend payment date, since the first issuance of any share or fraction of a share of Series A preferred stock.
In the event of our liquidation, dissolution or winding up, the holders of our outstanding Series A preferred stock are entitled to receive an amount per share equal to 1,000 multiplied by the aggregate amount to be distributed in respect of the common stock upon such liquidation, dissolution or winding up, prior to any distribution to holders of the common stock, plus an amount equal to any accrued and unpaid dividends the per share amount of all cash and other property.
Holders of our Series A preferred stock have no preemptive, subscription, redemption or conversion rights.
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Description of our Purchase Rights
General
On February 2, 2022 (the “Effective Date”), we entered into the Rights Agreement, pursuant to which we issued one Purchase Right for each share of common stock of the Company. The purpose of the Rights Agreement is to facilitate our ability to preserve our net operating losses (“NOLs”) and our other Tax Attributes (as such term is defined in the Rights Agreement) in order to be able to offset potential future income taxes for federal income tax purposes. Our ability to use its NOLs and other Tax Attributes would be substantially limited if it experiences an “ownership change,” as such term is defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). A company generally experiences an ownership change if the percentage of the value of its stock owned by certain “5-percent shareholders,” as such term is defined in Section 382 of the Code, increases by more than 50 percentage points over a rolling three-year period. The Rights Agreement is intended to reduce the likelihood of an ownership change under Section 382 of the Code by deterring any Person (as such term is defined in the Rights Agreement) or group of affiliated or associated Persons from acquiring Beneficial Ownership (as defined in the Rights Agreement) of 4.9% or more of the outstanding common stock.
Effectiveness
Upon and following the Effective Date, the Purchase Rights were issued in respect of all outstanding shares of common stock on February 14, 2022 (the “Record Date”). As long as the Purchase Rights are attached to the common stock, we will issue one Purchase Right with each new share of common stock so that all such shares of common stock will have Purchase Rights attached (subject to certain limited exceptions).
Distribution Date; Exercisability; Expiration
Initially, the Purchase Rights will be attached to all common stock certificates (or other evidence of book-entry or other uncertificated ownership) and no separate certificates evidencing the Purchase Rights (“Right Certificates”) will be issued. Until the Distribution Date (as defined below), the Purchase Rights will be transferred with and only with the shares of common stock. As long as the Purchase Rights are attached to the shares of common stock, we will issue one Purchase Right with each new share of common stock so that all such shares of common stock will have Purchase Rights attached (subject to certain limited exceptions).
The Purchase Rights will separate and begin trading separately from the shares of common stock, and Right Certificates will be caused to evidence the Purchase Rights, on the earlier to occur of (i) the Close of Business (as such term is defined in the Rights Agreement) on the tenth day following a public announcement, or the public disclosure of facts indicating, that a Person or group of affiliated or associated Persons has acquired Beneficial Ownership of 4.9% or more of the outstanding shares of common stock (an “Acquiring Person”) (or, in the event that our Board of Directors determines to effect an exchange in accordance with Section 24 of the Rights Agreement and our Board of Directors determines that a later date is advisable, then such later date) and (ii) the Close of Business on the tenth Business Day (as such term is defined in the Rights Agreement) (or such later date as may be determined by action of our Board of Directors prior to such time as any Person becomes an Acquiring Person) following the commencement of a tender offer or exchange offer the consummation of which would result in the Beneficial Ownership by a Person or group of 4.9% or more of the outstanding shares of common stock (the earlier of such dates, the “Distribution Date”). As soon as practicable after the Distribution Date, unless the Purchase Rights are recorded in book-entry or other uncertificated form, we will prepare and cause the Right Certificates to be sent to each record holder of shares of common stock as of the Distribution Date.
An “Acquiring Person” will not include (i) the Company, (ii) any Subsidiary (as such term is defined in the Rights Agreement) of the Company, (iii) any employee benefit plan of the Company or of any Subsidiary of the Company, (iv) any entity holding shares of common stock for or pursuant to the terms of any such employee benefit plan or (v) any Person who or which, together with all Affiliates and Associates (as such terms are defined in the Rights Agreement) of such Person, at the time of the first public announcement of the Rights
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Agreement, is a Beneficial Owner (as defined in the Rights Agreement) of 4.9% or more of the shares of common stock then outstanding (a “Grandfathered Stockholder”). However, if a Grandfathered Stockholder becomes, after such time, the Beneficial Owner (other than (A) pursuant to the vesting or exercise of any equity awards issued to a member of our Board of Directors, (B) pursuant to additional grants of any such equity awards to a member of our Board of Directors, (C) pursuant to the exercise of Warrants or options or the conversion or exchange of any securities in accordance with the terms thereof, in each case, either as held by a Grandfathered Stockholder as of the time of the first public announcement of the Rights Agreement or as directly issued by us to a Grandfathered Stockholder following the first public announcement of the Rights Agreement (D) pursuant to the payment of interest or dividends in the form of additional securities on any exchangeable or convertible securities held by a Grandfathered Stockholder as of the time of first public announcement of the Rights Agreement or any exercise or conversion of such additional securities by a Grandfathered Stockholder or (E) pursuant to the Company directly issuing shares of common stock or Warrants, options or other securities convertible into or exchangeable for shares of common stock to a Grandfathered Stockholder) of any additional shares of common stock (regardless of whether, thereafter or as a result thereof, there is an increase, decrease or no change in the percentage of shares of common stock then outstanding Beneficially Owned (as such term is defined in the Rights Agreement) by such Grandfathered Stockholder) then such Grandfathered Stockholder shall be deemed to be an Acquiring Person unless, upon such acquisition of Beneficial Ownership of additional shares of common stock, such person is not the Beneficial Owner of 4.9% or more of the shares of common stock then outstanding. In addition, upon the first decrease of a Grandfathered Stockholder’s Beneficial Ownership below 4.9%, such Grandfathered Stockholder will no longer be deemed to be a Grandfathered Stockholder. In the event that after the time of the first public announcement of the Rights Agreement, any agreement, arrangement or understanding pursuant to which any Grandfathered Stockholder is deemed to be the Beneficial Owner of shares of common stock expires, is settled in whole or in part, terminates or no longer confers any benefit to or imposes any obligation on the Grandfathered Stockholder, any direct or indirect replacement, extension or substitution of such agreement, arrangement or understanding with respect to the same or different shares of common stock that confers Beneficial Ownership of shares of common stock shall be considered the acquisition of Beneficial Ownership of additional shares of common stock by the Grandfathered Stockholder and render such Grandfathered Stockholder an Acquiring Person for purposes of the Rights Agreement unless, upon such acquisition of Beneficial Ownership of additional shares of common stock, such person is not the Beneficial Owner of 4.9% or more of the shares of common stock then outstanding.
“Beneficial Ownership” is defined in the Rights Agreement to include any securities (i) which a Person or any of such Person’s Affiliates or Associates (a) actually owns (directly or indirectly) or would be deemed to actually or constructively own for purposes of Section 382 of the Code or the Treasury Regulations (as such terms are defined in the Rights Agreement) promulgated thereunder, including any coordinated acquisition of securities by any Persons who have a formal or informal understanding with respect to such acquisition (to the extent ownership of such securities would be attributed to such Persons under Section 382 of the Code and the Treasury Regulations promulgated thereunder), (b) beneficially owns, directly or indirectly, within the meaning of Rules 13d-3 or 13d-5 promulgated under the Exchange Act or (c) has the right or ability to vote, or the right to acquire, pursuant to any agreement, arrangement or understanding (except under limited circumstances), (ii) which are directly or indirectly Beneficially Owned by any other Person with which a Person has any agreement, arrangement or understanding for the purpose of acquiring, holding or voting such securities, or obtaining, changing or influencing control of the Company or (iii) which are the subject of, or reference securities for, or that underlie, certain derivative positions of any Person or any of such Person’s Affiliates or Associates; provided, that a Person shall not be deemed to be the Beneficial Owner of, or to Beneficially Own (as defined in the Rights Agreement), securities tendered pursuant to a tender or exchange offer made pursuant to, and in accordance with, the applicable rules and regulations promulgated under the Exchange Act until such tendered securities are accepted for purchase or exchange.
The Purchase Rights are not exercisable until the Distribution Date. The Purchase Rights will expire on the earliest to occur of (i) the Close of Business on the day following the certification of the voting results of our 2022 annual meeting of stockholders, if at such stockholder meeting or any other meeting of our stockholders
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duly held prior to such meeting, a proposal to ratify the Rights Agreement has not been passed by the requisite vote of our stockholders, (ii) the date on which our Board of Directors determines in its sole discretion that (x) the Rights Agreement is no longer necessary for the preservation of material valuable NOLs or Tax Attributes or (y) the NOLs and Tax Attributes have been fully utilized and may no longer be carried forward and (iii) the Close of Business on February 2, 2025 (the “Final Expiration Date”).
Exempt Persons and Transactions
Our Board of Directors may, in its sole and absolute discretion, determine that a Person is exempt from the Rights Agreement (an “Exempt Person”), so long as such determination is made prior to such time as such Person becomes an Acquiring Person. Any Person will cease to be an Exempt Person if our Board of Directors makes a contrary determination with respect to such Person regardless of the reason therefor. In addition, our Board of Directors may, in its sole and absolute discretion, exempt any transaction from triggering the Rights Agreement, so long as the determination in respect of such exemption is made prior to such time as any Person becomes an Acquiring Person. Any Person, together with all Affiliates and Associates of such Person, who proposes to acquire 4.9% or more of the outstanding shares of common stock may apply to our Board of Directors in advance for an exemption in accordance with and pursuant to the terms of the Rights Agreement.
Flip-In Event
If a Person or group becomes an Acquiring Person at any time after the date of the Rights Agreement (with certain limited exceptions), the Purchase Rights will become exercisable for shares of common stock having a value equal to two times the exercise price of the Purchase Right. From and after the announcement that any Person has become an Acquiring Person, if the Purchase Rights evidenced by a Right Certificate are or were acquired or Beneficially Owned by an Acquiring Person or any Associate or Affiliate of an Acquiring Person, such Purchase Rights shall become void, and any holder of such Purchase Rights shall thereafter have no right to exercise such Purchase Rights. If our Board of Directors so elects, we may deliver upon payment of the exercise price of a Purchase Right an amount of cash, securities or other property equivalent in value to the shares of common stock issuable upon exercise of a Purchase Right.
Flip-Over Event
If, at any time after a Person becomes an Acquiring Person, (i) we consolidates with, or merge with, any other Person (or any Person consolidates with, or merges with us) and, in connection with such consolidation or merger, all or part of the shares of common stock are or will be changed into or exchanged for stock or other securities of any other Person or cash or any other property or (ii) 50% or more of our consolidated assets or Earning Power (as defined in the Rights Agreement) is sold, then proper provision will be made so that each holder of a Purchase Right will thereafter have the right to receive, upon the exercise thereof at the then current exercise price of the Purchase Right, that number of shares of common stock of the acquiring company which at the time of such transaction will have a market value of two times the exercise price of the Purchase Right.
Exchange
At any time after any Person becomes an Acquiring Person, our Board of Directors may exchange the Purchase Rights (other than Purchase Rights owned by any Person which have become void), in whole or in part, at an exchange ratio of one share of common stock per Purchase Right (subject to adjustment). We may issue, transfer or deposit such shares of common stock (or other property as permitted under the Rights Agreement) to or into a trust or other entity created upon such terms as our Board of Directors may determine and may direct that all holders of Purchase Rights receive such shares of common stock or other property only from the trust or other entity. In the event that our Board of Directors determines, before the Distribution Date, to effect an exchange, our Board of Directors may delay the occurrence of the Distribution Date to such time as it deems advisable.
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Redemption
At any time prior to the earlier to occur of (i) the Close of Business on the tenth day following the Stock Acquisition Date (as defined in the Rights Agreement) (or, if the tenth day following the Stock Acquisition Date occurs before the Record Date, the Close of Business on the Record Date) and (ii) the Final Expiration Date, our Board of Directors may redeem the Purchase Rights in whole, but not in part, at a price of $0.001 per Purchase Right (the “Redemption Price”). The redemption of the Purchase Rights may be made effective at such time, on such basis and with such conditions as our Board of Directors in its sole discretion may establish. Immediately upon any redemption of the Purchase Rights, the right to exercise the Purchase Rights will terminate and the only right of the holders of Purchase Rights will be to receive the Redemption Price.
Amendment
The terms of the Purchase Rights may be amended by our Board of Directors without the consent of the holders of the Purchase Rights, except that at any time after the Close of Business on the tenth day following the Stock Acquisition Date (or, if the tenth day following the Stock Acquisition Date occurs before the Record Date, the Close of Business on the Record Date), no such amendment may adversely affect the interests of the holders of the Purchase Rights (other than the Acquiring Person and its Affiliates and Associates).
Preferred Stock Rights
Each one-thousandth of a share of Series A Preferred Stock will entitle the holder thereof to the same dividends and liquidation rights as if the holder held one share of common stock and will be treated the same as a share of common stock in the event of a merger, consolidation or other share exchange.
Rights of Holders
Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends.
Certain Provisions of Our Charter, Bylaws and the Rights Agreement
Our Charter, Bylaws, the Rights Agreement and the DGCL contain provisions, which are summarized in the following paragraphs, are intended to enhance the likelihood of continuity and stability in the composition of our Board of Directors. These provisions are intended to avoid costly takeover battles, reduce our vulnerability to a hostile change of control and enhance the ability of our Board of Directors to maximize stockholder value in connection with any unsolicited offer to acquire us.
Authorized but Unissued Shares
The authorized but unissued shares of our common stock and our preferred stock will be available for future issuance without obtaining stockholder approval, except to the extent such approval is required by law or the listing requirements of the NYSE, the exchange on which our common stock is listed. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of our common stock and preferred stock could render more difficult or discourage an attempt to obtain control over us by means of a proxy contest, tender offer, merger or otherwise.
Pursuant to our Charter, shares of our preferred stock may be issued from time to time, and our Board of Directors is authorized to determine and alter all rights, preferences, privileges, qualifications, limitations and restrictions without limitation. See “Preferred Stock” above.
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Election and Removal of Directors; Structure of Board of Directors
Our Bylaws provide that a nominee to director shall be elected to our Board of Directors if, at a meeting of stockholders duly called and at which a quorum is present, the votes cast for such nominee’s election exceed the votes cast against such nominee’s election-i.e. the director receives a majority of the stockholder votes.
Notwithstanding the foregoing, directors shall be elected by a plurality of the votes cast at any such meeting of stockholders if, on the tenth (10th) day before the Company first mails its notice of meeting for such meeting of the stockholders, the number of nominees for directors exceeds the number of directors to be elected at such meeting. If directors are to be elected by a plurality of the votes cast, stockholders shall not be permitted to vote against a nominee. Abstentions and broker non-votes are not counted as votes cast for purposes of the election of directors and, therefore, will have no effect on the outcome of such election. Even if a nominee is not re-elected, he or she will remain in office as a director until his or her earlier resignation or removal.
The Charter and Bylaws provide that a director may be removed only for cause, as determined by the affirmative vote of the holders of at least a majority of the shares then entitled to vote in an election of directors, voting as a single class. The Charter provides that such stockholder vote may only be taken at a meeting of stockholders and not by written consent, the notice of which meeting expressly states such purpose. Cause for removal shall be deemed to exist only if the director whose removal is proposed has been convicted of a felony by a court of competent jurisdiction or has been adjudged by a court of competent jurisdiction to be liable for gross negligence or misconduct in the performance of such director’s duty to us and such adjudication is no longer subject to direct appeal.
Structure of the Board of Directors
Our Board of Directors currently consists of eight (8) members. Our Bylaws provide that the business and affairs of the Company shall be managed by or under the direction of not fewer than five (5) members at any given time. The exact number of directors may be increased or decreased, from time to time by action of our Board of Directors. No decrease in the number of directors constituting our Board of Directors shall shorten the term of any incumbent director.
Our Bylaws provide that directors are divided into three classes: class I, class II and class III. Each class shall be as nearly equal in number of directors as possible.
Each director shall serve for a term ending on the third annual meeting following the annual meeting at which such director was elected; provided, however, that each director shall serve until his successor shall have been duly elected and qualified, unless he or she shall resign, become disqualified or disabled, or shall otherwise be removed.
Stockholder Action by Written Consent
Our Bylaws provide that any action which may be taken at any meeting of stockholders may be taken without a meeting and without prior notice, if a unanimous consent in writing, setting forth the action so taken, shall be signed by the holders of all of the outstanding shares entitled to vote thereon.
Special Meetings of Stockholders; Advance Notice Requirements for Stockholder Nominations
Our Bylaws provide that notice of the time and place of every meeting of stockholders and of the business to be acted on at such meeting shall be delivered at least 10 days but not more than 60 days before the meeting to each stockholder of record having voting power and entitled to such notice. A notice of special meeting must state the purposes of the meeting.
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To be properly brought before an annual meeting of stockholders, any stockholder proposal or nomination for the Board of Directors must be received by the Secretary of the Company at our principal executive offices not less than 90 calendar days nor more than 120 days before the date of our proxy statement release to stockholders in connection with the previous year’s annual meeting of stockholders. If no annual meeting was held in the previous year, or if the date of the applicable annual meeting has been changed by more than 30 days from the date of the previous year’s annual meeting, then a stockholder’s notice, in order to be considered timely, must be received by the Secretary not later than the later of the close of business on the 60th day prior to such annual meeting or the tenth day following the day on which notice of the date of the annual meeting was mailed or public disclosure of such date was made.
Amendments to Governing Documents
The Charter provides that we may at any time and from time to time amend, alter, change or repeal any provision contained in the Charter, and any other provisions authorized by the DGCL may be added or inserted; provided, however, that any such action requires the affirmative vote of at least two-thirds (2/3) of the holders of all of the shares of our capital stock then entitled to vote in an election of directors, voting together as a single class.
Our Bylaws provide that in addition to any requirements set forth by the DGCL, the Bylaws may be adopted, amended or repealed by (i) the affirmative vote of at least 2/3 of the holders of all of the shares of our capital stock then entitled to vote in an election of directors, voting together as a single class, or by (ii) approval of a majority of the our Board of Directors.
Limitation on Director Liability
The Charter provides that, to the fullest extent permitted by the DGCL, directors of the Company will not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to us or our stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transaction from which the director derived an improper personal benefit.
The Charter provides that if the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Company will automatically be deemed eliminated and limited to the fullest extent permitted by the DGCL as so amended.
The Purchase Rights
The Purchase Rights have anti-takeover effects. If the Purchase Rights are exercised, shares of Series A preferred stock will be issued, which will cause significant dilution to an Acquiring Person that attempts to acquire us on terms not approved by our Board of Directors. The Purchase Rights should not interfere with any merger or other business combination approved by our Board of Directors since the Purchase Rights may be amended to permit such acquisition or be redeemed by us at the Redemption Price at any time prior to the time that a person or group becomes an Acquiring Person. For more information about the Purchase Rights, see “Description of Our Purchase Rights.”
Certain Anti-Takeover Effects of Delaware Law
We are subject to Section 203 of the DGCL. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in various “business combination” transactions with any interested stockholder for a period of three years following the date of the transactions in which the person became an interested stockholder, unless:
| • | the transaction is approved by our Board of Directors prior to the date the interested stockholder obtained such status; |
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| • | upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or |
| • | on or subsequent to such date the business combination is approved by our board and authorized at an annual or special meeting of stockholders by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder. |
A “business combination” is defined to include mergers, asset sales, and other transactions resulting in financial benefit to a stockholder. In general, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years, did own) 15% or more of a corporation’s voting stock. The statute could prohibit or delay mergers or other takeover or change in control attempts with respect to the Company and, accordingly, may discourage attempts to acquire the Company even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above the prevailing market price.
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The shares of our common stock offered under this prospectus may be offered and sold from time to time by the selling securityholders named below. As used in this prospectus, the term “selling securityholders” includes the selling securityholders identified below or any of their permitted assignees selling shares received after the date of this prospectus from the selling securityholders in accordance with and as may be permitted by the A&R Registration Rights Agreement, the Subscription Agreement, and the Warrants. The selling securityholders named below will acquire the shares of our common stock being offered under this prospectus (other than the PIPE Shares) directly from us upon the exercise of the Warrants. We will issue the shares (other than the PIPE Shares) to the selling securityholders in reliance on an exemption from the registration requirements of the Securities Act pursuant to Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder (or, in the case of the issuance of any shares of common stock upon cashless exercise of any Warrants, in a transaction exempt from registration pursuant to Section 3(a)(9) of the Securities Act).
The following table sets forth as of March 11, 2022: (1) the name of the selling securityholders on behalf of whom we are registering shares of our common stock under the Registration Statement of which this prospectus is a part, (2) the number of shares of our common stock beneficially owned by such selling securityholders prior to the offering, determined in accordance with Rule 13d-3 under the Exchange Act (but, for this purpose, including all shares of our common stock issuable upon full exercise of the Warrants, even if such shares are not deemed beneficially owned in accordance with Rule 13d-3 under the Exchange Act due to restrictions on exercise), (3) the number of shares of our common stock that may be offered by such selling securityholders under this prospectus and (4) the number of shares of our common stock to be owned by such selling securityholders after completion of this offering, assuming all of the shares of common stock available for issuance under this prospectus are sold. We will not receive any of the proceeds from the sale of the shares of our common stock offered under this prospectus. The amounts and information set forth below are based upon information provided to us by the selling securityholders or their representatives, or on our records, as of March 11, 2022. The percentage of beneficial ownership for the following table is based on 43,124,362 shares of our common stock outstanding as of March 11, 2022.
To our knowledge, except as indicated in the footnotes to this table, the named selling securityholders in the table have sole voting and investment power with respect to the PIPE Shares, and will have upon exercise, in whole or in part, of the outstanding Warrants, sole voting and investment power with respect to all such shares of our common stock issuable thereto as shown in the table to be beneficially owned by such securityholder. Except as described below, the selling securityholders have not had any position, office or other material relationship with us or any of our predecessors or affiliates within the past three years, except as a lender under the Amended Term Loan Credit Agreement or the Amended Subordinated Term Loan, or in connection with the Subscription Agreement. In addition, based on information provided to us, to the extent any selling securityholder is an affiliate of broker-dealers, such selling securityholder has not purchased any shares of our common stock outside the ordinary course of business nor is a party to any agreements, understandings or arrangements with any other persons, directly or indirectly, to dispose of the shares of our common stock. Information concerning the selling securityholders may change from time to time, and any changed information will be set forth in supplements to this prospectus to the extent required.
| Shares Beneficially Owned Prior to the Offering(1) |
Number of Shares Being Offered(1) |
Shares Beneficially Owned After Completion of the Offering |
||||||||||||||||||
| Name of Selling Securityholders |
Number | Percentage | Number | Percentage | ||||||||||||||||
| APSC Holdco II, L.P.(2) |
5,000,000 | 11.6 | % | 5,000,000 | — | — | ||||||||||||||
| Corre Opportunities Qualified Master Fund, LP(3)(4) |
12,087,092 | 26.5 | % | 9,991,054 | 2,096,038 | 4.6 | % | |||||||||||||
| Corre Horizon Fund, LP(3)(5) |
3,660,348 | 8.3 | % | 3,244,251 | 416,097 | * | ||||||||||||||
| Corre Horizon II Fund, LP(3)(6) |
3,798,032 | 8.6 | % | 3,669,456 | 128,576 | * | ||||||||||||||
| * | Represents beneficial ownership of less than 1%. |
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| (1) | The number of shares beneficially owned prior to the offering consists of (i) PIPE Shares, (ii) shares of our common stock issuable upon full exercise of the Warrants (even if such shares are not deemed beneficially owned in accordance with Rule 13d-3 under the Exchange Act due to restrictions on exercise) and/or (iii) other shares of common stock, as further described below. |
| (2) | The number of shares consists solely of shares issuable upon exercise of the Second A&R AP Warrant. While the total number of shares of our common stock issuable upon exercise of the Second A&R AP Warrant is being registered under the registration statement of which this prospectus forms a part, pursuant to the terms of the Second A&R AP Warrant, the selling securityholder is not permitted to exercise such warrant to the extent that such exercise would result in the selling securityholder and its affiliates and any other persons or entities whose beneficial ownership of our common stock would be aggregated with such selling securityholder for purposes of Section 13(d) of the Exchange Act, beneficially owning more than 9.9% of the number of shares of our common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon exercise of such warrants. For purposes of the 9.9% beneficial ownership exercise restriction, beneficial ownership is determined in accordance with Section 13(d) of the Exchange Act and the rules and regulation promulgated thereunder. The business address of APSC Holdco II, L.P. is c/o Iron Park Capital Partners L.P., 535 Madison Avenue, 31st Floor, New York, NY 10022. Atlantic Park Strategic Capital Parallel Master Fund, L.P. is the sole beneficial owner of APSC Holdco II, L.P. Pursuant to an Investment Management Agreement, Atlantic Park Strategic Capital Parallel Master Fund, L.P. has delegated its voting and dispositive power over its direct and indirect investments (including the shares of common stock to be offered under this prospectus) to Iron Park Capital Partners, LP and GASC APF, L.P. and appointed each of them to jointly act as investment advisers. Each of APSC Holdco II, L.P., Atlantic Park Strategic Capital Parallel Master Fund, L.P., Iron Park Capital Partners, LP and GASC APF, L.P. may be deemed to beneficially own the shares of our common stock beneficially owned by APSC Holdco II, L.P. |
| (3) | The business address of Corre Opportunities Qualified Master Fund, LP, Corre Horizon Fund, LP and Corre Horizon II Fund, LP (collectively, the “Funds”) is c/o Corre Partners Management, LLC, 12 East 49th Street, 40th Floor, New York, New York 10017. Each of (i) Corre Partners Advisors, LLC, which serves as the general partner of the Funds (the “General Partner”), (ii) Corre Partners Management, LLC, which has been delegated investment authority over the assets of the Funds by the General Partner (the “Investment Adviser”), (iii) Mr. John Barrett, who serves as a managing member of the General Partner and the Investment Adviser, and (iv) Mr. Eric Soderlund, who serves as a managing member of the General Partner and the Investment Adviser, has shared power to vote or direct the vote, and shared power to dispose or direct the disposition of, the shares of common stock beneficially owned or to be owned by the Funds. |
| (4) | The number of shares consists of (i) 7,440,476 PIPE Shares, (ii) 2,550,578 shares of common stock issuable upon exercise of the applicable Corre Warrant and (iii) 2,096,038 shares of common stock. |
| (5) | The number of shares consists of (i) 2,083,333 PIPE Shares, 1,160,918 shares of common stock issuable upon exercise of the applicable Corre Warrant and (iii) 416,097 shares of common stock. |
| (6) | The number of shares consists of (i) 2,380,952 PIPE Shares, (ii) 1,288,504 shares of common stock issuable upon exercise of the applicable Corre Warrant and (iii) 128,576 shares of common stock. |
Material Relationships Between the Selling Securityholders and the Company
Amended Term Loan Credit Agreement
On December 18, 2020, we entered into that certain Term Loan Credit Agreement with Atlantic Park (as amended on October 19, 2021, October 29, 2021, November 9, 2021, December 2, 2021, December 7, 2021 and February 11, 2022). Atlantic Park agreed to certain funding commitments to us under the Term Loan Credit Agreement, subject to certain conditions, for one or more term loans in an aggregate amount of up to $250.0 million.
We entered into Amendment No. 1 to the Term Loan Credit Agreement on October 19, 2021, which among other things, (i) deferred an October 19, 2021 interest payment until October 29, 2021, (ii) required that we use
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commercially reasonable efforts to appoint an additional independent director to our Board of Directors who is acceptable to the agent, (iii) provided the lenders with additional information rights and (iv) tightened certain negative covenants until the deferred interest is made current.
We entered into Amendment No. 2 to the Term Loan Credit Agreement on October 29, 2021, which among other things, (i) further deferred an October 29, 2021 interest payment until November 15, 2021, (ii) contained certain milestones, (iii) provided the lenders with a 10-day right of first refusal regarding any refinancing of the Company’s obligations under the Company’s then-outstanding asset-based credit agreement, (iv) obligated the Company to establish, pursuant to a charter to be adopted by the Company’s Board of Directors and reasonably acceptable to the agent, a special committee that shall have exclusive responsibility and authority to make recommendations to the Company’s Board of Directors regarding certain transactions and (v) provided that the Company would not permit a covenant trigger event under its then-outstanding revolving credit facility to occur.
We entered into Amendment No. 3 to the Term Loan Credit Agreement on November 9, 2021, which among other things, (i) waived certain covenants until September 30, 2022 and modified covenants thereafter to provide the Company with additional flexibility, (ii) required the Company to seek stockholder approval (or an exception therefrom) to issue, pursuant to the terms of the Commitment Letter Agreement, additional warrants to Atlantic Park providing for the purchase of an aggregate of 1,417,051 shares of Company common stock, exercisable for seven years at the holder’s option at any time, in whole or in part, at an exercise price of $1.50 per share, or, if stockholder approval to issue the full amount of the Second A&R AP Warrant to Atlantic Park or an exception therefrom is not obtained by November 30, 2021, issue certain preferred stock to Atlantic Park and (iii) required the Company to amend the Initial Warrant to provide for an exercise price of $1.50 per share.
We entered into Amendment No. 4 to the Term Loan Credit Agreement on December 2, 2021, which among other things, extended the date upon which we were required to issue the Second A&R AP Warrant to Atlantic Park to 11:59 P.M. on December 7, 2021.
We entered into Amendment No. 5 to the Term Loan Credit Agreement on December 7, 2021, which among other things, extended the date upon which we we were required to issue the Second A&R AP Warrant to Atlantic Park to 11:59 P.M. on December 8, 2021.
We entered into Amendment No. 6 to the Term Loan Credit Agreement on February 11, 2022, which among other things, (i) permitted the entry into the ABL Credit Agreement, (ii) permitted certain interest payments due under the Amended Term Loan Credit Agreement to be paid in kind, (iii) permitted certain asset sales and required certain related mandatory prepayments, subject to an applicable prepayment premium, and (iv) amended the financial covenants, such that the maximum net leverage ratio of 7.00 to 1.00 will not be tested until the fiscal quarter ending March 31, 2023, and we are not permitted to exceed $20.0 million in unfinanced capital expenditures in any calendar year; provided, that such unfinanced capital expenditures limitation will not apply if we maintain a net leverage ratio of less than or equal to 4.00 to 1.00 as of the end of the second and fourth fiscal quarter of each calendar year.
Loans under the Amended Term Loan Credit Agreement bear interest through maturity at a variable rate per annum based upon, at our option, a Base Rate or a LIBOR rate, plus an applicable margin, referred to as Base Rate Advances or the LIBOR Rate Advances, respectively. The Base Rate has a 2.00% floor and is otherwise defined as a fluctuating interest rate equal to the greatest of (1) the federal funds rate plus 0.50%, (2) the prime rate as defined in the Amended Term Loan Credit Agreement, and (3) the one month LIBOR rate plus 1.00%. The LIBOR rate has a 1.00% floor and is otherwise defined as the London interbank offered rate as administered by the ICE Benchmark Administration Limited. The applicable margin is defined as a rate of 6.50% for Base Rate Advances and 7.50% for LIBOR Rate Advances. Interest is payable either (a) monthly for Base Rate Advances or (b) for LIBOR Rate Advances, on the earlier of (1) the last day of the interest period, which can be one, two, three or six months as selected by the Company or (2) for LIBOR Rate Advances with interest periods greater than three months, the day prior to the last day of each three month interval within such interest period.
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The loans under the Amended Term Loan Credit Agreement were issued with an original issue discount of 3.00%. We may prepay the loans under the Amended Term Loan Credit Agreement, in whole or in part, at any time and from time to time, at a prepayment premium (including a make whole during the first two years) specified in the Amended Term Loan Credit Agreement (subject to certain exceptions), plus accrued and unpaid interest.
Our obligations under the Amended Term Loan Credit Agreement are guaranteed by certain of our direct and indirect subsidiaries (other than certain excluded subsidiaries) and are secured by substantially all of our assets and the assets of the subsidiaries guaranteeing our obligations.
The Amended Term Loan Credit Agreement contains customary conditions to borrowings, events of default and covenants, including covenants that restrict our ability to sell assets, make changes to the nature of our business, engage in mergers or acquisitions, incur, assume or permit to exist additional indebtedness and guarantees, create or permit to exist liens, pay dividends, issue equity instruments, make distributions or redeem or repurchase capital stock or make other investments, engage in transactions with affiliates and make payments in respect of certain debt.
Amended Subordinated Term Loan
On November 9, 2021, we entered into the Subordinated Term Loan (as amended on November 30, 2021, December 6, 2021, December 7, 2021, December 8, 2021 and February 11, 2022) with Corre providing for an unsecured $50.0 million delayed draw Subordinated Term Loan facility. Pursuant to the Amended Subordinated Term Loan, we borrowed $22.5 million on November 9, 2021 and $27.5 million on December 8, 2021. The Amended Subordinated Term Loan matures, and all outstanding amounts become due and payable, on the earlier of December 31, 2026 and the date that is two weeks later than the maturity or full repayment of the Amended Term Loan Credit Agreement. The stated interest rate on the Amended Subordinated Term Loan is 12% paid-in-kind monthly. Among other requirements of the Amended Subordinated Term Loan, we were required to (i) issue the lenders the Corre Warrants providing for the purchase of an aggregate of 5,000,000 shares of our common stock, exercisable at the holder’s option at any time, in whole or in part, until the seventh anniversary of the issue date, at an exercise price of $1.50 per share, (ii) amend our Charter, Bylaws, and all other necessary corporate governance documents to reduce the size of our Board of Directors and (iii) reconstitute our Board of Directors. The Amended Subordinated Term Loan also contains customary prepayment provisions, events of default and covenants.
On November 30, 2021, we entered into Amendment No. 1 to the Subordinated Term Loan, which among other things, (i) extended the payment date for interest in the form of payment-in-kind interest with respect to the Initial Term Loans (as defined in the Subordinated Term Loan), (ii) extended the date upon which we were required to deliver a fully executed ABL Consent (as defined in the Subordinated Term Loan) to, in each case, 11:59 P.M. on December 6, 2021 and (iii) extended the date upon which we were required to issue the Corre Warrants to 11:59 P.M. on December 7, 2021.
On December 6, 2021, we entered into Amendment No. 2 to the Subordinated Term Loan, which among other things, (i) extended the payment date for interest in the form of payment-in-kind interest with respect to the Initial Term Loans (as defined in the Subordinated Term Loan) and (ii) extended the date upon which we were required to deliver a fully executed ABL Consent, in each case, 11:59 P.M. on December 7, 2021.
On December 7, 2021, we entered into Amendment No. 3 to the Subordinated Term Loan, which among things, (i) extended the payment date for interest in the form of payment in kind interest, (ii) extended the date upon which we were required to deliver a fully executed ABL Consent and (iii) extended the date upon which we were required to issue the Corre Warrants to, in each case, 11:59 P.M. on December 8, 2021.
On December 8, 2021, we entered into that certain Resignation, Consent and Appointment Agreement and Amendment No. 4 to the Subordinated Term Loan, which among other things, (i) substituted Cantor Fitzgerald
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Securities as the administrative agent in replacement of Corre as the Corre Agent and (ii) effected the resignation of Corre as the Corre Agent.
On February 11, 2022, we entered into Amendment No. 5 to the Subordinated Term Loan, which among other things, (i) provided for an additional commitment of $10.0 million in subordinated delayed draw term loans to be available for borrowing by the Company until July 1, 2022, (ii) permitted the entry into the ABL Credit Agreement, (iii) permits certain asset sales and requires certain related mandatory prepayments, subject to an applicable prepayment premium, and (iv) amended the financial covenants, such that the maximum net leverage ratio of 7.00 to 1.00 will not be tested until the fiscal quarter ending March 31, 2023, and we are not permitted to exceed $20.0 million in unfinanced capital expenditures in any calendar year; provided, that such unfinanced capital expenditures limitation will not apply if the Company maintains a net leverage ratio of less than or equal to 4.00 to 1.00 as of the end of the second and fourth fiscal quarter of each calendar year.
Commitment Letter Agreement
On November 9, 2021, we entered into that certain Commitment Letter Agreement (the “Commitment Letter Agreement”) with Corre Partners Management, LLC (collectively, with its affiliates, “Corre Management”) and Atlantic Park. Pursuant to the Commitment Letter Agreement, we (i) reduced the size of our Board of Directors to seven directors, (ii) appointed two Directors to our Board of Directors selected by Corre Management after consultation with Atlantic Park, (iii) appointed one Director selected by Corre Management to our Board of Directors’ Independent Subcommittee, also to include one Director selected by Atlantic Park, (iv) provided Corre Management and Atlantic Park with Board of Director observation rights, (v) launched a strategic alternatives process and presented results of the review to our Board of Directors, (vi) issued the Warrants and (vii) paid certain advisor fees on behalf of Corre Management and Atlantic Park.
ABL Credit Agreement
On February 11, 2022, the Company, the lender parties thereto, and Eclipse Business Capital, LLC, a Delaware limited liability company, as agent, entered into ABL Credit Agreement. Available funding commitments to the Company under the ABL Credit Agreement, subject to certain conditions, include a revolving credit line in an amount of up to $130.0 million to be provided by certain affiliates of Eclipse Business Capital, LLC (the “Revolving Credit Loans”), with a $35.0 million sublimit for swingline borrowings and a $26.0 million sublimit for issuances of letters of credit, and a delayed draw term loan of up to $35.0 million (the “Delayed Draw Term Loans”) to be provided by Corre, as lenders thereunder. The ABL Credit Agreement matures and all outstanding amounts become due and payable on February 11, 2025.
The Company’s obligations under the ABL Credit Agreement are guaranteed by certain direct and indirect subsidiaries of the Company (other than certain excluded subsidiaries) (the “ABL Guarantors” and, together with the Company, the “ABL Loan Parties”). The obligations of the Company under the ABL Credit Agreement are secured on a first priority basis by, among other things, accounts receivable, deposit accounts, securities accounts and inventory of the ABL Loan Parties (the “ABL Priority Collateral”) and are secured on a second priority basis by substantially all of the other assets of the ABL Loan Parties (the “Term Loan Priority Collateral”). Availability under the revolving credit line under the ABL Credit Agreement is based on the percentage of the value of accounts receivable and inventory, as reduced by certain reserves.
Revolving Credit Loans under the ABL Credit Agreement bear interest through maturity at a variable rate per annum based upon a LIBOR Rate (with a 1.00% floor) or, if the LIBOR Rate is unavailable for any reason, a Base Rate (as defined below), plus an applicable margin (respectively, a “LIBOR Rate Loan” and “Base Rate Loan”). The “Base Rate” has a 2.00% floor and is otherwise defined as a fluctuating interest rate equal to the greatest of (1) the federal funds rate plus 0.50%, (2) Wells Fargo Bank, National Association’s prime rate, and (3) the one-month LIBOR Rate. The “applicable margin” is defined as a rate of 3.15%, 3.40% or 3.65% for Base Rate Loans, and a rate of 4.15%, 4.40% or 4.65% for LIBOR Rate Loans, in each case depending on the amount
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of EBITDA as of the most recent measurement period, as reported in a monthly compliance certificate. The Delayed Draw Term Loans bear interest through maturity at a rate of the LIBOR Rate plus 10.0%, with a 1.00% LIBOR floor. The fee for undrawn revolving amounts is 0.50% and the fee for undrawn delayed draw term loan amounts is 3.00%. Interest under the ABL Credit Agreement is payable monthly. The Company may make voluntary prepayments of the loans under the ABL Credit Agreement from time to time, subject, in the case of the delayed draw term loans, to certain conditions. Mandatory prepayments are also required in certain circumstances, including with respect to the Delayed Draw Term Loans, if the ratio of aggregate value of the collateral under the ABL Credit Agreement to the sum of the delayed draw term loans plus revolving facility usage outstanding is less than 130%. Amounts repaid may be re-borrowed, subject to compliance with the borrowing base and the other conditions set forth in the ABL Credit Agreement, and, in the case of the delayed draw term loans, subject to a maximum of four such borrowings in any 12-month period. Certain permanent repayments of the ABL Credit Agreement loans are subject to the payment of a premium of 2.00% during the first year of the facility, 1.00% during the second year of the facility, and 0.50% in the last year of the facility.
The ABL Credit Agreement contains customary conditions to borrowings, events of default and covenants, including covenants that restrict the Company’s ability to sell assets, make changes to the nature of the Company’s business, engage in mergers or acquisitions, incur, assume or permit to exist additional indebtedness and guarantees, create or permit to exist liens, pay dividends, issue equity instruments, make distributions or redeem or repurchase capital stock or make other investments, engage in transactions with affiliates and make payments in respect of certain debt. The ABL Credit Agreement also requires that the Company will not exceed $20.0 million in unfinanced capital expenditures in any calendar year; provided that this limitation will not apply if the Company maintains a net leverage ratio of less than or equal to 4.00 to 1.00 as of the end of the second and fourth fiscal quarter of each calendar year. In addition, the ABL Credit Agreement includes customary events of default, the occurrence of which may require that the Company pay an additional 2.0% interest on the outstanding loans under the ABL Credit Agreement.
Subscription Agreement
On February 11, 2022, we entered into certain incremental financing transactions with the Corre Holders, including entry into the Subscription Agreement under which we issued 11,904,761 PIPE Shares at a price of $0.84 per share for $10.0 million. Pursuant to the Subscription Agreement, among other things, the Corre Holders have agreed not to sell their portion of the PIPE Shares until the earliest to occur of (i) the date that is 180 days from the date of the Subscription Agreement, and (ii) such date on which we complete a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property, without consent of the Company.
Waivers of Anti-Dilution Adjustments
On February 11, 2022, the Company, the Corre Holders and Atlantic Park entered into those certain Team, Inc. Waivers of Anti-Dilution Adjustments and Cash Transaction Exercise (collectively, the “Warrant Waivers”) with respect to each of the Warrants. Pursuant to the Warrant Waivers, the Corre Holders and Atlantic Park agreed with respect to such holders’ Warrant, subject to certain terms and conditions set forth therein (and for only so long as the applicable provisions remain in effect), among other things, (i) to irrevocably waive certain anti-dilution adjustments set forth in such Warrant in connection with the Proposed Equity Financing (as defined in the Warrant Waivers); (ii) to not exercise such Warrant, in whole or in part, if the Company determines that such exercise will cause an ownership change within the meaning of Section 382 of the Internal Revenue Code of 1986, as amended (assuming, among other things, that the ownership change threshold is 47% rather than 50%); and (iii) to only exercise such Warrant in a “cashless” or “net-issue” exercise.
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The selling securityholders may offer and sell shares of our common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. Such sales may be made on one or more exchanges or otherwise, at prices and under terms then-prevailing or at prices related to the then-current market price, at fixed prices, at varying prices determined at the time of sale or at negotiated prices. The selling securityholders may use any one or more of the following methods when selling shares pursuant to this prospectus:
| • | through agents; |
| • | to or through underwriters, brokers or dealers; |
| • | ordinary brokerage transactions and transactions in which the broker solicits purchasers; |
| • | purchases by a broker-dealer or market maker, as principal, and resale by the broker-dealer for its account; |
| • | directly to one or more other purchasers; |
| • | an exchange or market distribution in accordance with the rules of the NYSE; |
| • | “at the market” offerings, within the meaning of Rule 415(a)(4) of the Securities Act, to or through a market maker or into an existing trading market on an exchange or otherwise; |
| • | through a block trade in which the broker or dealer engaged to handle the block trade will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; |
| • | short sales or transactions to cover short sales relating to the Warrants or shares of common stock issuable upon exercise of the Warrants; |
| • | the writing of options, whether the options are listed on an options exchange or otherwise; |
| • | through distributions by a selling securityholder or its successors in interest to its members, general or limited partners or shareholders (or their respective members, general or limited partners or shareholders); |
| • | privately negotiated transactions; or |
| • | otherwise through a combination of any of the above methods or any other method permitted by law. |
The selling securityholders may also resell all or a portion of its securities in open market transactions in reliance upon Rule 144 under the Securities Act, rather than under this prospectus, provided such selling securityholder meets the criteria and conforms to the requirements of Rule 144 and all applicable laws and regulations, Section 4(a)(1) under the Securities Act, if available, or any other exemption from the registration requirements that become available, rather than under this prospectus.
In connection with distributions of the securities or otherwise, the selling securityholders may enter into hedging transactions with broker-dealers or other financial institutions. In connection with such transactions, broker-dealers or other financial institutions may engage in short sales of the securities in the course of hedging the positions they assume with selling securityholders. The selling securityholders may also sell the securities short and redeliver the securities to close out such short positions. The selling securityholders may also enter into option or other transactions with broker-dealers or other financial institutions which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). The selling securityholders may also pledge securities to a broker-dealer or other financial
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institution, and, upon a default, such broker-dealer or other financial institution, may effect sales of the pledged securities pursuant to this prospectus (as supplemented or amended to reflect such transaction).
A selling securityholder may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third party may use securities pledged by any selling securityholder or borrowed from any selling securityholder or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from any selling securityholder in settlement of those derivatives to close out any related open borrowings of stock. The third party in such sale transactions will be an underwriter and will be identified in the applicable prospectus supplement (or a post-effective amendment). In addition, any selling securityholder may otherwise loan or pledge securities to a financial institution or other third party that in turn may sell the securities short using this prospectus. Such financial institution or other third party may transfer its economic short position to investors in our securities or in connection with a concurrent offering of other securities.
There can be no assurance that any selling securityholders will sell any or all of the shares of our common stock registered pursuant to the Registration Statement, of which this prospectus is a part.
We have advised the selling securityholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares of our common stock in the market and to the activities of the selling securityholders and their affiliates. In addition, we will make copies of this prospectus available to the selling securityholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling securityholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act. We have agreed to indemnify the selling securityholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
The selling securityholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock covered by this prospectus owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell such shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act, amending, if necessary, the list of selling securityholders to include the pledgee, transferee or other successors in interest as selling securityholders under this prospectus. The selling securityholders may also transfer and donate shares of common stock covered by this prospectus in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
A selling securityholder that is an entity may elect to make an in-kind distribution of shares of common stock covered by this prospectus to its members, general or limited partners or shareholders pursuant to the registration statement of which this prospectus is a part by delivering a prospectus. To the extent that such members, general or limited partners or shareholders are not affiliates of ours, such members, partners or shareholders would thereby receive freely tradable shares of common stock pursuant to the distribution through a registration statement. Additionally, to the extent that entities, members, partners or shareholders are affiliates of ours received shares in any such distribution, such affiliates will also be selling securityholders and will be entitled to sell such shares pursuant to this prospectus.
We agreed to use our commercially reasonable efforts to keep the Registration Statement of which this prospectus is a part continuously effective, supplemented and amended as required by the Securities Act, in order to permit this prospectus to be usable by the selling securityholders at all times until the earliest of (i) the date upon which all of the shares of common stock covered by the Registration Statement of which this prospectus is a part has been disposed of and (ii) the date upon which the shares of common stock covered by the Registration
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Statement of which this prospectus is a part otherwise cease to be Registerable Securities (as defined in the A&R Registration Rights Agreement).
We have agreed to bear all of the expenses incurred in connection with the registration of these shares, including the fees and expenses of counsel to the selling securityholders. The selling securityholders will be required to bear the expenses of any discounts, fees or selling commissions payable to any underwriter, agent or broker and transfer taxes incurred for the sale of shares of our common stock.
We have agreed to indemnify the selling securityholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. Agents, dealers and underwriters may be entitled under agreements entered into with the selling securityholders to indemnification by the selling securityholders against certain civil liabilities, including liabilities under the Securities Act, or to contribution with respect to payments which such agents, dealers or underwriters may be required to make in respect thereof. Agents, dealers and underwriters may be customers of, engage in transactions with or perform services on the selling securityholders’ behalf.
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Unless otherwise stated in the applicable prospectus supplement, the validity of the securities offered in this prospectus will be passed upon for us by Kirkland & Ellis LLP. If certain legal matters in connection with an offering of the securities made by this prospectus and a related prospectus supplement are passed on by counsel for the underwriters of such offering, that counsel will be named in the applicable prospectus supplement related to that offering.
The consolidated financial statements of Team, Inc. and subsidiaries as of December 31, 2021 and 2020, and for each of the years in the three-year period ended December 31, 2021, and management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2021, have been incorporated by reference herein and in the Registration Statement in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITY
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Set forth below are the expenses (other than underwriting discounts and commissions) expected to be incurred in connection with the issuance and distribution of the securities registered hereby. With the exception of the Securities and Exchange Commission registration fee, the amounts set forth below are estimates:
| Securities and Exchange Commission registration fee |
$ | 2,527.18 | ||
| Legal fees and expenses |
— | † | ||
| Accounting fees and expenses |
— | † | ||
| Printing and engraving expenses |
— | † | ||
| Trustee’s fees and expenses |
— | † | ||
| Miscellaneous |
— | † | ||
|
|
|
|||
| Total |
$ | 2,527.18 | ||
|
|
|
| † | Omitted because estimates are not currently available. The expenses of any offering will be set forth in the applicable prospectus supplement. |
Item 15. Indemnification of Directors and Officers
Section 145 of the DGCL empowers a Delaware corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided that such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful.
A Delaware corporation may indemnify directors, officers, employees and other agents of such corporation in an action by or in the right of the corporation under the same conditions, except that no indemnification is permitted without judicial approval if the person to be indemnified has been adjudged to be liable to the corporation. Where a director, officer, employee or agent of the corporation is successful on the merits or otherwise in the defense of any action, suit or proceeding referred to above or in defense of any claim, issue or matter therein, the corporation must indemnify such person against the expenses (including attorneys’ fees) which he or she actually and reasonably incurred in connection therewith.
The Charter provides that directors and officers may be indemnified to the fullest extent permitted by the applicable provisions of the DGCL. The Bylaws provide that we will indemnify and hold harmless, to the fullest extent permitted by applicable law, any person who was or is made a party or is threatened to be made a party to or is otherwise involved in any proceeding by reason of the fact that he or she is or was a director or officer of the Company, against all expense, liability and loss reasonably incurred or suffered by such indemnitee in connection therewith; provided, however, that with some exceptions, we shall indemnify any such indemnitee in connection with a proceeding initiated by such indemnitee only if such proceeding was authorized in the first instance by the Board of Directors of the Company. The right to indemnification includes the right to be paid by us the expenses incurred in defending any such proceeding in advance of its final disposition.
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As permitted by Section 102(b)(7) of the DGCL, the Charter provides that, to the fullest extent permitted by the DGCL, directors of the Company shall not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to us or our stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transaction from which the director derived an improper personal benefit.
The Charter provides that if the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Company will automatically be deemed eliminated and limited to the fullest extent permitted by the DGCL as so amended.
Item 16. Exhibits
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| * | Filed herewith |
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Item 17. Undertakings
(a) The Company hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
| (i) | to include any prospectus required by Section 10(a)(3) of the Securities Act; |
| (ii) | to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement; |
| (iii) | to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; |
provided, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Securities and Exchange Commission by the registrant pursuant to section 13 or section 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the Registration Statement.
(2) that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
| (i) | Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the Registration Statement as of the date the filed prospectus was deemed part of and included in the Registration Statement; and |
| (ii) | Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the Registration Statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the Registration Statement relating to the securities in the Registration Statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; provided, however, that no statement made in a registration statement or prospectus that is part of the Registration Statement or made in a document incorporated or deemed incorporated by reference into the Registration Statement or prospectus that is part of the Registration Statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or |
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| modify any statement that was made in the Registration Statement or prospectus that was part of the Registration Statement or made in any such document immediately prior to such effective date. |
(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this Registration Statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
| (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
(d) If and when applicable, the undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of section 310 of the Trust Indenture Act (“Act”) in accordance with the rules and regulations prescribed by the Commission under section 305(b)(2) of the Act.
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Pursuant to the requirements of the Securities Act of 1933, the Company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Sugar Land, State of Texas, on March 18, 2022.
| Team, Inc. | ||
| By: | /s/ Amerino Gatti | |
| Name: | Amerino Gatti | |
| Title: | Chief Executive Officer (Principal Executive Officer) | |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints each of Amerino Gatti and André C. Bouchard, or either of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same and all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting said attorney-in-fact and agent, and either of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or either of them, or his or her or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
| /s/ Amerino Gatti Amerino Gatti |
Chairman and Chief Executive Officer (Principal Executive Officer) |
March 18, 2022 | ||
| /s/ Matthew E. Kvarda Matthew E. Kvarda |
Interim Chief Financial Officer (Principal Financial Officer) |
March 18, 2022 | ||
| /s/ Matthew E. Acosta Matthew E. Acosta |
Vice President and Chief Accounting Officer (Principal Accounting Officer) |
March 18, 2022 | ||
| /s/ Sylvia J. Kerrigan Sylvia J. Kerrigan |
Lead Director | March 18, 2022 | ||
| /s/ J. Michael Anderson Michael Anderson |
Director | March 18, 2022 | ||
| /s/ Jeffery G. Davis Jeffery G. Davis |
Director | March 18, 2022 | ||
| /s/ Anthony R. Horton Anthony R. Horton |
Director | March 18, 2022 | ||
Table of Contents
| /s/ Evan S. Lederman Evan S. Lederman |
Director | March 18, 2022 | ||
| /s/ Ted Stenger Ted Stenger |
Director | March 18, 2022 | ||
| /s/ Michael J. Caliel Michael J. Caliel |
Director | March 18, 2022 | ||
Exhibit 5.1
609 Main Street
Houston, TX 77002
United States
+1 713 836 3600
www.kirkland.com
March 18, 2022
Team, Inc.
13131 Dairy Ashford, Suite 600
Sugar Land, Texas 77478
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We are acting as special counsel to Team, Inc., a Delaware corporation (the “Company”) in connection with the preparation of the Registration Statement on Form S-3 (such Registration Statement, as amended or supplemented, is hereinafter referred to as the “Registration Statement”), including the prospectus contained therein (the “Prospectus”), filed with the Securities and Exchange Commission (the “Commission”) on or about March 18, 2022 under the Securities Act of 1933, as amended (the “Securities Act”), by the Company. The Registration Statement relates to the resale by the selling securityholders identified in the Prospectus (the “Selling Securityholders”) of up to an aggregate of 21,904,761 shares of common stock, par value $0.30 per share (“Common Stock”), including (i) 10,000,000 shares of our Common Stock issuable upon exercise of certain warrants (each, a “Warrant” and, collectively, the “Warrants”) (the “Warrant Shares”) and (ii) 11,904,761 shares of our Common Stock (the “PIPE Shares”) issued pursuant to that certain subscription agreement (the “Subscription Agreement”), dated February 11, 2022, by and among the Company and certain of the Selling Securityholders described in the Prospectus. The Warrant Shares and the PIPE Shares are collectively referred to as the “Securities.”
In connection with the registration of the Securities, we have examined originals, or copies certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed necessary for the purposes of this opinion, including: (i) the organizational documents of the Company, (ii) minutes and records of the corporate proceedings of the Company, (iii) the Second Amended and Restated Registration Rights Agreement, dated February 11, 2022, by and among the Company and the Selling Securityholders, (iv) the Subscription Agreement, (v) the Warrants and (vi) the Registration Statement and the exhibits thereto.
Austin Bay Area Beijing Boston Brussels Chicago Dallas Hong Kong London Los Angeles Munich New York Paris Salt Lake City Shanghai Washington, D.C.
Team, Inc.
March 18, 2022
Page 2
For purposes of this opinion, we have assumed the authenticity of all documents submitted to us as originals, the conformity to the originals of all documents submitted to us as copies and the authenticity of the originals of all documents submitted to us as copies. We have also assumed the legal capacity of all natural persons, the genuineness of the signatures of persons signing all documents in connection with which this opinion is rendered, the authority of such persons signing on behalf of the parties thereto other than the Company and the due authorization, execution and delivery of all documents by the parties thereto other than the Company. We have not independently established or verified any facts relevant to the opinions expressed herein, but have relied upon statements and representations of the officers and other representatives of the Company.
We have also assumed that: (i) the Registration Statement will be effective and will comply with all applicable laws at the time the Securities are offered or issued as contemplated by the Registration Statement; (ii) if applicable, a prospectus supplement or term sheet (“Prospectus Supplement”) will have been prepared and filed with the Commission describing the Securities offered thereby and will comply with all applicable laws; (iii) all Securities will be sold in compliance with applicable federal and state securities laws and in the manner stated in the Registration Statement and, if applicable, the appropriate Prospectus Supplement; and (iv) at the time of the issuance of any Warrant Shares, (a) the Company will validly exist and be duly qualified and in good standing under the laws of its jurisdiction of formation, (b) the Company will have the necessary organizational power and authority to issue the Warrant Shares, and (c) the Company will have made available for issuance such number of Warrant Shares.
Based upon and subject to the foregoing qualifications, assumptions and limitations and the further limitations set forth below, we are of the opinion that:
| 1. | The PIPE Shares are validly issued, fully paid and non-assessable. |
| 2. | The Warrant Shares will be validly issued, fully paid and non-assessable when issued in accordance with the Warrants. |
Our opinions expressed above are subject to the qualifications that we express no opinion as to the applicability of, compliance with, or effect of (i) any bankruptcy, insolvency, reorganization, fraudulent transfer, fraudulent conveyance, moratorium or other similar law affecting the enforcement of creditors’ rights generally, (ii) general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), (iii) public policy considerations which may limit the rights of parties to obtain certain remedies and (iv) any laws except the laws of the State of New York and the General Corporation Law of the State of Delaware, including the applicable provisions of the Delaware constitution and reported judicial decisions interpreting these laws.
We express no opinion with respect to the enforceability of (i) consents to, or restrictions upon, judicial relief or jurisdiction or venue; (ii) waivers of rights or defenses with respect to stay, extension or usury laws; (iii) advance waivers of claims, defenses, rights granted by law, or notice, opportunity for hearing, evidentiary requirements, statutes of limitation, trial by jury or at law, or
Team, Inc.
March 18, 2022
Page 3
other procedural rights; (iv) waivers of broadly or vaguely stated rights; (v) provisions for exclusivity, election or accumulation of rights or remedies; (vi) provisions authorizing or validating conclusive or discretionary determinations; (vii) grants of setoff rights; (viii) provisions for the payment of attorneys’ fees where such payment is contrary to law or public policy; (ix) proxies, powers and trusts; (x) restrictions upon non-written modifications and waivers; (xi) provisions prohibiting, restricting, or requiring consent to assignment or transfer of any right or property; (xii) any provision to the extent it requires any party to indemnify any other person against loss in obtaining the currency due following a court judgment in another currency; and (xiii) provisions for liquidated damages, default interest, late charges, monetary penalties, make-whole premiums or other economic remedies to the extent such provisions are deemed to constitute a penalty.
We hereby consent to the filing of this opinion with the Commission as Exhibit 5.1 to the Registration Statement. We also consent to the reference to our firm under the heading “Legal Matters” in the Registration Statement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission.
We do not find it necessary for the purposes of this opinion, and accordingly we do not purport to cover herein, the application of the securities or “Blue Sky” laws of the various states to the sale of the Securities.
This opinion is limited to the specific issues addressed herein, and no opinion may be inferred or implied beyond that expressly stated herein. We assume no obligation to revise or supplement this opinion should the present laws of the State of New York or the General Corporation Law of the State of Delaware be changed by legislative action, judicial decision or otherwise.
This opinion is furnished to you in connection with the filing of the Registration Statement, and is not to be used, circulated, quoted or otherwise relied upon for any other purpose.
| Sincerely, |
| /s/ KIRKLAND & ELLIS LLP |
Exhibit 10.2
EXECUTION VERSION
AMENDMENT NO. 1 TO TERM LOAN CREDIT AGREEMENT
This AMENDMENT NO. 1 TO TERM LOAN CREDIT AGREEMENT (this “Amendment”), dated as of October 19, 2021, is among TEAM, INC., a Delaware corporation (the “Borrower”), and each of the Lenders party hereto.
W I T N E S S E T H:
WHEREAS, the Borrower, Atlantic Park Strategic Capital Fund, L.P., as agent for the Lenders and the Secured Parties (the “Agent”), and the Lenders have entered into that certain Term Loan Credit Agreement, dated as of December 18, 2020 (from time to time further amended, supplemented, restated, amended and restated or otherwise modified the “Credit Agreement”; capitalized terms used in this Amendment not otherwise defined herein shall have the respective meanings given thereto in the Credit Agreement), pursuant to which the Lenders have extended credit to the Borrower in the form of the Initial Term Loans; and
WHEREAS, the Borrower has requested that the Lenders agree to amend the Credit Agreement to extend certain interest payment dates with respect to the Initial Term Loans to November 5, 2021; and
WHEREAS, the Borrower and the Lenders are willing to effect such amendment on the terms and conditions contained in this Amendment.
NOW, THEREFORE, in consideration of the premises and further valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. Amendments to the Credit Agreement.
The Credit
Agreement is, effective as of the Amendment No. 1 Effective Date, hereby amended to delete the stricken text (indicated textually in the same manner as the following sample: stricken text) and to add the underlined text (indicated textually in the same manner as the following example:
double underlined text), in each case, as set forth in the
Credit Agreement attached as Annex A hereto
2. Effectiveness; Conditions Precedent.
The amendments contained herein shall only be effective upon the satisfaction or waiver of each of the following conditions precedent (the date of satisfaction or waiver, the “Amendment No. 1 Effective Date”):
(a) the Agent shall have received counterparts of this Amendment executed by the Borrower and each Lender; and
(b) each of the representations and warranties made by the Borrower in Section 3 hereof shall be true and correct.
The Administrative Agent shall, upon the satisfaction or waiver of the conditions contained in this Section 2, promptly provide written notice to the Borrower and the Lenders of the effectiveness of this Amendment.
| 3. | Representations and Warranties. |
In order to induce the Lenders to enter into this Amendment, the Borrower represents and warrants to the Lenders, for itself and for each other Loan Party, as follows:
| (a) | that both immediately prior to and immediately after giving effect to this Amendment, no Default or Event of Default exists; |
| (b) | the execution, delivery and performance by the Borrower of this Amendment and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action, do not contravene the Borrower’s Governing Documents and do not and will not contravene any Material Contract; |
| (c) | this Amendment has been duly executed and delivered on behalf of the Borrower; and |
| (d) | this Amendment constitutes a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, Debtor Relief Laws or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity. |
| 4. | Entire Agreement. |
This Amendment, the Credit Agreement (including giving effect to the amendments set forth in Section 1 above), and the other Loan Documents (collectively, the “Relevant Documents”) constitute the entire agreement among the parties, supersede any prior written and verbal agreements among them with respect to the subject matter hereof and thereof, and shall bind and benefit the parties and their respective successors and permitted assigns. This Agreement shall be deemed to have been jointly drafted, and no provision of it shall be interpreted or construed for or against a party because such party purportedly prepared or requested such provision, any other provision or this Amendment as a whole. No promise, condition, representation or warranty, express or implied, not set forth in the Relevant Documents shall bind any party hereto, and no such party has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as otherwise expressly stated in the Relevant Documents, no representations, warranties or commitments, express or implied, have been made by any party to any other party in relation to the subject matter hereof or thereof. None of the terms or conditions of this Amendment may be changed, modified, waived or cancelled orally or otherwise, except in writing and in accordance with Section 12.5 of the Credit Agreement (Amendments, Waivers and Consents).
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| 5. | Full Force and Effect of Credit Agreement. |
This Amendment is a Loan Document (and the Borrower agrees that the “Obligations” secured by the Collateral shall include any and all obligations of the Borrower under this Amendment). Except as expressly modified hereby, all terms and provisions of the Credit Agreement and all other Loan Documents remain in full force and effect and nothing contained in this Amendment shall in any way impair the validity or enforceability of the Credit Agreement or the Loan Documents, or alter, waive, annul, vary, affect, or impair any provisions, conditions, or covenants contained therein or any rights, powers, or remedies granted therein. This Amendment shall not constitute a modification of the Credit Agreement or any of the other Loan Documents or a course of dealing with Agent or the Lenders at variance with the Credit Agreement or the other Loan Documents such as to require further notice by Agent or any Lender to require strict compliance with the terms of the Credit Agreement and the other Loan Documents in the future, except in each case as expressly set forth herein. The Borrower acknowledges and expressly agrees that Agent and the Lenders reserve the right to, and do in fact, require strict compliance with all terms and provisions of the Credit Agreement and the other Loan Documents (subject to any qualifications set forth therein), as amended herein.
| 6. | Counterparts; Effectiveness. |
This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Except as provided in Section 3 above, this Amendment shall become effective when the Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Amendment by facsimile, electronic email or other electronic imaging means (e.g., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Amendment.
The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to this Amendment or any document to be signed in connection with this Amendment and the transactions contemplated hereby (including without limitation assignment and assumptions, amendments or other borrowing requests, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based
3
recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act. Each of the parties represents and warrants to the other parties that it has the corporate capacity and authority to execute this Amendment through electronic means and there are no restrictions for doing so in that party’s constitutive documents.
| 7. | Governing Law; Jurisdiction; Waiver of Jury Trial. |
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AMENDMENT AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS AMENDMENT, WHETHER SOUNDING IN CONTRACT, TORT OR EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND DECISIONS OF THE STATE OF NEW YORK. Sections 12.15 (Submission to Jurisdiction) and 12.17 (Jury Trial) of the Credit Agreement are hereby incorporated herein by this reference.
| 8. | Severability. |
In case any provision in or obligation under this Amendment shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provisions or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
| 9. | References. |
All references in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement and each reference to the “Credit Agreement”, (or the defined term “Agreement”, “thereunder”, “thereof” of words of like import referring to the Credit Agreement) in the other Loan Documents shall mean and be a reference to the Credit Agreement as amended hereby and giving effect to the amendments contained in this Amendment.
[Signature pages follow]
4
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be made, executed and delivered by their duly authorized officers as of the day and year first above written.
| TEAM, INC., as Borrower | ||
| By: | /s/ Andre C. Bouchard | |
| Name: | Andre C. Bouchard | |
| Title: | EVP, Chief Legal Officer | |
[Team, Inc. Term Loan Credit Agreement
Amendment No.1 Signature Page]
| APSC HOLDCO I, L.P., as Lender | ||
| By: | /s/ George Fan | |
| Name: | George Fan | |
| Title: | Authorized Signatory | |
[Team, Inc. Term Loan Credit Agreement
Amendment No.1 Signature Page]
| Acknowledged and Agreed: | ||
| ATLANTIC PARK STRATEGIC CAPITAL FUND, L.P., as Agent | ||
| By: | /s/ George Fan | |
| Name: | George Fan | |
| Title | Authorized Signatory | |
[Team, Inc. Term Loan Credit Agreement
Amendment No.1 Signature Page]
Execution
VersionANNEX A
TERM LOAN CREDIT AGREEMENT
among
TEAM, INC.
as Borrower,
THE LENDERS FROM TIME TO TIME PARTY HERETO,
and
ATLANTIC PARK STRATEGIC CAPITAL FUND, L.P.,
as Agent
Dated as of December 18, 2020
TABLE OF CONTENTS
| Page | ||||||
| ARTICLE I. DEFINITIONS |
1 | |||||
| 1.1 |
Definitions | 1 | ||||
| 1.2 |
Accounting Terms and Determinations | |||||
| 1.3 |
Divisions | |||||
| 1.4 |
Other Terms; Headings | |||||
| 1.5 |
Dutch Terms. In this Agreement, a reference to: | |||||
| 1.6 |
Quebec Matters | 57 | ||||
| ARTICLE II. THE CREDIT FACILITIES | ||||||
| 2.1 |
The Loans | |||||
| 2.2 |
[Reserved] | |||||
| 2.3 |
Procedure for Borrowing; Notices of Borrowing; Notices of Conversion | |||||
| 2.4 |
Application of Proceeds | |||||
| 2.5 |
Mandatory Prepayments; Optional Prepayments | |||||
| 2.6 |
[Reserved] | |||||
| 2.7 |
[Reserved] | |||||
| 2.8 |
Term | |||||
| 2.9 |
Payment Procedures | |||||
| 2.10 |
Designation of a Different Lending Office | |||||
| 2.11 |
Replacement of Lenders | |||||
| 2.12 |
[Reserved] | |||||
| 2.13 |
[Reserved] | |||||
| 2.14 |
Sharing of Payments, Etc. | |||||
| 2.15 |
[Reserved] | |||||
| 2.16 |
Incremental Term Loans | |||||
| ARTICLE III. [RESERVED] | ||||||
| ARTICLE IV. INTEREST, FEES AND EXPENSES | ||||||
| 4.1 |
Interest | |||||
| 4.2 |
Interest After Event of Default | |||||
| 4.3 |
Applicable Premium | |||||
| 4.4 |
[Reserved] | |||||
| 4.5 |
[Reserved] | |||||
| 4.6 |
[Reserved] | |||||
-i-
| 4.7 |
[Reserved] | |||||
| 4.8 |
[Reserved] | |||||
| 4.9 |
Calculations | |||||
| 4.10 |
Increased Costs | |||||
| 4.11 |
Taxes | |||||
| ARTICLE V. CONDITIONS OF LENDING |
||||||
| 5.1 |
Conditions to Initial Term Loan | |||||
| 5.2 |
Conditions Precedent to Each Loan | |||||
| ARTICLE VI. REPRESENTATIONS AND WARRANTIES |
||||||
| 6.1 |
Representations and Warranties of Borrower | |||||
| ARTICLE VII. AFFIRMATIVE COVENANTS OF THE BORROWER |
||||||
| 7.1 |
Existence | |||||
| 7.2 |
Maintenance of Property | |||||
| 7.3 |
[reserved] | |||||
| 7.4 |
Taxes | |||||
| 7.5 |
Requirements of Law | |||||
| 7.6 |
Insurance | |||||
| 7.7 |
Books and Records; Inspections | |||||
| 7.8 |
Notification Requirements | |||||
| 7.9 |
||||||
| 7.10 |
Qualify to Transact Business | |||||
| 7.11 |
Financial Reporting | |||||
| 7.12 |
Payment of Liabilities | |||||
| 7.13 |
ERISA | |||||
| 7.14 |
Environmental Matters | |||||
| 7.15 |
Intellectual Property | |||||
| 7.16 |
Solvency | |||||
| 7.17 |
||||||
| 7.18 |
[Reserved] | |||||
| 7.19 |
Anti-Money Laundering Laws and Anti-Corruption Laws | |||||
| 7.20 |
Formation of SubsidiariesFurther Assurances | |||||
| 7.21 |
Post-Closing Covenants | |||||
| 7.22 |
||||||
| 7.23 |
Residency for Dutch Tax Purposes | |||||
| 7.24 |
Fiscal Unity for Dutch Tax Purposes | |||||
| 7.25 |
Allocation of Tax Losses upon Termination of Fiscal Unity for Dutch Tax Purposes | |||||
| ARTICLE VIII. NEGATIVE COVENANTS | ||||||
| 8.1 |
Indebtedness | |||||
| 8.2 |
[Reserved] | |||||
| 8.3 |
Entity Changes, Etc. | |||||
| 8.4 |
Change in Nature of Business | |||||
| 8.5 |
Sales, Etc. of Assets | |||||
| 8.6 |
Use of Proceeds | |||||
| 8.7 |
[Reserved] | |||||
| 8.8 |
Liens | |||||
| 8.9 |
Dividends, Redemptions, Distributions, Etc. | |||||
| 8.10 |
Investments | |||||
| 8.11 |
[Reserved] | |||||
| 8.12 |
Fiscal Year | |||||
| 8.13 |
||||||
| 8.14 |
[Reserved] | |||||
| 8.15 |
ERISA Compliance | |||||
| 8.16 |
||||||
| 8.17 |
Prepayments and Amendments | |||||
| 8.18 |
Lease Obligations | |||||
| 8.19 |
[Reserved] | |||||
| 8.20 |
[Reserved] | |||||
| 8.21 |
||||||
|
8.22 |
Negative Pledge | |||||
| 8.23 |
Affiliate Transactions | |||||
|
8.24 |
Collateral Located in Quebec. | 116 | ||||
| ARTICLE IX. FINANCIAL COVENANT(S) | ||||||
| 9.1 |
Maximum Net Leverage Ratio | |||||
| 9.2 |
Maximum Annual Capital Expenditures | |||||
| ARTICLE X. EVENTS OF DEFAULT |
||||||
| 10.1 |
Events of Default | |||||
| 10.2 |
Acceleration and Termination | |||||
| 10.3 |
Other Remedies | |||||
| 10.4 |
License for Use of Software and Other Intellectual Property | |||||
| 10.5 |
Post-Default Allocation of Payments | |||||
| 10.6 |
No Marshaling; Deficiencies; Remedies Cumulative | |||||
| 10.7 |
Waivers | |||||
| 10.8 |
Further Rights of Agent and the Lenders | |||||
| 10.9 |
Interest After Event of Default | |||||
| 10.10 |
Receiver | |||||
| 10.11 |
Rights and Remedies not Exclusive | |||||
| ARTICLE XI. THE AGENT |
||||||
| 11.1 |
Appointment of Agent | |||||
| 11.2 |
Nature of Duties of Agent | |||||
| 11.3 |
Lack of Reliance on Agent | |||||
| 11.4 |
Certain Rights of Agent | |||||
| 11.5 |
Reliance by Agent | |||||
| 11.6 |
Indemnification of Agent | |||||
| 11.7 |
Agent in Its Individual Capacity | |||||
| 11.8 |
Holders of Notes | |||||
| 11.9 |
Successor Agent | |||||
| 11.10 |
Collateral Matters | |||||
| 11.11 |
Actions with Respect to Defaults | |||||
| 11.12 |
Delivery of Information | |||||
| 11.13 |
English Law Governed Transaction Security | |||||
| ARTICLE XII. GENERAL PROVISIONS |
||||||
| 12.1 |
Notices | |||||
| 12.2 |
Delays; Partial Exercise of Remedies | |||||
| 12.3 |
Right of Setoff | |||||
| 12.4 |
Indemnification; Reimbursement of Expenses of Collection. | |||||
| 12.5 |
Amendments, Waivers and Consents | |||||
| 12.6 |
Nonliability of Agent and Lenders | |||||
| 12.7 |
Assignments and Participations | |||||
| 12.8 |
Counterparts; Facsimile Signatures | |||||
| 12.9 |
Severability | |||||
| 12.10 |
Maximum Rate | |||||
| 12.11 |
[Reserved] | |||||
| 12.12 |
Entire Agreement; Successors and Assigns; Interpretation | |||||
| 12.13 |
LIMITATION OF LIABILITY | |||||
| 12.14 |
GOVERNING LAW | |||||
| 12.15 |
SUBMISSION TO JURISDICTION | |||||
| 12.16 |
[RESERVED] | |||||
| 12.17 |
JURY TRIAL | |||||
| 12.18 |
Attorney | |||||
| 12.19 |
Agent Titles | |||||
| 12.20 |
Publicity | |||||
| 12.21 |
No Third Party Beneficiaries | |||||
| 12.22 |
Confidentiality | |||||
| 12.23 |
Patriot Act Notice, etc. | |||||
| 12.24 |
Advice of Counsel | |||||
| 12.25 |
Captions | |||||
| 12.26 |
Platform | |||||
| 12.27 |
Right to Cure | |||||
| 12.28 |
Acknowledgment and Consent to Bail-In of Affected Financial Institutions | |||||
| 12.29 |
Time | |||||
| 12.30 |
Keepwell | |||||
| 12.31 |
Sovereign Immunity | |||||
| 12.32 |
Tax Treatment | |||||
| Schedules |
||
| Schedule E-1 | Eligible Inventory | |
| Schedule E-2 | Existing Letters of Credit | |
| Schedule 3.4(a) | Commercial Tort Claims | |
| Schedule 6.1(a) | Loan Parties | |
| Schedule 6.1(b) | Locations of Collateral and Real Property | |
| Schedule 6.1(f) | Consents and Authorizations | |
| Schedule 6.1(g) | Ownership; Subsidiaries | |
| Schedule 6.1(p) | Judgments; Litigation | |
| Schedule 6.1(v) | ERISA Plans | |
| Schedule 6.1(w) | Intellectual Property | |
| Schedule 6.1(x) | Labor Contracts | |
| Schedule 6.1(ii) | Common Enterprise | |
| Schedule 6.1(nn) | Responsible Officers | |
| Schedule 7.21 | Post-Closing Covenants | |
| Schedule 8.1(b) | Existing Indebtedness | |
| Schedule 8.2 | Contingent Obligations | |
| Schedule 8.5 | Dispositions | |
| Schedule 8.8 | Existing Liens | |
| Schedule 8.23 | Affiliate Transactions of Loan Parties | |
| Annexes | ||
| Annex A | Lenders and Commitments | |
| Exhibits | ||
| Exhibit A | Note | |
| Exhibit B | Notice of Borrowing | |
| Exhibit C | Notice of Conversion | |
| Exhibit D | [Reserved] | |
| Exhibit E | Perfection Certificate | |
| Exhibit F | Financial Condition Certificate | |
| Exhibit G | Closing Certificate | |
| Exhibit H | Compliance Certificate | |
| Exhibit I | [Reserved] | |
| Exhibit J | Assignment and Acceptance | |
| Exhibits K-1 to K-4 | U.S. Tax Compliance Certificates | |
-i-
TERM LOAN CREDIT AGREEMENT
This CREDIT AGREEMENT, is entered into as of December 18, 2020, among (i) TEAM, INC., a Delaware corporation (the “Borrower”), (ii) each of the lenders identified as a “Lender” on Annex A attached hereto (together with each of its respective successors and assigns, if any, and any Additional Lenders, each a “Lender” and, collectively, the “Lenders”), and (iii) ATLANTIC PARK STRATEGIC CAPITAL FUND, L.P. (“Atlantic Park”), acting not individually but as agent on behalf of, and for the benefit of, the Lenders and all other Secured Parties (in such capacity, together with its successors and assigns, if any, in such capacity, herein called the “Agent”).
W I T N E S S E T H :
WHEREAS, upon the terms and subject to the conditions set forth herein, the Lenders are willing to make loans to the Borrower consisting, on the Closing Date, of a term loan in an amount of up to $250,000,000 and have requested that Atlantic Park act as Agent in connection with such credit extensions;
NOW, THEREFORE, in respect of the foregoing premises and other valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the Borrower, the Lenders, and the Agent, each intending to be legally bound, hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. Any terms (whether capitalized or lower case) used in this Agreement that are defined in the UCC (including Account, Account Debtor, Chattel Paper, Commercial Tort Claims, Deposit Account, Drafts, Documents, Equipment, Farm Products, Fixtures, General Intangibles, Inventory, Investment Property, Instruments, Promissory Notes, Proceeds, Securities Account and Supporting Obligations) shall be construed and defined as set forth in the UCC unless otherwise defined herein. In addition, as used herein, the following terms shall have the meanings herein specified (to be equally applicable to both the singular and plural forms of the terms defined):
“2017 Senior Convertible Notes” means the 5.00% Convertible Senior Notes due 2023 issued by the Borrower as of the Closing Date.
“ABL Agent” means Citibank, N.A., in its capacity as administrative agent and/or collateral agent for the lenders under the ABL Credit Agreement, or the administrative agent and/or collateral agent (or similar agent) under any other ABL Facility, and any successor thereto in any such capacity.
“ABL Credit Agreement” means that certain Credit Agreement, dated as of the date hereof, by and among the Borrower, the lenders party thereto from time to time and ABL Agent, as amended, restated, supplemented or otherwise modified (including increasing the amount loaned thereunder) or extended or refinanced from time to time in accordance with the Loan Documents.
“ABL Facility” means Indebtedness under (a) the ABL Credit Agreement and (b) any customary asset-based revolving credit facility that refunds, replaces (whether upon termination or otherwise) or refinances in whole or in part any Indebtedness under the ABL Credit Agreement from time to time; provided that any such Indebtedness is Incurred in accordance with Section 8.1.
“ABL Obligations” means all “ABL Debt Obligations” (as defined in the Intercreditor Agreement).
“ABL Loan Documents” means (a) the ABL Credit Agreement and (b) each of the other agreements, instruments and other documents with respect to the ABL Obligations, all as in effect on the date hereof or as may be amended, modified or supplemented from time to time in accordance with the Intercreditor Agreement.
“Acceptance Date” has the meaning specified in Section 12.7(b).
“Acquired Indebtedness” means Indebtedness of a Person whose assets or Equity Interests are acquired by a Loan Party or any of its Subsidiaries in a Permitted Acquisition; provided, that
(i) such Indebtedness (i) was in existence prior to the date of such Permitted Acquisition, and (ii) was not incurred in connection with, or in contemplation of, such Permitted Acquisition,
(ii) no Person (other than such Person so acquired in such Permitted Acquisition or any other Person that such Person merges with or that acquires the assets of such Person in connection with such Permitted Acquisition) shall have any liability or other obligation with respect to such Indebtedness and
(iii) if such Indebtedness is secured, no Lien thereon shall extend to or cover any other assets other than the assets acquired in such Permitted Acquisition (other than the proceeds or products thereof, accessions or additions thereto and improvements thereon) or attach to any other property of any Loan Party.
“Acquisition” means (i) the purchase or other acquisition by a Person or its Subsidiaries of all or substantially all of the assets of (or any division or business line of) any other Person, or (ii) the purchase or other acquisition (whether by means of a merger, consolidation, or otherwise) by a Person or its Subsidiaries of all of the Equity Interests of any other Person.
“Additional Lender” has the meaning specified in Section 2.16(b).
“Advance” means amounts advanced by the Lenders (or any of them, as applicable) to or for the benefit of Borrower pursuant to Section 2.1 hereof on the occasion of any borrowing and which are of the same initial Type, and “Advances” shall mean more than one Advance.
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“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, as to any Person, any other Person who directly or indirectly Controls, is under common Control with, is Controlled by or is a director, officer, manager or general partner of such Person, provided that, in any event, any Person who owns directly or indirectly 15% or more of the Voting Interests of a Person, shall be deemed to control such Person. Without limitation of the foregoing, the following Persons shall at all times constitute Affiliates of the Borrower: (i) the Borrower, (iii) each Guarantor and (iv) all Subsidiaries.
“Agent” has the meaning specified in the preamble to this Agreement.
“Agent Parties” has the meaning specified in Section 12.25(b).
“Agent’s Payment Account” means an account designated on the Closing Date and from time to time thereafter by Agent to the Lenders and Borrower as the “Agent’s Payment Account”.
“Agreement” means this Credit Agreement, as amended, amended and restated, supplemented or otherwise modified from time to time.
“AHYDO Catch-Up Payment” has the meaning specified in Section 2.5(c).
“AHYDO Catch-Up Payment Date” has the meaning specified in Section 2.5(c).
“All-In Yield” means, as to any Indebtedness, the annual yield thereof, whether in the form of interest rate margins, original issue discount (“OID”) or upfront fees and any LIBOR Index Rate floors (with such increased amount being equated to interest margins for purposes of determining any increase to the Applicable Margin); provided that, (i) OID and upfront fees shall be equated to interest rates assuming a four year life to maturity and (ii) “All-In Yield” shall not include arrangement fees, structuring fees, underwriting fees or similar fees that are not paid to all Lenders providing the relevant Indebtedness.
“ Amendment No. 1” means that certain Amendment No. 1 to Term Loan Credit Agreement, dated as of the Amendment No. 1 Effective Date, between the Borrower and the Lenders party thereto.
“Amendment No. 1 Effective Date” means October 19, 2021.
“Anti-Corruption Laws” means the United States Foreign Corrupt Practices Act of 1977, the U.K. Bribery Act of 2010, the Corruption of Foreign Public Officials Act (Canada), each as amended, and all other applicable laws and regulations or ordinances concerning or relating to bribery or corruption in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business.
3
“Anti-Money Laundering Laws” means the applicable statutes, laws, regulations, or rules in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto, including, but not limited to, the Bank Secrecy Act (31 U.S.C. § 5311 et seq.), the Patriot Act and the Proceeds of Crime Money Laundering and Terrorist Financing Act (Canada).
“Applicable Margin” means, (a) for LIBOR Loans, 7.50% and (b) for Base Rate Loans, 6.50%.
“Applicable Premium” means
(i) in connection with the occurrence of an Applicable Premium Trigger Event specified in clause (i), (iii), or (iv) of the definition thereof:
(A) during the period from and after the Closing Date up to and including the date that is the second anniversary of the Closing Date, an amount equal to the Make-Whole Amount;
(B) during the period after the second anniversary of the Closing Date up to and including the date that is the third anniversary of the Closing Date, an amount equal to 4.00% of (x) in connection with the occurrence of an Applicable Premium Trigger Event specified in clause (i) of the definition thereof, the aggregate principal amount of the Term Loans being paid on such date or (y) in connection with the occurrence of an Applicable Premium Trigger Event specified in clauses (iii) or (iv) of the definition thereof, the aggregate principal amount of the Term Loans outstanding on such date;
(C) during the period after the third anniversary of the Closing Date up to and including the date that is the fourth anniversary of the Closing Date, an amount equal to 2.00% of (x) in connection with the occurrence of an Applicable Premium Trigger Event specified in clause (i) of the definition thereof, the aggregate principal amount of the Term Loans being paid on such date or (y) in connection with the occurrence of an Applicable Premium Trigger Event specified in clauses (iii) or (iv) of the definition thereof, the aggregate principal amount of the Term Loans outstanding on such date; and
(D) thereafter, zero; and
(ii) in connection with the occurrence of a Corporate Change of Control Trigger Event:
(A) during the period from and after the Closing Date up to and including the date that is the first anniversary of the Closing Date, an amount equal to the Make-Whole Amount;
(B) during the period after the first anniversary of the Closing Date up to and including the date that is the second anniversary of the Closing Date, an amount equal to 6.00% of the aggregate principal amount of the Term Loans being paid on such date;
4
(C) during the period after second anniversary of the Closing Date up to and including the date that is the third anniversary of the Closing Date, an amount equal to 4.00% of the aggregate principal amount of the Term Loans being paid on such date;
(D) during the period after the third anniversary of the Closing Date up to and including the date that is the fourth anniversary of the Closing Date, an amount equal to 2.00% of the aggregate principal amount of the Term Loans being paid on such date; and
(E) thereafter, zero.
“Applicable Premium Trigger Event” means
(i) any payment by any Loan Party of all, or any part, of the principal balance of any Term Loan for any reason (including any optional prepayment or mandatory prepayment other than any prepayment made pursuant to Section 2.5(b)(i) but excluding a Corporate Change of Control) whether before or after (A) the occurrence of an Event of Default, (B) the commencement of any Insolvency Event, and notwithstanding any acceleration (for any reason) of the Obligations or (C) pursuant to Section 2.11 ;
(ii) any prepayment made substantially concurrently with a Corporate Change of Control (any such Applicable Premium Trigger Event pursuant to this clause (ii), a “Corporate Change of Control Trigger Event”);
(iii) the acceleration of the Obligations following an Event of Default, including acceleration in accordance with Section 10.2 , including as a result of the commencement of an Insolvency Event; or
(iv) the satisfaction, release, payment, restructuring, reorganization, replacement, reinstatement, defeasance or compromise of any of the Obligations in any Insolvency Event, foreclosure (whether by power of judicial proceeding or otherwise) or deed in lieu of foreclosure or the making of a distribution of any kind in any Insolvency Event to Agent, for the account of the Lenders in full or partial satisfaction of the Obligations.
“Asset Disposition” means any direct or indirect sale, lease (other than an operating lease entered into in the ordinary course of business), transfer, issuance or other disposition, or a series of related sales, leases, transfers, issuances or dispositions that are part of a common plan, of shares of Equity Interests of a Subsidiary (other than directors’ qualifying shares), property or other assets (each referred to for the purposes of this definition as a “disposition”) by the Borrower or any of its Subsidiaries, including any disposition by means of a merger, amalgamation, consolidation or similar transaction.
“Assignment and Acceptance” means an Assignment and Acceptance entered into by a Lender and its assignee, and accepted by Agent, to be substantially in the form of Exhibit J-1, or such other form as acceptable to Agent.
“Atlantic Park” has the meaning specified in the preamble to this Agreement.
5
“Auditors” means a nationally recognized firm of independent public accountants selected by Borrower and reasonably satisfactory to Agent.
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of an interest period pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is eliminated pursuant to Section 2.3(j) titled “Benchmark Replacement Setting.”
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority or UK Resolution Authority in respect of any liability of an Affected Financial Institution or any UK Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Bank Product” means any of the following products, services or facilities extended to any Loan Party or any of its Subsidiaries:
(i) Cash Management Services; and
(ii) products under Hedging Agreements for non-speculative purposes.
“Bank Product Obligations” means Indebtedness and other obligations of any Loan Party or any of its Subsidiaries arising from Bank Products.
“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as that title may be amended from time to time, or any successor statute.
“Base Rate” means, for any period, a fluctuating interest rate per annum at all times equal to the greatest of: (i) the Federal Funds Rate plus 0.50%, (ii) the Prime Rate, and (iii) the LIBOR Index Rate that would be payable on such day for a LIBOR Index Rate Loan with a one-month Interest Period plus 1.00% per annum. If, for any reason, Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable, after due inquiry, to ascertain LIBOR Index Rate, for any reason, including the inability or failure of Agent to obtain sufficient quotations in accordance with the terms hereof, the Base Rate shall be determined without regard to clause (iii) of the first sentence of this definition until the circumstances giving rise to such inability no longer exist. Any change in the Base Rate due to a change in the Prime Rate or LIBOR Index Rate shall be effective on the effective date of such change in the Prime Rate or LIBOR Index Rate, respectively, automatically and without notice to any Person. Notwithstanding anything in this Agreement to the contrary, if the Base Rate determined as provided above would be less than 2.00%, then the Base Rate shall be deemed to be 2.00%.
6
“Base Rate Advance” means an Advance that bears interest as provided in Section 4.1(a).
“Base Rate Loans” means Loans the rate of interest applicable to which is based upon the Base Rate.
“Benchmark” means, initially, USD LIBOR; provided that if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to USD LIBOR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2.3(j) titled “Benchmark Replacement Setting.”
“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Agent for the applicable Benchmark Replacement Date:
(i) the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment;
(ii) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment;
(iii) the sum of: (a) the alternate benchmark rate that has been selected by the Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (1) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (2) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S. dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment; provided that, in the case of clause (i), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by the Agent in its reasonable discretion.
If the Benchmark Replacement as determined pursuant to clause (i), (ii) or (iii) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then current Benchmark with an Unadjusted Benchmark Replacement for any applicable interest period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:
(i) for purposes of clauses (i) and (ii) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by the Agent: (a) the
7
spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for an applicable interest period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor; (b) the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such interest period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and
(ii) for purposes of clause (iii) of the definition of “Benchmark Replacement,” 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 Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (b) 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 such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar denominated syndicated credit facilities; provided that, in the case of clause (i) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Agent in its reasonable discretion.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “ABR,” the definition of “Business Day,” the applicable interest period, timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Agent in a manner substantially consistent with market practice (or, if the Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:
(i) in the case of clause (i) or (ii) 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 such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof);
8
(ii) in the case of clause (iii) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein; or
(iii) in the case of an Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, so long as the Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Required Lenders.
For the avoidance of doubt, (a) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (b) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (i) or (ii) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
(i) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(ii) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(iii) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.
9
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (i) or (ii) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.3(j) titled “Benchmark Replacement Setting” and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.3(j) titled “Benchmark Replacement Setting.”
“Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Borrower” has the meaning specified in the preamble to this Agreement.
“Borrowing” has the meaning specified in Section 2.3(a).
“Borrowing Date” means the date on which a Borrowing is obtained.
“Business Day” means any day other than a Saturday, a Sunday or any other day on which commercial banks in New York, New York are required or permitted by law to close. When used in connection with any LIBOR Rate Advance, a Business Day shall also exclude any day on which commercial banks are not open for dealings in Dollar deposits in the London interbank market.
“Business Plan” means a business plan of the Loan Parties and their Subsidiaries, consisting of consolidated projected balance sheets, related cash flow statements and related profit and loss statements, together with appropriate supporting details and a statement of the underlying assumptions, which (i) as of the Closing Date, covers a four-year period and (ii) for business plans delivered after the Closing Date, covers a one-year period, and, in each case, which is prepared on a monthly basis for the first year and a quarterly basis thereafter.
“Canadian Guarantor” means any Guarantor organized under Canadian law.
“Canadian Registered Pension Plan” means a pension plan subject to (i) the Pension Benefits Act (Ontario) or any other applicable provincial, territorial, or federal pension benefits standards legislation as amended from time to time and any successor statute or (ii) a “registered pension plan” as that term is defined in subsection 248(1) of the Tax Act.
“Canadian Security Agreement” means a guaranty and security agreement, dated as of even date with this Agreement, in form and substance reasonably satisfactory to Agent, executed and delivered by each of the Canadian Loan Parties to Agent.
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“Canadian Security Documents” means the Canadian Security Agreement, any share pledge agreement governed by Canadian law which provides for a Lien in favor of the Agent as security for any of the Obligations, and each other agreement, document or instrument executed by any Loan Party governed by Canadian law which provides for a Lien in favor of the Agent as security for any of the Obligations.
“Capital Expenditures” means, for any period of four consecutive fiscal quarters, for Borrower and its Subsidiaries on a consolidated basis, consolidated expenditures during such period that are required to be included in or are reflected by the consolidated property, plant, or equipment accounts of Borrower or any of its Subsidiaries, or any similar fixed asset or improvements, replacements, substitutions or additions thereto or therefor which have a useful life of more than one year, and shall include all payments in respect of Capitalized Lease Obligations and leasehold improvements, in each case on the balance sheet of Borrower and its Subsidiaries in conformity with GAAP.
“Capital Lease” means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.
“Capitalized Lease Obligations” means that portion of the obligations under a Capital Lease which, under GAAP, is or will be required to be capitalized on the books of the lessee, taken at the amount thereof accounted for as Indebtedness (net of Interest Expense) in accordance with GAAP.
“ Catch Up Interest Payment Date” means the date on which all interest originally scheduled to become due during the period commencing on October 18, 2021 and ending on October 28, 2021 (disregarding the proviso set forth in the defintion of “ Interest Payment Date” ) has been paid in full in cash and no interest payments on the Initial Term Loans are due and outstanding.
“Cash Equivalents” means
(i) securities issued, guaranteed or insured by the United States or any of its agencies with maturities of not more than one year from the date acquired;
(ii) certificates of deposit with maturities of not more than one year from the date acquired, issued by (a) a Lender or its Affiliates; (b) any U.S. federal or state chartered commercial bank of recognized standing which has capital and unimpaired surplus in excess of $500,000,000; or (c) any bank or its holding company that has a short-term commercial paper rating of at least A 1 or the equivalent by Standard & Poor’s Ratings Services or at least P 1 or the equivalent by Moody’s Investors Service, Inc.;
(iii) repurchase agreements and reverse repurchase agreements with terms of not more than thirty days from the date acquired, for securities of the type described in clause (i) above and entered into only with commercial banks having the qualifications described in clause (ii) above or such other financial institutions with a short-term commercial paper rating of at least A 1 or the equivalent by Standard & Poor’s Ratings Services or at least P 1 or the equivalent by Moody’s Investors Service, Inc.;
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(iv) commercial paper, other than commercial paper issued by Borrower or any of its Affiliates, issued by any Person incorporated under the laws of the United States or any state thereof and rated at least A 1 or the equivalent thereof by Standard & Poor’s Ratings Services or at least P 1 or the equivalent thereof by Moody’s Investors Service, Inc., in each case with maturities of not more than one year from the date acquired; and
(v) investments in money market funds registered under the Investment Company Act of 1940, which have net assets of at least $500,000,000 and at least eighty-five percent (85%) of whose assets consist of securities and other obligations of the type described in clauses (i) through (iv) above.
“Cash Management Services” means any one or more of the following types of services or facilities:
(i) credit cards, merchant card services, purchase or debit cards, including non-card e-payables services, or electronic funds transfer services,
(ii) treasury management services (including controlled disbursement, overdraft automatic clearing house fund transfer services, return items, and interstate depository network services) and
(iii) any other demand deposit or operating account relationships or other cash management services.
“Casualty Events” means any event (not constituting an Asset Disposition) occurring after the Closing Date that gives rise to the receipt by a Loan Party or any of its Subsidiaries of any casualty insurance proceeds (including business interruption insurance proceeds in excess of $5,000,000 in the aggregate) or condemnation awards in respect of any equipment, fixed assets or real property (including any improvements thereon) to replace or repair such equipment, fixed assets or real property.
“CFC” means a “controlled foreign corporation” within the meaning of Section 957 of the Code in which any Loan Party or direct or indirect owner of a Loan Party is a “United States shareholder” within the meaning of Section 951(b) of the Code; provided that, notwithstanding anything under any Loan Documents, none of the entities organized in the United Kingdom, Canada or the Netherlands (or successors thereto) shall be considered a CFC or a Foreign Subsidiary, be subject to any Section 956 Limitations, or be or become owned by any entity other than Loan Parties. For purposes of the foregoing, “Section 956 Limitation” means any exclusion or limitation on an entity providing guarantees, pledging its assets, engaging in any repayment or repatriation transaction or on the pledge of Equity Interests issued by any entity, in each case, as a result of such entity being considered a “controlled foreign corporation” under Section 957 of the Code or any adverse tax, cost or impact under Section 956 of the Code or any similar provision.
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“Change in Law” means the occurrence, after the date of this Agreement, of any of the following:
(i) the adoption or taking effect of any law, rule, regulation or treaty;
(ii) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority; or
(iii) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority;
provided that notwithstanding anything herein to the contrary,
(A) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith, and
(B) 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 that:
(i) any Person or two or more Persons acting in concert, shall have acquired beneficial ownership, directly or indirectly, of Equity Interests of the Borrower (or other securities convertible into such Equity Interests) representing 35% or more of the combined voting power of all Equity Interests of the Borrower entitled (without regard to the occurrence of any contingency) to vote for the election of members of the Governing Body of the Borrower,
(ii) Borrower fails to own and control, directly or indirectly, 100% of the Equity Interests of each other Loan Party except where such failure is as a result of a transaction permitted under the Loan Documents,
(iii) a change in control or similar event with respect to any Loan Party, as defined or described under any indenture or agreement in respect of Material Indebtedness to which any Loan Party is a party, shall have occurred or
(iv) sale of all or substantially all the assets of the Borrower and its Subsidiaries.
“Claims” has the meaning specified in Section 12.4(a).
“Closing Date” means the date of the making of the Initial Term Loans under this Agreement.
“Code” means the Internal Revenue Code of 1986, as in effect from time to time, and all regulations and guidelines promulgated thereunder.
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“Collateral” means all assets and interests in assets and proceeds thereof now owned or hereafter acquired by any Loan Party or its Subsidiaries in or upon which a Lien is granted by such Person in favor of Agent or the Lenders under any of the Loan Documents.
“Commitments” means, collectively, the Term Commitments and any other commitments that the Lenders may from time to time make to Borrowers pursuant hereto for the extension of any credit or other financial accommodation.
“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. Section 1 et seq.), as amended from time to time, and any successor statute, and all regulations and guidelines promulgated thereunder.
“Communications” has the meaning specified in Section 12.25(b).
“Compliance Certificate” has the meaning specified in Section 7.11(d).
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Consolidated Funded Indebtedness” means, as of any date of determination, for the Borrower and its Subsidiaries on a consolidated basis, the sum of
(i) the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations hereunder) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments, other than amounts owed pursuant to insurance premium financings,
(ii) all purchase money Indebtedness,
(iii) all direct obligations arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments,
(iv) all obligations in respect of the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business),
(v) Capitalized Leases Obligations,
(vi) all obligations to purchase, redeem, retire, defease or otherwise make any payment prior to the Termination Date in respect of any Equity Interests of such Person or any other Person or any warrant, right or option to acquire such Equity Interest, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends;
(vii) without duplication, all guarantees with respect to outstanding Indebtedness of the types specified in clauses (a) through (f) above of Persons other than the Borrower or any Subsidiary, and
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(viii) all Indebtedness of the types referred to in clauses (a) through (g) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which the Borrower or a Subsidiary is a general partner or joint venturer, unless such Indebtedness is expressly made non-recourse to the Borrower or such Subsidiary.
“Consolidated” means, when used with reference to financial statements or financial statement items of the Borrower and its Subsidiaries or any other Person, such statements or items on a consolidated basis in accordance with the consolidation principles of GAAP.
“Consolidated Tangible Assets” means, as of any date of determination, Consolidated total assets of the Borrower and its Subsidiaries as of that date, determined in accordance with GAAP minus the Intangible Assets of the Borrower and its Subsidiaries on that date.
“Contingent Acquisition Indebtedness” means a seller note, any earn-out obligation or similar deferred or contingent obligation of Borrower or any Subsidiary of a Borrower incurred or created in connection with hereunder; provided that all such obligations in an aggregate amount in excess of $2,000,000 shall be subordinated to the Obligations as to right and time of payment and as to other rights and remedies thereunder and having such subordination and other terms as are, in each case, satisfactory to Agent.
“Contribution Notice” means a contribution notice issued by the Pensions Regulator under section 38 or section 47 of the Pensions Act 2004.
“Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” shall have meanings correlative thereto.
“Convert,” “Conversion” and “Converted” each refers to conversion of Advances of one Type into Advances of another Type pursuant to Section 2.3(c).
“Copyright Security Agreement” means a copyright security agreement, in form and substance reasonably satisfactory to Agent, pursuant to which each Loan Party that has Copyrights shall grant a specific security interest as security for the Obligations, as amended, restated, supplemented or otherwise modified from time to time.
“Copyrights” means
(i) any and all copyright rights in any works subject to the copyright laws of the United States, Canada, the United Kingdom or the Netherlands or any other country or group of countries, whether as author, assignee, transferee or otherwise,
(ii) all registrations and applications for registration of any such copyright in the United States, Canada, the United Kingdom or the Netherlands or any other country or group of countries, including registrations, supplemental registrations and pending applications for registration in the United States Copyright Office and the right to obtain all renewals thereof, including those listed on Schedule 6.1(w);
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(iii) all income, royalties, damages and payments now and hereafter due or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past, present or future infringements thereof;
(iv) the right to sue for past, present, and future infringements thereof; and all rights corresponding thereto throughout the world.
“Corporate Acquiror” means a publicly traded company or any privately held company (including a company held by a financial sponsor), and shall not include a financial sponsor (other than via a bona fide extant portfolio company of a financial sponsor).
“Corporate Change of Control” means a Change of Control pursuant to clause (i) or (iv) of the definition thereof where the Person or Persons acquiring the beneficial ownership, directly or indirectly, of Equity Interests of the Borrower is a Corporate Acquiror or purchase of all or substantially all of the Equity Interests of the Borrower or all or substantially all of the assets of the Borrower and its Subsidiaries is Corporate Acquiror.
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided, that if the Agent decides that any such convention is not administratively feasible for the Agent, then the Agent may establish another convention in its reasonable discretion.
“Debtor Relief Laws” means the Bankruptcy Code, the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada), the Winding up and Restructuring Act (Canada), the debt and/or securities reorganization provisions of the Canada Business Corporations Act or the Business Corporations Act (Ontario), the Insolvency Act 1986 and all other liquidation, conservatorship, receivership, insolvency, reorganization or similar debtor relief laws of the United States or other any other comparable and applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
“Default” means any of the events specified in Section 10.1, which, with the giving of notice or lapse of time, or both, or the satisfaction of any other condition, would constitute an Event of Default.
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“Disqualified Institutions” means:
(i) (a) any Person that is a competitor of the Borrower or any of its Subsidiaries and identified by the Borrower in writing to the Agent on or prior to the Closing Date;
(b) any Person that is a competitor of the Borrower or any of its Subsidiaries and identified by the Borrower in writing to the Agent from time to time after the Closing Date; and
(c) together with any Affiliates of such competitors described in the foregoing clauses (a) and (b) that are reasonably identifiable as such on the basis of such Affiliate’s name or otherwise identified in writing by the Borrower to the Agent from time to time (other than any such Affiliate that is a bank, financial institution or fund (other than a Person described in clause (ii) below) that regularly invests in commercial loans or similar extensions of credit in the ordinary course of business and for which no personnel involved with the relevant competitor (1) make investment decisions or (2) have access to non-public information relating to the Borrower or any Person that forms part of the Borrower’s business (including its Subsidiaries)); or
(ii) certain banks, financial institutions, other institutional lenders and investors and other entities that are identified by the Borrower in writing to the Agent on or prior to the Closing Date, together with any Affiliates of such identified entities that are reasonably identifiable as such on the basis of such Affiliate’s name or otherwise identified in writing by the Borrower to the Agent from time to time.
provided that, notwithstanding anything herein to the contrary, no written notice shall apply retroactively to disqualify any Person that has previously acquired an assignment or participation interest in any Loans or entered into a trade for either of the foregoing; provided, further, notwithstanding anything herein to the contrary, (a) the Agent shall not be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions hereof relating to Disqualified Institutions and (b) the Borrowers (on behalf of themselves and the other Loan Parties) and the Lenders acknowledge and agree that the Agent shall have no responsibility or obligation to determine whether any Lender or potential Lender is a Disqualified Institution and that the Agent shall have no liability with respect to any assignment or participation made to a Disqualified Institution.
“Disqualified Equity Interests” means any Equity Interests that, by their terms (or by the terms of any security or other Equity Interests into which they are convertible or for which they are exchangeable), or upon the happening of any event or condition
(i) mature automatically or are mandatorily redeemable (other than solely for Equity Interests issued by Borrower (and not by one or more of its Subsidiaries) that are not Disqualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments),
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(ii) are redeemable at the option of the holder thereof (other than solely for Equity Interests issued by Borrower (and not by one or more of its Subsidiaries) that are not Disqualified Equity Interests), in whole or in part,
(iii) provide for the scheduled payments of dividends in cash that are payable without further action or decision of Borrower, or
(iv) are or become convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is 120 days after the Termination Date.
“Dollars” and the sign “$” means freely transferable lawful currency of the United States of America.
“Dutch Guarantor” means any Guarantor organized under Dutch law.
“Dutch Loan Party” means any Loan Party organized under Dutch law.
“Dutch Security Agreements” means the following Dutch law governed security agreements:
(i) the senior ranking security agreement among the Agent as pledgee and the Loan Parties party thereto as pledgors in relation to the Term Loan Priority Collateral; and
(ii) the junior ranking security agreement among the Agent as pledgee and the Loan Parties party thereto as pledgors in relation to the ABL Priority Collateral.
“Dutch Security Documents” means the Dutch Security Agreements, the Dutch Share Pledges, and each other agreement, document or instrument executed by any Loan Party governed by Dutch law which provides for a Lien in favor of the Agent as security for any of the Obligations.
“Dutch Share Pledges” means the following Dutch law governed notarial deeds of pledge of shares:
(i) the deed of pledge of shares among the Agent as pledgee, Team Industrial Services Europe B.V. as pledgor and Team Industrial Services Netherlands B.V. as company;
(ii) the deed of pledge of shares among the Agent as pledgee, Quest Integrity EU Holdings B.V. as pledgor and Quest Integrity NLD B.V. as company;
(iii) the deed of pledge of shares among the Agent as pledgee, Team Industrial Services Europe B.V. as pledgor and Threshold Inspection & Application Training Europe B.V. as company;
(iv) the deed of pledge of shares among the Agent as pledgee, Team Industrial Services Europe B.V. as pledgor and Quality Inspection Services B.V. as company;
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(v) the deed of pledge of shares among the Agent as pledgee, A&M Beheer B.V. as pledgor and Turbinate International B.V. as company;
(vi) the deed of pledge of shares among the Agent as pledgee, Team Industrial Services Europe B.V. as pledgor and Team Valve Repair Services B.V. as company;
(vii) the deed of pledge of shares among the Agent as pledgee, Quest Integrity EU Holdings B.V. as pledgor and A&M Beheer B.V. as company;
(viii) the deed of pledge of shares among the Agent as pledgee, Quest Integrity Group, LLC as pledgor and Quest Integrity EU Holdings, B.V. as company;
(ix) the deed of pledge of shares among the Agent as pledgee, Quest Integrity NLD B.V. as pledgor and P3 Pullen Polyurethane Products B.V. as company;
(x) the deed of pledge of shares among the Agent as pledgee, Team Industrial Services Netherlands B.V. as pledgor and Teaminc Europe B.V. as company;
(xi) the deed of pledge of shares among the Agent as pledgee, Team Industrial Services Europe B.V. as pledgor and Furmanite B.V. as company;
(xii) the deed of pledge of shares among the Agent as pledgee, Team Industrial Services International, Inc. as pledgor and Team Industrial Services Europe B.V. as company; and
(xiii) the deed of pledge of shares among the Agent as pledgee, Team Industrial Services Europe B.V. as pledgor and Furmanite Holding B.V. as company.
“Early Opt-in Election” means, if the then-current Benchmark is USD LIBOR, the occurrence of the following on or after December 31, 2020:
(i) a notification by the Agent to (or the request by the Borrower to the Agent to notify) each of the other parties hereto that at least five currently outstanding U.S. Dollar-denominated syndicated credit facilities in the U.S. syndicated loan market at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and
(ii) the joint election by the Agent and the Borrower to trigger a fallback from USD LIBOR and the provision by the Agent of written notice of such election to the Lenders.
“EBITDA” means, for any period, with respect to the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP, Net Income for such period,
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(i) plus in each case, to the extent deducted in determining Net Income for such period:
(A) the amount of depreciation and amortization of fixed and intangible assets during such period, plus
(B) all Interest Expense and all fees for the use of money or the availability of money, including commitment, facility and like fees and charges upon Indebtedness (including Indebtedness to Agent or Lenders) paid or payable during such period, without duplication, plus
(C) net Tax Expense paid or accrued during such period, without duplication, plus
(D) the amount of all stock based compensation during such period, plus
(E) the amount of all unusual or non-recurring charges or expenses during such period (not to exceed in the aggregate with clause (i)(L) below $10,000,000 for any such period without giving effect to this clause (i)(E) or clause (i)(L)), plus
(F) the amount of out-of-pocket expenses incurred during such period and prior to or 180 days after the Closing Date in connection with this Agreement, the Loan Documents, the ABL Loan Documents and the repurchase of the 2017 Senior Convertible Notes in an aggregate amount not to exceed $5,000,000, plus
(G) financing fees, financial and other advisory fees, accounting fees, legal fees (and similar advisory and consulting fees), and related costs and expenses incurred during such period by the Borrower or any Subsidiary in connection with Permitted Acquisitions and asset sales permitted by Section 8.5 (whether or not consummated) (not to exceed with respect to any such transaction, $2,500,000), plus
(H) any loss in connection with any disposition of assets during such period, plus
(I) non-cash adjustments during such period for currency exchanges in accordance with GAAP, plus
(J) non-cash losses from foreign exchange conversions and mark-to-market adjustments to foreign exchange hedge agreements (or other derivatives) during such period, plus
(K) the aggregate amount of all non-cash charges, expenses, fees or losses during such period, plus
(L) business optimization expenses and other restructuring charges or reserves (which, for the avoidance of doubt, shall include the effect of inventory optimization programs, facility, district, office or business unit closures, facility, district, office or business unit consolidations, retention, severance, systems establishment costs, contract termination costs, future lease commitments and excess pension charges) (not to exceed
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in the aggregate with clause (i)(E) above $10,000,000 for any such period without giving effect to this clause (i)(L) or clause (i)(E)).
(ii) less in each case, to the extent included in determining Net Income for such period:
(A) the amount of all non-recurring gains during such period, less
(B) any gain in connection with any disposition of assets, less
(C) non-cash positive adjustments for currency exchanges in accordance with GAAP, less
(D) non-cash gains from foreign exchange conversions and mark-to-market adjustments to foreign exchange hedge agreements (or other derivatives), less
(E) the aggregate amount of non-cash gains during such period.
Notwithstanding anything to the contrary contained herein, (1) EBITDA for the fiscal quarter ended on December 31, 2019 shall be deemed to be $22,915,000, (2) EBITDA for the fiscal quarter ended on March 31, 2020 shall be deemed to be ($3,599,000), (3) EBITDA for the fiscal quarter ended June 30, 2020 shall be deemed to be $13,461,000, (4) EBITDA for the fiscal quarter ended September 30, 2020 shall be deemed to be $19,163,000 and (5) EBITDA for the fiscal quarter ended on December 31, 2020 shall be deemed to be $22,000,000.
“EEA Financial Institution” means (i) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (ii) any entity established in an EEA Member Country which is a parent of an institution described in clause (i) of this definition, or (iii) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (i) or (ii) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Eligible Assignee” means any
(i) a Lender or any Affiliate thereof; or
(ii) any other Person;
provided, that
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(A) none of any owner of Equity Interests of a Loan Party, any Loan Party or any of their respective Affiliates shall qualify as an Eligible Assignee,
(B) a natural person shall not qualify as an Eligible Assignee,
(C) each Eligible Assignee under clauses (ii) hereof shall be reasonably acceptable to and subject to the consent of Agent (not to be unreasonably withheld),
(D) nothing herein shall restrict or require the consent of any Person to the pledge by any Lender of all or any portion of its rights and interests under this Agreement or any other Loan Document to any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System or U.S. Treasury Regulation 31 CFR 203.14, and such Federal Reserve Bank may enforce such pledge in any manner permitted by applicable law, and
(E) a Disqualified Institution shall not qualify as an Eligible Assignee.
“English Security Documents” means: (i) the English law governed debenture to be made between the UK Loan Parties as chargors and the Agent (the “English Debenture”); (ii) the English law governed share charge and subordinated debt assignment to be made between each Loan Party which is the holder of the shares in the UK Loan Parties (other than UK Loan Parties which are already party to the English Debenture as chargors) in favor of the Agent (the “English Share Charge”) and (iii) each other agreement, deed, instrument or document executed by any Loan Party governed by English law which provides for a Lien in favor of the Agent as security for any of the Obligations, in each case in form and substance satisfactory to the Agent.
“Entity” for each Loan Party (other than an individual), means its status, as applicable, as a corporation, limited liability company or limited partnership.
“Environment” means ambient air, indoor air, surface water (including potable waters, navigable waters and wetlands), groundwater, surface and subsurface strata, natural resources, wildlife, plant life, biota, and the work place or as otherwise defined in Environmental Laws.
“Environmental Action” means any summons, citation, notice of investigation or judicial or administrative proceeding, action, suit, abatement order or other order, judgment, decree or directive (conditional or otherwise) from any Governmental Authority, or any written notice of violation, complaint, claim, or other demand from any Person arising (i) pursuant to Environmental Laws, (ii) in connection with any actual or alleged violation of, or liability pursuant to, Environmental Laws, including any Permits issued pursuant to Environmental Laws, (iii) in connection with any Hazardous Materials, including the presence or Release of, or exposure to, any Hazardous Materials and any abatement, removal, remedial, corrective or other response action related to Hazardous Materials, or (iv) in connection with any actual or alleged damage, injury, threat or harm to health, safety or the Environment.
“Environmental Laws” means all federal, state, provincial and local statutes, laws (including common laws), rulings, regulations, ordinances, codes, legally binding and enforceable policies or guidelines or governmental, administrative or judicial directives, judgments, orders or interpretations of any of the foregoing now or hereafter in effect relating to pollution or protection of human health or the Environment including laws and regulations
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relating to emissions, discharges, Releases or threatened Releases of Hazardous Materials, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of or exposure to any Hazardous Materials, in each case as amended from time to time.
“Environmental Liabilities” means all liabilities, monetary obligations, losses, damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts, or consultants, and costs of investigation, feasibility study, removal, remediation or post remediation monitoring or action), fines, penalties, sanctions, and interest incurred as a result of any Environmental Action.
“Environmental Lien” means any Lien in favor of any Governmental Authority for Environmental Liabilities.
“Equity Interests” means (i) in the case of a corporation, its capital stock, (ii) in the case of a limited liability company, its membership interests, and (iii) in the case of a limited partnership, its general and limited partnership interests, including in each case, all of the following rights relating to such Equity Interests, whether arising under the Governing Documents of the Entity issuing such Equity Interests or under any applicable law of such Entity’s jurisdiction of organization or formation: (x) all economic rights (including all rights to receive dividends and distributions) relating to such Equity Interests; (y) all voting rights and rights to consent to any particular actions by the applicable issuer; and (z) all management rights with respect to such issuer, but, in each case, excluding any debt security convertible into, or exchangeable for, Equity Interests.
“ERISA” means the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1000 et seq., amendments thereto, successor statutes, and regulations or guidelines promulgated thereunder.
“ERISA Affiliate” means any entity that, together with a Loan Party is required to be treated as a single employer under Section 414(b), (c), (m) or (o) of the Code, or under Section 4001(a)(14) of ERISA. Any former ERISA Affiliate of any Loan Party shall continue to be considered an ERISA Affiliate of such Loan Party for purposes of this definition with respect to the period such entity was an ERISA Affiliate of such Loan Party and with respect to liabilities arising after such period for which such Loan Party would be liable under the Code or 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.
“Event of Default” means the occurrence of any of the events specified in Section 10.1.
“Excess” has the meaning specified in Section 2.16(d).
“Excess Availability” means “Excess Availability” (as defined in the ABL Credit Agreement).
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“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Excluded Property” means:
(i) Voting Interests of any CFC (other than a Protected CFC) held by any Loan Party, except to the extent that such Voting Interests represent no more than 65% of the Voting Interests and 100% of all other interests of a first tier CFC (other than a Protected CFC);
(ii) any
(x) rights or interest in any contract, lease, permit, license, franchise, charter, authorization or license agreement covering real or personal property of any Loan Party (including any governmental licenses or approvals and state or local franchises, charters and authorizations, to the extent a security interest in any such license, approval, franchises, charters, or authorizations are prohibited or restricted thereby) and
(y) equipment owned by any Loan Party that is subject to a purchase money lien or a capital lease obligation if (but only to the extent that and only for so long as such purchase money Indebtedness or capital lease restricts the granting of a Lien therein to Agent)
the grant of a security interest therein would constitute a violation of a valid and enforceable restriction in favor of a third party if under the terms of such contract, lease, permit, license, franchise, charter, authorization or license agreement, or applicable law with respect thereto, the grant of a security interest or lien therein is prohibited as a matter of law or under the terms of such contract, lease, permit, license, franchise, charter, authorization or license agreement and such prohibition or restriction has not been waived or the consent of the other party to such contract, lease, permit, license, franchise, charter, authorization or license agreement has not been obtained (provided, that
(A) the foregoing exclusions of this clause (ii) shall in no way be construed
(1) to apply to the extent that any described prohibition or restriction is ineffective under Section 9-406, 9-407, 9-408, or 9-409 of the UCC (or any successor provision or provisions) or other applicable law, or
(2) to apply to the extent that any consent or waiver has been obtained that would permit Agent’s security interest or lien to attach notwithstanding the prohibition or restriction on the pledge of such contract, lease, permit, license, franchise, charter, authorization or license agreement and
(B) the foregoing exclusions of clauses (i) and (ii) shall in no way be construed to limit, impair, or otherwise affect any of Agent’s or any Lender’s continuing security interests in and liens upon any rights or interests of any Loan Party in or to
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(1) monies due or to become due under or in connection with any described contract, lease, permit, license, franchise, charter, authorization, license agreement, or Equity Interests (including any Receivables or Equity Interests), or
(2) any proceeds from the sale, license, lease, or other dispositions of any such contract, lease, permit, license, franchise, charter, authorization, license agreement, or Equity Interests);
(iii) any United States intent-to-use Trademark applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use Trademark applications or any registrations issuing therefrom under applicable federal law; provided, that upon submission and acceptance by the United States Patent and Trademark Office of a statement of use or an amendment to allege use, such intent-to-use Trademark application shall be considered Collateral;
(iv) all leasehold Real Property interests;
(v) fee simple Real Property interests located outside of the United States (other than in the United Kingdom if perfected by means of a floating charge);
(vi) fee simple Real Property interests located in the United States having a fair market value (as determined in good faith by Borrower) less than $2,500,000 on a per-property basis, and any fee-owned Real Property that is subject to a Permitted Lien of the type described in clause (v)(B) of the definition thereof (to the extent the documents creating such Permitted Lien prohibits junior liens);
(vii) to the extent subject to certificates of title (or the local law equivalent), motor vehicles and other assets subject to certificates of title or any rolling stock;
(viii) [reserved];
(ix) [reserved];
(x) any demand deposit account, securities account, commodity account or other deposit account of any Loan Party that (A) is used solely and exclusively for payroll, payroll taxes, and other employee wage and benefit payments to or for any Loan Party’s employees or (B) held as cash collateral to secure Indebtedness permitted by Section 8.1(j)(ii) (but only to the extent that and only for so long as that the determination with respect to such Indebtedness restricts the granting of a Lien therein to Agent);
(xi) any asset in circumstances where the cost of obtaining a security interest therein, including the cost of title insurance, surveys or flood insurance (if necessary) would be excessive in light of the practical benefit to the Lenders afforded thereby as reasonably determined by the Agent; and
(xii) the last day of the term of any lease, sublease or agreement to sublease now held or subsequently acquired by any of the Loan Parties which is organized under the laws of Canada or any province or territory therein (it being understood and agreed that the Loan Parties shall stand possessed of such last day in trust for the assignment and disposal of it as the Agent may direct).
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“Excluded Swap Obligation” means any obligation of any Loan Party to pay or perform under any Swap Obligation if, and to the extent that, all or a portion of the guaranty of such Loan Party (including by virtue of the joint and several liability provisions of Section 12.11) 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 the Loan Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time such guaranty or the grant of such security interest becomes effective with respect to such Swap Obligation (after giving effect to Section 12.29). 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.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient,
(i) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (A) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (B) that are Other Connection Taxes,
(ii) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (A) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by Borrower under Section 2.11) or (B) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 4.11, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office,
(iii) Taxes attributable to such Recipient’s failure to comply with Section 4.11(g), and
(iv) any U.S. federal withholding Taxes imposed under FATCA.
“Existing Credit Agreement” means that certain Ninth Amendment to Third Amended and Restated Credit Agreement, dated as of June 17, 2020 (as amended, supplemented or otherwise modified from time to time prior to the date hereof), by and among the Borrower, the guarantors and lenders party thereto, and Bank of America, N.A., as administrative agent.
“FATCA” mean Sections 1471 and 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, and any agreements entered into pursuant to Section 1471(b)(1) of the Code, and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.
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“Federal Funds Rate” means, for any day, the fluctuating interest rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by Agent from three federal funds brokers of recognized standing selected by it, as determined in good faith by Agent.
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System or any Person succeeding to the functions thereof.
“Financial Covenant” means the covenant set forth in Article VIII.
“Financial Statements” means, with respect to the Borrower and its Subsidiaries, the consolidated balance sheets, consolidated profit and loss statements and statements of cash flow of the Borrower and its Subsidiaries for the period specified, prepared in accordance with GAAP and consistent with prior practices and, except in the case of annual audited Financial Statements, a comparison in reasonable detail to (i) the projected balance sheets, profit and loss statements and statements of cash flow set forth in the Business Plan for the same year-to-date and month periods and (ii) the balance sheets, profit and loss statements and statements of cash flow for the same year-to-date and month periods of the immediately preceding year.
“Financial Support Directions” means a financial support direction issued by the Pensions Regulator under section 43 of the Pensions Act 2004.
“Flood Hazard Property” means any Real Property with respect to which a Mortgage is granted that is in an area designated by the Federal Emergency Management Agency as having special flood or mudslide hazards.
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to USD LIBOR.
“Foreign Lender” means a Lender that is not a U.S. Person.
“Foreign Plan” has the meaning specified in Section 7.13.
“Foreign Subsidiary” means, subject to the proviso included in the definition of the term “CFC”, any direct or indirect subsidiary of any Loan Party that is organized under the laws of any jurisdiction other than the United States, any State thereof or the District of Columbia.
“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board that are applicable to the circumstances as of the date of determination.
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“Governing Body” means (i) in the case of a corporation (or a limited liability company incorporated in the United Kingdom), its board of directors and/or shareholders (as the case may be), (ii) in the case of a limited liability company, its managers or members, and (iii) in the case of a limited partnership, its general partner(s), or in each case, another comparable governing body of the applicable Entity.
“Governing Documents” means
(i) in the case of a corporation, its articles (or certificate) of incorporation and bylaws,
(ii) in the case of a limited liability company, its articles (or certificate) of organization (or formation) and its operating agreement,
(iii) in the case of a limited partnership, its articles (or certificate) of limited partnership and its limited partnership agreement, or in each case, another comparable governing document of the applicable Entity,
(iv) in the case of a limited liability company incorporated in the United Kingdom, its articles of association and memorandum (as the case may be) and its certificate of incorporation and any certificate of incorporation on a change of name, and
(v) in relation to any Dutch Loan Party in each case including its deed of incorporation (oprichtingsakte), articles of association (statuten) and an extract (uittreksel) from the commercial register (handelsregister) of the Dutch Chamber of Commerce (Kamer van Koophandel).
“Governmental Authority” means any nation or government, any state or other political subdivision thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions thereof or pertaining thereto.
“Guarantors” means the Borrower and each other Person that guarantees, in whole or in part, the Obligations on the Closing Date or at any time thereafter.
“Guaranty and Security Agreement” means a guaranty and security agreement, dated as of even date with this Agreement, in form and substance reasonably satisfactory to Agent, executed and delivered by each of the Loan Parties to Agent.
“Hazardous Materials” means any and all pollutants, contaminants and toxic, caustic, radioactive and hazardous materials, substances and wastes including petroleum or petroleum distillates, urea formaldehyde foam insulation, asbestos or asbestos-containing materials, whether or not friable, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature, that are regulated under any Environmental Laws.
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“Hedging Agreement” means any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging agreement. The term “Hedging Agreement,” as used herein, shall extend to and include any Swap Obligation.
“Highest Lawful Rate” has the meaning specified in Section 12.10.
“Historical Financials” has the meaning specified in Section 5.1(a)(xiii).
“Incremental Term Loans” has the meaning specified in Section 2.16(a).
“Indebtedness” means, with respect to any Person, as of the date of determination thereof (without duplication of the same obligation under any other clause hereof),
(i) all obligations of such Person for borrowed money of any kind or nature, including funded and unfunded debt,
(ii) all monetary obligations of such Person owing under Hedging Agreements (which amount shall be calculated based on the amount that would be payable by such Person if the Hedging Agreement were terminated on the date of determination),
(iii) all obligations of such Person to pay the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business and repayable in accordance with customary trade practices and, for the avoidance of doubt, other than royalty payments payable in the ordinary course of business in respect of non-exclusive licenses) and any earn-out or similar obligations,
(iv) all Capitalized Lease Obligations,
(v) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right to be secured) a Lien on any asset of such Person whether or not the Indebtedness is assumed by such Person,
(vi) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreements in the event of default are limited to repossession or sale of such property),
(vii) any Disqualified Equity Interests,
(viii) all obligations of such Person evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, or other financial products, and
(ix) any obligation of such Person guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of any other Person that constitutes Indebtedness under any of clauses (i) through (viii) above.
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For purposes of this definition, (A) the amount of any Indebtedness represented by a guaranty or other similar instrument shall be the lesser of the principal amount of the obligations guaranteed and still outstanding and the maximum amount for which the guaranteeing Person may be liable pursuant to the terms of the instrument embodying such Indebtedness, and (B) the amount of any Indebtedness which is limited or is non-recourse to a Person or for which recourse is limited to an identified asset shall be valued at the lesser of (1) if applicable, the limited amount of such obligations, and (2) if applicable, the fair market value of such assets securing such obligation.
“Indemnified Party” has the meaning specified in Section 12.4(a).
“Indemnified Taxes” means (i) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (ii) to the extent not otherwise described in clause (i), Other Taxes.
“Information” has the meaning specified in Section 12.21.
“Initial Term Loan” means a Loan made to the Borrower on the Closing Date pursuant to Section 2.01(a).
“Insolvency Event” means, with respect to any Person (other than any UK Loan Party in respect of clauses (ii), (iii) or (vi) below), the occurrence of any of the following:
(i) such Person shall be adjudicated insolvent or bankrupt, institutes or, in the case of a Canadian Guarantor, consents, to the institution of proceedings under any Debtor Relief Laws or shall generally fail to pay or admit in writing its inability to pay its debts as they become due,
(ii) such Person shall seek reorganization or the appointment of a receiver, interim receiver, receiver and manager, trustee, monitor custodian, administrator, administrative receiver, compulsory manager, liquidator or similar officer for it or a substantial portion of its property, assets or business or to effect a plan or other arrangement with its creditors,
(iii) such Person shall make a general assignment for the benefit of its creditors, or consent to or acquiesce in the appointment of a receiver, interim receiver, receiver and manager, trustee, monitor, custodian administrator, administrative receiver, compulsory manager, liquidator or similar officer for a substantial portion of its property, assets or business,
(iv) such Person shall file a voluntary petition under, or shall seek the entry of an order for relief under any Debtor Relief Laws,
(v) such Person shall take any corporate, limited liability company, partnership or similar act, as applicable, in furtherance of any of the foregoing, or
(vi) such Person, or a substantial portion of its property, assets or business, shall become the subject of an involuntary proceeding or petition for
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(A) its dissolution, the suspension of payments, a moratorium of any indebtedness, winding-up, administration, or reorganization (by way of voluntary arrangement scheme or arrangement or otherwise) or
(B) the appointment of a receiver, interim receiver, receiver and manager, trustee, monitor, custodian, liquidator, administrator for it or restructuring official (herstructureringsdeskundige) for all or any material part of its property and (I) such proceeding shall not be dismissed or stayed within sixty (60) days or (II) such receiver, interim receiver, receiver and manager, trustee, monitor, custodian, liquidator, administrator or restructuring official (herstructureringsdeskundige) shall be appointed; provided, however, that the Lenders shall have no obligation to make any Loans during the pendency of any sixty-(60) day period described in this definition, or
(C) any proceeding under any Debtor Relief Law relating to a Canadian Guarantor or any material part of its property is instituted and such proceeding shall not be dismissed or stayed within 60 (days); provided, however, that the Lenders shall have no obligation to make any Loans during the pendency of any sixty-(60) day period described in this definition.
and in respect of any UK Loan Parties, means any corporate action, legal proceedings or other procedure or step is taken in relation to: (1) the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganization (by way of voluntary arrangement, scheme of arrangement or otherwise) of that UK Loan Party; (2) by reason of actual or anticipated financial difficulties, a composition, compromise, assignment or arrangement with or for the benefit of any creditor of that UK Loan Party; (3) the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager or other similar officer in respect of that UK Loan Party or a substantial portion of its assets; or (4) enforcement of any Liens over a substantial portion of the assets of that UK Loan Party, or any procedure or step with analogous effect is taken in any jurisdiction and/or any expropriation, attachment, sequestration, distress or execution (or any process with analogous effect) affects a substantial portion of the assets of a UK Loan Party (the proceedings and procedures set out in clause (1) to (4) above being the “Insolvency Proceedings”; any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within fifteen (15) Business Days of commencement will not be deemed Insolvency Proceedings).
“Intangible Assets” means assets that are considered to be intangible assets under GAAP, including customer lists, goodwill, computer software, copyrights, trade names, trademarks, patents, franchises, licenses, unamortized deferred charges, unamortized debt discount and capitalized research and development costs.
“Intellectual Property” means any and all Patents, Copyrights, Trademarks, trade secrets, know-how, inventions (whether or not patentable), algorithms, software programs (including source code and object code), processes, product designs, industrial designs, blueprints, drawings, data, customer lists, URLs and domain names, specifications, documentations, reports, catalogs, literature, and any other forms of technology or proprietary information of any kind, including all rights therein and all applications for registration or registrations thereof.
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“Intercompany Subordination Agreement” means an intercompany subordination agreement, dated as of even date with this Agreement, in form and substance satisfactory to Agent, executed and delivered by each Loan Party and each of its Subsidiaries, and Agent, as amended, restated, supplemented or otherwise modified from time to time.
“Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of even date with this Agreement, between Agent and ABL Agent.
“Interest Expense” means, for any period, all interest with respect to Indebtedness (including the interest component of Capitalized Lease Obligations) accrued or capitalized during such period (whether or not actually paid during such period) determined in accordance with GAAP.
“Interest Payment Date” means
(i) with respect to any Base Rate Advance, the first Business Day of each calendar month during any period in which such Advance is outstanding,
(ii) with respect to any LIBOR Rate Advance, the last day of the Interest Period applicable to the Borrowing of which such
Advance is a part and, in the case of a LIBOR Rate Advance with an Interest Period of more than three (3) months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three (3) months’
duration after the first day of such Interest Period and
; provided
that any Interest Payment Date with respect to any LIBOR Rate Advance that is scheduled to
occur in accordance with this clause (ii) during the period commencing on October 18, 2021 and ending on
October 28, 2021 shall instead be deemed to occur on October 29, 2021; and
(iii) with respect to any Loans, the Termination Date or such earlier date on which the Commitments are terminated.
“Interest Period” means the period commencing on the date of a LIBOR Rate Advance and ending one (1), two (2), three (3) or six (6) months thereafter (or, if available to all of the Lenders, twelve months or any shorter period in the Agent’s discretion), as selected by Borrower; provided, however, that
(i) Borrower may not select any Interest Period that ends after the Termination Date;
(ii) whenever the last day of an Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, except that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, then the last day of such Interest Period shall occur on the next preceding Business Day; and
(iii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.
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“Interests” has the meaning specified in Section 8.9.
“Internal Revenue Service” or “IRS” means the United States Internal Revenue Service and any successor agency.
“Investment” in any Person means, as of the date of determination,
(i) any payment or contribution in or to such Person including property contributed to such Person for or in connection with its acquisition of any stock, bonds, notes, indebtedness, debentures, partnership or other ownership interest or any other security of such Person,
(ii) any payment or contribution for all or substantially all of the assets of such Person (or of any division or business line of such other Person) and
(iii) any loan, advance or other extension of credit or guaranty of or other surety obligation for any Indebtedness made to, or for the benefit of, such Person.
In determining the aggregate amount of Investments outstanding at any particular time,
(A) a guaranty (or other surety obligation) shall be valued at not less than the principal outstanding amount of the primary obligation;
(B) returns of capital (but only by repurchase, redemption, retirement, repayment, liquidating dividend or liquidating distribution) shall be deducted;
(C) earnings, whether as dividends, interest or otherwise, shall not be deducted; and
(D) decreases in the market value shall not be deducted unless such decreases are computed in accordance with GAAP.
For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.
“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
“Joinder” means a joinder agreement substantially in the form of Exhibit J-2 to this Agreement.
“Lender” and “Lenders” have the respective meanings specified in the preamble to this Agreement.
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“Lender Group Expenses” means all
(i) [reserved],
(ii) reasonable and documented out-of-pocket fees or charges paid or incurred by Agent in connection with transactions under any of the Loan Documents,
(iii) Agent’s customary fees and charges imposed or incurred in connection with any background checks or OFAC/PEP searches related to any Loan Party or its Subsidiaries performed in connection with the transactions contemplated under the Loan Documents,
(iv) [reserved],
(v) reasonable and documented out-of-pocket costs and expenses paid or incurred by
Agent and the Lenders, or any of them, to correct any default or enforce any provision of the Loan Documents,
(vi) [reserved],
(vii) Agent’s and the Lenders’ reasonable and documented costs and expenses (including reasonable attorneys’ fees and expenses) relative to third party claims or any other lawsuit or adverse proceeding paid or incurred, whether in enforcing or defending the Loan Documents or otherwise in connection with the transactions contemplated by the Loan Documents, Agent’s Liens in and to the Collateral, or the relationship of Agent and the Lenders, or any of them, with any Loan Party or any of its Subsidiaries,
(viii) Agent’s reasonable and documented costs and expenses (including reasonable attorneys’ fees for one primary counsel for the Agent, and, if reasonably necessary, one local counsel and one regulatory counsel in each relevant jurisdiction and due diligence expenses) incurred in advising, drafting, reviewing, administering, or amending, waiving, or modifying the Loan Documents, and
(ix) Agent’s and each Lender’s reasonable and documented costs and expenses (including attorneys, accountants, consultants, and other advisors fees and expenses) incurred in terminating, enforcing (including attorneys, accountants, consultants, and other advisors fees and expenses) incurred in connection with a “workout,” a “restructuring,” or an Insolvency Event concerning any Loan Party or any of its Subsidiaries or in exercising rights or remedies under the Loan Documents or, after the Amendment No. 1 Effective Date, in connection with Amendment No. 1 or otherwise.
“LIBOR Index Rate” means a rate per annum equal to (a) the London interbank offered rate as administered by the ICE Benchmark Administration Limited (or any other Person that takes over the administration of such rate) as displayed on the applicable Bloomberg screen page that displays such rate at 11:00 a.m. (London time), two (2) Business Days prior to the commencement of such Interest Period, for deposits in Dollars (for delivery on the first day of such Interest Period) and with a term equivalent to such Interest Period, or (b) in the event the rate referenced in the preceding clause (a) is not available, the rate per annum (rounded upwards to the nearest 1/100 of 1%) equal to the offered quotation rate by major banks in the London
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interbank market quoted to the Agent for deposits in Dollars (for delivery on the Interest Rate Determination Date), with a term equivalent to such Interest Period and in amounts in same day funds comparable to the principal amount of the applicable Loan for which the LIBOR Index Rate is then being determined as of approximately 11:00 a.m. (London, England time) two Business Days commencement of such Interest Period; provided, that, if any LIBOR Index Rate as determined pursuant to this definition shall be less than 1.00%, the LIBOR Index Rate shall be deemed to be 1.00% for purposes of this Agreement. If the Board of Governors of the Federal Reserve System (or any successor) imposes a LIBOR Reserve Percentage with respect to LIBOR deposits, then, the LIBOR Index Rate shall be the foregoing rate divided by 1 minus the LIBOR Reserve Percentage.
“LIBOR Loans” means Loans the rate of interest applicable to which is based upon the LIBOR Index Rate.
“LIBOR Rate Advance” means an Advance that bears interest as provided in Section 4.1(b).
“LIBOR Reserve Percentage” for any LIBOR Rate Advance, means the reserve percentage applicable during a one (1) month interest period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such interest period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to liabilities or assets consisting of or including Eurocurrency liabilities having a term equal to such interest period.
“Lien” means any lien, claim, charge, pledge, security interest, assignment, hypothecation, deed of trust, mortgage, lease, conditional sale, retention of title, attachment or other preferential arrangement having substantially the same economic effect as any of the foregoing, whether voluntary or imposed by law.
“Liquidity” means, at any time of determination, the sum of (a) unrestricted cash and Cash Equivalents of Borrower and its Subsidiaries at such time (including, for the avoidance of doubt, any cash or Cash Equivalents subject to a Lien in favor of the Agent for the benefit of the Secured Parties) and (b) Excess Availability.
“Loan Documents” means this Agreement, the Security Documents, the Intercompany Subordination Agreement, the Intercreditor Agreement and any other documents and instruments entered into, now or in the future, by any Loan Party or any of its Subsidiaries under or in connection with this Agreement, as each of the same may be amended, restated, supplemented or otherwise modified from time to time.
“Loan Party” means the Borrower and each Guarantor.
“Loans” means the loans and financial accommodations made by the Lenders hereunder or under this Agreement, including the Term Loans.
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“Make-Whole Amount” means, as of any date of determination, an amount equal to the present value, as determined in accordance with generally accepted financial practices at the date of such Applicable Premium Trigger Event, of
(i) the aggregate amount of interest which would have otherwise been payable on the principal amount of the Loans paid on such date (or in the
case of an Applicable Premium Trigger Event specified in clauses (ii), (iii), or (iv) or (v)
of the definition thereof, the principal amount of the Term Loans outstanding on such date) from the date of the occurrence of the Applicable Premium Trigger Event until the applicable Make-Whole End Date (calculated based upon using an interest
rate equal to (x) the LIBOR Index Rate for an Interest Period of three months in effect on the third Business Day prior to such Applicable Premium Trigger Event plus (y) the Applicable Margin for LIBOR Loans), plus
(ii) an amount equal to the Applicable Premium that would otherwise be payable, as if such Applicable Premium Trigger Event had occurred on the day after the applicable Make-Whole End Date
in each case, discounted to the date of such Applicable Premium Trigger Event on a quarterly basis assuming a 360-day year and actual days elapsed at a rate equal to the Treasury Rate plus 0.50%.
“Make-Whole End Date” means
(i) in the case of a Corporate Change of Control Trigger Event, the first anniversary of the Closing Date and
otherwise, the second anniversary of the Closing Date.
“Material Adverse Effect” means (i) a material adverse effect on the business, operations, results of operations, assets, liabilities, or financial condition of the Loan Parties, taken as a whole or (ii) the material impairment of (A) the Loan Parties’ ability to perform their payment or other material obligations under the Loan Documents to which they are a party or (B) the ability of Agent or the Lenders to enforce the Obligations or realize upon the Collateral, or (iii) a material adverse effect upon the enforceability or priority of Agent’s Liens with respect to all or a material portion of the Collateral other than any material impairment caused by any action or inaction of Agent.
“Material Contract” means any agreement or arrangement to which a Loan Party is party (other than the Loan Documents) (i) for which breach, termination, nonperformance or failure to renew could reasonably be expected to have a Material Adverse Effect; or (ii) that relates to Material Indebtedness.
“Material Indebtedness” means (a) the ABL Obligations and (b) any other Indebtedness (other than the Loans), or obligations in respect of one or more Hedging Agreements in an aggregate principal amount exceeding $12,500,000. For purposes of this definition, the “principal amount” of the obligations of any Loan Party in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Loan Party would be required to pay if such Hedging Agreement were terminated at such time.
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“Material Subsidiary” means, at any date of determination
(i) the Borrower; and
(ii) each Subsidiary of the Borrower that, as of the end of the most recently ended fiscal year for which Financial Statements are required to be delivered pursuant to Section 7.11, (A) owns at least 5.0% of the consolidated total assets of the Loan Parties and their Subsidiaries as of such date, (B) generated at least 5.0% of the consolidated revenues of the Loan Parties and their Subsidiaries during such fiscal year or (C) is part of any group comprising Subsidiaries of the Borrower that each would not have been a Material Subsidiary under clauses (A) or (B) but that, taken together, had revenues or total assets in excess of 7.5% of the consolidated revenues for any fiscal year or total assets as of such date, as applicable, of the Loan Parties and their Subsidiaries.
“Maturity Trigger Date” means the date that is 120 days prior to the maturity date of the 2017 Convertible Notes.
“Maximum Accrual” has the meaning specified in Section 2.5(c).
“Mortgage” means each mortgage, deed of trust or security deed between the applicable Loan Party and Agent, in form and substance reasonably satisfactory to Agent, relating to the Real Property covered thereby, as amended, restated, supplemented or otherwise modified from time to time.
“Mortgaged Property” means any owned Real Property listed on Schedule 7.21 and, thereafter, shall include each other Real Property with respect to which a Mortgage is granted, so long as such Real Property does not constitute Excluded Property.
“Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which Borrower or any ERISA Affiliate has contributed within the past six years or with respect to which Borrower or any ERISA Affiliate has any liability, whether fixed or contingent, excluding any Canadian Registered Pension Plan.
“Net Cash Proceeds” means
(i) with respect to any Asset Disposition by any Loan Party or any of its Subsidiaries, or any Casualty Event, the excess, if any, of
(A) the sum of cash and Cash Equivalents received in connection with such transaction (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over
(B) the sum of
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(I) the principal amount of any Indebtedness that is secured by the applicable asset and that is required to be repaid in connection with such transaction (other than Indebtedness under the Loan Documents),
(II) in respect of an Asset Sale, any bona fide direct costs incurred in connection with such Asset Disposition, including
(1) income or gains taxes payable by the seller as a result of any gain recognized in connection with such Asset Disposition,
(2) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Loans) that, in the case of a Loan Party, is secured by a Lien on the stock or assets in question and that is required to be repaid under the terms thereof as a result of such Asset Disposition,
(3) a reasonable reserve for any indemnification payments (fixed or contingent) attributable to seller’s indemnities and representations and warranties to purchaser in respect of such Asset Disposition undertaken by the Borrower or any of its Subsidiaries in connection with such Asset Disposition or for any other liabilities retained by the Borrower or any of its Subsidiaries associated with such Asset Disposition,
(4) bona fide selling fees, costs, commissions and expenses (including reasonable brokers’ fees or commissions, legal, accounting and other professional and transactional fees, transfer and similar taxes) and
(5) the Borrower’s good faith estimate of payments required to be made with respect to unassumed liabilities relating to the properties sold within 180 days of such Asset Disposition; provided that, to the extent such cash proceeds are not used to make payments in respect of such unassumed liabilities within 180 days of such Asset Disposition, such Cash proceeds shall constitute Net Cash Proceeds;
(III) in respect of a Casualty Event,
(1) any actual and reasonable costs incurred by the Borrower or any of its Subsidiaries in connection with the collection, adjustment or settlement of any claims of the Borrower or such Subsidiary in respect thereof, and
(2) any bona fide direct costs incurred in connection with any sale of such assets as a result of a taking or condemnation or otherwise, including income taxes paid or payable as a result of any gain recognized in connection therewith and the costs and expenses incurred in connection with the preparation of assets for transfer upon a taking or condemnation, and
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(ii) with respect to any Prohibited Debt Issuance, the excess of (i) the sum of the cash and Cash Equivalents received by the Borrower or any Material Subsidiary in connection with such issuance over (ii) reasonable underwriting discounts and commissions, and other reasonable and customary out-of-pocket expenses, incurred by the Borrower or such Subsidiary in connection therewith.
“Net Income” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, the net income of the Borrower and its Subsidiaries (excluding extraordinary gains and extraordinary losses) for that period, determined in accordance with GAAP.
“Net Leverage Ratio” means, as of any date of determination, for the Borrower and its Subsidiaries on a consolidated basis, the ratio of
(i) Consolidated Funded Indebtedness as of such date minus unrestricted cash of the Loan Parties in an aggregate amount up to $30,000,000 (provided such unrestricted cash is free and clear of all Liens other than the Liens securing the Obligations hereunder and the ABL Obligations or Liens arising in the ordinary course of business by virtue of rights of setoff or similar rights and remedies as to deposit accounts and such cash does not Collateralize (as defined in the ABL Credit Agreement as of the date hereof) any letters of credit or Bank Product Obligations) to
(ii) EBITDA for the period of four consecutive Fiscal Quarters ending on such date.
“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all or all affected Lenders in accordance with the terms of Section 12.7 and (ii) has been approved by the Required Lenders.
“Notice of Borrowing” has the meaning specified in Section 2.3(a).
“Notice of Conversion” has the meaning specified in Section 2.3(c).
“Obligations” means and includes all loans (including the Loans), advances, debts, liabilities, obligations, covenants and duties owing by the Loan Parties to Agent, the Lenders, or any of them, or any of their respective Affiliates, of any kind or nature, present or future, whether or not evidenced by any note, guaranty or other instrument, which may arise under, out of, or in connection with, this Agreement, the other Loan Documents (including the guaranty contained in the Guaranty and Security Agreement) or any other agreement executed in connection herewith or therewith. The term “Obligations” includes all interest, charges, Applicable Premium, Lender Group Expenses, commitment, facility, closing and collateral management fees, letter of credit fees, cash management and other fees, interest, charges, expenses, fees, attorneys’ fees and disbursements, and any other sum chargeable to any of the Loan Parties under this Agreement or the other Loan Documents (including, in each case, any such amounts accruing on or after an Insolvency Event, whether or not such amounts are allowed or allowable following such Insolvency Event). Notwithstanding the foregoing, the term “Obligations” shall not include any Excluded Swap Obligations.
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“OFAC” means the Office of Foreign Assets Control of the U.S. Department of Treasury.
“Operating Account” means a deposit account of Borrower that Borrower designates in writing to Agent on the Closing Date as Borrower’s “operating account” for purposes hereof in regard to the receipt and distribution of the proceeds any Borrowings, or such other deposit account of Borrower as Borrower may from time to time subsequent to the Closing Date so designate in writing to Agent as such account.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing, sales, value added or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.10 or Section 2.11).
“Participant” has the meaning specified in Section 12.7(f).
“Participant Register” has the meaning specified in Section 12.17.
“Patent Security Agreement” means a patent security agreement, in form and substance reasonably satisfactory to Agent, pursuant to which each Loan Party that has rights in any Patents shall grant a specific security interest in its Patents as security for the Obligations, as amended, restated, supplemented or otherwise modified from time to time.
“Patents” means patents and patent applications, including (i) all continuations, divisionals, continuations-in-part, re-examinations, reissues, and renewals thereof and improvements thereon, (ii) all income, royalties, damages and payments now and hereafter due or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past, present, or future infringements thereof, (iii) the right to sue for past, present, and future infringements thereof, and (iv) all rights corresponding thereto throughout the world.
“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title II of Pub. L. No. 107-56 (signed into law October 26, 2001).
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“Payment in Full” or “Paid in Full” (or words of similar import) means with respect to any Obligations,
(i) the payment or repayment in full in cash of all Obligations (other than contingent indemnification obligations as to which no claim has been asserted) and
(ii) all Commitments related to such Obligations have expired or been terminated.
“PBGC” means the Pension Benefit Guaranty Corporation and any Person succeeding to the functions thereof.
“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA (other than a Multiemployer Plan) which a Borrower or any ERISA Affiliate sponsors or maintains, under which a Borrower or any ERISA Affiliate has any liability, whether fixed or contingent, or to which it is making or is obligated to make contributions, or, in the case of a multiple employer plan (as described in Section 4063 or 4064(a) of ERISA), has made contributions at any time during the immediately preceding six (6) plan years. For the avoidance of doubt, any Canadian Registered Pension Plan shall not be considered a Pension Plan for purposes of this Agreement.
“Pensions Regulator” means the body corporate called the Pensions Regular established under part 1 of the Pensions Act 2004.
“Permits” means, in respect of any Person, all licenses, permits, franchises, consents, rights, privileges, certificates, authorizations, approvals, registrations and similar consents granted or issued by any Governmental Authority to which or by which such Person is bound.
“Permitted Acquisition” means any Acquisition so long as
(i) no Event of Default shall have occurred and be continuing or would result from the consummation of the proposed Acquisition and the proposed Acquisition is non-hostile,
(ii) the subject assets or Equity Interests are being acquired directly by a Loan Party and the applicable Loan Party shall have complied with Section 7.20,
(iii) Borrower has provided Agent with written notice of the proposed Acquisition at least ten (10) Business Days prior to the anticipated closing date of the proposed Acquisition and, not later than five (5) Business Days prior to the anticipated closing date of the proposed Acquisition, copies of the acquisition agreement and other material documents relative to the proposed Acquisition, and
(iv) with respect to any Acquisition with a purchase price over $20,000,000, Borrowers have provided Agent with their due diligence package relative to the proposed Acquisition, including forecasted balance sheets, profit and loss statements, and cash flow statements of the Person or assets to be acquired, all prepared on a basis consistent with such Person’s (or assets’) historical financial statements, together with appropriate supporting details and a statement of underlying assumptions for the one-year period following the date of the proposed Acquisition, on a month-to-month basis), in form (including as to scope) and containing underlying assumptions reasonably satisfactory to Agent, and
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(v) Permitted Acquisitions of entities that are not Loan Parties shall not exceed at any time an aggregate amount equal to $10,000,000.
“Permitted Hedging Agreement” means a Hedging Agreement made by a Loan Party or its Subsidiary in the ordinary course of its business in accordance with the reasonable requirements of its business, and not for speculative purposes, and in any such case, if the counterparty to such Permitted Hedging Agreement is not a Lender or an Affiliate of a Lender, such Permitted Hedging Agreement shall be unsecured (except for Permitted Liens of the type described in clause (xii) of the definition thereof).
“Permitted Intercompany Advances” means loans or advances made by
(i) a Loan Party to another Loan Party,
(ii) a Subsidiary of a Loan Party that is not a Loan Party to another Subsidiary of a Loan Party that is not a Loan Party,
(iii) a Subsidiary of a Loan Party that is not a Loan Party to a Loan Party, so long as the parties thereto are party to the Intercompany Subordination Agreement, and
(iv) , a Loan Party to a Subsidiary of a Loan Party that is not a Loan Party so long as the aggregate principal amount outstanding at any time of such advance (when combined with any Investment made pursuant to Sections 8.10(k)(ii) and (n)) does not exceed $20,000,000 at any time (and, prior to the Catch Up Interest Payment Date, solely in the ordinary course of business and consistent with past practices).
“Permitted Investments” has the meaning specified in Section 8.10.
“Permitted Liens” means the following:
(i) Liens created hereunder and by the Security Documents;
(ii) Liens securing Indebtedness permitted by Section 8.1(c); provided that (A) such Liens shall be created substantially simultaneously with the acquisition of such assets or within 90 days after the acquisition or the completion of the construction or improvements thereof, (B) such Liens do not at any time encumber any assets other than the assets financed by such Indebtedness, and (C) the principal amount of Indebtedness secured by any such Lien shall at no time exceed the cost of acquiring, constructing or improving such assets;
(iii) Liens on any property or asset of Borrower or its Subsidiaries existing on the Closing Date and set forth on Schedule 8.8 and any Lien granted as a replacement or substitute therefor; provided that any such replacement or substitute Lien (A) does not secure an aggregate principal amount of Indebtedness, if any, greater than that secured on the Closing Date and (B) does not encumber any property in any material manner other than the property that secured such original Indebtedness (or would have been required to secure such original Indebtedness pursuant to the terms thereof);
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(iv) Liens assumed by any Loan Party or its Subsidiaries in connection with a Permitted Acquisition that secure Acquired Indebtedness permitted under Section 8.1(i); provided that (A) such Lien is not created in contemplation of or in connection with such acquisition and (B) such Lien shall not apply to or cover any other asset or property other than assets or property so acquired;
(v) Liens for taxes, assessments and other governmental charges or levies not yet delinquent or that are being contested by a Borrower or the applicable Subsidiary in good faith by appropriate proceedings diligently conducted and for which adequate reserves are being maintained in accordance with GAAP;
(vi) Liens imposed by law, including landlord’s, carriers’, warehousemen’s. mechanics’, materialmen’s, repairmen’s, construction or other like Liens arising in the ordinary course of business securing obligations that are not overdue by more than thirty (30) days or that are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves are being maintained in accordance with GAAP;
(vii) deposits to secure the performance of bids, trade contracts (other than for Indebtedness), leases (other than Capitalized Lease Obligations), statutory obligations, surety and appeal bonds, performance and return of money bonds, bids, leases, government contracts, trade contracts, agreements with utilities, and other obligations of a like nature (including letters of credit in lieu of any such bonds or to support the issuance thereof) incurred by a Borrower or any of its Subsidiaries in the ordinary course of business, including those incurred to secure health, safety and environmental obligations in the ordinary course of business;
(viii) (a) zoning restrictions, easements, encroachments, licenses, restrictions or covenants on the use of any Real Property which do not materially impair either the use of such Real Property in the operation of the business of the applicable Borrower or its Subsidiaries or the value of such Real Property or (b) and any other permitted encumbrances described in the Mortgages;
(ix) rights of general application reserved to or vested in any Governmental Authority to control or regulate any Real Property, or to use any Real Property in a manner which does not materially impair the use of such Real Property for the purposes for which it is held by a Borrower or any of its Subsidiaries;
(x) any interest or title of a lessor or sublessor under any leases or subleases entered into by a Borrower or any of its Subsidiaries in the ordinary course of business;
(xi) (A) Liens on demand deposit account, securities account, commodity account or other deposit account of any Loan Party held as cash collateral to secure Indebtedness permitted by Section 8.1(j)(ii) and (B) rights of set-off, banker’s lien, netting agreements and other Liens arising by operation of law or by the terms of documents of banks or other financial institutions (including for the avoidance of doubt any general banking terms and conditions) in relation to the maintenance of administration of deposit accounts, securities accounts, cash management arrangements or in connection with the issuance of letters of credit, bank guarantees or other similar instruments and so long as such Liens do not secure borrowed money;
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(xii) Liens arising under the ABL Credit Agreement subject to the Intercreditor Agreement;
(xiii) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;
(xiv) Liens granted in the ordinary course of business on insurance policies and the proceeds thereof securing any financing of the premiums with respect thereto permitted under the terms of this Agreement;
(xv) Liens in favor of customs and revenue authorities arising as a matter of applicable law to secure payment of customs duties in connection with the importation of goods;
(xvi) Liens arising by reason of deposits with or giving of any form of security to any Governmental Authority as required by applicable law in the ordinary course of Borrower or any of its Subsidiaries as a condition to the transaction of any business or the exercise of any privilege or license;
(xvii) Liens arising from precautionary UCC or PPSA financing statements that do not secure Indebtedness;
(xviii) the reservations, limitations, provisos and conditions, if any, expressed in any original grant from the Crown of any real property or any interest therein or in any comparable grant in jurisdictions other than Canada;
(xix) applicable municipal and other governmental restrictions, including municipal by-laws and regulations, affecting the use of land or the nature of any structures which may be erected thereon;
(xx) Liens on any cash earnest money deposits made by the Borrower in connection with any letter of intent or purchase agreement with respect to a Permitted Acquisition; provided, that the aggregate amount of cash earnest money deposits and cash in any escrow accounts maintained in connection with Permitted Acquisitions shall not exceed $5,000,000 outstanding at any time;
(xxi) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods permitted hereunder entered into by the Borrower or its Subsidiaries in the ordinary course of business;
(xxii) [reserved];
(xxiii) Liens arising from judgments, writs or warrants of attachment or similar process in circumstances not constituting an Event of Default under Section 10.1(g);
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(xxiv) [reserved];
(xxv) [reserved];
(xxvi) Liens solely on the assets of Subsidiaries of the Borrower that are not organized under the laws of a Security Jurisdiction, in each case securing Indebtedness permitted by Section 8.1(p); and
(xxvii) other Liens, provided that (A) the value (determined as the lesser of cost or market value) of the property covered thereby does not exceed, as to any single item of property or all items of property in the aggregate, $2,500,000 and (B) the Liens incurred pursuant to this clause (xxvi) do not secure debt for borrowed money.
“Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, joint stock company, association, corporation, institution, entity, party or government (including any division, agency or department thereof) or any other legal entity, whether acting in an individual, fiduciary or other capacity, and, as applicable, the successors, heirs and assigns of each.
“Plan” means any employee benefit plan, other than a Canadian Registered Pension Plan, as defined in Section 3(3) of ERISA, maintained or contributed to by a Borrower or any ERISA Affiliate or with respect to which any of them may incur liability (whether fixed or contingent) even if such plan is not covered by ERISA pursuant to Section 4(b)(4) thereof.
“Platform” means Debt Domain, Intralinks, Syndtrak, DebtX or a substantially similar electronic transmission system.
“Pledged Interests” means all of each Loan Party’s right, title and interest in and to all of the Equity Interests now owned or hereafter acquired by such Loan Party, regardless of class or designation, and all substitutions therefor and replacements thereof, all proceeds thereof and all rights relating thereto, also including any certificates representing the Equity Interests, the right to receive any certificates representing any of the Equity Interests, all warrants, options, share appreciation rights and other rights, contractual or otherwise, in respect thereof and the right to receive all dividends, distributions of income, profits, surplus, or other compensation by way of income or liquidating distributions, in cash or in kind, and all cash, instruments, and other property from time to time received, receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of, or in exchange for any or all of the foregoing.
“Pledged Interests Addendum” means a Pledged Interests Addendum to the Guaranty and Security Agreement, in form and substance reasonably satisfactory to Agent.
“PPSA” means the Personal Property Security Act (Ontario), or any other applicable Canadian federal or provincial statute pertaining to the granting, perfecting, priority or making of security interests, liens, hypothecs on personal property, and any successor statutes, together with any regulations thereunder, in each case, as in effect from time to time, including, without limitation, the Civil Code of Quebec. References to sections of the PPSA shall be construed to also refer to any successor sections
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“Preliminary Business Plan” means a preliminary high-level business plan for the next fiscal year, which shall only consist of a consolidated profit and loss statement forecast.
“Prime Rate” means the rate of interest per annum publicly announced from time to time by The Wall Street Journal as the “Prime Rate” in the United States (or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Agent) or any similar release by the Federal Reserve Board (as determined by the Agent)); each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.
“Pro Rata Share” of any amount means, with respect to any Lender, a fraction (expressed as a percentage), the numerator of which is the aggregate amount of the outstanding Loans of such Lender and the denominator of which is the aggregate outstanding amount of the Loans of all of the Lenders. The initial Pro Rata Share of such Lender shall be as set forth opposite such Lender’s name on Annex A or in the Assignment and Acceptance pursuant to which such Lender becomes a party hereto, as applicable.
“Prohibited Debt Issuance” means the issuance by any Loan Party or any Subsidiary of any Indebtedness other than Indebtedness permitted under Section 7.1.
“Prohibited Transaction” has the meaning specified in Section 6.1(v)(v).
“Protected CFC” means any “controlled foreign corporation” within the meaning of Section 957 of the IRC all of whose United States shareholders as defined in Section 951(b) of the IRC are treated as domestic “C-corporations” for federal income tax purposes that are eligible for the deduction under Section 245A of the IRC with respect to dividends from such controlled foreign corporation and with respect to all income inclusions under Sections 951(a)(1)(B) and 956 of the IRC.
“Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Loan Party that has total assets exceeding Ten Million Dollars ($10,000,000) (or whatever greater or lesser sum as is then prescribed for such purposes under the Commodity Exchange Act) at the time that 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.
“Real Property” means any real property owned or leased by a Loan Party or any Subsidiary of a Loan Party.
“Receivables” means all present and future accounts, including, whether or not constituting “accounts”, any rights to payment for the sale or lease of goods or rendition of services.
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“Recipient” means (i) Agent or (ii) any Lender, as applicable.
“Recovery Plan” means: (i) the most recent recovery plan relating to the Furmanite International Limited Pension Plan agreed between Team Industrial Services (UK) Limited and the trustee of the Furmanite International Limited Pension Plan prior to the date of this Agreement (as amended or varied from time to time); and (ii) any recovery plan or schedule of contributions entered into between the trustee of the Furmanite International Limited Pension Plan and any employer (within the meaning set out in Section 318 of the Pensions Act 2004 and regulations made thereunder) under that Furmanite International Limited Pension Plan, in accordance with sections 226 and 227 of the Pensions Act 2004 that is additional to, or replaces and supersedes, the recovery plan referred to in clause (i).
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is USD LIBOR, 11:00 a.m. (London time) on the day that is two Business Days preceding the date of such setting, and (2) if such Benchmark is not USD LIBOR, the time determined by the Agent in its reasonable discretion.
“Refinancing Indebtedness” means refinancings, renewals, or extensions of Indebtedness so long as
(i) such refinancings, renewals, or extensions do not result in an increase in the principal amount of the Indebtedness so refinanced, renewed, or extended, other than by the amount of premiums paid thereon, the fees and expenses incurred in connection therewith, any accrued and unpaid interest and by the amount of unfunded commitments with respect thereto,
(ii) such refinancings, renewals, or extensions do not result in a shortening of the final stated maturity or the average weighted maturity (measured as of the refinancing, renewal, or extension) of the Indebtedness so refinanced, renewed, or extended, nor are they on terms or conditions that, taken as a whole, are materially adverse to the interests of the Lenders,
(iii) if the Indebtedness that is refinanced, renewed, or extended was subordinated in right of payment to the Obligations, then the terms and conditions of the refinancing, renewal, or extension must include subordination terms and conditions that are not less favorable to the Lenders as those that were applicable to the refinanced, renewed, or extended Indebtedness in any material respect,
(iv) the Indebtedness that is refinanced, renewed, or extended is not recourse to any Person that is liable on account of the Obligations other than those Persons which were obligated with respect to the Indebtedness that was refinanced, renewed, or extended,
(v) if the Indebtedness that is refinanced, renewed or extended was unsecured, such refinancing, renewal or extension shall be unsecured, and
(vi) if the Indebtedness that is refinanced, renewed, or extended was secured (A) such refinancing, renewal, or extension shall be secured by substantially the same or less collateral as secured such refinanced, renewed or extended Indebtedness on terms no less favorable to Agent or the Lenders and (B) the Liens securing such refinancing, renewal or extension shall not have a priority more senior than the Liens securing such Indebtedness that is refinanced, renewed or extended.
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“Register” has the meaning specified in Section 12.7(d).
“Release” means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching into the Environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing Hazardous Materials) and the migration through Environment, including movement through the air, soil, surface water or groundwater,
“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.
“Remedial Action” means all actions taken to (i) clean up, remove, remediate, treat, monitor, assess or evaluate Hazardous Materials in the environment, (ii) prevent or minimize a release or threatened release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public or employee health or welfare or the environment, (iii) restore or reclaim natural resources or the environment, (iv) perform any pre-remedial environmental-related studies, investigations, or post-remedial environmental-related operation and maintenance activities, or (v) conduct any other remedial actions with respect to Hazardous Materials required by Environmental Laws.
“Reportable Event” means any of the events described in Section 4043 of ERISA and the regulations issued thereunder other than a reportable event for which the thirty-day notice requirement to the PBGC has been waived.
“Required Lenders” means Lenders having more than 50% of the sum of all Loans outstanding.
“Requirement of Law” or “Requirements of Law” means (i) the Governing Documents, (ii) any law, treaty, rule, regulation, order or determination of an arbitrator, court or other Governmental Authority, or (iii) any franchise, license, lease, permit, certificate, authorization, qualification, easement, right of way, or other right or approval binding on a Loan Party or any of its property.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” means, with respect to
(i) any Loan Party other than a Dutch Loan Party, the chairman, president, chief executive officer, chief financial officer, chief operating officer, vice president, secretary, treasurer or any other individual designated in writing to Agent by an existing Responsible Officer of such Loan Party as an authorized signatory of any certificate or other document to be delivered hereunder; and
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(ii) a Dutch Loan Party, any director of that Dutch Loan Party authorized to represent that Dutch Loan Party or any other Person with express irrevocable authority to act on behalf of that Dutch Loan Party designated as such by the board of directors of that Dutch Loan Party.
“Restricted Payments” has the meaning specified in Section 8.9.
“Secured Parties” mean Agent and the Lenders.
“Securitization” has the meaning specified in Section 12.7(e).
“Security Documents” means this Agreement, the Guaranty and Security Agreement, any Copyright Security Agreement, any Patent Security Agreement, any Trademark Security Agreement, each Mortgage (if any), any Canadian Security Document, any English Security Document, any Dutch Security Document, and any other agreement delivered in connection herewith which grants or purports to grant a Lien in favor of Agent or any other Secured Party to secure all or any of the Obligations.
“Security Jurisdiction” shall mean each of England, Wales, the Netherlands, Canada, any province thereof, the United States, any State thereof or the District of Columbia, and any other jurisdiction which may be agreed to from time to time by the Borrower and the Agent.
“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“Solvent” means:
(i) when used with respect to any Person (other than a UK Loan Party), that as of the date as to which such Person’s solvency is to be measured:
(A) the fair saleable value of its assets is in excess of (A) the total amount of its liabilities (including contingent, subordinated, absolute, fixed, matured, unmatured, liquidated and unliquidated liabilities) and (B) the amount that will be required to pay the probable liability of such Person on its debts as such debts become absolute and matured;
(B) it has sufficient capital to conduct its business; and
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(C) it is able to meet its debts as they mature; and
(ii) in respect of any UK Loan Party, means:
(I) that Person: (A) is able or does not admit inability to pay its debts as they fall due; (B) is not deemed to, or is not declared to be unable to pay its debts under applicable law; (C) by reason of actual or anticipated financial difficulties, has not suspended or threatened making payments on any of its debts; or (D) by reason of actual or anticipated financial difficulties, has not commenced negotiations with one or more of its creditors (excluding any Lenders in their capacity as such) with a view to rescheduling any of its indebtedness; and/or (II) the value of that Person’s assets is not less than its liabilities (taking into account contingent and prospective liabilities); and/or (I) no moratorium has been declared in respect of any of that Person’s indebtedness (and the ending of a moratorium will not remedy any Event of Default so caused by that moratorium).
“Subordinated Debt” means any Indebtedness incurred by Loan Parties that by its terms is subordinated in right of payment to any of the Obligations pursuant to a Subordination Agreement.
“Subordination Agreement” means an agreement among the Agent, the applicable Borrower or Subsidiary of the Borrower and the holder of any Subordinated Debt, pursuant to which such Indebtedness is made subordinate in right of payment to Payment in Full of all Obligations on terms reasonably satisfactory to the Agent.
“Subsidiary” means, as to any Person, any Entity in which that Person directly or indirectly owns or controls more than 50% of the issued and outstanding Voting Interests of such Entity. Unless otherwise stated herein, any reference herein to a “Subsidiary” means a direct or indirect Subsidiary of Borrower.
“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.
“Tax” or “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other similar charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Tax Act” means the Income Tax Act (Canada), as amended from time to time.
“Tax Expense” shall mean, for any period, the tax expense (including federal, state, provincial, local, foreign, franchise, excise and foreign withholding taxes) of the Loan Parties and their Subsidiaries, including any penalties and interest relating to any tax examinations for such period, determined on a consolidated basis in accordance with GAAP.
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“Term Commitment” means the commitment of each Lender to make Term Loans, subject to the terms and conditions set forth herein, up to the maximum amount specified for such Lender on Annex A, as it may change from time to time pursuant to Section 2.16.
“Term Loan” means an Initial Term Loan or an Incremental Term Loan, as the context may require.
“Term Priority Collateral” has the meaning assigned to the term “Term Priority Collateral” in the Intercreditor Agreement.
“Term SOFR” means, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.
“Termination Date” means the earlier of (i) the Maturity Trigger Date unless (x) the outstanding principal amount of the 2017 Senior Convertible Notes is less than $50,000,000 on the Maturity Trigger Date or (y) the maturity date of the 2017 Senior Convertible Notes is extended past the date that is 91 days after the sixth (6th) anniversary of the Closing Date or (ii) the sixth (6th) anniversary of the Closing Date.
“Termination Event” means
(i) a Reportable Event with respect to any Pension Plan, any failure to make a required contribution to any Plan that could reasonably be expected to result in the imposition of a Lien, or the arising of a Lien with respect to a Pension Plan;
(ii) the withdrawal of a Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which it was a “substantial employer” (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as a withdrawal under Section 4062(e) of ERISA;
(iii) the provision of notice by the administrator of any Pension Plan of intent to terminate a Pension Plan in a distress termination (as described in Section 4041(c) of ERISA), or the imposition of liability on a Borrower or any ERISA Affiliate of liability under Section 4062(e) or 4069 of ERISA;
(iv) the institution by the PBGC of proceedings to terminate a Pension Plan under Section 4042 of ERISA;
(v) the occurrence of any event or condition that (A) constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, or (B) could reasonably be expected to result in the termination of a Multiemployer Plan pursuant to Section 4041A of ERISA;
(vi) the partial or complete withdrawal, within the meaning of Sections 4203 or 4205 of ERISA, of a Borrower or any ERISA Affiliate from a Multiemployer Plan;
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(vii) receipt by a Borrower or any ERISA Affiliate of notice that a Multiemployer Plan is “insolvent” or in “reorganization” within the meaning of Section 4245(b) or 4241of ERISA, is in “at-risk” status (as defined in Section 430(i)(4) of the Code or Section 303(i)(4) of ERISA), is in “critical and declining” status (within the meaning of Section 305 of ERISA), or has become subject to the limitations of Section 436 of the Code; or
(viii) the imposition of any liability under Title IV of ERISA, other than for premiums due but not delinquent, upon a Borrower or any ERISA Affiliate.
“Trademark Security Agreement” means a trademark security agreement, in form and substance reasonably satisfactory to Agent, pursuant to which each Loan Party that has rights in any Trademarks shall grant a specific security interest in its Trademarks as security for the Obligations, as amended, restated, supplemented or otherwise modified from time to time.
“Trademarks” means any and all trademarks, trade names, registered trademarks, trademark applications, service marks, registered service marks and service mark applications, including (i) all renewals thereof, (ii) all income, royalties, damages and payments now and hereafter due or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, (iii) the right to sue for past, present and future infringements and dilutions thereof, (iv) the goodwill symbolized by the foregoing or connected therewith, and (v) all rights corresponding thereto throughout the world.
“Transactions” means the execution and delivery of the Loan Documents to be entered into on the Closing Date and the funding of the Initial Term Loans on the Closing Date, together with each of the following transactions to be consummated in connection therewith:
(i) the repayment in full of the principal, accrued and unpaid interest, fees, premium, if any, and other amounts under the Existing Credit Agreement and the issuance of the Warrants;
(ii) the repurchase of certain 2017 Senior Convertible Notes substantially concurrently with the Closing Date; and
(iii) the payment of all fees, costs and expenses incurred in connection with the transactions described in the foregoing provisions of this definition.
“Treasury Rate” means, with respect to any prepayment, a rate per annum (computed on the basis of actual days elapsed over a year of 360 days) equal to the rate determined by the Agent on the date 3 Business Days prior to the date of such prepayment, to be the yield expressed as a rate listed in The Wall Street Journal for United States Treasury securities most nearly equal to the period from the date of such prepayment, repayment or date of required repayment to and including the applicable Make Whole End Date.
“Type” means a Base Rate Advance or a LIBOR Rate Advance.
“UCC” shall mean the Uniform Commercial Code as from time to time in effect in the State of New York; provided, however, that if by reason of mandatory provisions of law, the perfection or the effect of perfection or non-perfection of the security interest in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect on or after the date hereof in any other jurisdiction, then the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or availability of such remedy.
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“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Loan Party” means any Loan Party incorporated under the laws of England and Wales.
“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 applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“USD LIBOR” means the London interbank offered rate for U.S. Dollars.
“U.S. Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.
“U.S. Tax Compliance Certificate” has the meaning specified in Section 4.11(g)(ii)(B)(3).
“Voting Interests” means Equity Interests having ordinary voting power for the election of the Governing Body of such Person.
“Warrants” means that certain common stock purchase warrant, dated as of December 18, 2020, issued to APSC Holdco II, L.P., to purchase in the aggregate up to 3,582,949 shares of common stock, $0.01 par value per share, of the Borrower.
“Withholding Agent” means any Loan Party or Agent.
“Write-Down and Conversion Powers” means (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
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1.2 Accounting Terms and Determinations. Unless otherwise defined or specified herein, all accounting terms used in this Agreement shall be construed in accordance with GAAP, applied on a basis consistent in all material respects with the Financial Statements delivered to Agent on or before the Closing Date. All accounting determinations for purposes of determining compliance with the covenants contained herein shall be made in accordance with GAAP as in effect on the Closing Date and applied on a basis consistent in all material respects with the audited Financial Statements delivered to Agent on or before the Closing Date. The Financial Statements required to be delivered hereunder from and after the Closing Date, and all financial records, shall be maintained in accordance with GAAP. In the event that any Accounting Change (as defined below) occurs and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then upon the written request of Borrower or Agent (acting upon the request of the Required Lenders), Borrower, Agent and the Lenders will enter into good faith negotiations in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Change with the desired result that the criteria for evaluating Borrower’s financial condition will be the same after such Accounting Change as if such Accounting Change had not occurred; provided that provisions of this Agreement in effect on the date of such Accounting Change will be calculated as if no such Accounting Change had occurred until the effective date of such amendment effected in accordance with this Agreement. “Accounting Change” means (i) any change in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or (ii) any change in the application of GAAP by Borrower. Anything in this Agreement to the contrary notwithstanding, any obligations of a Person under a lease (whether existing now or entered into in the future) that is not (or would not be) required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP as in effect on December 31, 2018 shall not be treated as Capital Lease solely as a result of changes in the application of GAAP, in each case, after December 31, 2018. For purposes of calculating the Net Leverage Ratio as of any date, EBITDA shall be calculated on a pro forma basis (as certified by the Borrower to the Agent) assuming that all acquisitions made, and all dispositions completed, during the four consecutive fiscal quarters then most recently ended had been made on the first day of such period (but without any adjustment for projected cost savings or other synergies unless otherwise approved by the Agent).
1.3 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 jurisdiction’s laws): (a) 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 (b) 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.
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1.4 Other Terms; Headings. An Event of Default shall “continue” or be “continuing” unless and until such Event of Default has been cured or waived in writing by Agent and the Required Lenders (or all Lenders, as applicable). The headings and the Table of Contents are for convenience only and shall not affect the meaning or construction of any provision of this Agreement. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. The term “or” has, except where otherwise specifically indicated, the inclusive meaning represented by the phrase “and/or.” Unless the context requires otherwise
(i) any definition of or reference to any agreement, instrument or other document herein or in any other Loan Document shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein or in any other Loan Document),
(ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns,
(iii) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof,
(iv) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement,
(v) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights,
(vi) time of day means time of day New York, New York, except as otherwise expressly provided; and
(vii) the “discretion” of Agent, the Required Lenders or the Lenders means the sole and absolute discretion of such Person(s).
Any reference to any law will include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation means unless otherwise specified, such law or regulation as amended, modified or supplemented from time to time. All making of Loans and payments of Obligations shall be in Dollars and, unless the context otherwise requires, all determinations (including calculations of the Financial Covenants) made from time to time under the Loan Documents shall be made in light of the circumstances existing at such time. No provision of any Loan Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision. Whenever the phrase “to the knowledge of” or words of similar import are used in any Loan Documents, it means actual knowledge of a Responsible Officer of the applicable Loan Party or knowledge that such Responsible Officer would have obtained if he or she had engaged in good faith and diligent performance of his or her duties, including reasonably specific inquiries of employees or agents and a good faith attempt to ascertain the matter to which such phrase relates.
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1.5 Dutch Terms. In this Agreement, a reference to:a “board of directors” means a managing board (bestuur) when a Dutch Loan Party;
(b) a “director” means a managing director (bestuurder) when a Dutch Loan Party is concerned;
(c) a “lien” includes any mortgage (hypotheek), pledge (pandrecht), retention of title arrangement (eigendomsvoorbehoud), privilege (voorrecht), right of retention (recht van retentie), right to reclaim goods (recht van reclame), and, in general, any right in rem (beperkt recht), created for the purpose of granting security (goederenrechtelijk zekerheidsrecht) when a Dutch Loan Party is concerned;
(d) any “evidence of authorization” where applicable, includes:
(i) any action required to comply with the Works Councils Act of the Netherlands (Wet op de ondernemingsraden); and
(ii) obtaining an unconditional positive advice (advies) from the competent works council(s) if a positive advice is required pursuant to the Works Councils Act of the Netherlands (Wet op de ondernemingsraden);
(e) a “winding up”, “administration” or “dissolution” includes a bankruptcy (faillissement) or dissolution (ontbinding);
(f) a “moratorium” includes surseance van betaling and “a moratorium is declared” or “occurs” includes surseance verleend;
(g) any “action” taken in connection with insolvency proceedings includes a Dutch Loan Party having filed (i) a notice under section 36 of the Dutch Tax Collection Act (Invorderingswet 1990), or (ii) any notice under Section 60 of the Social Insurance Financing Act of the Netherlands (Wet Financiering Sociale Verzekeringen) in conjunction with Section 36 of the Dutch Tax Collection Act (Invorderingswet 1990);
(h) a “liquidator” includes a curator;
(i) an “administrator” includes a bewindvoerder;
(j) an “attachment” or any form thereof including “attached” includes a beslag;
(k) “gross negligence” means grove schuld;
(l) “willful misconduct” means opzet;
(m) “the Netherlands” means the European part of the Kingdom of The Netherlands and Dutch means in or of the Netherlands;
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(n) “works council” includes a works council (ondernemingsraad), central works council (centrale ondernemingsraad), group works council (groepsondernemingsraad), SE works council (SE-ondernemingsraad) and staff meeting (personeelsvergadering);
(o) “insolvency” includes a bankruptcy (faillissement) and moratorium (surseance van betaling); and
(p) a “Subsidiary” includes a dochtermaatschappij as defined in section 2:24a of the Dutch Civil Code (Burgerlijk Wetboek).
1.6 Quebec Matters. For purposes of any Collateral located in the Province of Québec or charged by the Security Documents governed by the laws of the Province of Québec and for all other purposes pursuant to which the interpretation or construction of a Loan Document may be subject to the laws of the Province of Québec or a court or tribunal exercising jurisdiction in the Province of Québec, (a) “personal property” shall be deemed to include “movable property”, (b) “real property” shall be deemed to include “immovable property”, (c) “tangible property” shall be deemed to include “corporeal property”, (d) “intangible property” shall be deemed to include “incorporeal property”, (e) “security interest” and “mortgage” shall be deemed to include a “hypothec”, (f) all references to filing, registering or recording shall be deemed to include publication under the Civil Code of Québec, (g) all references to “perfection” of or “perfected” Liens shall be deemed to include a reference to the “opposability” of such Liens to third parties, (h) any “right of offset”, “right of setoff” or similar expression shall be deemed to include a “right of compensation”, (i) “goods” shall be deemed to include “corporeal movable property” other than chattel paper, documents of title, instruments, money and securities, (j) an “agent” shall be deemed to include a “mandatary”, (k) “joint and several” shall be deemed to include “solidary”, (l) “gross negligence or willful misconduct” shall be deemed to be “intentional or gross fault” and (m) “beneficial ownership” shall be deemed to include “ownership on behalf of another as mandatory”.
ARTICLE II.
THE CREDIT FACILITIES
2.1 The Loans.
(a) Each Lender agrees (severally, not jointly or jointly and severally), subject to the terms and conditions of this Agreement, to make term loans (the “Initial Term Loans”) to Borrower, on the Closing Date, at Borrower’s request to Agent, in an amount not to exceed such Lender’s Term Commitment as of the Closing Date. All Term Commitments of the Closing Date shall automatically terminate on the Closing Date (whether or not drawn).
(b) [reserved].
(c) The Loans made by each Lender may, at the request of such Lender, be evidenced by a single promissory note payable to such Lender, substantially in the form of Exhibit A (as amended, restated, supplemented or otherwise modified from time to time, a “Note” and, collectively, the “Notes”), executed by Borrower and delivered to such Lender in a stated maximum principal amount equal to such Lender’s Loan.
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(d) Borrowers hereby promise to pay all of the Loans and all other Obligations in respect thereof (including principal, interest, fees, costs, and expenses payable under this Agreement and the other Loan Documents) in full on the Termination Date or, if earlier, on the date on which the Loans and the Obligations become due and payable pursuant to the terms of this Agreement. Once prepaid or repaid, Loans may not be reborrowed.
2.2 [Reserved].
2.3 Procedure for Borrowing; Notices of Borrowing; Notices of Conversion.
(a) Borrowing. Each borrowing of a Loan (each, a “Borrowing”) shall be made on notice, given not later than 1:00 p.m. (New York time) on the third Business Day prior to the date of the proposed Borrowing in the case of a LIBOR Rate Advance, and not later than 1:00 p.m. (New York time) one Business Day prior to the date of the proposed Borrowing in the case of a Base Rate Advance, by Borrower to Agent; provided that any Borrowing made on the Closing Date must be made as a Base Rate Advance unless Borrower shall have given the notice required for a LIBOR Rate Advance under Section 2.3(d) and provided an indemnity letter extending the benefits of Section 4.10 to Lenders in respect of such Borrowing. Each such notice of a Borrowing shall be in writing (by electronic transmission or otherwise as permitted hereunder), substantially in the form of Exhibit B (a “Notice of Borrowing”), specifying therein the requested (i) the date of such Borrowing, (ii) the Type of Advance comprising such Borrowing, (iii) if it is a LIBOR Rate Advance, the applicable Interest Period, (iv) the Borrower’s wire instructions, and (v) the aggregate principal amount of such Borrowing.
(b) [reserved].
(c) Conversions. Borrower may on any Business Day by giving a notice to Agent in writing (by electronic transmission or otherwise as permitted hereunder), substantially in the form of Exhibit C (a “Notice of Conversion”), and subject to the provisions of Section 2.3(d), convert the entire amount of or a portion of an Advance of one Type into an Advance of another Type; provided, however, that any Conversion of a LIBOR Rate Advance into a Base Rate Advance shall be made on, and only on, the last day of the Interest Period. Each such Notice of Conversion shall be given not later than 1:00 p.m. (New York time) one Business Day prior to the date of any proposed Conversion into a Base Rate Advance and on the third Business Day prior to the date of any proposed Conversion into a LIBOR Rate Advance. Subject to the restrictions specified above, each Notice of Conversion shall be in writing (by electronic transmission or otherwise as permitted hereunder), specifying (i) the requested date of such Conversion, (ii) the Type of Advance to be Converted, (iii) if a LIBOR Rate Advance the applicable Interest Period and (iv) the amount of such Advance to be Converted and whether such amount comprises part (or all) of the Term Loans. Each Conversion shall be in an aggregate amount not less than $2,000,000 or an integral multiple of $500,000 in excess thereof. If the Borrower fails to specify an Interest Period in its Notice of Conversion for a LIBOR Rate Advance, the Borrower will be deemed to have selected an Interest Period of one month. If the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made as, or converted to, Base Rate Advance, effective as of the last day of the Interest Period then in effect with respect to the applicable LIBOR Rate Advance.
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(d) Limitations on Use of LIBOR Index Rate. Anything in subsection (b) or (c) above to the contrary notwithstanding,
(i) if, at least one (1) Business Day before the date of any requested LIBOR Rate Advance, the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other Governmental Authority asserts that it is unlawful, for the Lenders or any of its Affiliates to perform its obligations hereunder to make a LIBOR Rate Advance or to fund or maintain a LIBOR Rate Advance hereunder (including in the case of a Conversion), Agent shall promptly give written notice of such circumstance to Borrower, and the right of Borrower to select a LIBOR Rate Advance for such Borrowing or any subsequent Borrowing (including a Conversion) shall be suspended until the circumstances causing such suspension no longer exist, and any Advance comprising such requested Borrowing (or Conversion) shall be a Base Rate Advance;
(ii) if Agent is unable to determine the LIBOR Index Rate for LIBOR Rate Advances comprising any requested Borrowing or Conversion, Agent shall promptly give written notice of such circumstance to Borrower, and the right of Borrower to select or maintain LIBOR Rate Advances for such Borrowing (or Conversion) or any subsequent Borrowing shall be suspended until Agent shall notify Borrower that the circumstances causing such suspension no longer exist, and any Advance comprising such Borrowing (or Conversion) shall be a Base Rate Advance;
(iii) if any Lender shall, at least one (1) Business Day before the date of any requested Borrowing of, or Conversion into, a LIBOR Index Rate Advance, notify Agent and Borrower that the LIBOR Index Rate for Advances comprising such Borrowing or Conversion will not adequately reflect the cost to such Lender of making or funding Advances for such Borrowing, the right of Borrower to select LIBOR Rate Advances shall be suspended until such Lender shall notify Agent and Borrower that the circumstances causing such suspension no longer exist, and any Advance comprising such Borrowing (or Conversion) shall be a Base Rate Advance;
(iv) there shall not be outstanding at any time more than eight (8) Borrowings which consist of LIBOR Rate Advances;
(v) each Borrowing which consists of LIBOR Rate Advances shall be in an amount equal to $2,000,000 or a whole multiple of $500,000 in excess thereof; and
(vi) if a Default or Event of Default has occurred and is continuing, no LIBOR Rate Advances may be borrowed or continued as such and no Base Rate Advance may be Converted into a LIBOR Rate Advance.
(e) Effect of Notice. Each Notice of Borrowing and each Notice of Conversion shall be irrevocable and binding on Borrower. Borrower agrees to indemnify Agent and the Lenders against any loss, cost or expense incurred by Agent or any Lender as a result of (i) default by Borrower in making a Borrowing of, Conversion into a LIBOR Rate Advance after Borrower has given notice requesting the same or (ii) default by Borrower in payment when due of the principal amount of or interest on any LIBOR Rate Advance, including any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by Agent or any Lender to fund such Advance.
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(f) Disbursements. Promptly after its receipt of a Notice of Borrowing under Section 2.3(a), Agent shall notify each Lender of the amount of its Pro Rata Share of the Term Commitment, and Agent shall elect, in its discretion, to have the terms of Section 2.3(g) apply to the requested Borrowings. In the case of a Borrowing, each Lender shall make the amount of its Loan available to the Agent in immediately available funds by wire transfer to the Agent’s Payment Account not later than 1:00 p.m., New York City time, on the Business Day specified in the applicable Notice of Borrowing. Upon receipt of all requested funds and satisfaction of the applicable conditions set forth in Section 5.1, the Agent shall make all funds so received available to the Borrower in like funds as received by the Agent by wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Agent by the Borrower.
(g) [Reserved].
(h) [Reserved].
(i) [Reserved].
(j) Benchmark Replacement Setting.
(i) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (i) or (ii) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (iii) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders.
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(ii) Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the 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 or any other Loan Document.
(iii) Notices; Standards for Decisions and Determinations. The Agent will promptly notify the Borrower and the Lenders of (A) any occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date, (B) the implementation of any Benchmark Replacement, (C) the effectiveness of any Benchmark Replacement Conforming Changes, (D) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (iv) below and (E) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section titled “Benchmark Replacement Setting,” 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 or any selection, 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 to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section titled “Benchmark Replacement Setting”.
(iv) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (A) if the then-current Benchmark is a term rate (including Term SOFR or USD LIBOR) and either (x) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Agent in its reasonable discretion or (y) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Agent may modify the interest period for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (B) if a tenor that was removed pursuant to clause (A) above either (x) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (y) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Agent may modify the interest period for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(v) Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a LIBOR Rate Advance of, conversion to or continuation of LIBOR 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 or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of Base Rate.
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(vi) Disclaimer. The Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to (A) the administration, submission or any other matter related to the London interbank offered rate or other rates in the definition of “Eurodollar Rate” or with respect to any alternative or successor rate thereto, or replacement rate thereof (including any Benchmark Replacement implemented hereunder), (B) the composition or characteristics of any such Benchmark Replacement, including whether it is similar to, or produces the same value or economic equivalence to USD LIBOR (or any other Benchmark) or have the same volume or liquidity as did USD LIBOR (or any other Benchmark), (C) any actions or use of its discretion or other decisions or determinations made with respect to any matters covered by this Section titled “Benchmark Replacement Setting” including whether or not a Benchmark Transition Event has occurred, the removal or lack thereof of unavailable or non-representative tenors, the implementation or lack thereof of any Benchmark Replacement Conforming Changes, the delivery or non-delivery of any notices required by clause (d) above or otherwise in accordance herewith, and (D) the effect of any of the foregoing provisions of this Section titled “Benchmark Replacement Setting”.
2.4 Application of Proceeds. The proceeds of the Loans shall be used by Borrower to refinance existing Indebtedness, for their general working capital purposes, for expenses incurred by Borrower in connection herewith and for other, general purposes consistent with the terms of this Agreement.
2.5 Mandatory Prepayments; Optional Prepayments.
(a) [Reserved].
(b) Mandatory Prepayments. The Borrower shall provide written notice to the Agent by 1:00 p.m. (New York time) one Business Day prior to any mandatory prepayment hereunder. In addition to any prepayment required in accordance with Section 10.2 as a result of an Event of Default hereunder, the Loans shall be subject to mandatory prepayment as follows:
(i) in an aggregate amount equal to 100% of the Net Cash Proceeds received by any Loan Party or any Subsidiary from all Asset Dispositions permitted by Section 8.5(l) or Casualty Events within three (3) Business Days of the receipt of such Net Cash Proceeds by such Person; provided, however, that so long as no Event of Default shall have occurred and be continuing, such Net Cash Proceeds shall not be required to be so applied at the election of the Borrower to the extent such Loan Party or such Subsidiary reinvests, within twelve (12) months of receipt of such Net Cash Proceeds, all or any portion of such Net Cash Proceeds in assets used in the business of the Loan Parties and their Subsidiaries; provided that if, prior to the expiration of such twelve (12) month period, the Borrower, directly or through its Subsidiaries, shall have entered into a binding agreement providing for such investment on or prior to the date that is six (6) months after the expiration of such twelve (12) month period, such twelve (12) month period shall be extended to an eighteen (18) month period; provided further,
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if such Net Cash Proceeds shall have not been so reinvested, such Net Cash Proceeds shall be immediately applied to prepay the Loans; provided further, that, notwithstanding the foregoing, no such prepayment shall be required if the aggregate Net Cash Proceeds received in any calendar year from Asset Dispositions and Casualty Events is less than $5,000,000 (which amount shall be increased by any unused portion of such $5,000,000 exclusion from the immediately preceding year),
(i) Immediately upon the receipt by the Borrower or any Material Subsidiary of the Net Cash Proceeds of any Prohibited Debt Issuance, in an aggregate amount equal to 100% of such Net Cash Proceeds.
(ii) the entire outstanding principal amount of the Loans, together with all accrued and unpaid interest thereon and all fees and Lender Group Expenses payable by Borrower hereunder, shall become due and payable on the Termination Date.
(c) Voluntary Prepayments.
(i) Borrower may, at any time and from time to time, prepay any tranche of the Loans, in whole or in part (subject, in the case of the Payment in Full of all the Loans, to the additional requirements of Section 4.7), upon at least one (1) Business Days’ irrevocable notice by Borrower to Agent by 1:00 p.m. (New York time) in the case of Base Rate Advances, and three (3) Business Days’ irrevocable notice by Borrower to Agent by 1:00 p.m. (New York time) in the case of LIBOR Rate Advances, specifying the date and amount of prepayment; provided that a notice of optional prepayment may state that such notice is conditioned upon the effectiveness of other credit facilities or the receipt of the proceeds from the incurrence of other Indebtedness or any other event, in which case such notice of prepayment may be revoked by the Borrower (by written notice to the Agent on or prior to the specified date) if such condition is not satisfied. If such notice is given, Borrower shall make such prepayment, and the payment amount specified in such notice shall be due and payable, on the date specified therein accompanied by the amount of accrued and unpaid interest thereon. Each such prepayment shall be paid to the Lenders in accordance with their respective Pro Rata Share in respect of the tranche of Loans being prepaid.
(ii) If the Borrower determines that the Loan is an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code, then, notwithstanding anything in this Agreement to the contrary, if at the end of any “accrual period” (as defined in Section 1272(a)(5) of the Code) ending after the fifth anniversary of the issue date of the Loans, the aggregate amount of accrued and unpaid interest and “original issue discount” (as defined in Section 1273(a)(1) of the Code) would, but for this Section 2.5(c), exceed an amount equal to the Loan’s “issue price” (as defined in Section 1273(b) and 1274(a) of the Code) multiplied by the Loan’s “yield to maturity” (as defined in Treasury Regulations Section 1.1272-1(b)(1)(i)) (such product, the “Maximum Accrual”), the Borrower shall redeem at each such applicable date (an “AHYDO Catch-Up Payment Date”), without premium or penalty, the amount of principal plus accrued and unpaid interest, if any, on the amount of principal to be redeemed, to, but excluding, the applicable AHYDO Catch-Up Payment Date, equal to all accrued and
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unpaid interest and original issue discount on the Loans as of the end of such accrual period in excess of an amount equal to the Maximum Accrual (the “AHYDO Catch-Up Payment”), and such AHYDO Catch-Up Payment shall be treated for purposes of Section 163(i) of the Code as interest paid under the Loan. For the avoidance of doubt, there shall be no prepayments under this paragraph on or prior to the fifth anniversary of the date of this Agreement.
(d) Application of Prepayments. Each prepayment made pursuant to Section 2.5 shall be accompanied by the payment of accrued and unpaid interest to the date of such payment on the amount prepaid and, in the case of any prepayment made pursuant to Section 2.5(b)(ii) or Section 2.5(c) shall be accompanied by the Applicable Premium, if any, payable in connection with such prepayment of the Loans. Each such prepayment shall be applied against the remaining installments of principal due on the Term Loan in the inverse order of maturity.
2.6 [Reserved].
2.7 [Reserved].
2.8 Term. The term of this Agreement shall be for a period from the Closing Date through and including the Termination Date. Notwithstanding the foregoing, Borrower shall have no right to terminate this Agreement at any time that any principal of or interest on any of the Loans is outstanding, except upon Payment in Full of all Obligations.
2.9 Payment Procedures.
(a) [Reserved].
(b) Time of Payment. Each payment by Borrower on account of principal, interest, fees or Lender Group Expenses hereunder shall be made to Agent. All payments to be made by Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff, deduction or counterclaim and shall be made prior to 1:00 p.m. (New York time) on the due date thereof to Agent, for the account of the Lenders according to their Pro Rata Shares (except as expressly otherwise provided), at Agent’s Payment Account in immediately available funds. All payments received by the Agent after 1:00 p.m. (New York City time), may, in the Agent’s discretion, be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. Except for payments which are expressly provided to be made for the account of Agent only, Agent shall promptly distribute all payments to the Lenders following receipt in like funds as received. Notwithstanding anything to the contrary contained in this Agreement, if a Lender or any of its Affiliates exercises its right of setoff under Section 12.3 or otherwise, any amounts so recovered shall promptly be shared by such Lender with the other Lenders according to their respective Pro Rata Shares.
(c) Next Business Day. Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, the payment may be made on the next succeeding Business Day (with respect to the Interest Period rules) and such extension of time shall be included in the computation of the amount of interest due hereunder.
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(d) Application. Subject to Section 10.5, Agent shall have the continuing and exclusive right, if an Event of Default exists, to apply or reverse and re-apply any payment and any and all proceeds of Collateral to any portion of the Obligations. To the extent that any Borrower makes a payment or Agent receives any payment or proceeds of the Collateral for any Borrower’s benefit, which is subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver, custodian or any other party under any bankruptcy law, common law or equitable cause, then, to such extent, the Obligations or part thereof intended to be satisfied shall be revived and continue as if such payment or proceeds had not been received by Agent.
2.10 Designation of a Different Lending Office. If any Lender requests compensation under Section 4.10, or requires any Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 4.11, then such Lender (at the request of Borrower) shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 4.10 or Section 4.11, as the case may be, in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
2.11 Replacement of Lenders. If any Lender requests compensation under Section 4.10, or if any Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 4.11 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 2.10, or if any Lender is a Non-Consenting Lender, then Borrower may, at their sole expense and effort, upon notice by Borrower to such Lender and Agent, require such Lender to assign and delegate (and such Lender agrees to assign and delegate), without recourse (in accordance with and subject to the restrictions contained in, and the consents required by, Section 12.7), all of its interests, rights (other than its existing rights to payments pursuant to Section 4.10 or Section 4.11) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that
(a) Borrower shall have paid to Agent the assignment fee (if any) specified in Section 12.7;
(b) such Lender shall have received payment of an amount equal to the outstanding principal of all Loans owed to it, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 4.3 and 4.10) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or Borrower (in the case of all other amounts);
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(c) in the case of any such assignment resulting from a claim for compensation under Section 4.10 or payments required to be made pursuant to Section 4.11, such assignment will result in a reduction in such compensation or payments thereafter;
(d) such assignment does not conflict with applicable law; and
(e) in the case of any assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall consent, at the time of such assignment, to each applicable amendment, waiver or consent.
A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling Borrower to require such assignment and delegation cease to apply.
2.12 [Reserved].
2.13 [Reserved].
2.14 Sharing of Payments, Etc.. If any Lender shall obtain at any time any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on account of Obligations payable to such Lender hereunder at such time in excess of its ratable share (according to the proportion of (a) the amount of such Obligations to (b) the aggregate amount of the Obligations payable to all Lenders hereunder at such time), such Lender shall forthwith purchase from the other Lenders such participations in the Obligations payable to them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that, if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each other Lender shall be rescinded and such other Lender shall repay to the purchasing Lender the purchase price to the extent of such other Lender’s ratable share (according to the proportion of (i) the purchase price paid to such Lender to (ii) the aggregate purchase price paid to all Lenders) of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (A) the amount of such other Lender’s required repayment to (B) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.14 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of such Borrower in the amount of such participation.
2.15 [Reserved].
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2.16 Incremental Term Loans.
(a) Borrower may by written notice to the Agent increase the then-effective amount of the Initial Term Loans or establish a new tranche of term loans hereunder (any such increase or new tranche, “Incremental Term Loans”) to repay or retire the 2017 Senior Convertible Notes (provided, up to $7,000,000 may be used in a single borrowing for working capital purposes or to fund a Permitted Acquisition); provided that:
(i) the principal amount of Incremental Term Loans established pursuant to this Section 2.16, shall not exceed $100,000,000 (such amount, after deducting any Incremental Term Loans borrowed hereunder, the “Incremental Basket”);
(ii) Borrower shall execute and deliver such documents and instruments and take such other actions as may be required by Agent in connection with such increases and at the time of any such proposed increase;
(iii) no Default or Event of Default shall have occurred and be continuing or would occur after giving effect to such increase and all representations and warranties by or on behalf of each Loan Party and its Subsidiaries set forth in the Loan Documents shall be true and correct in all material respects (other than those representations and warranties that are expressly qualified by a Material Adverse Effect or other materiality, in which case such representations and warranties shall be true and correct in all respects) on and as of the date of such increase or, to the extent such representations and warranties expressly relate to an earlier date, true and correct in all material respects on and as of such earlier date;
(iv) (A) the Incremental Term Loans provided under this Section 2.16 shall have a maturity date no earlier than the Termination Date and (B) the weighted average life to maturity of any Incremental Term Loans shall be no shorter than the weighted average life to maturity of the Initial Term Loans;
(v) Borrower shall be in pro forma compliance with a Net Leverage Ratio of not more than 6.50 to 1.00 calculated as of the most recently ended Fiscal Quarter for which financial statements have been delivered and as if such Incremental Term Loans had been established (and fully funded) as of the first day of the relevant period for testing compliance and
(vi) All other terms and conditions with respect to the Incremental Term Loans, except with respect to All-in Yield (which shall be subject to clause (d) below), be no more favorable to the Borrower than those applicable to the Initial Term Loans (including in respect of guarantees and collateral) or added for the benefit of the Initial Term Loans; provided, the addition of Loan Parties organized in jurisdictions other than the United States, Canada, England and the Netherlands shall be subject to approval of the Agent.
(b) No Lender shall have any obligation, express or implied, to offer to increase the aggregate principal amount of its Loans. Only the consent of the Lenders agreeing to provide Incremental Term Loans (each such lender being an “Additional Lender”) shall be required pursuant to this Section 2.16.
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(c) Subject to subsections (a) and (b) of this Section 2.16, any Incremental Term Loans requested by Borrower shall be effective upon delivery to Agent of each of the following documents (the date of such effectiveness, the “Incremental Effective Date”):
(i) an originally executed copy of any instrument of joinder signed by a duly authorized officer of each Additional Lender, in form and substance reasonably acceptable to Agent;
(ii) a notice to the Additional Lenders, in form and substance reasonably acceptable to Agent, signed by a Responsible Officer of Borrower;
(iii) a certificate of Borrower signed by a Responsible Officer, in form and substance acceptable to Agent, certifying that each of the conditions in subsection (a) of this Section 2.16 has been satisfied: and
(iv) any other certificates or documents that Agent shall request, each in form and substance satisfactory to Agent.
(d) Anything to the contrary contained herein notwithstanding, the All-In Yield that is to be applicable to the Incremental Term Loans may be lower than, equal to or higher than the All-In Yield applicable to the Initial Term Loans hereunder immediately prior to the Incremental Effective Date; provided that if the All-In Yield that is to be applicable to the Incremental Term Loans is higher than the All-In Yield applicable to the Initial Term Loans hereunder immediately prior to the Incremental Effective Date by more than 0.50% (the amount by which the All-In Yield is higher than 0.50%, the “Excess”), then the interest margin applicable to the Initial Term Loans immediately prior to the Incremental Effective Date shall be increased by the amount of the Excess, subject to the occurrence of and effective upon the Incremental Effective Date and without the necessity of any action by any party hereto.
(e) [Reserved].
(f) Unless otherwise specifically provided herein, all references in this Agreement and any other Loan Document to Loans shall be deemed, unless the context otherwise requires, to include Loans made pursuant to the Incremental Term Loans pursuant to this Section 2.16.
ARTICLE III.
[RESERVED]
ARTICLE IV.
INTEREST, FEES AND EXPENSES
4.1 Interest. Subject to Section 4.2, Borrower shall pay to Agent for the ratable benefit of the Lenders interest on the Advances, payable in arrears on each Interest Payment Date, at the following rates per annum:
(a) Base Rate Advances. If such Advance is a Base Rate Advance, at a fluctuating rate which is equal to (i) the Base Rate then in effect plus (ii) the Applicable Margin.
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(b) LIBOR Rate Advances. If such Advance is a LIBOR Rate Advance, at (i) the LIBOR Index Rate plus (ii) the Applicable Margin.
4.2 Interest After Event of Default.
(a) Automatically upon the occurrence and during the continuation of an Event of Default under Section 10.1(d), and (b) upon the occurrence and during the continuation of any Event of Default (other than an Event of Default under Section 10.1(d)), at the direction of Agent or the Required Lenders, all Loans and all Obligations shall bear interest at a per annum rate equal to two percent (2%) above the per annum rate otherwise applicable thereunder until the earlier of the date upon which (i) all Obligations shall have been Paid in Full or (ii) such Event of Default shall have been cured or waived.
4.3 Applicable Premium.
(a) Upon the occurrence of an Applicable Premium Trigger Event, the Borrower shall pay to the Agent, for the account of the Lenders in accordance with their Pro Rata Shares, the Applicable Premium.
(b) Any Applicable Premium payable in accordance with this Section 4.3 shall be presumed to be equal to the liquidated damages sustained by the Lenders as the result of the occurrence of the Applicable Premium Trigger Event and the Loan Parties agree that it is reasonable under the circumstances currently existing. THE LOAN PARTIES EXPRESSLY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING APPLICABLE PREMIUM IN CONNECTION WITH ANY ACCELERATION.
(c) The Loan Parties expressly agree that:
(i) the Applicable Premium is reasonable and is the product of an arm’s length transaction between sophisticated business people, ably represented by counsel;
(ii) the Applicable Premium shall be payable notwithstanding the then prevailing market rates at the time payment is made;
(iii) there has been a course of conduct between the Lenders and the Loan Parties giving specific consideration in this transaction for such agreement to pay the Applicable Premium;
(iv) the Loan Parties shall be estopped hereafter from claiming differently than as agreed to in this paragraph;
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(v) their agreement to pay the Applicable Premium is a material inducement to Lenders to provide the Commitments and make the Loans, and
(vi) the Applicable Premium represents a good faith, reasonable estimate and calculation of the lost profits or damages of the Agents and the Lenders and that it would be impractical and extremely difficult to ascertain the actual amount of damages to the Agents and the Lenders or profits lost by the Agents and the Lenders as a result of such Applicable Premium Trigger Event.
4.4 [Reserved].
4.5 [Reserved].
4.6 [Reserved].
4.7 [Reserved].
4.8 [Reserved].
4.9 Calculations.
(a) Interest payable pursuant to Section 4.1 shall be computed (i) in the case of Base Rate Advance based on the Prime Rate, on the basis of a three hundred and sixty-five (365) day or three hundred and sixty-six (366) day year, as the case may be and (ii) in the case of LIBOR Rate Advance and Base Rate Advance not based on the Prime Rate, on the basis of a three hundred and sixty (360) day year, in each case for the actual number of days elapsed in the period during which it accrues. Each determination by Agent of an interest rate, fee or other payment hereunder shall be conclusive and binding for all purposes, absent manifest error. Borrower hereby acknowledges and agrees that each fee payable under this Agreement is fully earned and non-refundable on the date such fee is due and payable and that each such fee constitutes Obligations and is in addition to any other fees payable by Borrower under the Loan Document. If any provision of this Agreement or any other Loan Document would require a Loan Party to make any payment of interest or any other payment that by a court of competent jurisdiction construes to be interest in an amount or calculated at a rate which would be prohibited by law or would result in the Agent’s receipt of interest at a criminal rate (as those terms are construed under the Criminal Code (Canada)), then despite that provision, that amount or rate will be deemed to have been adjusted retroactively to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by law or would not result in a receipt by the Agent of interest at a criminal rate. The adjustment will be made, to the extent necessary, first, by reducing the amount or rate of interest required to be paid and thereafter by reducing any fees, commissions, premiums, and other amounts that would constitute interest for the purposes of section 347 of the Criminal Code (Canada).
(b) In computing interest on any Loan, the date of the making of such Loan or the first day of an Interest Period applicable to such Loan or, the last Interest Payment Date with respect to such Loan or, with respect to a Base Rate Advance being converted from a LIBOR Rate Advance, the date of conversion of such LIBOR Rate Advance to such Base Rate Advance, as the case may be, shall be included, and the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate Advance being converted to a LIBOR Rate Advance, the date of conversion of such Base Rate Advance to such LIBOR Rate Advance, as the case may be, shall be excluded.
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(c) For purposes of the Interest Act (Canada),
(i) whenever any interest or fee under this Agreement is calculated using a rate based on a year of 360 days or 365 days (or such other period that is less than a calendar year), as the case may be, the rate determined pursuant to such calculation, when expressed as an annual rate, is equivalent to (x) the applicable rate based on a year of 360 days or 365 days (or such other period that is less than a calendar year), as the case may be, (y) multiplied by the actual number of days in the calendar year in which the period for which such interest or fee is payable (or compounded) ends, and (z) divided by 360 or 365 (or such other period that is less than a calendar year), as the case may be,
(ii) the principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement, and
(iii) the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields.
4.10 Increased Costs.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any such reserve requirement reflected in the LIBOR Index Rate);
(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (ii) through (iv) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender or the London interbank market any other condition (other than Taxes) affecting this Agreement or Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such Lender of making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make any such Loan, or to reduce the amount of any sum received or receivable by such Lender (whether of principal, interest or any other amount), then Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.
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(b) If any Lender determines that any Change in Law affecting such Lender or any lending
office of such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate
of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by such Lender to a level below that which such Lender or
such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy or liquidity), then from
time to time Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section 4.10 and delivered to Borrower will be conclusive absent manifest error. Borrower will pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.
(d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section 4.10 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that Borrower shall not be required to compensate a Lender pursuant to this Section 4.10 for any increased costs incurred or reductions suffered more than 180 days prior to the date that such Lender notifies Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’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).
4.11 Taxes.
(a) Defined Terms. For purposes of this Section 4.11, the term “applicable law” includes FATCA.
(b) Payments Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(c) Payment of Other Taxes by Borrower. The Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of Agent timely reimburse it for the payment of, any Other Taxes.
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(d) Indemnification by Borrower. The Loan Parties, jointly and severally, shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Borrower by a Lender (with a copy to Agent), or by Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(e) Indemnification by the Lenders. Each Lender shall severally indemnify Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 12.7 relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by Agent shall be conclusive absent manifest error. Each Lender hereby authorizes Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by Agent to the Lender from any other source against any amount due to Agent under this clause (e).
(f) Evidence of Payments. As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority pursuant to this Section 4.11, such Loan Party shall deliver to Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Agent.
(g) Status of Lenders.
(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to Borrower and Agent, at the time or times reasonably requested by Borrower or Agent, such properly completed and executed documentation reasonably requested by Borrower or Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by Borrower or Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by Borrower or Agent as will enable Borrower or Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 4.11(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
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(ii) Without limiting the generality of the foregoing,
(A) any Lender that is a U.S. Person shall deliver to Borrower and Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;
(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Agent), whichever of the following is applicable:
(1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(2) executed copies of IRS Form W-8ECI;
(3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit K-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of any Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN-E; or
(4) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit K-2 or Exhibit K-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit K-4 on behalf of each such direct and indirect partner;
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(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit Borrower or Agent to determine the withholding or deduction required to be made; and
(D) if a payment made to a Lender under any Loan Document would be subject to withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to Borrower and Agent at the time or times prescribed by law and at such time or times reasonably requested by Borrower or Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower or Agent as may be necessary for Borrower and Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Borrower and Agent in writing of its legal inability to do so.
(h) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 4.11 (including by the payment of additional amounts pursuant to this Section 4.11), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this clause (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this clause (h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this clause (h) the payment of which would place the indemnified party in a less favorable net
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after-tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
(i) Survival. Each party’s obligations under this Section 4.11 shall survive the resignation or replacement of Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.
ARTICLE V.
CONDITIONS OF LENDING
5.1 Conditions to Initial Term Loan . The obligation of the Lenders to make the Initial Term Loans is subject to the satisfaction or waiver in writing (which shall include Schedule 7.21) of the following conditions prior to making of such Initial Term Loan:
(a) Loan Documents. Agent shall have received the following, each dated as of the Closing Date or as of an earlier date acceptable to Agent, in form and substance satisfactory to Agent and its counsel:
(i) counterparts of this Agreement, duly executed by the parties hereto;
(ii) the Notes, each duly executed by Borrowers, to the extent such Notes were requested three (3) Business Days prior to the Closing Date;
(iii) the Copyright Security Agreement, duly executed by each applicable Loan Party;
(iv) the Patent Security Agreement, duly executed by each applicable Loan Party;
(v) the Trademark Security Agreement, duly executed by each applicable Loan Party;
(vi) ABL Credit Agreement and ABL Intercreditor Agreement;
(vii) a Guaranty and Security Agreement and Non-U.S. Collateral Documents (other than each of the Dutch Share Pledges, which shall be executed within 30 Business Days of the date of this Agreement), in each case, duly executed by each Loan Party;
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(viii) acknowledgment copies of financing statements duly authorized and filed under the Uniform Commercial Code and PPSA (naming Agent as secured party and the Loan Parties as debtors and containing a description of the applicable Collateral) with respect to each Loan Party in the jurisdiction in which such Loan Party is organized as set forth on Schedule 6.1(a);
(ix) results of lien, judgment and Intellectual Property searches, dated on or before the Closing Date, listing all effective financing statements filed in the jurisdictions referred to in clause (viii) above and in all other jurisdictions (except the Province of Quebec) that Agent deems necessary or desirable to confirm the priority of the Liens created hereunder and under the Security Documents, that name each of the Loan Parties as debtor, together with copies of such financing statements;
(x) a completed perfection certificate, substantially in the form of Exhibit E, signed by a Responsible Officer of Borrower;
(xi) a financial condition certificate of a Responsible Officer of Borrower, in the form of Exhibit F;
(xii) Warrants;
(xiii) the following (collectively, the “Historical Financials”)
(A) the audited Financial Statements for the fiscal year ended December 31, 2019, certified by the Auditors, and unaudited Financial Statements for the nine-month period ended September 30, 2020, certified by a Responsible Officer of Borrower,
(B) a pro forma consolidated balance sheet of the Loan Parties and their Subsidiaries, after giving effect to the consummation of the transactions contemplated hereby, in form and substance reasonably satisfactory to Agent, and
(C) a certificate executed by a Responsible Officer of Borrower certifying that since December 31, 2019,
(I) there has been no change, occurrence, development or event which has had or could reasonably be expected to have a Material Adverse Effect,
(II) all data, reports and information (other than projections and budgets) heretofore or contemporaneously furnished by or on behalf of the Loan Parties in writing to Agent or the Auditors for purposes of or in connection with this Agreement or any other Loan Document, or any transaction contemplated hereby or thereby, are true and accurate in all material respects as of the date or certification thereof and are not incomplete by omitting to state any material fact necessary to make such data, reports and information not misleading at such time, and
(III) all projections and budgets heretofore furnished to Agent or the Auditors for purposes of or in connection with this Agreement or any other Loan Document, or any transaction contemplated hereby or thereby, have been prepared in good faith based on assumptions believed by Borrower to be reasonable at the time of preparation;
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(xiv) an opinion of counsel for each Loan Party addressed to Agent covering such matters incident to the transactions contemplated by this Agreement as Agent may reasonably require, which such counsel is hereby requested by Borrower on behalf of all the Loan Parties to provide;
(xv) certified copies of all policies of insurance required by this Agreement and the other Loan Documents, inclusive of those described in Section 7.6 hereof together with loss payee endorsements for all such policies naming Agent as lender loss payee and an additional insured;
(xvi) a copy of the Business Plan for the four (4) year period commencing October 1, 2020, accompanied by a certificate executed by a Responsible Officer of Borrower certifying to Agent and the Lenders that the Business Plan has been prepared in good faith on the basis of assumptions which were believed to be reasonable in the context of the conditions existing on the date hereof, and represents, as of the date hereof, Borrower’s good faith estimate of its future financial performance;
(xvii) copies of the Governing Documents (other than the deed of incorporation (oprichtingsakte) of Furmanite B.V.) of each Loan Party and a copy of the resolutions of the Governing Body (or similar evidence of authorization) of each Loan Party and authorizing the execution, delivery and performance of this Agreement, the other Loan Documents to which such Loan Party is or is to be a party, and the transactions contemplated hereby and thereby, attached to a certificate of the Secretary or an Assistant Secretary or other officer of such Loan Party certifying
(A) that such copies of the Governing Documents and resolutions of the Governing Body (or similar evidence of authorization) relating to such Loan Party are true, complete and accurate copies thereof, have not been amended or modified since the date of such certificate and are in full force and effect,
(B) the incumbency, names and true signatures of the officers of such Loan Party authorized to sign the Loan Documents to which it is a party,
(C) that attached thereto is a list of all persons authorized to execute and deliver Notices of Borrowing and Notices of Conversion on behalf of Borrower and
(D) in respect of the UK Loan Parties, the Solvency of that UK Loan Party;
(xviii) with respect to US Loan Parties, a certified copy of a certificate of the Secretary of State of the state of incorporation, organization or formation (or the equivalent Governmental Authority in the jurisdiction of incorporation, organization or formation) of each Loan Party, dated within twenty (20) days of the Closing Date, listing the certificate of incorporation, organization or formation of such Loan Party and each amendment thereto on file in such official’s office and certifying (to the extent such concept exists in such jurisdictions) that
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(A) such amendments are the only amendments to such certificate of incorporation, organization or formation on file in that office,
(B) such Loan Party has paid all franchise taxes to the date of such certificate and
(C) such Loan Party is in good standing in that jurisdiction (as applicable);
(xix) with respect to any Loan Party formed under the laws of Canada or any province or territory thereof, a certificate of status (or equivalent) issued by the governmental authority in the jurisdiction in which such Loan Party is formed, dated within twenty (20) days of the Closing Date;
(xx) [reserved];
(xxi) [reserved];
(xxii) each of the English Security Documents, duly executed by each Loan Party thereto;
(xxiii) evidence that any process agent referred to in Clause 33.2 (Service of process) of the English Share Charge, has accepted its appointment;
(xxiv) a copy of all notices required to be sent under the English Security Documents executed by the relevant parties thereto;
(xxv) a letter of financial support from the Borrower addressed to the directors of each UK Loan Party and Team Industrial Services (UK) Limited in form and substance acceptable to the Agent.
(xxvi) a closing certificate from a Responsible Officer of Borrower, in the form of Exhibit G.
(b) [Reserved].
(c) Reimbursement. Borrower shall have paid
(i) all reasonable and documented out-of-pocket fees and Lender Group Expenses required to be paid pursuant to Section 12.4 of this Agreement to the extent invoiced at least three (3) Business Days prior to the Closing Date (it being understood that all other such fees and Lender Group Expenses shall be paid after the Closing Date in accordance with the terms of this Agreement), and
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(ii) the fees referred to in this Agreement that are required to be paid on the Closing Date.
(d) [Reserved].
(e) Collateral Review. Agent and its counsel shall have performed (i) a review satisfactory to Agent of all of the Material Contracts and other assets (including material leases of operating facilities) of each Loan Party, the financial condition of each Loan Party, including all of its tax, litigation, environmental and other potential contingent liabilities, the capitalization and capital structure of each Loan Party and the cash management and management information systems of Borrower and (ii) reviews and investigations of such other matters as Agent and its counsel deem appropriate, in each case with results satisfactory to Agent.
(f) [Reserved].
(g) [Reserved].
(h) [Reserved].
(i) Due Diligence. Agent shall have completed satisfactory business and legal due diligence.
(j) Payment of Outstanding Indebtedness, etc. Agent shall have received reasonably satisfactory evidence that all Indebtedness (other than any Indebtedness permitted under Section 8.1), together with all interest, all prepayment premiums and other amounts due and payable with respect thereto, will have been paid in full upon the making of the initial Loan and all obligations with respect thereto will, substantially concurrently with the making of the initial Loan, be terminated (other than contingent indemnification obligations), and payoff letters evidencing that all Liens securing payment of any such Indebtedness will substantially contemporaneously be released at the time of the making of the initial Loan, on terms and in a manner reasonably satisfactory to Agent; provided, that Agent shall have received fully executed and effective purchase agreements to repurchase up to $137,000,000 of the 2017 Senior Convertible Notes. In addition, Agent shall have received duly authorized release or termination statements, duly filed (or an authorization from all required Persons to file release or termination statements) in all jurisdictions that Agent deems necessary from any creditors of the Loan Parties being paid off on the Closing Date.
(k) KYC. Upon the request of Agent or any Lender made at least ten (10) days prior to the Closing Date, Borrower shall have provided to Agent or such Lender no later than five (5) days prior to the Closing Date, a duly executed W-9 (or other applicable tax form) of the Borrower, and all other documentation and information so requested in connection with applicable “know your customer” and Anti-Money Laundering Laws, including the Patriot Act. At least three (3) days prior to the Closing Date, any Borrower that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation shall have delivered to Agent a Beneficial Ownership Certification in relation to such Borrower.
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5.2 Conditions Precedent to Each Loan . The obligation of the Lenders to make any Loan is subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. All representations and warranties contained in this Agreement and the other Loan Documents shall be true, correct and complete 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 and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties 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) as of such earlier date);
(b) No Default. No Default or Event of Default shall have occurred and be continuing or would result from the making of the requested Loan; and
(c) Borrowing Notice. The Borrower shall have delivered a Notice of Borrowing, in the form of Exhibit B, in accordance with Section 2.3.
Each condition in Sections 5.1 and 5.2 that is subject to the satisfaction or discretion of Agent or any Lender shall be deemed satisfied upon Agent’s or Lender’s, as applicable, making of any Loan.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of Borrower. The Borrower makes the following representations and warranties to Agent and the Lenders, which shall be true, correct and complete in all respects as of the Closing Date, and after the Closing Date, shall be true, correct, and complete 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 of the date of any Borrowing as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties 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) as of such earlier date), and such representations and warranties shall survive the execution and delivery of this Agreement:
(a) Organization, Good Standing and Qualification. Each Loan Party
(i) is an Entity duly organized (or incorporated, as the case may be), validly existing and in good standing (to the extent such concept exists in the relevant jurisdiction) under the laws of the state of its incorporation, organization or formation,
(ii) has the requisite power and authority to own its properties and assets and to transact the businesses in which it presently is, or proposes to be, engaged, except to the extent that the failure own such properties and assets or transact business in such a way could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect and
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(iii) is duly qualified, authorized to do business and in good standing (to the extent such concept exists in the relevant jurisdictions) in each jurisdiction where it presently is, or proposes to be, engaged in business, except to the extent that the failure so to qualify or be in good standing could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
Schedule 6.1(a) specifies the jurisdiction in which each Loan Party is organized and also specifies the tax identification numbers and organizational identification numbers of each Loan Party.
(b) Locations of Offices, Records and Collateral. The address of the principal place of business and chief executive office of each Loan Party is, and the books and records of each Loan Party and all of its chattel paper are maintained exclusively in the possession of such Loan Party at the address of such Loan Party specified in Schedule 6.1(b) (as such Schedule may be updated from time to time to reflect changes resulting from transactions permitted under this Agreement). There is no location at which any Loan Party maintains any Collateral in an aggregate principal amount exceeding $500,000 other than the locations specified for it in Schedule 6.1(b) (as such Schedule may be updated from time to time to reflect changes resulting from transactions permitted under this Agreement). Schedule 6.1(b) (as such Schedule may be updated from time to time to reflect changes resulting from transactions not prohibited under this Agreement) specifies all Real Property of each Loan Party, and indicates whether each location specified therein is leased or owned by such Loan Party.
(c) Authority. Each Loan Party has the requisite power and authority to execute, deliver and perform its obligations under each of the Loan Documents to which it is a party. All requisite corporate, limited liability company or partnership action necessary for the execution, delivery and performance by each Loan Party of the Loan Documents to which it is a party (including the consent of its owners, where required) has been taken.
(d) Enforceability. The Loan Documents delivered by the Loan Parties, when executed and delivered, will be, the legal, valid and binding obligation of each Loan Party party thereto enforceable in accordance with its terms, except as enforceability may be limited by (i) bankruptcy, insolvency or similar laws affecting creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
(e) No Conflict. The execution, delivery and performance by each Loan Party of each Loan Document to which it is a party
(i) do not and will not contravene any of the Governing Documents of such Loan Party,
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(ii) do not and will not contravene any Requirement of Law, except as such contravention could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect,
(iii) do not and will not contravene any Material Contract, except as such contravention could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, and
(iv) do not and will not result in the imposition of any Liens upon any of its properties except for Permitted Liens.
(f) Consents and Filings. No consent, authorization or approval of, or filing with or other act by, any Governmental Authority or any other Person is required in connection with the execution, delivery or performance of this Agreement or any other Loan Document, or the consummation of the transactions contemplated hereby or thereby, except
(i) such consents, authorizations, approvals, filings or other acts as have been made or obtained, as applicable, and are in full force and effect,
(ii) the filing of UCC and PPSA financing statements,
(iii) filing of the Patent Security Agreements, Trademark Security Agreements, and Copyright Security Agreement with the United States Patent and Trademark Office and the United States Copyright Office and the Canadian Intellectual Property Office, the UK Intellectual Property office, the European Patents Office, the relevant intellectual property register of the EU Office of Harmonization for the Internal Market and any other intellectual property register or authority or other national intellectual property registers as may be available for the purpose,
(iv) filings or other actions listed on Schedule 6.1(f), and
(i) registration of the particulars of the English Security Documents (and any other Security Documents entered into by a UK Loan Party) at Companies House in England and Wales under section 859A of the Companies Act 2006 and payment of associated fees and
(ii) such consents, authorizations, approvals, filings or other acts the failure of which to be obtained or made could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
(g) Ownership; Subsidiaries. Schedule 6.1(g) (as such Schedule may be updated from time to time to reflect changes resulting from transactions permitted under this Agreement) sets forth the legal name (within the meaning of Section 9-503 of the UCC), the Persons that own the Equity Interests of each such Loan Party (other than the Borrower), and the number of Equity Interests owned by each such Person. As of the Closing Date, the Borrower has no Subsidiaries other than those specifically disclosed on Schedule 6.1(g), and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and nonassessable and are owned directly or indirectly by a Loan Party in the amounts specified on
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Schedule 6.1(g) free and clear of all Liens other than Liens permitted pursuant to Section 8.8. As of the Closing Date, the Borrower has no equity investments in any other corporation or entity other than those specifically disclosed on Schedule 6.1(g). All of the outstanding Equity Interests in the Borrower have been validly issued and are fully paid and nonassessable.
(h) Solvency. The Loan Parties, taken as a whole, are Solvent and no procedure, act or filing described as an “Insolvency Event” has taken place with respect to any Loan Party. As of the Closing Date, each UK Loan Party is Solvent.
(i) Financial Data. Borrower has provided to Agent complete and accurate copies of the Historical Financials. The Historical Financials have been prepared in accordance with GAAP consistently applied throughout the periods involved and fairly present, in all material respects, the financial position, results of operations and cash flows of the Loan Parties and their Subsidiaries for each of the periods covered. Since December 31, 2019, there has been no change, occurrence, development or event, which has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(j) Accuracy and Completeness of Information. All written factual data, reports and written factual information (other than any projections, estimates and information of a general economic or industry specific nature) concerning the Loan Parties and their Subsidiaries that has been furnished by or on behalf of any Loan Party to Agent or any Lender in connection with the transactions contemplated hereby, when taken as a whole, are correct in all material respects as of the date of certification of such data, reports and information, and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made at such time.
(k) Legal and Trade Name. As of the Closing Date, during the past year, none of the Loan Parties has been known by or used any legal name or, except as such usage could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, any trade name or fictitious name, except for its name as set forth in the introductory paragraph and on the signature page of this Agreement or the Guaranty and Security Agreement, as applicable, which is the exact correct legal name of such Loan Party.
(l) [Reserved].
(m) Investment Company. None of the Loan Parties is an “investment company,” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.
(n) Margin Stock. None of the Loan Parties is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying “margin stock” as that term is defined in Regulation U of the Federal Reserve Board. No part of the proceeds of any Loan will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, (i) to purchase or carry Margin Stock or to extend credit to others for the purpose of purchasing or carrying Margin Stock or to refund Indebtedness originally incurred for such purpose or (ii) for any purpose that entails a violation of, or that is inconsistent with, the provisions of the Regulations of the Board, including Regulations T, U or X.
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(o) Taxes and Tax Returns.
(i) Each Loan Party and each of its Subsidiaries has properly completed and timely filed all federal and other material income tax returns it is required to file and such returns were complete and accurate in all material respects.
(ii) All federal and other material taxes and similar governmental charges required to have been paid by the Loan Parties have been timely paid.
(iii) No material deficiencies for taxes have been claimed, proposed or assessed by any taxing or other Governmental Authority against any Loan Party or any of its Subsidiaries which remain unpaid. There are no pending or, to the knowledge of Borrower, threatened audits, investigations or claims by a Governmental Authority for or relating to any material liability of any Loan Party or any of its Subsidiaries for taxes.
(iv) Each Dutch Loan Party is resident for tax purposes in the Netherlands only, and does not have a permanent establishment or permanent representative outside the Netherlands.
(v) Any fiscal unity (fiscale eenheid) for Dutch tax purposes in which a Loan Party is included, consists of Loan Parties only
(p) No Judgments or Litigation. Except as specified in Schedule 6.1(p), no judgments, orders, writs or decrees are outstanding against any Loan Party or any of its Subsidiaries, nor is there now pending or, to the knowledge of any Loan Party after due inquiry, any threatened litigation, contested claim, investigation, arbitration, or governmental proceeding by or against any Loan Party or any of its Subsidiaries that
(i) individually or in the aggregate could reasonably be expected to have a Material Adverse Effect or
(ii) purports to affect the legality, validity or enforceability of this Agreement, any other Loan Document or the consummation of the transactions contemplated hereby or thereby.
(q) Title to Property. Each Loan Party and each of its Subsidiaries has (i) valid fee simple title to or valid leasehold interests in all of its Real Property and (ii) good and marketable title to all of its other assets, in each case, except where such failure to have such title, interest or right could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. All of such assets are free and clear of Liens except for Permitted Liens.
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(r) No Other Indebtedness. On the Closing Date and after giving effect to the transactions contemplated hereby, none of the Loan Parties nor any of their Subsidiaries have any Indebtedness other than Indebtedness permitted under Section 8.1.
(s) Investments; Contracts. None of the Loan Parties, nor any of their Subsidiaries,
(i) has committed to make any Investment;
(ii) is a party to any indenture, agreement, contract, instrument or lease, or subject to any restriction in the Governing Documents or similar restriction or any injunction, order, restriction or decree;
(iii) is a party to any “take or pay” contract as to which it is the purchaser; or
(iv) has material contingent or long term liability, including any management contracts,
in each case, which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.
(t) Compliance with Laws. On the Closing Date and after giving effect to the transactions contemplated hereby, none of the Loan Parties nor any of their Subsidiaries is in violation of any Requirement of Law, or is in default with respect to any judgment, writ, injunction or decree of any Governmental Authority, where such violation or default could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(u) Rights in Collateral; Priority of Liens. All of the Collateral of each Loan Party is owned or leased by it free and clear of any and all Liens in favor of third parties, other than Liens in favor of Agent, Liens incurred under the ABL Credit Agreement and other Permitted Liens. Upon the proper filing of the financing and termination statements specified in Section 5.1(a)(viii) and any Mortgage and release specified in Section 5.1(a)(viii), the Liens granted by the Loan Parties pursuant to the Loan Documents constitute valid, enforceable and perfected first priority Liens on the Collateral (subject only to Permitted Liens which are non-consensual Permitted Liens, permitted purchase money Liens, the interests of lessors in respect of Capitalized Lease Obligations or ABL Agent with respect to ABL Priority Collateral).
(v) ERISA.
(i) Neither any Loan Party nor any ERISA Affiliate maintains or contributes to any Plan, other than those specified in Schedule 6.1(v).
(ii) Each Loan Party and each ERISA Affiliate have fulfilled all contribution obligations for each Plan (including obligations related to the minimum funding standards of ERISA and the Code), except for ordinary funding obligations which are not past due, and no application for a funding waiver or an extension of any amortization period pursuant to Sections 303 and 304 of ERISA or Section 412 of the Code has been made with respect to any Plan.
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(iii) No Termination Event has occurred nor has any other event occurred that is likely to result in a Termination Event. Neither a Loan Party or any ERISA Affiliate, nor any fiduciary of any Plan, is subject to any material direct or indirect liability with respect to any Plan under any Requirement of Law or agreement.
(iv) Neither a Loan Party nor any ERISA Affiliate is required to or reasonably expects to be required to provide security to any Plan under Section 307 of ERISA or Section 401(a)(29) of the Code, and no Lien exists or could reasonably be expected to arise with respect to any Plan.
(v) Each Loan Party and each ERISA Affiliate is in compliance in all material respects with all applicable provisions of ERISA and the Code with respect to all Plans. There has been no prohibited transaction as defined in Section 406 or 407 of ERISA or Section 4975 of the Code with respect to any Plan or any Multiemployer Plan or any trust created thereunder that could subject any Loan Party or ERISA Affiliate to a material civil penalty pursuant to Section 502(i) of ERISA or a material tax imposed by Section 4975 of the Code (a “Prohibited Transaction”). Each Loan Party and each ERISA Affiliate have made when due any and all payments required to be made under any agreement or any Requirement of Law applicable to any Plan or Multiemployer Plan. With respect to each Plan and Multiemployer Plan, neither any Loan Party nor any ERISA Affiliate has incurred any liability to the PBGC or had asserted against it any penalty for failure to fulfill the minimum funding requirements of ERISA or the Code other than for payments of premiums in the ordinary course of business.
(vi) Each Plan and each trust established thereunder which is intended to qualify under Section 401(a) or 501(a) of the Code has received a favorable determination or advisory opinion letter from the IRS, and no event has occurred since the date of such determination or advisory opinion letter which could reasonably be expected to adversely affect the qualified status of such Plan or trust.
(vii) The aggregate actuarial present value of all benefit liabilities (whether or not vested) under each Pension Plan, determined on a plan termination basis, as disclosed in, and as of the date of, the most recent actuarial report for such Pension Plan, does not exceed the aggregate fair market value of the assets of such Pension Plan as of such date.
(viii) Neither any Loan Party nor any ERISA Affiliate has incurred or reasonably expects to incur any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in any such liability) under Section 4201 or 4243 of ERISA with respect to any Multiemployer Plan.
(ix) The aggregate withdrawal liability that would be incurred in the event of a complete withdrawal as of the date of this Agreement by a Loan Party or any ERISA Affiliate from all Multiemployer Plans would not reasonably be expected to have a Material Adverse Effect.
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(x) There are no actions, suits, claims or other proceedings, either pending or, to the knowledge of a Responsible Officer, threatened against any Loan Party, or any ERISA Affiliate, or otherwise involving a Plan (other than routine claims for benefits), which could reasonably be expected to be asserted successfully against any Plan, any Loan Party, or any ERISA Affiliate. To the extent that any Plan is funded with insurance, each Loan Party and each ERISA Affiliate have paid when due all premiums required to be paid. To the extent that any Plan is funded other than with insurance, it and each ERISA Affiliate have made when due all contributions required to be paid.
(w) Intellectual Property. Set forth on Schedule 6.1(w) is a complete and accurate list of all material Patents and all material or registered Trademarks and Copyrights, and all licenses thereof, of the Loan Parties, showing as of the date hereof the jurisdiction in which registered, the registration number and the date of registration. Each Loan Party owns or licenses all Patents, Trademarks, Copyrights and other Intellectual Property rights which are reasonably necessary for the operation of its business. No Loan Party, to its knowledge, has infringed any Patent, Trademark, Copyright or other intellectual property right owned by any other Person by the sale or use of any product, process, method, substance, part or other material now sold or used, where such sale or use could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, and no claim or litigation is pending or, to each Loan Party’s knowledge after due inquiry, threatened against any Loan Party that contests its right to sell or use any such product, process, method, substance, part or other material.
(x) Labor Matters. Schedule 6.1(x) accurately sets forth all labor contracts to which any Loan Party or any of its Subsidiaries is a party as of the Closing Date, and their dates of expiration. There are no existing or, to each Loan Party’s knowledge after due inquiry, threatened strikes, lockouts or other disputes relating to any collective bargaining or similar labor agreement to which any Loan Party or any of its Subsidiaries is a party which could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
(y) Compliance with Environmental Laws. Except as to matters that could not reasonably be expected to have a Material Adverse Effect:
(i) each Loan Party and each of its Subsidiaries is in compliance with all applicable Environmental Laws;
(ii) there are and have been, no conditions, occurrences, violations of Environmental Law, or presence or Releases of Hazardous Materials which could reasonably be expected to form the basis of an Environmental Action against any Loan Party, any of its Subsidiaries or affect any real property used in the business of any Loan Party or any of its Subsidiaries;
(iii) there are no pending Environmental Actions against any Loan Party or any of its Subsidiaries, and no Loan Party or any Subsidiary has received any written notification of any alleged violation of, or liability pursuant to, Environmental Law or responsibility for the Release or threatened Release of, or exposure to, any Hazardous Materials; and
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(iv) no Environmental Lien has attached to any Collateral and no conditions exist that could reasonably be expected to result in the imposition of such a Lien on any Collateral.
To the knowledge of each Loan Party, all of the real property used in the business (including its Equipment) is free, and has at all times been free, of Hazardous Materials, underground storage tanks and underground waste disposal areas except in compliance with applicable Environmental Laws or in a manner that could not reasonably be expected to have a Material Adverse Effect.
(z) Licenses and Permits. Each Loan Party and each of its Subsidiaries has obtained and maintained all Permits which are necessary or advisable for the operation of its business, except where the failure to possess any of the foregoing could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
(aa) Compliance with Anti-Terrorism Laws. None of the Loan Parties nor any of their Subsidiaries is any of the following:
(i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224 on Terrorist Financing effective September 24, 2001 (the “Executive Order”);
(ii) a Person owned or Controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;
(iii) a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any laws with respect to terrorism or money laundering; or
(iv) a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order; or a Person that is named as a “specially designated national and blocked Person” on the most current list published by OFAC at its official website or any replacement website or other replacement official publication of such list and none of the proceeds of the Term Loans will be, directly or, to the knowledge of Borrower or any of their respective Subsidiaries, indirectly, offered, lent, contributed or otherwise made available to any Subsidiary, joint venture partner or other Person for the purpose of financing the activities of any Person currently the subject of sanctions administered by OFAC.
(bb) Government Regulation. None of the Loan Parties nor any of their Subsidiaries is subject to regulation under the Energy Policy Act of 2005, the Federal Power Act, the Interstate Commerce Act or any other Requirement of Law that limits its ability to incur Indebtedness or to consummate the transactions contemplated by this Agreement and the other Loan Documents.
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(cc) Material Contracts. Each Material Contract has been duly authorized, executed and delivered by the applicable Loan Party. Except for matters that could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, each Material Contract of the Loan Parties and their Subsidiaries is in full force and effect and is binding upon and enforceable against all parties thereto in accordance with its terms, and there exists no default under such Material Contract by any party thereto.
(dd) Business and Properties. No business of any Loan Party or any of its Subsidiaries is affected by any fire, explosion, accident, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
(ee) Business Plan. The Business Plan delivered to Agent on the Closing Date were prepared in good faith on the basis of assumptions which were fair in the context of the conditions existing at the time of delivery thereof, and, with respect to the Business Plan, represented, at the time of delivery, the Loan Parties’ best estimate of their and their Subsidiaries’ future financial performance.
(ff) Insurance. The properties and businesses of the Borrower and its Material Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies of similar size engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Subsidiary operates (it being acknowledged and agreed by the Agent and the Lenders that the Borrower’s insurance program existing on the Closing Date and any similar insurance program in effect after the Closing Date shall be deemed to be customary).
(gg) Anti-Money-Laundering Laws and Anti-Corruption Laws. Each Loan Party complied in all material respects and is and has been during the past five (5) years in all material respects with all Anti-Money Laundering Laws and Anti-Corruption Laws, and has instituted and maintained policies and procedures designed to promote and achieve compliance in all material respects with such Laws. No Loan Party has received any communication (including any oral communication) from any Governmental Authority (acting in its capacity as such) that has jurisdiction over the respective Loan Party alleging that it is not in compliance with, or may be subject to liability under, any Anti-Money Laundering Laws or Anti-Corruption Laws.
(hh) Business. As of the Closing Date, the Borrower is engaged directly or through Subsidiaries in the business of providing industrial services to customers in the petrochemical, refinery, power, pipeline, pulp and paper, steel, and other industries.
(ii) Common Enterprise. The Borrower and its Subsidiaries are engaged in the businesses set forth in Section 6.1(hh) as of the Closing Date. These operations require financing on a basis such that the credit supplied can be made available from time to time to the Borrower and various of its Subsidiaries, as required for the continued successful operation of the Borrower and its Subsidiaries as a whole. The Borrower has requested the Lenders to make
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credit available hereunder primarily for the purposes set forth in Section 6.1(hh) and generally for the purposes of financing the operations of the Borrower and its Subsidiaries. The Borrower and each of its Subsidiaries expects to derive benefit (and the Board of Directors (or other similar governing body) of the Borrower and each of its Subsidiaries has determined that such Subsidiary may reasonably be expected to derive benefit), directly or indirectly, from a portion of the credit extended by the Lenders hereunder, both in its separate capacity and as a member of the group of companies, since the successful operation and condition of the Borrower and each of its Subsidiaries is dependent on the continued successful performance of the functions of the group as a whole. The Borrower acknowledges that, but for the agreement by each of the Guarantors to execute and deliver its Guaranty, the Agent and the Lenders would not have made available the credit facilities established hereby on the terms set forth herein.
(jj) Covered Entities. No Loan Party is a Covered Entity.
(kk) Designation as Senior Indebtedness. The Obligations constitute “Designated Senior Indebtedness” or any similar designation (with respect to indebtedness that having the maximum rights as “senior debt”) under and as defined in any agreement governing any Subordinated Debt and the subordination provisions set forth in each such agreement are legally valid and enforceable against the parties thereto.
(ll) EEA Financial Institution. No Loan Party is an EEA Financial Institution.
(mm) Beneficial Ownership Certification. As of the Closing Date, in the event a Beneficial Ownership Certification is required to be delivered on the Closing Date and as of the date that any Beneficial Ownership Certification is delivered pursuant to Section 5.1(k), the information included in such Beneficial Ownership Certification is true and correct in all respects.
(nn) Responsible Officers. The individuals set forth on Schedule 6.1(nn) are Responsible Officers, holding the offices indicated next to their respective names, as of Closing Date, and such Responsible Officers are, as of the Closing Date, duly elected and qualified officers of the Loan Parties indicated on Schedule 6.1(nn) and are duly authorized to execute and deliver, on behalf of the respective Loan Party, this Agreement and the other Loan Documents to which such Loan Party is a party.
(oo) Regulation H. No Real Property with respect to which a Mortgage is granted is a Flood Hazard Property unless: (a) the applicable Loan Party’s written acknowledgment of receipt of written notification from the Agent (i) as to the fact that such Real Property is a Flood Hazard Property, (ii) as to whether the community in which each such Flood Hazard Property is located is participating in the National Flood Insurance Program and (iii) such other flood hazard determination forms, notices and confirmations thereof as requested by the Agent and (b) copies of insurance policies or certificates of insurance of the applicable Loan Party evidencing flood insurance reasonably satisfactory to the Agent and naming the Agent as loss payee on behalf of the Lenders. All flood hazard insurance policies required hereunder have been obtained and remain in full force and effect, and the premiums thereon have been paid in full.
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(pp) Canadian Registered Pension Plans. No Loan Party maintains, sponsors, contributes to, is a party to, or otherwise has any liability (including any contingent liability) or contribution obligations under or in respect of any Canadian Registered Pension Plan.
(qq) Pensions – UK Loan Parties. Other than in relation to Furmanite International Limited Pension Plan, no UK Loan Party nor any of its Subsidiaries:
(i) is or has at any time in the six years prior to the date of this Agreement been an employer (for the purposes of sections 38 to 51 of the Pensions Act 2004) of an occupational pension scheme which is not a money purchase scheme (both terms as defined in the Pensions Schemes Act 1993) and is not a scheme within section 38(1)(b) of the Pensions Act 2004;
(ii) no member of the Group is or has at any time been in the six years prior to the date of this Agreement “connected” with or an “associate” of (as those terms are used in sections 38 and 43 of the Pensions Act 2004 save that for the purposes of this clause, a member of the Group shall not be connected with another company solely by reason of one or more of its directors or employees being a director of that other company) such an employer.
No member of the Group has at any time in the six years prior to the date of this Agreement been party to an act or omission involving a scheme or employer (both as referred to in paragraphs (i) and (ii) above) which could reasonably be expected to give rise to the issue (to it or any of its Subsidiaries) of a financial support direction or contribution notice pursuant to section 38 or 43 of the Pensions Act 2004 or fine by the Pensions Regulator.
(rr) Centre of main interests and establishments. As of the Closing Date, in respect of the UK Loan Parties, for the purposes of Regulation (EU) 2015/848 of 20 May 2015 on insolvency proceedings (recast) (as the same may be retained added to or modified by the European Withdrawal Act 2018 or any statutory instrument made under such Act the “Regulation”), its centre of main interest (as that term is used in Article 3(1) of the Regulation) is situated in England and Wales and it has no “establishment” (as that term is used in Article 2(h) of the Regulations) in any other jurisdiction.
(ss) Collateral located in Quebec. As of the Closing Date, the fair market value of the tangible Collateral located in Quebec does not exceed the amount of CAD $750,000.
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ARTICLE VII.
AFFIRMATIVE COVENANTS OF THE BORROWER
The Borrower covenants and agrees that, until Payment in Full of all Obligations:
7.1 Existence. The Loan Parties shall, and shall cause each of their Subsidiaries to,
(a) maintain their Entity existence, except in connection with a transaction expressly permitted under Section 8.3 or in the case of any Entity other than a Borrower, where the failure to do so could not reasonably be expected to have a Material Adverse Effect,
(b) maintain in full force and effect all material licenses, bonds, franchises, leases, Trademarks, qualifications and authorizations to do business, and all material Patents, contracts and other rights necessary or advisable to the profitable conduct of its businesses, except
(i) as expressly permitted by this Agreement,
(ii) such as may expire, be abandoned or lapse in the ordinary course of business or
(iii) as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and
(c) continue in the same or reasonably related lines of business as presently conducted by it.
7.2 Maintenance of Property. The Loan Parties shall, and shall cause each of their Subsidiaries to, keep all assets used or useful and necessary to its business in good working order and condition (ordinary wear and tear and casualty and condemnation excepted) in accordance with its past operating practices.
7.3 [reserved].
7.4 Taxes. The Loan Parties shall, and shall cause each of their Subsidiaries to, pay, before the same becomes delinquent or in default,
(a) all federal and other material Taxes imposed against it or any of its property, and
(b) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided that, such payment and discharge will not be required with respect to any Tax or claim if
(i) the validity thereof, or to the extent the amount thereof, is being contested in good faith, by appropriate proceedings diligently conducted, and
(ii) an adequate reserve or other appropriate provision shall have been established therefor as required in accordance with GAAP.
7.5 Requirements of Law. The Loan Parties shall, and shall cause each of their Subsidiaries to, comply with all Requirements of Law applicable to it, including any State Licensing Laws and Environmental Laws, except where the failure to so comply could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
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7.6 Insurance. Each of the Loan Parties shall, and shall cause each of their Subsidiaries to maintain, with insurance companies reasonably believed to be financially sound and reputable, insurance in such amounts and against such risks as are customarily maintained by similarly situated companies engaged in the same or similar businesses operating in the same or similar locations, and cause Agent to be listed as a lender loss payee on property and casualty policies and as an additional insured on liability policies, pursuant to a standard loss payable endorsement with a standard non-contributory “lender” or “secured party” clause. Borrower will furnish to Agent, upon request, information in reasonable detail as to the insurance so maintained. Furthermore, the Loan Parties shall:
(a) obtain certificates and endorsements reasonably acceptable to the Agent with respect to property and casualty insurance;
(b) cause each insurance policy referred to in this Section 7.6 to provide that it shall not be cancelled, modified or not renewed (x) by reason of nonpayment of premium except upon not less than 10 days’ prior written notice thereof by the insurer to Agent (giving Agent the right to cure defaults in the payment of premiums) or (y) for any other reason except upon not less than 30 days’ prior written notice thereof by the insurer to Agent; and
(c) deliver to Agent, prior to the cancellation, modification or non-renewal of any such policy of insurance, a copy of a renewal or replacement policy (or other evidence of renewal of a policy previously delivered to Agent, including an insurance binder) together with evidence reasonably satisfactory to Agent of payment of the premium therefor.
If any Loan Party fails to obtain and maintain insurance as provided in this Section, or to keep the same in force, Agent, if Agent so elects, may obtain such insurance and pay the premium therefor for Borrower’s account and such expenses so paid shall be part of the Obligations. Without limitation of the foregoing, if as of the Closing Date or at any time thereafter, all or a portion of the improvements situated on any fee owned Real Property with respect to which a Mortgage is granted are located within an area designated by the Federal Emergency Management Agency or the Flood Disaster Protection Act of 1973 (P.L. 93-234) as being in a “special flood hazard area” or as having specific flood hazards, Borrower shall also furnish Agent with flood insurance policies which conform to the requirements of said Flood Disaster Protection Act of 1973 and the National Flood Insurance Act of 1968, as either may be amended from time to time.
7.7 Books and Records; Inspections.
(a) The Loan Parties shall, and shall cause each of their Subsidiaries to, maintain books and records (including computer records and programs) of account pertaining to the assets, liabilities and financial transactions of the Loan Parties and their Subsidiaries in such detail, form and scope as is consistent with good business practice.
(b) The Loan Parties shall, and shall cause each of their Subsidiaries to, provide Agent and its agents and one representative of each of the Lenders access to the premises of the Loan Parties and their Subsidiaries at any time and from time to time, during normal business hours and with reasonable notice under the circumstances, and at any time after the occurrence and during the continuance of a Default or Event of Default, for the purposes of
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(i) inspecting and verifying the Collateral,
(ii) inspecting and copying any and all records pertaining thereto,
(iii) [reserved], and
(iv) discussing the affairs, finances and business of the Loan Parties and their Subsidiaries with any officer, employee or director thereof or with the Auditors (subject to such Auditor’s policies and procedures, and the right of the Loan Parties to be present at the discussions with the Auditors).
Borrowers shall reimburse Agent for the reasonable and documented travel and related expenses of Agent’s employees or, at Agent’s option, of such outside accountants or examiners as may be retained by Agent to verify or inspect Collateral, records or documents of the Loan Parties and their Subsidiaries; provided that, so long as no Default or Event of Default then exists, the number verifications and inspections for which Borrowers shall be liable for reimbursement to Agent hereunder shall be limited to one verification and inspection in each calendar year; provided, further, that the foregoing shall not operate to limit the number of verifications or inspections that Agent may elect to undertake. If Agent’s own employees are used, Borrowers shall also pay such reasonable per diem allowance as Agent may from time to time establish, or, if outside examiners or accountants are used, Borrowers shall also pay Agent such sum as Agent may be obligated to pay as fees for such services. Notwithstanding anything to the contrary in this Section 7.7, none of the Borrower or any of its Subsidiaries will be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter that (a) constitutes non-financial trade secrets or non-financial proprietary information, (b) in respect of which disclosure is prohibited by law or any binding agreement or (c) is subject to attorney-client or similar privilege or constitutes attorney work product; provided, that in the event the Borrower does not provide information in reliance on clauses (b) and (c) of this sentence, the Borrower shall provide notice to the Agent (to the extent permitted to do so) that such information is being withheld and the Borrower shall use commercially reasonable efforts to obtain consent to provide such information or otherwise to communicate, to the extent both feasible and permitted under applicable law, rule, regulation or confidentiality obligation or without waiving such privilege, as applicable, the applicable information.
7.8 Notification Requirements. The Loan Parties shall timely give Agent and each Lender the following notices and other documents:
(a) Notice of Defaults. Promptly, and in any event within three (3) Business Days after any Responsible Officer of the Borrower obtains actual knowledge of the occurrence of a Default or Event of Default, a certificate of a Responsible Officer specifying the nature thereof and Borrower’s proposed response thereto, each in reasonable detail.
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(b) Proceedings or Changes. Promptly, and in any event within five (5) Business Days after any Responsible Officer of Borrower obtains actual knowledge of any actual change, development or event which has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, a written statement describing such proceeding, change, development or event and any action being taken by such Loan Party or any of its Subsidiaries with respect thereto.
(c) Changes.
(i) Promptly, and in any event within five (5) Business Days after (A) a change in the location of any Collateral from the locations specified in Schedule 6.1(b) or (B) a change of the legal name of any Loan Party, and
(ii) prior to a change to the Entity structure or jurisdiction of organization of any Loan Party, in each case, together with a written statement describing such change,
together with, in the case of clauses (i)(B) and (ii), copies of the Governing Documents of such Loan Party, certified by the Secretary of State (or equivalent) in each relevant jurisdiction, evidencing such change. If any notice is delivered with respect to Schedule 6.1(b) pursuant to this Section 7.8, such notice shall be deemed to be an addition to such Schedule.
(d) ERISA Notices.
(i) Promptly, and in any event within five (5) Business Days after a Termination Event has occurred, a written statement of a Responsible Officer of Borrower describing such Termination Event and any action that is being taken with respect thereto by any Loan Party or ERISA Affiliate, and any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC;
(ii) promptly, and in any event within five (5) Business Days after the filing thereof with the Internal Revenue Service, a copy of each funding waiver request filed with respect to any Plan subject to the funding requirements of Section 412 of the Code and all communications received by any Borrower or ERISA Affiliate with respect to such request;
(iii) promptly, and in any event within five (5) Business Days after receipt by any Loan Party or ERISA Affiliate of the PBGC’s intention to terminate a Pension Plan or to have a trustee appointed to administer a Pension Plan, a copy of each such notice;
(iv) promptly, and in any event within five (5) Business Days after the occurrence thereof, notice (including the nature of the event and, when known, any action taken or threatened by the Internal Revenue Service or the PBGC with respect thereto) of:
(A) any Prohibited Transaction,
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(B) any cessation of operations (by any Loan Party or ERISA Affiliate) at a facility in the circumstances described in Section 4062(e) of ERISA,
(C) a failure by any Loan Party or ERISA Affiliate to make a payment to a Plan required to avoid imposition of a Lien under Section 302(f) of ERISA or Section 412(n) of the Code, or the imposition of such a Lien,
(D) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA or Section 401(a)(29) of the Code, or
(E) any change in the actuarial assumptions or funding methods used for any Plan where the effect of such change is to increase materially or reduce materially the unfunded benefit liability or obligation to make periodic contributions;
(v) promptly upon and in any event within five (5) Business Days after the request of Agent, each annual report (IRS Form 5500 series) and all accompanying schedules, the most recent actuarial reports, the most recent financial information concerning the financial status of each Plan administered or maintained by any Loan Party or ERISA Affiliate, and schedules showing the amounts contributed to each Pension Plan by or on behalf of any Loan Party or ERISA Affiliate in which any of its personnel participate or from which such personnel may derive a benefit, and each Schedule B (Actuarial Information) to the annual report filed by such Loan Party or ERISA Affiliate with the Internal Revenue Service with respect to each such Plan;
(vi) promptly upon and in any event within five (5) Business Days after the filing thereof, copies of any Form 5310, or any successor or equivalent form to Form 5310, filed with the Internal Revenue Service in connection with the termination of any Plan, and copies of any standard termination notice or distress termination notice filed with the PBGC in connection with the termination of any Pension Plan;
(vii) promptly, and in any event within five (5) Business Days after receipt thereof by any Loan Party or ERISA Affiliate, notice and demand for payment of withdrawal liability under Section 4201 of ERISA with respect to a Multiemployer Plan;
(viii) promptly, and in any event within five (5) Business Days after receipt thereof by any Loan Party or ERISA Affiliate, notice by the Department of Labor of any penalty, audit, investigation or purported violation of ERISA with respect to a Plan;
(ix) promptly, and in any event within five (5) Business Days after receipt thereof by any Loan Party or ERISA Affiliate, notice by the Internal Revenue Service or the Treasury Department of any income tax deficiency or delinquency, excise tax penalty, audit or investigation with respect to a Plan; and
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(x) promptly, and in any event within five (5) Business Days after receipt thereof by any Loan Party or ERISA Affiliate, notice of any administrative or judicial complaint, or the entry of a judgment, award or settlement agreement, in either case with respect to a Plan that could reasonably be expected to have a Material Adverse Effect.
(e) Material Contracts. Concurrently with the delivery of any Compliance Certificates pursuant to Section 7.11(d), notice of any Material Contract that has been terminated or amended in any material respect, together with a copy of any such amendment and delivery of a copy of any new Material Contract that has been entered into, in each case since the later of the Closing Date or delivery of the prior Compliance Certificate; provided that the Borrower Agent shall not be required to separately deliver copies of any Material Contracts (or amendments thereto) that are included in materials otherwise filed with the SEC.
(f) Environmental Matters.
(i) Promptly provide notice of any Release of Hazardous Materials in any reportable quantity from or onto real property owned or operated by a Loan Party or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect, and
(ii) Promptly, but in any event within 5 Business Days of its receipt thereof, provide written notice of any of the following: (i) an Environmental Lien has been filed against any of the real or personal property of a Loan Party of one of its Subsidiaries, (ii) commencement of any Environmental Action or written notice that an Environmental Action will be filed against a Loan Party or one of its Subsidiaries, or (iii) written notice of a violation, citation, or other administrative order from a Governmental Authority, in each case which could reasonably be expected to have a Material Adverse Effect.
(g) Insurance. Promptly, and in any event within five (5) Business Days after receipt by a Loan Party of notice or knowledge thereof, of the actual or intended cancellation of, or any material and adverse change in coverage or other terms of, any insurance required to be maintained by the Loan Parties pursuant to this Agreement or any other Loan Document.
7.9 [Reserved]Independent Director.
The Borrower will use commercially reasonable efforts to increase to the size of its board of directors and the addition of an independent director to the board that is acceptable to the Agent, with any such decisions subject to evaluation, review and approval of the board of directors of the Borrower in its reasonable discretion.
7.10 Qualify to Transact Business. The Loan Parties shall, and shall cause each of their Subsidiaries to, qualify to transact business as a foreign corporation, limited partnership or limited liability company, as the case may be, in each jurisdiction where the nature or extent of its business or the ownership of its property requires it to be so qualified or authorized and where failure to qualify or be authorized could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
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7.11 Financial Reporting. Borrower shall deliver to Agent the following:
(a) Annual Financial Statements. Within ninety (90) days after the end of each fiscal year, beginning with the fiscal year ended December 31, 2020, the annual audited and certified consolidated Financial Statements of the Borrower and its Subsidiaries for such fiscal year, setting forth in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall be unqualified as to going concern and scope of audit (except for any such qualification pertaining to impending debt maturities of the Term Loans, the ABL Facility or the 2017 Senior Convertible Notes occurring within 12 months of such audit or any breach of any financial covenant thereunder).
(b) Quarterly Financial Statements. Within forty-five (45) days after the end of each fiscal quarter, commencing with the fiscal quarter ended December 31, 2020,
(i) the interim consolidated Financial Statements of the Borrower and its Subsidiaries as at the end of such quarter and for the fiscal year to date, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year (it being understood and agreed that, notwithstanding the foregoing, such comparison shall not be required for any period occurring prior to the Closing Date), all in reasonable detail and certified by a Responsible Officer of the Borrower as fairly presenting the financial condition, results of operations and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes and
(ii) a narrative discussion of the financial condition of the Borrower and its Subsidiaries and results of operations and the liquidity and capital resources for the fiscal quarter then ended, prepared by a Responsible Officer of Borrower.
(c) Monthly
Financial Statements. Within thirty (30) days after the end of each fiscal month (except for any month ending at the end of a fiscal quarter), commencing with the fiscal month ended November 30, 2020,
(i) the interim consolidated Financial Statements of the Borrower and its Subsidiaries as at the end of such month and for the fiscal year to date, and
(ii) a certification by a Responsible Officer of Borrower that such Financial Statements have been prepared in accordance with GAAP and are fairly stated in all material respects (subject to normal year-end audit adjustments).
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(d) Compliance Certificate. Together with the delivery of each of the financial statements referred to in Section 7.11(a) and Section 7.11(b), a compliance certificate, substantially in the form of Exhibit H (a “Compliance Certificate”), signed by a Responsible Officer of Borrower, with an attached schedule of computations calculating (A) Capital Expenditures each fiscal quarter and (B) the Net Leverage Ratio as of the end of such fiscal quarter.
(e) Lender Calls. Within 5 Business Days after the quarterly financial statements are to be delivered pursuant to Section 7.11(b) (or, at the reasonable request of the Agent, within 5 Business Days after the monthly financial statements are delivered pursuant to Section 7.11(c)), participate in conference calls or meetings with the Agent and the Lenders, such calls or meetings to be held at such time as may be agreed to by the Borrower and the Agent, to discuss the financial condition and results of operations of the Borrower and the Subsidiaries for the most recently-ended period for which financial statements have been delivered pursuant to Section 7.11(a), Section 7.11(b) or Section 7.11(c), as applicable.
(f) ABL Reporting. At the request of the Agent, any documents provided by the Loan Parties to the ABL Agent in accordance with the reporting requirements under the ABL Credit Agreement.
(g)
[reserved].
Weekly Reporting. Within three
(3) Business Days of the beginning of each calendar week, commencing with the week starting
October 25, 2021 (provided that the first such delivery shall be due on October 29, 2021) ,a thirteen-week cash flow report (a “13
Week Cash Flow Report”) for such week and each of the following twelve weeks together with, after delivery of the first 13 Week Cash Flow Report, a
line-by-line comparison of actual cash receipts versus the previously delivered 13 Week Cash Flow Report, in each case, in form and substance reasonably acceptable to
the Agent.
(h) [reserved].
(i) Preliminary Business Plan. Beginning with December 31, 2021, not later than December 31 of each year, the Preliminary Business Plan of the Loan Parties and their Subsidiaries.
(j) Business Plan. Not later than the earlier of (x) ten (10) Business Days after certification by the Board of Directors of Borrower and (y) February 28 of each year, the Business Plan of the Loan Parties and their Subsidiaries.
(k) SEC Reports. As soon as available, but not later than five (5) Business Days after the same are sent or filed, as the case may be, copies of all financial statements and reports that any Loan Party sends to any of the owners of its Equity Interests or files with the Securities and Exchange Commission or any other Governmental Authority and not otherwise required to be delivered to the Agent hereto.
(l) Other Financial Information. Promptly after the request by Agent, such additional financial statements and other related data and information as to the business, operations, results of operations, assets, collateral, liabilities or condition (financial or otherwise) of any Loan Party or any of its Subsidiaries as Agent may from time to time reasonably request.
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As to any information contained in materials furnished pursuant to Section 7.11(k), the Borrower shall not be separately required to furnish such information under clauses under Section 7.11(a), 7.11(b) and 7.11(c) above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish the information and materials described in Sections 7.11(a), 7.11(b) and 7.11(c) at the times specified therein.
Documents required to be delivered pursuant to Sections 7.11(a), 7.11(b), 7.11(c) or 7.11(k) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date
(i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address: https://www.teaminc.com; or
(ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Agent have access (whether a commercial, third-party website or whether sponsored by the Agent);
provided that the Borrower shall notify (by fax or e-mail transmission) the Agent and each Lender of the posting of any such documents and provide to the Agent by e-mail electronic versions (i.e., soft copies) of such documents. The Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.
7.12 Payment of Liabilities. The Loan Parties shall, and shall cause each of their Subsidiaries to, pay and discharge, in the ordinary course of business, all obligations and liabilities (including tax liabilities and other governmental charges), except where
(i) the same may be contested in good faith by appropriate proceedings and for which adequate reserves with respect thereto have been established in accordance with GAAP or
(ii) the failure to make payment could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
7.13 ERISA. The Loan Parties shall, and shall cause each of their Subsidiaries and ERISA Affiliates to,
(a) maintain each Plan intended to qualify under Section 401(a) of the Code so as to satisfy the qualification requirements thereof in all material respects,
(b) contribute, or require that contributions be made, in a timely manner
(i) to each Plan in amounts sufficient (x) to satisfy the minimum funding requirements of Section 302 of ERISA or Section 412 of the Code, if applicable, (y) to satisfy any other Requirements of Law and (z) to satisfy the terms and conditions of each such Plan, and
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(ii) to each Foreign Plan in amounts sufficient to satisfy the minimum funding requirements of any applicable law or regulation, without any application for a waiver from any such funding requirements,
(c) cause each Plan or Foreign Plan to comply in all material respects with applicable law (including all applicable statutes, orders, rules and regulations) and
(d) pay in a timely manner, in all material respects, all required premiums to the PBGC.
As used in this Section 7.13, “Foreign Plan” means any Plan that is subject to any Requirement of Law other than ERISA or the Code and that is maintained, or otherwise contributed to, by a Loan Party or any of its Subsidiaries for the benefit of employees outside the United States and Canada.
7.14 Environmental Matters. The Loan Parties shall, and shall cause each of their Subsidiaries to, conduct its business so as to comply in all material respects with and address all liabilities under all applicable Environmental Laws and obtain and renew all Permits, except, in each case, to the extent the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
7.15 Intellectual Property. The Loan Parties shall, and shall cause each of their Subsidiaries to, do and cause to be done all things necessary to preserve and keep in full force and effect all of its material registrations of Trademarks, Patents and Copyrights.
7.16 Solvency. The Loan Parties, taken as a whole, shall be and remain Solvent at all times.
7.17 [Reserved]. Access to
Employees. At the request of the Agent (and in any event, no later than Tuesday, October 26, 2021), the Borrower shall cause each of the following to meet with representatives of the Agent and Lenders: as may
be reasonably requested by the Agent, senior employees that are the head of any business line or division and senior members of the internal finance teams of the Borrower and its Subsidiaries.
7.18 [Reserved].
7.19 Anti-Money Laundering Laws and Anti-Corruption Laws. Each of the Loan Parties shall comply with all applicable Anti-Money Laundering Laws and Anti-Corruption Laws and shall maintain all of the necessary Permits required pursuant to any applicable Anti-Money Laundering Laws and Anti-Corruption Laws in order for such Loan Party to continue the conduct of its business as currently conducted, and will maintain policies procedures, and internal controls designed to promote and achieve compliance with such applicable laws and with the terms and conditions of this Agreement.
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7.20 Formation of Subsidiaries; Further Assurances.
Each Loan Party will, at the time that any Loan Party forms or acquires any direct or indirect Material Subsidiary organized under the laws of a Security Jurisdiction after the Closing Date (including in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws), within thirty (30) days of such event (or such later date as permitted by Agent in its reasonable discretion) (a) cause such new Material Subsidiary to provide to Agent a joinder or similar document to the applicable Security Documents, (b) deliver to Agent financing statements with respect to such Material Subsidiary, a Pledged Interests Addendum with respect to the Equity Interests of such Material Subsidiary (to the extent the shareholder of such Material Subsidiary is also a Loan Party), and such other security agreements (including Mortgages with respect to any Real Property owned in fee of such new Material Subsidiary), all in form and substance reasonably satisfactory to Agent, necessary to create the Liens intended to be created under the Security Documents; provided, that the joinder to this Agreement or the Security Documents, shall not be required to be provided to Agent with respect to any Subsidiary that is not organized under the laws of a Security Jurisdiction; provided, further, that, subject to Section 7.21, Team Industrial Services (UK) Limited shall not be required to become a Loan Party, (c) provide, or cause the applicable Loan Party to provide, to Agent a Pledged Interests Addendum and appropriate certificates and powers or financing statements, pledging all of the direct or beneficial ownership interest in such new Material Subsidiary (to the extent the shareholder of such Material Subsidiary is also a Loan Party); provided, that only sixty-five percent (65%) (or such higher percentage that would not cause an adverse tax impact on any Loan Party pursuant to Section 245A of the Code and Treasury Regulation Section 1.956-1) of the total outstanding Voting Interests of any first tier CFC (other than a Protected CFC) (and none of the Equity Interests of any Subsidiary of such CFC) shall be required to be pledged (which pledge, if reasonably requested by Agent, shall be governed by the laws of the jurisdiction of such Subsidiary), and (d) provide to Agent all other documentation, including one or more opinions of counsel reasonably satisfactory to Agent, which, in its reasonable discretion, is appropriate with respect to the execution and delivery of the applicable documentation referred to above (including policies of title insurance, flood certification documentation or other documentation with respect to all Real Property owned in fee and subject to a Mortgage). Without limiting the foregoing, each Loan Party will, and will cause each Subsidiary to, execute and deliver, or cause to be executed and delivered, to the Agent such documents, agreements and instruments, and will take or cause to be taken such further actions (including the filing and recording of financing statements and other documents), which may be required by law or which the Agent may, from time to time, reasonably request to carry out the terms and conditions of this Agreement and the other Loan Documents and, to ensure perfection and priority of the Liens created or intended to be created by the Collateral Documents, all at the expense of the Loan Parties; provided that no such action shall be required with respect to Collateral located in Quebec unless the aggregate fair market value of tangible Collateral in Quebec exceeds CAD $750,000.
7.21 Post-Closing Covenants. As promptly as practicable, and in any event within the applicable time period set forth on Schedule 7.21 (or such longer time as Agent may agree in its sole discretion), each Loan Party will deliver all documents and take all actions set forth on Schedule 7.21.
7.22 [Reserved].
7.23 Residency for Dutch Tax Purposes. Each Dutch Loan Party will remain resident for tax purposes in the Netherlands only and not create a permanent establishment or permanent representative outside the Netherlands, unless with the prior written consent of the Agent.
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7.24 Fiscal Unity for Dutch Tax Purposes. Any fiscal unity (fiscale eenheid) for Dutch corporate income tax purposes in which a Loan Party is included, will consist of Loan Parties only, unless with the prior written consent of the Agent.
7.25 Allocation of Tax Losses upon Termination of Fiscal Unity for Dutch Tax Purposes. If, at any time, a Loan Party is member of a fiscal unity (fiscale eenheid) for Dutch corporate income tax purposes (vennootschapsbelasting) and such fiscal unity is, in respect of that Loan Party, terminated (verbroken) or disrupted (beëindigd) as a result of or in connection with the Agent or a Lender enforcing its rights under any Loan Document, such Loan Party shall, at the request of the Agent, together with the parent company (moedermaatschappij) or deemed parent company (aangewezen moedermaatschappij) of that fiscal unity, for no consideration and as soon as reasonably practicable, lodge a request with the relevant Governmental Authority to allocate and surrender any tax losses (within the meaning of Article 20 of the Dutch Corporate Income Tax Act (Wet op de vennootschapsbelasting 1969)) to the Loan Party leaving the fiscal unity, to the extent such tax losses are attributable (toerekenbaar) to that Loan Party (within the meaning of Article 15af of the Dutch Corporate Income Tax Act (Wet op de vennootschapsbelasting 1969)).
ARTICLE VIII.
NEGATIVE COVENANTS
The Borrower covenants and agrees that, until Payment in Full of all Obligations:
8.1 Indebtedness. The Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, at any time create, incur, assume or suffer to exist any Indebtedness other than:
(a) Indebtedness under the Loan Documents;
(b) Indebtedness existing on the Closing Date and set forth in Schedule 8.1(b), and any Refinancing Indebtedness in respect of such Indebtedness;
(c) Indebtedness (including Capitalized Lease Obligations and purchase money Indebtedness) to finance all or any part of the purchase, lease, construction, installment, repair or improvement of property, plant or equipment or other fixed or capital assets in an aggregate principal amount not to exceed the greater of (i) $15,000,000 and (ii) an amount equal to 3.0% of Consolidated Tangible Assets at any time outstanding; provided that such Indebtedness is incurred within 90 days after the purchase, lease, construction, installation, repair or improvement of the property that is the subject of such Indebtedness;
(d) Bank Product Obligations (other than arising under Hedging Agreements) and Indebtedness under Permitted Hedging Agreements;
(e) Indebtedness comprised of Permitted Intercompany Advances;
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(f) Indebtedness in respect of performance bonds, bid bonds, appeal bonds, surety bonds and completion guarantees and similar obligations, in each case, provided in the ordinary course of business;
(g) Guarantees of Indebtedness of the Loan Parties or their Subsidiaries permitted to be incurred under this Agreement; provided that if the Indebtedness being guaranteed is subordinated to the Obligations, such guarantee shall be subordinated to the guarantee of the Obligations on terms at least as favorable to the Lenders as those contained in the subordination of such Indebtedness;
(h) Acquired Indebtedness in an amount not to exceed $15,000,000 at any one time;
(i) endorsement of negotiable instruments for deposit or collection in the ordinary course of business;
(j) Indebtedness incurred in the ordinary course of business in respect of
(i) overdraft facilities, employee credit card programs, netting services, automatic clearinghouse arrangements and other cash management and similar arrangements, and in connection with securities and commodities arising in connection with the acquisition or disposition of Permitted Investments and not any obligation in connection with margin financing,
(ii) up to $5,000,000 in the aggregate of any bankers’ acceptance, bank guarantees or letter of credit facilities, in each case, in the ordinary course of business,
(iii) the endorsement of instruments for deposit or the financing of insurance premiums,
(iv) deferred compensation or similar arrangements to the employees of the Loan Parties or any of their Subsidiaries,
(v) obligations to pay insurance premiums or take or pay obligations contained in supply agreements and
(vi) Indebtedness owed to any Person providing property, casualty, business interruption or liability insurance to any Loan Party or any of its Subsidiaries, so long as such Indebtedness shall not be in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of the annual premium for such insurance; or
(k) ABL Obligations in an amount not to exceed the ABL Cap Amount (as defined in the Intercreditor Agreement);
(l) [reserved];
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(m) Indebtedness of the Borrower or any Material Subsidiary in the form of purchase price adjustments or indemnification incurred in connection with the any Permitted Acquisition or any disposition permitted under Section 8.5;
(n) Subordinated Debt and Contingent Acquisition Indebtedness in an aggregate amount not to exceed $15,000,000 at any time outstanding;
(o) the 2017 Senior Convertible Notes; and
(p) Indebtedness of Subsidiaries of the Borrower that are not organized under the laws of a Security Jurisdiction in an aggregate amount not to exceed $10,000,000 at any time outstanding; and
(q) Indebtedness not otherwise permitted in this Section 8.1 in an aggregate amount not to exceed $7,500,000 at any time outstanding; provided, that
(i) the Net Leverage Ratio for each of the two consecutive fiscal quarters of the Borrower occurring after the Closing Date but immediately prior to such incurrence is less than 4.00 to 1.00 and
(ii) to the extent such Indebtedness is secured by a Lien on Collateral, such Lien must be junior to the Lien that secures the Obligations.
Notwithstanding the foregoing, on and after the Amendment No. 1 Effective Date and until the occurrence of the Catch Up Interest Payment Date, the Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, at any time create, incur, assume or suffer to exist any Indebtedness for borrowed money other than any such Indebtedness existing as of the Amendment No. 1 Effective Date and the ABL Obligations. Prior to the Catch Up Interest Payment Date, the Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, guarantee or otherwise become an obligor in respect of the 2017 Senior Convertible Notes (other than the Borrower).
8.2 [Reserved].
8.3 Entity Changes, Etc. The Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, divide, merge, amalgamate or consolidate with any Person, liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution) except that, so long as no Default exists or would result therefrom:
(a) any such Subsidiary may merge with or liquidate or dissolve into
(i) the Borrower, provided that the Borrower shall be the continuing or surviving Person, or
(ii) any one or more Subsidiaries, provided that when a subsidiary which is not a Loan Party merges with a Loan Party, the Loan Party shall be the continuing or surviving Person and when a Loan Party liquidates or dissolves, it shall liquidate and dissolve into another Loan Party;
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(b) any Subsidiary may sell all or substantially all of its assets (upon voluntary liquidation or otherwise), to the Borrower or to a Guarantor (or if such Subsidiary is not a Guarantor to another Subsidiary which is not a Guarantor);
(c) any Subsidiary may change its jurisdiction of organization, provided
(i) such Person provides the Agent with at least twenty (20) days prior written notice of change,
(ii) no Default exists at such time; and
(iii) if such Person is organized in the U.S., Canada, England or the Netherlands,
(A) such new jurisdiction is in the U.S., Canada, England or the Netherlands and
(B) if such Person is a Loan Party, such Person shall deliver such Security Documents and any other documentation (including opinions) as may be requested by the Agent to ensure the Agent maintains a valid, enforceable and perfected first priority Lien on the Collateral of such Person (subject only to Permitted Liens which are non-consensual Permitted Liens, permitted purchase money Liens, or the interests of lessors in respect of Capitalized Lease Obligations); and
(d) any Subsidiary may change in legal form if such change is not materially disadvantageous to the Lenders.
8.4 Change in Nature of Business. The Loan Parties will not, and will not permit any of their Subsidiaries to, at any time make any material change in the nature of their business as carried on at the date hereof or enter into any new line of business that is not similar, corollary, related, ancillary, incidental or complementary, or a reasonable extension, development or expansion thereof or ancillary thereto the business as carried on as of the date hereof.
8.5 Sales, Etc. of Assets. The Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, sell, transfer or otherwise dispose of any of its assets (including by an allocation of assets among newly divided limited liability companies pursuant to a “plan of division”) except:
(a) sales of Inventory in the ordinary course of business;
(b) the sale or other disposition of obsolete or worn out property, or other property no longer used or useful in the conduct of business, in each case, disposed of in the ordinary course of business (and not part of an accounts receivable financing, factoring or similar transaction (other than by a Subsidiary which is not a Loan Party if done in ordinary course));
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(c) the sale, transfer or other disposition of cash and Cash Equivalents in the ordinary course of business;
(d) sales, transfers or other dispositions of property that are a settlement of or payment in respect of any property or casualty insurance claim or any taking under power of eminent domain or by condemnation or similar proceeding of or relating to any property or asset of any Loan Party or any Subsidiary;
(e) non-exclusive licenses of Intellectual Property in the ordinary course of business and not interfering in any material respect with the business of the Loan Parties and their Subsidiaries;
(f) the abandonment of Intellectual Property (or lapse of any registration or application in respect of Intellectual Property) that is, in the reasonable good faith judgment of Borrower, no longer economically practicable to maintain or useful in the conduct of the business of the Loan Parties and their Subsidiaries; and
(g) dispositions of equipment or real property to a bona fide third party in an amount not to exceed $2,500,000 in any calendar year, to the extent that
(i) such property is exchanged for credit against the purchase price of similar replacement property,
(ii) the proceeds of such disposition are reasonably promptly applied to the purchase price of such replacement property or
(iii) the Board of Directors or senior management of the Borrower or such Subsidiary has determined in good faith that the failure to replace such property will not be detrimental to the business of the Borrower or such Subsidiary;
(h) dispositions permitted under Section 8.3;
(i) dispositions of property (i) by any Loan Party or Subsidiary to a Loan Party, (ii) by a subsidiary which is not a Loan Party to a subsidiary which is not a Loan Party or (iii) by a Loan Party to a subsidiary which is not a Loan Party so long as such disposition is for fair market value and otherwise not prohibited pursuant to Section 8.10;
(j) dispositions constituting Permitted Investments;
(k) dispositions set forth on Schedule 8.5; and
(l) sales or dispositions of other assets (including intangible property related to such fixed assets) so long as made at fair market value and the aggregate fair market value of all assets disposed of in the aggregate would not exceed $5,000,000 in any calendar year (which amount shall be increased by any unused portion of such $5,000,000 exclusion from the immediately preceding year) and not part of an accounts receivable financing, factoring or similar transaction (other than by a subsidiary which is not a Loan Party if done in ordinary course).
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8.6 Use of Proceeds. Borrower will not
(a) use any portion of the proceeds of any Loan in violation of Section 2.4 or for the purpose of purchasing or carrying any “margin stock” (as defined in Regulation U of the Federal Reserve Board) in any manner which violates the provisions of Regulation T, U or X of the Federal Reserve Board or for any other purpose in violation of any applicable statute or regulation, or of the terms and conditions of this Agreement, or
(b) take, or permit any Person acting on its behalf to take, any action which could reasonably be expected to cause this Agreement or any other Loan Document to violate any regulation of the Federal Reserve Board.
8.7 [Reserved].
8.8 Liens. The Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, at any time create, incur, assume or suffer to exist any Lien on or with respect to any assets other than Permitted Liens. For avoidance of doubt, after the Amendment No. 1 Effective Date, the Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, at any time create, incur, assume or suffer to exist any Lien on or with to any assets that secure the 2017 Senior Convertible Notes.
8.9 Dividends, Redemptions, Distributions, Etc.. The Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, pay any dividends or make any distributions on or in respect of its Equity Interests, or purchase, redeem or retire any of its Equity Interests or any warrants, options or rights to purchase any such Equity Interests, whether now or hereafter outstanding (“Interests”), or make any payment on account of or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of such Interests, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of the Loan Parties or any of their Subsidiaries (all of the foregoing, the “Restricted Payments”), except that:
(a) each Subsidiary may make Restricted Payments to the Borrower and any of its Subsidiaries; provided that if such Subsidiary is not a wholly-owned Subsidiary of the Borrower, such dividends must be made on a pro rata basis to the holders of its Equity Interests or on a greater than ratable basis to the extent such greater payments are made solely to the Borrower or a Subsidiary;
(b) the Borrower and each Subsidiary may declare and make dividends payable solely in the common stock or other common Equity Interests of such Person so long as, in the case of a Subsidiary, such Subsidiary remains wholly-owned by the Borrower; provided that if such Subsidiary is not a wholly-owned Subsidiary of the Borrower, such dividends must be made on a pro rata basis to the holders of its Equity Interests or on a greater than ratable basis to the extent such greater payments are made solely to the Borrower or a Subsidiary;
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(c) the Borrower and each Subsidiary may make Equity Interest repurchases with the proceeds received from the substantially concurrent issue of new shares of its common stock; and
(d) prior to the Amendment No. 1 Effective Date or after the occurrence of the Catch Up Interest Payment Date, Loan Parties or their Subsidiaries may make Restricted Payments up to $25,000,000 in the aggregate so long as
(i) before and after giving effect to such Restricted Payment, no Default exists or would result therefrom, and
(ii) after giving pro forma effect to such Restricted Payment,
(A) the Borrower shall be in compliance with each of the Financial Covenants as of the most recently ended fiscal quarter of the Borrower,
(B) Liquidity will be at least $15,000,000 and
(C) the Net Leverage Ratio as of the most recently ended fiscal quarter of the Borrower is less than 3.50 to 1.00.
8.10 Investments. The Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, at any time make or hold any Investment in any Person (whether in cash, securities or other property of any kind) except the following (collectively, the “Permitted Investments”):
(a) Investments existing on, or contractually committed as of, the date hereof and set forth on Schedule 8.10;
(b) Investments in cash and Cash Equivalents;
(c) Guarantees by the Loan Parties and their Subsidiaries constituting Indebtedness permitted by Section 8.1;
(d) loans or advances to employees, officers or directors of the Loan Parties or any of their Subsidiaries in the ordinary course of business for travel, relocation and related expenses; provided that the aggregate amount of all such loans and advances does not exceed $1,000,000 at any time outstanding;
(e) Permitted Hedging Agreements;
(f) prior to the Amendment No. 1 Effective Date or after the occurrence of the Catch Up Interest Payment Date, Permitted Acquisitions so long as (1) Liquidity will be at least $25,000,000 and (2) the Net Leverage Ratio is less than 4.50 to 1.00 on a pro forma basis after giving effect to such Permitted Acquisition;
(g) Permitted Intercompany Advances;
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(h) Investments by Borrower or any of its Subsidiaries in a Loan Party or in any Person that will become a Loan Party concurrently with such Investment;
(i) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;
(j) deposits of cash made in the ordinary course of business to secure performance of (i) operating leases and (ii) other contractual obligations that do not constitute Indebtedness;
(k) Investments
by (i) Subsidiaries that are not Loan Parties in Subsidiaries that are not Loan Parties and (ii) Loan Parties in Subsidiaries that are not Loan Parties in an aggregate amount (when combined with all other Investments made pursuant to
clauses (g) (to Subsidiaries that are not Loan Parties) and (n)) not to exceed $20,000,000 at any time outstanding; (and, prior to the Catch Up Interest Payment Date, solely in the ordinary
course of business and consistent with past practices); and
(l) [reserved];
(m) [reserved]; and
(n) prior to the Amendment No. 1 Effective Date or after the occurrence of the Catch Up Interest Payment Date, other Investments (including by way of clarification joint ventures) which in the aggregate (when combined with all other Investments made pursuant to clauses (g) (to Subsidiaries that are not Loan Parties) and (k)(ii)) do not exceed $20,000,000 at any time outstanding.
8.11 [Reserved].
8.12 Fiscal Year. The Loan Parties will not, and will not permit any of their Subsidiaries to, change their fiscal year from a year ending December 31.
8.13 Accounting Changes. The Loan Parties will not, and will not permit any of their Subsidiaries to, at any time make or permit any change in accounting policies, except as required by GAAP.
8.14 [Reserved].
8.15 ERISA Compliance. The Loan Parties will not, and will not permit any of their Subsidiaries or ERISA Affiliates to, directly or indirectly:
(i) engage in any Prohibited Transaction for which a statutory or class exemption is not available or a private exemption has not been previously obtained from the Department of Labor;
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(ii) permit to exist with respect to any Pension Plan any accumulated funding deficiency (as defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived;
(iii) terminate any Pension Plan where such event would result in any liability of any Loan Party or Subsidiary or ERISA Affiliate under Title IV of ERISA;
(iv) fail to make any required contribution or payment to any Multiemployer Plan;
(v) fail to pay any required installment or any other payment required under
Section 412 or 430 of the Code on or before the due date for such installment or other payment;
(vi) amend a Pension Plan resulting in an increase in current liability for the plan year such that any Loan Party or Subsidiary or ERISA Affiliate is required to provide security to such Plan under Section 307 of ERISA or Section 401(a)(29) of the Code;
(vii) withdraw from any Multiemployer Plan where such withdrawal is reasonably likely to result in any liability of any such entity under Title IV of ERISA; or
(viii) take any action that would cause a Termination Event or the imposition of an excise tax under Section 4978 or Section 4979A of the Code.
8.16 UK Pensions.
(a) Each Loan Party shall ensure that:
(i) no member of the Group is or becomes an employer (for the purposes of sections 38 to 51 of the Pensions Act 2004) of an occupational pension scheme which is not a money purchase scheme (both terms as defined in the Pensions Schemes Act 1993) and is not a scheme within section 38(1)(b) of the Pensions act 2004 or “connected” with or an “associate” of (as those terms are used in sections 38 and 43 of the Pensions Act 2004 save that for the purposes of this clause, a member of the Group shall not be connected with another company solely by reason of one or more of its directors or employees being a director of that other company) such an employer;
(ii) any contributions that a UK Loan Party or any of its Subsidiaries are required to pay to Furmanite International Limited Pension Plan are so paid before or when they fall due and payable in accordance with the schemes’ governing documentation and any overriding legislation; and
(iii) no action or omission is taken by any member of the Group in relation to a pension scheme which has or is reasonably likely to have a Material Adverse Effect including, without limitation, the commencement of winding-up proceedings but excluding for these purposes any action or omission that is taken by any member of the Group in relation to the continuation or termination of employment of any employee of the Group (on grounds of ill-health or otherwise).
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(b) Each Loan Party shall promptly:
(i) notify the Agent of any material change in the rate of contributions to the Furmanite International Limited Pension Plan paid or recommended to be paid (whether by the scheme actuary or otherwise) or required (by law or otherwise);
(ii) provide to the Agent a copy of the Recovery Plan (and any amendments and/or variations thereto from time to time); and
(iii) (subject to any confidentiality obligations) provide copies of all notifications made to the Pensions Regulator under section 69 of the Pensions Act 2004 (as amended from time to time).
(c) Each Loan Party shall immediately notify the Agent:
(i) if it receives a Financial Support Direction or a contribution Notice from the Pensions Regulator;
(ii) (subject to any confidentiality obligations) of any investigation or proposed investigation by the Pensions Regulator of which it is aware which has resulted or may result in the Pensions Regulator taking any regulatory action against any member of the Group; and
(iii) any event of which it is aware which has triggered or may trigger a debt on any member of the Group under sections 75 or 75A of the Pensions Act 2004.
8.17 Prepayments and Amendments. The Loan Parties will not, and will not permit any of their Subsidiaries to,
(a) at any time, directly or indirectly, make any prepayment in cash in respect of principal of or interest in any Subordinated Debt, any unsecured Indebtedness or any other Indebtedness secured a Lien that is junior to the Lien securing the Obligations (collectively, “Junior Indebtedness”), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Junior Indebtedness more than one year prior to the scheduled maturity date thereof; provided that, for the avoidance of doubt, the ABL Obligations shall not constitute Junior Indebtedness; provided, further, that the foregoing shall not apply to:
(i) the 2017 Senior Convertible Notes, provided that with respect to principal thereof, such payment may only be made if at the time of such payment the Net Leverage Ratio as of the most recently ended Fiscal Quarter of the Borrower is less than or equal to 7.00 to 1.00,
(ii) conversion of any Junior Indebtedness to Equity Interests of the Borrower (other than Disqualified Equity Interests),
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(iii) the payment, prepayment, repurchase, redemption, retirement, acquisition or payment on the account of any Junior Indebtedness (other than the 2017 Senior Convertible Notes) with any Refinancing Indebtedness in respect thereof,
(iv) the payment, prepayment, repurchase, redemption, retirement, acquisition or payment on account of any intercompany indebtedness (A) owing to a Loan Party to another Loan Party, (B) owing by a Subsidiary that is not a Loan Party to a Subsidiary that is not a Loan Party and (C) owing by a Subsidiary that is not a Loan Party to a Loan Party and as to any Subordinated Debt, except as expressly permitted in the Subordination Agreement applicable thereto,
(v) the payment of regularly scheduled interest (including any penalty interest, if applicable) and payment of fees, expenses and indemnification obligations as and when due (other than payments with respect to Junior Indebtedness that are prohibited by the subordination provisions thereof), or
(vi) prior to the Amendment No. 1 Effective Date or after the occurrence of the Catch Up Interest Payment Date, prepayments of up to $50,000,000 in the aggregate of Junior Indebtedness so long as
(A) before and after giving effect to such prepayment, no Default exists or would result therefrom, and
(B) after giving pro forma effect to such prepayment,
(1) Liquidity will be at least $15,000,000, and
(2) the Net Leverage Ratio as of the most recently ended fiscal quarter of the Borrower is less than 4.50 to 1.00.
(b) directly or indirectly, amend, modify, or change any of the terms or provisions of the Governing Documents of any Loan Party or any of its Subsidiaries or any documentation in respect of any Junior Indebtedness, in each case, if the effect thereof, either individually or in the aggregate, could reasonably be expected to be materially adverse to the interests of the Lenders; provided, this Section 8.17(b) shall not prohibit the refinancing, renewal or extension of Junior Indebtedness to the extent otherwise permitted by Section 8.1.
(c) at any time prior to the occurrence of the Catch Up Interest Payment Date, directly or indirectly, make any repayment or prepayment in cash in respect of principal in any 2017 Senior Convertible Notes, including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination thereof.
8.18 Lease Obligations. The Loan Parties will not, and will not permit any of their Subsidiaries to, at any time create, incur or assume any obligations as lessee for the rental or hire of real or personal property in connection with any sale and leaseback transaction other than operating lease transactions for equipment paid for by such operating leases.
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8.19 [Reserved].
8.20 [Reserved].
8.21 Securities and Deposit Accounts. The Loan Parties will not establish or maintain any securities account or deposit account (other than
securities accounts or deposit accounts which constitute Excluded Property or which hold less than $5,000,000 in the aggregate at any one time) unless Agent shall have received a Control Agreement, duly executed by the applicable Loan Party and the
securities intermediary or depository bank parties thereto, in respect of such securities account or deposit account, subject to the requirements set forth in Section 7.21.
8.22 Negative Pledge. The Loan Parties will not, and will not permit any of their Subsidiaries to, enter into or suffer to exist any agreement (other than in favor of Agent) prohibiting or conditioning the creation or assumption of any Lien in favor of the Obligations upon any of its assets; provided that the foregoing shall not apply to:
(i) restrictions or conditions imposed by Requirements of Law or by this Agreement or any other Loan Document,
(ii) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale,
(iii) restrictions or conditions imposed by any agreement relating to secured or purchase money Indebtedness or capital leases permitted by this Agreement if such restrictions and conditions apply only to the property or assets securing such Indebtedness,
(iv) customary provisions in lease and other contracts restricting the assignment thereof,
(v) customary anti-assignment clauses in licenses under which the Borrower or any of its Subsidiaries are the licensees,
(vi) any agreement in effect at a time a Person becomes a Subsidiary, so long as such agreement was not entered into in connection with or in contemplation of such Person becoming a Subsidiary,
(vii) any encumbrances or restrictions imposed by any amendments or refinancings that are otherwise permitted by the Loan Documents; provided that such amendments or refinancings are no more restrictive, taken as a whole, with respect to such encumbrances and restrictions than those prior to such amendments or refinancings,
(viii) customary restrictions on Liens imposed by agreements relating to deposit accounts and cash deposits and in the ordinary course of business,
(ix) [Reserved], and
(x) restrictions or conditions set forth in the ABL Loan Documents.
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8.23 Affiliate Transactions. The Loan Parties will not, and will not permit any of their Subsidiaries to, enter into or be party to any transaction with an Affiliate, except
(i) transactions contemplated by the Loan Documents;
(ii) transactions with Affiliates that are in effect as of the Closing Date, as shown on Schedule 8.23;
(iii) transactions with Affiliates in the ordinary course of business, upon fair and reasonable terms and no less favorable than would be obtained in a comparable arm’s-length transaction with a non-Affiliate;
provided, that the foregoing restrictions shall not apply to
(i) employment and severance arrangements (including equity incentive plans and employee benefit plans and arrangements) with their respective officers and employees in the ordinary course of business;
(ii) payment of customary fees and reasonable out of pocket costs to, and indemnities for the benefit of, directors, officers and employees of the Borrower and its Subsidiaries in the ordinary course of business;
(iii) any transaction solely between or among the Subsidiaries that are not Loan Parties;
(iv) any transaction solely between or among Loan Parties; or
(v) guarantees by the Borrower or any Subsidiary of operating leases or of other obligations that do not constitute Indebtedness, in each case entered into by the Borrower or any Subsidiary in the ordinary course of business or consistent with past practice or industry norm.
8.24 Collateral Located in Quebec. The Loan Parties will not, and will not permit any of their Subsidiaries to own tangible Collateral in Quebec having a fair market value in excess of CAD $750,000, unless the Agent has confirmed in writing that
it is satisfied that the Loan Parties or Subsidiaries owning such Collateral in Quebec have taken all action that the Agent has reasonably requested in order to perfect and protect the Agent’s security interest in such Collateral under the laws
of Quebec.
ARTICLE IX.
FINANCIAL COVENANT(S)
Until the Payment in Full of all Obligations:
9.1 Maximum Net Leverage Ratio. The Borrower hereby covenants and agrees that the Loan Parties and their Subsidiaries will maintain a Net Leverage Ratio, calculated for the four (4) fiscal quarter period ending on the last day of the fiscal quarter most recently ended on or after March 31, 2022, of less than or equal to 7.00 to 1.00.
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9.2 Maximum Annual Capital Expenditures. The Borrower hereby covenants and agrees that the Loan Parties and their Subsidiaries will not exceed $33,000,000 in Capital Expenditures during any four (4) fiscal quarter period ending on the last day of the fiscal quarter most recently ended; provided that this Section 9.2 will not apply if the Net Leverage Ratio is less than or equal to 4.00 to 1.00 as of the end of the second and fourth fiscal quarter of such calendar year.
ARTICLE X.
EVENTS OF DEFAULT
10.1 Events of Default. The occurrence of any of the following events shall constitute an “Event of Default”:
(a) any Loan Party shall fail to pay any (i) principal of any Loan when due and payable, whether at the due date therefor, stated maturity, by acceleration, or otherwise; or (ii) interest, fees, Lender Group Expenses or other Obligations (other than an amount referred to in the foregoing clause (i)) when due and payable, whether at the due date therefor, stated maturity, by acceleration, or otherwise, and such default continues unremedied for a period of three (3) Business Days; or
(b) there shall occur a default in the performance or observance of any covenant contained in
(i) Section 2.4, 2.5(a), 2.5(b), 2.7 (with respect to any Loan Party), 7.1, 7.6, 7.7, 7.8, 7.11, 7.16, 7.17, 7.19, 7.20 or 7.21, Article 8 or Article 9; or
(ii) this Agreement or any other Loan Document (other than those referred to in Section 10.1(a) and Section 10.1(b)(i)) and such default continues for a period of thirty (30) days after the earlier of (x) the date on which such default first becomes known to any Responsible Officer of Borrower or (y) written notice thereof from Agent to Borrower; or
(c) The Pensions Regulator issues a Financial Support Direction or a Contribution Notice to any Loan Party; or
(d) any Loan Party or any of its Material Subsidiaries shall become the subject of an Insolvency Event; or
(e) (i) any Loan Party or any of its Subsidiaries shall fail to make any payment (whether of principal, interest or otherwise and regardless of amount) in respect of any Material Indebtedness when due (whether at scheduled maturity or by required prepayment, acceleration, demand or otherwise), or
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(ii) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with all applicable grace periods having expired) the holder or holders (or a trustee or agent on behalf of such holder or holders) to declare any Material Indebtedness to be due and payable, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; or
(f) any representation or warranty made or deemed made by or on behalf of any Loan Party or any of its Subsidiaries under or in connection with any Loan Document, or in any Financial Statement, report, document or certificate delivered in connection therewith, shall prove to have been incorrect in any material respect (except that such materiality qualifier shall not be applicable to any representations and warranties that are already qualified or modified by materiality in the text thereof) when made or deemed made; or
(g) any judgment or order for the payment of money which, when taken together with all other judgments and orders rendered against the Loan Parties and their Subsidiaries exceeds $12,500,000 in the aggregate (to the extent not covered by insurance) and either
(i) there is a period of thirty consecutive days at any time after the entry of any such judgment, order, or award during which (A) the same is not discharged, satisfied, vacated, or bonded pending appeal, or (B) a stay of enforcement thereof is not in effect, or
(ii) enforcement proceedings are commenced upon such judgment, order, or award; or
(h) a Change of Control shall occur; or
(i) this Agreement or any other Security Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and perfected and, except to the extent of Permitted Liens which are non-consensual Permitted Liens, permitted purchase money Liens or the interests of lessors in respect of Capitalized Lease Obligations, first priority Lien on any material portion of the Collateral covered thereby;
(j) The Intercreditor Agreement shall be invalidated or otherwise cease to constitute the legal, valid and binding obligations of the ABL Agent enforceable in accordance with its terms; or
(k) (i) any material covenant, agreement or obligation of a Loan Party contained in or evidenced by any of the Loan Documents shall cease to be enforceable, or shall be determined to be unenforceable, in accordance with its terms;
(ii) any Loan Party shall deny or disaffirm its obligations under any of the Loan Documents or any Liens granted in connection therewith or shall otherwise challenge any of its obligations under any of the Loan Documents; or
(iii) any Liens granted on any of the Collateral in favor of the Agent shall be determined to be void, voidable or invalid, are subordinated or are not given the priority contemplated by this Agreement or any other Loan Document.
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10.2 Acceleration and Termination. Upon the occurrence and during the continuance of an Event of Default, Agent, at the direction of the Required Lenders, shall take any or all of the following actions, without prejudice to the rights of Agent or any Lender to enforce its claims against Borrower:
(a) Acceleration. To declare all Obligations immediately due and payable (except with respect to any Event of Default with respect to a Loan Party specified in Section 10.1(d), in which case all Obligations (including with any Applicable Premium) shall automatically become immediately due and payable) without presentment, demand, protest or any other action or obligation of Agent or any Lender, all of which are hereby waived by the Borrower.
(b) Termination of Commitments. To declare the Commitments immediately terminated (except with respect to any Event of Default with respect to a Loan Party set forth in Section 10.1(d), in which case the Commitments shall automatically terminate) and, at all times thereafter, any Loan made by the Lenders shall be in their discretion. Notwithstanding any such termination, until all Obligations shall have been Paid in Full, Agent and each Lender shall retain all rights under guaranties and all security in existing and future Receivables, inventory, general intangibles, investment property, real property and equipment of the Loan Parties and all other Collateral held by it hereunder and under the Security Documents.
Notwithstanding anything to the contrary contained herein, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained by, the Agent in accordance with this Article X for the benefit of the Secured Parties.
10.3 Other Remedies.
(a) [Reserved]
(b) The Loan Parties and the Lenders hereby irrevocably authorize Agent, based upon the instruction of the Required Lenders, to, upon the occurrence and during the continuation of an Event of Default,
(i) consent to the sale of, credit bid, or purchase (either directly or indirectly through one or more entities) all or any portion of the Collateral at any sale thereof conducted under the provisions of the Bankruptcy Code, including Section 363 of the Bankruptcy Code, or the Insolvency Act 1986,
(ii) credit bid or purchase (either directly or indirectly through one or more entities) all or any portion of the Collateral at any sale or other disposition thereof conducted under the provisions of the UCC, including pursuant to Sections 9-610 or 9-620 of the UCC, or
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(iii) credit bid or purchase (either directly or indirectly through one or more entities) all or any portion of the Collateral at any other sale or foreclosure conducted or consented to by Agent in accordance with applicable law in any judicial action or proceeding or by the exercise of any legal or equitable remedy, in each case, free from any right of redemption, which right is expressly waived by Borrower.
If notice of intended disposition of any Collateral is required by law, it is agreed that ten (10) days’ notice shall constitute reasonable notification. Borrower will assemble the Collateral in their possession and make it available at such locations in the United States as Agent may specify, whether at the premises of a Loan Party or elsewhere, and will make reasonably available to Agent the premises and facilities of each Loan Party for the purpose of Agent’s taking possession of or removing the Collateral or putting the Collateral in saleable form. Agent may sell the Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker’s board or at any of Agent’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as Agent may deem commercially reasonable. Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. The Borrower hereby grants Agent a license to enter and occupy (in each case, so long as no Event of Default then exists, at reasonable times and subject to reasonable procedures) any of Borrower’ leased or owned premises and facilities, without charge, to exercise any of Agent’s rights or remedies. The proceeds received from any sale of Collateral shall be applied in accordance with Section 10.5.
10.4 License for Use of Software and Other Intellectual Property. Borrower hereby grants to Agent a license or other right to use, without charge, all computer software programs, data bases, processes, trademarks, tradenames, copyrights, labels, trade secrets, service marks, advertising materials and other rights, assets and materials used by Borrower in connection with its businesses or in connection with the Collateral, in each case with respect to any exercise of remedies hereunder.
10.5 Post-Default Allocation of Payments.
(a) Allocation. Notwithstanding anything herein to the contrary, during an Event of Default, if so directed by the Required Lenders or at Agent’s discretion, monies to be applied to the Obligations, whether arising from payments by the Loan Parties, realization on Collateral, setoff, or otherwise, shall be allocated as follows:
(i) first, to all Lender Group Expenses owing to Agent (including attorneys’ fees) in its capacity as Agent;
(ii) second, to all Lender Group Expenses owing to the Lenders;
(iii) third, [reserved];
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(iv) fourth, [reserved];
(v) fifth, to all Obligations constituting fees (other than any Applicable Premium); and
(vi) sixth, to all Obligations constituting interest; and
(vii) seventh, to all Obligations constituting principal and, thereafter, to all Obligations constituting Applicable Premium;
(viii) eighth, to all other Obligations;
(ix) ninth, [reserved];
(x) tenth, [reserved]; and
(xi) finally, to the Loan Parties or whoever else may be lawfully entitled thereto.
Amounts shall be applied to each of the foregoing categories of Obligations in the order presented above before being applied to the following category. Where applicable, all amounts to be applied to a given category will be applied on a pro rata basis among those entitled to payment in such category. The allocations set forth in this section are solely to determine the rights and priorities of the Secured Parties among themselves and may be changed by agreement among them without the consent of any Loan Party. No Loan Party is entitled to any benefit under this Section or has any standing to enforce this section.
10.6 No Marshaling; Deficiencies; Remedies Cumulative. Agent shall have no obligation to marshal any Collateral or to seek recourse against or satisfaction of any of the Obligations from one source before seeking recourse against or satisfaction from another source. The net cash proceeds resulting from Agent’s exercise of any of the foregoing rights to liquidate all or substantially all of the Collateral, shall be applied by Agent to such of the Obligations and in such order as Agent shall elect in its discretion, whether due or to become due. Borrower shall remain liable to Agent and the Lenders for any deficiencies, and Agent and the Lenders in turn agree to remit to the applicable Loan Party or its successor or assign any surplus resulting therefrom. All of Agent’s and the Lenders’ remedies under the Loan Documents shall be cumulative, may be exercised simultaneously against any Collateral and any Loan Party or in such order and with respect to such Collateral or such Loan Party as Agent or the Lenders may deem desirable, and are not intended to be exhaustive.
10.7 Waivers. Except as may be otherwise specifically provided herein or in any other Loan Document, Borrower hereby waive any right to a judicial or other hearing with respect to any action or prejudgment remedy or proceeding by Agent to take possession, exercise control over, or dispose of any item of Collateral in any instance (regardless of where the same may be located) where such action is permitted under the terms of this Agreement or any other Loan Document or by applicable law or of the time, place or terms of sale in connection with the exercise of Agent’s or any Lender’s rights hereunder and also waives any bonds, security or sureties required by any statute, rule or other law as an incident to any taking of possession by
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Agent of any Collateral. Borrower also waive any damages (direct, consequential or otherwise) occasioned by the enforcement of Agent’s or any Lender’s rights under this Agreement or any other Loan Document including the taking of possession of any Collateral of Borrower or the giving of notice to any account debtor or the collection of any Receivable of a Loan Party. Borrower also consent that Agent and the Lenders may enter upon any premises owned by or leased to it without obligations to pay rent or for use and occupancy, through self-help, without judicial process and without having first obtained an order of any court (in each case in connection with the remedies hereunder). These waivers and all other waivers provided for in this Agreement and the other Loan Documents have been negotiated by the parties, and Borrower acknowledges that it has been represented by counsel of its own choice, has consulted such counsel with respect to its rights hereunder and has freely and voluntarily entered into this Agreement and the other Loan Documents as the result of arm’s-length negotiations.
10.8 Further Rights of Agent and the Lenders. If Borrower shall fail to purchase or maintain insurance (where applicable), or to pay any tax, assessment, governmental charge or levy, except as the same may be otherwise permitted hereunder or which is being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, or if any Lien prohibited hereby shall not be paid in full and discharged or if a Borrower shall fail to perform or comply with any other covenant, promise or obligation to Agent or any Lender hereunder or under any other Loan Document, in each case of the foregoing to the extent an Event of Default arises and continues, the Agent may (but shall not be required to) perform, pay, satisfy, discharge or bond the same for the account of Borrower, and all amounts so paid by Agent shall be treated as a Term Loan comprised of Base Rate Advances hereunder and shall constitute part of the Obligations.
10.9 Interest After Event of Default. Borrower agrees and acknowledges that the additional interest and fees that may be charged under Section 4.2 are
(a) an inducement to the Lenders to make Advances hereunder and that the Lenders and Agent would not consummate the transactions contemplated by this Agreement without the inclusion of such provisions,
(b) fair and reasonable estimates of the Lenders’ and Agent’s costs of administering the credit facility upon an Event of Default, and
(c) intended to estimate the Lenders’ and Agent’s increased risks upon an Event of Default.
10.10 Receiver. In addition to any other remedy available to it, Agent shall also have the right, upon the occurrence of an Event of Default and during its continuation, to seek and obtain the appointment of a receiver to take possession of and operate and/or dispose of the business and assets of Borrower.
10.11 Rights and Remedies not Exclusive. The enumeration of the foregoing rights and remedies is not intended to be exhaustive and the exercise of any right or remedy shall not preclude the exercise of any other right or remedy provided for herein or in any other Loan Document or otherwise provided by law from and after the occurrence of any Event of Default and during its continuation, all of which shall be cumulative and not alternative.
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ARTICLE XI.
THE AGENT
11.1 Appointment of Agent.
(a) Each Lender hereby designates Atlantic Park as its agent and irrevocably authorizes it to take action on such Lender’s behalf under the Loan Documents and to exercise the powers and to perform the duties described therein and to exercise such other powers as are reasonably incidental thereto. Agent may perform any of its duties by or through its agents or employees or by or through one or more sub-agents appointed by it.
(b) Each Lender further irrevocably authorizes the Agent to accept, for and on behalf of the Lenders, any parallel debt obligations with the Loan Parties pursuant to which the Agent shall have its own, independent right to demand payment of the amounts payable by each Loan Party in connection with the Obligations.
(c) The provisions of this Article are solely for the benefit of Agent and the Lenders, and except as expressly set forth herein, Loan Parties shall not have any rights with respect to any of the provisions hereof. Agent shall act solely as agent of the Lenders and assume no obligation toward or relationship of agency or trust with or for Borrower.
11.2 Nature of Duties of Agent. Agent shall have no duties or responsibilities except those expressly set forth in the Loan Documents. Neither Agent nor any of its officers, directors, employees or agents shall be liable for any action taken or omitted by it or them as such hereunder or in connection herewith, unless caused by its or their gross negligence or willful misconduct. The duties of Agent shall be mechanical and administrative in nature. Agent does not have a fiduciary relationship with or any implied duties to any Lender or any participant of any Lender.
11.3 Lack of Reliance on Agent.
(a) Independent Investigation. Independently and without reliance upon Agent, each Lender, to the extent it deems appropriate, has made and shall continue to make
(i) its own independent investigation of the financial or other condition and affairs of Borrower and the other Loan Parties in connection with taking or not taking any action related hereto and
(ii) its own appraisal of the creditworthiness of Borrower and the other Loan Parties, and, except as expressly provided in this Agreement, Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Initial Term Loans or at any time or times thereafter.
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(b) No Obligation of Agent. Agent shall not be responsible to any Lender for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith or for the execution, effectiveness, genuineness, validity, enforceability, collectability, priority or sufficiency of this Agreement or the financial or other condition of Borrower and the other Loan Parties. Agent shall not be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or any other Loan Document, the financial condition of Borrower and the other Loan Parties, or the existence or possible existence of any Default or Event of Default, and shall not be deemed to have knowledge of any Default or Event of Default unless and until written notice describing such Default or Event of Default is given to such Agent by a Loan Party or a Lender.
11.4 Certain Rights of Agent. Agent may request instructions from the Required Lenders at any time. If Agent requests instructions from the Required Lenders with respect to any action or inaction, it shall be entitled to await instructions from the Required Lenders. No Lender shall have any right of action based upon Agent’s action or inaction in response to instructions from the Required Lenders.
11.5 Reliance by Agent. Agent may rely upon any written, electronic or telephonic communication it believes to be genuine and to have been signed, sent or made by the proper Person. Agent may obtain the advice of legal counsel (including counsel for Borrower with respect to matters concerning Borrower), independent public accountants and other experts selected by it and shall have no liability for any action or inaction taken or omitted to be taken by it in good faith based upon such advice.
11.6 Indemnification of Agent. To the extent Agent is not reimbursed and indemnified by Borrower, each Lender will reimburse and indemnify Agent to the extent of such Lender’s Pro Rata Share (determined as of the time that such indemnity payment is sought) for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Agent in performing its duties hereunder or otherwise relating to the Loan Documents unless resulting from Agent’s gross negligence or willful misconduct as determined in a final and non-appealable judgment by a court of competent jurisdiction. The agreements contained in this Section shall survive any termination of this Agreement and the other Loan Documents and the Payment in Full of the Obligations.
11.7 Agent in Its Individual Capacity. In its individual capacity, Agent shall have the same rights and powers hereunder as any other Lender or participation interest and may exercise the same as though it was not performing the duties specified herein. The terms “Lenders,” “Required Lenders,” “holders of Notes” or any similar terms shall, unless the context clearly otherwise indicates, include Atlantic Park in its individual capacity. Agent and its Affiliates may accept deposits from, lend money to, acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory or other business with Borrower or any Affiliate of Borrower as if it were not performing the duties specified herein, and may accept fees and other consideration from Borrower for services in connection with this Agreement and otherwise without having to account for the same to the Lenders.
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11.8 Holders of Notes.
Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof shall have been filed with Agent. Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is the holder of any Note, shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note or of any Note or Notes issued in exchange therefor.
11.9 Successor Agent.
(a) Resignation. Agent may, upon twenty (20) Business Days’ notice to the Lenders and Borrower, resign by giving written notice thereof to the Lenders and Borrower.
(b) Replacement of Agent after Resignation. Upon receipt of notice of resignation by Agent, the Required Lenders, with, so long as no Event of Default then exists, the consent of the Borrower (such consent not to be unreasonably withheld or delayed) may appoint a successor agent. If a successor agent has not accepted its appointment within fifteen (15) Business Days, then the retiring Agent may (but shall not be obligated to), on behalf of the Lenders, appoint a successor agent which, so long as no Event of Default then exists, shall be subject to the written approval of Borrower, which approval shall not be unreasonably withheld and shall be delivered to the retiring Agent and the Lenders within ten (10) Business Days after Borrower’s receipt of notice of a proposed successor agent.
(c) [reserved].
(d) Discharge. Upon its acceptance of the agency hereunder, such successor Agent shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. The retiring Agent shall continue to have the benefit of the provisions of this Article for any action or inaction while it was Agent.
(e) For purposes of the Dutch Security Documents, any resignation by the Agent is not effective with respect to its rights under any parallel debt obligations until all rights and obligations with respect to such parallel debt obligations have been assigned to and assumed by the successor Agent. The Agent will cooperate in assigning its right under the parallel debt obligations to any such successor agent and will cooperate in transferring all rights under any Dutch Security Document to such successor agent.
11.10 Collateral Matters.
(a) Exercise Binding. Except as otherwise set forth herein, any action or exercise of powers by Agent provided under the Loan Documents, together with such other powers as are reasonably incidental thereto, shall be deemed authorized by and binding upon all of the Lenders. At any time and without notice to or consent from any Lender, Agent may take any action necessary or advisable to perfect and maintain the perfection of the Liens upon the Collateral.
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(b) Releases. Agent is authorized to release any Lien granted to or held by it upon any Collateral
(i) upon Payment in Full of all of the Obligations,
(ii) upon any sale or transfer of Collateral which is permitted pursuant to the terms by this Agreement or
(iii) if the release can be and is approved by the Required Lenders.
Agent may request, and the Lenders will provide, confirmation of Agent’s authority to release particular types or items of Collateral.
(c) Sale of Collateral. Upon any sale or transfer of Collateral which is permitted pursuant to the terms of this Agreement, or consented to in writing by the Required Lenders or all of the Lenders, as applicable, and upon at least three (3) Business Days’ prior written request (or such shorter period as the Agent may agree to in its sole discretion) by Borrower, Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to Agent herein or under any of the other Loan Documents or pursuant hereto or thereto upon the Collateral that was sold or transferred, provided that
(i) Agent shall not be required to execute any document on terms which would reasonably expose Agent to liability or create any obligation or entail any consequence other than the release of such Liens and
(ii) such release shall not in any manner discharge, affect or impair the Obligations or any Liens upon (or obligations of Borrower in respect of) all interests retained by Borrower, including, without limitation, the proceeds of the sale, all of which shall continue to constitute part of the Collateral.
In the event of any sale or transfer of Collateral in the exercise of remedies, or any foreclosure with respect to any of the Collateral, Agent shall be authorized to deduct all of the expenses reasonably incurred by Agent from the proceeds of any such sale, transfer or foreclosure.
(d) No Obligation for Agent. Agent shall not have any obligation to assure that the Collateral exists or is owned by the Borrower, that the Collateral is cared for, protected or insured, or that the Liens on the Collateral have been created or perfected or have any particular priority. With respect to the Collateral, Agent may act in any manner it may deem appropriate, in its sole discretion, given Atlantic Park’s own interest in the Collateral as one of the Lenders, and it shall have no duty or liability whatsoever to the Lenders with respect thereto, except for its gross negligence or willful misconduct as determined in a final and non-appealable judgment by a court of competent jurisdiction.
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11.11 Actions with Respect to Defaults. In addition to Agent’s right to take actions on its own accord as permitted under this Agreement, Agent shall take such action with respect to an Event of Default as shall be directed by the Required Lenders. Until Agent shall have received such directions, Agent may act or not act as it deems advisable and in the best interests of the Lenders.
11.12 Delivery of Information. Agent shall not be required to deliver to any Lender originals or copies of any documents, instruments, notices, communications or other information received by Agent from Borrower, the Required Lenders, any Lender or any other Person under or in connection with this Agreement or any other Loan Document except (i) as specifically provided in this Agreement or any other Loan Document and (ii) as specifically requested from time to time in writing by any Lender with respect to a specific document, instrument, notice or other written communication received by and in the possession of Agent at the time of receipt of such request and then only in accordance with such specific request.
11.13 English Law Governed Transaction Security.
(a) This Section 11.13 shall be governed by English law and applies in relation to the English Security Documents, with the security interest created or expressed to be created pursuant to the English Security Documents being the “English Transaction Security”. For the purposes of this Section 11.13 only:
(i) “Finance Parties” means each Secured Bank Provider, Lender and the Agent;
(ii) “Secured Parties” means each Finance Party from time to time party to this Agreement, any Receiver or Delegate and each other agent, arranger and lender from time to time party to this Agreement;
(iii) “Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any part of the Collateral; and
(iv) “Delegate” means any delegate, agent, attorney or co-trustee appointed by the Agent.
(b) The Agent declares that it holds the benefit of the English Transaction Security in trust for each Finance Party on the terms contained in this Agreement.
(c) Each of the Finance Parties:
(i) authorizes the Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Agent under or in connection with the English Security Documents together with any other incidental rights, powers, authorities and discretions; and
(ii) agrees that no Finance Party shall have any independent power to enforce, or have recourse to, any of the Liens or Collateral created or evidenced, or expressed to be created or evidenced, under the English Security Documents or to exercise any right, power, authority or discretion arising under the English Security Documents except through the Agent.
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(d) The Agent shall have the benefit of (without limitation) Sections 11.2 (Nature of Duties of Agent), 11.3 (Lack of Reliance on Agent), 11.4 (Certain Rights of Agent), 11.5 (Reliance by Agent), 11.6 (Indemnification of Agent), 11.10 (Collateral Matters), 11.11 (Actions with Respect to Defaults), 11.12 (Delivery of Information), 12.4 (Indemnification; Reimbursement of Expenses of Collection), 12.6 (Nonliability of Agent and Lenders), 12.13 (Limitation of Liability), 12.21 (Confidentiality) and 12.26 (Right to Cure), as if:
(i) references in such clauses were governed by English law; and
(ii) references in such clauses to the Agent were to the Agent acting in its capacity as “Security Agent” in respect of the English Transaction Security, mutatis mutandis.
(e) The rights, powers, authorities and discretions given to the Agent under or in connection with the Loan Documents shall be supplemental to the Trustee Act 1925 and the Trustee Act 2000 and in addition to any which may be vested in the Agent by law or regulation or otherwise.
(f) Section 1 of the Trustee Act 2000 shall not apply to the duties of the Agent in relation to the trusts constituted by this Agreement, and where there are any inconsistencies between the Trustee Act 1925 or the Trustee Act 2000 and the provisions of this Agreement, the provisions of this Agreement shall, to the extent permitted by law and regulation, prevail and, in the case of any inconsistency with the Trustee Act 2000, the provisions of this Agreement shall constitute a restriction or exclusion for the purposes of that Act. Sections 22 and 23 of the Trustee Act 2000 shall not apply to the English Security Documents.
(g) If the Agent determines, in accordance with Section 11.10(b)(i) (Collateral Matters: Releases) that:
(i) all of the obligations secured by the English Security Document have been fully and finally discharged; and
(ii) no Finance Party is under any commitment, obligation or liability (actual or contingent) to make advances or provide other financial accommodation to any Loan Party pursuant to the Loan Documents,
the Agent shall release, without recourse or warranty, all of the Liens and Collateral created or evidenced, or expressed to be created or evidenced, under each English Security Document and the rights of the Agent under each of the English Security Documents, in each case in accordance with the terms of that English Security Document and the terms of this Agreement and the trusts set out in this Agreement shall thereafter be wound up.
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(h) Without prejudice to Section 11.9(a) (Successor Agent: Resignation):
(i) The Agent may resign and appoint one of its Affiliates as successor by giving notice to the other Finance Parties and the Borrower.
(ii) If the Agent does not appoint an Affiliate as successor in the relevant resignation notice, the Required Lenders may appoint a successor Agent with the consent of the Borrower (such consent not to be unreasonably withheld or delayed), unless an Event of Default then exists in which case no consent of the Borrower shall be required. If the Required Lenders have not appointed a successor within thirty (30) days after notice of resignation was given, the Agent may appoint a successor after consultation with the Borrower and the Required Lenders.
(iii) The retiring Agent shall, make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as “Security Agent” under the English Security Documents, and the Borrower shall, on demand, reimburse the retiring Agent for the amount of all costs and expenses (including legal fees) properly incurred by it in making available such documents and records and providing such assistance.
(iv) The resignation notice of the Agent shall only take effect upon:
(A) the appointment of a successor; and
(B) the transfer of the English Transaction Security and any other amounts or property, whether rights, entitlements, choses in action or otherwise, actual or contingent, which the Agent is required by the terms of the English Security Documents to hold as trustee on trust for the Secured Parties to that successor.
(v) Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respect of the English Security Documents (other than its obligations under paragraph (g) and (h)(iii) above) but shall remain entitled to the benefit of Sections 11.6 (Indemnification of Agent) and 12.4 (Indemnification; Reimbursement of Expenses of Collection) (each as amended by paragraph (d) above) and this Section 11.13 (and any fees for the account of the retiring Agent shall cease to accrue from (and shall be payable on) that date). Any successor and each of the other parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original party.
(i) The Agent shall not be obliged:
(i) to insure any of the assets subject to the English Transaction Security;
(ii) to require any other person to maintain any insurance; or
(iii) to verify any obligation to arrange or maintain insurance contained in any Loan Document,
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and the Agent shall not be liable for any damages, costs or losses to any person as a result of the lack of, or inadequacy of, any such insurance.
(j) If the Agent is named on any insurance policy as an insured party, it shall not be liable for any damages, costs or losses to any person as a result of its failure to notify the insurers of any material fact relating to the risk assumed by such insurers or any other information of any kind, unless the Required Lenders request it to do so in writing and the Agent fails to do so within 14 days after receipt of that request.
(k) The Agent may appoint and pay any person to act as a custodian or nominee on any terms in relation to any asset of the trust as the Agent may determine, including for the purpose of depositing with a custodian this Agreement or any document relating to the trust created under this Agreement and the Agent shall not be responsible for any loss, liability, expense, demand, cost, claim or proceedings incurred by reason of the misconduct, omission or default on the part of any person appointed by it under this Agreement or be bound to supervise the proceedings or acts of any person. The Agent may retain or invest in securities payable to bearer without appointing a person to act as a custodian.
(l) Each Finance Party and Secured Party confirms “that the Agent has authority to accept on its behalf (and ratifies the acceptance on its behalf of any letters or reports already accepted by the Agent) the terms of any reliance letter or engagement letters relating to any reports or letters provided by accountants, auditors or providers of due diligence reports in connection with the Loan Documents or the transactions contemplated in the Loan Documents and to bind it in respect of those reports or letters and to sign such letters on its behalf and further confirms that it accepts the terms and qualifications set out in such letters.
ARTICLE XII.
GENERAL PROVISIONS
12.1 Notices. Except as otherwise provided herein, all notices and other communications hereunder shall be in writing and sent by certified or registered mail, return receipt requested, by overnight delivery service, with all charges prepaid, by hand delivery, or by telecopier or other form of electronic transmission, including email, as follows:
| To Agent | Atlantic Park | |||
| 527 Madison Avenue, 25th Floor | ||||
| New York, NY 10022 | ||||
| Attn: Viral Naik | ||||
| Email: viral.naik@ironparkcap.com | ||||
| With a copy to: | ||||
| 225 W. Washington St., 9th Floor | ||||
| Chicago, IL, 60606 | ||||
| Attn.: Mike Kumor, Legal Department | ||||
| Email: atlanticparkagency@alterdomus.com | ||||
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| To Borrower: | Borrower | |||
| c/o Team, Inc. | ||||
| 13131 Dairy Ashford, Suite 600, | ||||
| Sugar Land, Texas, 77478 | ||||
| Attn: André C. Bouchard, Chief Legal Officer | ||||
| Email: butch.bouchard@teaminc.com | ||||
| To any Lender | to its address specified in Annex A or in the | |||
| Assignment and Acceptance under which it | ||||
| became a party hereto | ||||
Any party hereto may change its address, email address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All such notices and correspondence shall be deemed given (a) if sent by certified or registered mail, five (5) Business Days after being postmarked, (b) if sent by overnight delivery service or by hand delivery, when received at the above stated addresses or when delivery is refused and (c) if sent by facsimile or other form of electronic transmission (including by electronic imaging), when such transmission is confirmed. All notices and other communications sent to an e-mail address shall be (i) deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement) and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, in the case of clauses (i) and (ii) above, if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient.
12.2 Delays; Partial Exercise of Remedies. No delay or omission of Agent to exercise any right or remedy hereunder shall impair any such right or operate as a waiver thereof. No single or partial exercise by Agent of any right or remedy shall preclude any other or further exercise thereof, or preclude any other right or remedy.
12.3 Right of Setoff. In addition to and not in limitation of all rights of offset that any Lender or any of its Affiliates may have under applicable law, if an Event of Default shall have occurred and be continuing and whether or not such Lender shall have made any demand or the Obligations of Borrower have matured, each Lender and its Affiliates shall have the right, subject to the consent of the Agent, to set off and apply any and all deposits (general or special, time or demand, provisional or final, or any other type) at any time held and any other Indebtedness at any time owing by such Lender or any of its Affiliates to or for the credit or the account of Borrower or any of their Affiliates against any and all of the Obligations. In the event that any Lender or any of its Affiliates exercises any of its rights under this Section 12.3, such Lender shall provide notice to Agent and Borrower of such exercise, provided that the failure to give such notice shall not affect the validity of the exercise of such rights.
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12.4 Indemnification; Reimbursement of Expenses of Collection.
(a) Borrower hereby agrees that, whether or not any of the transactions contemplated by this Agreement or the other Loan Documents are consummated, Borrower will indemnify, defend and hold harmless Agent, each Lender and each other Secured Party and their respective successors, assigns, directors, officers, agents, employees, advisors, shareholders, attorneys and Affiliates (each, an “Indemnified Party”) from and against any and all losses, claims, damages, liabilities, deficiencies, obligations, fines, penalties, actions (whether threatened or existing), judgments, suits (whether threatened or existing) or expenses (including reasonable fees and disbursements of counsel, experts, consultants and other professionals) incurred by any of them (collectively, “Claims”) (except, in the case of each Indemnified Party, to the extent that any Claim is determined in a final and non-appealable judgment by a court of competent jurisdiction to have directly resulted from such Indemnified Party’s gross negligence or willful misconduct) arising out of or by reason of
(i) any litigation, investigation, claim or proceeding related to (A) this Agreement, any other Loan Document or the transactions contemplated hereby or thereby, (B) any actual or proposed use by a Borrower of the proceeds of the Loans, (C) [reserved] or (D) any Indemnified Party’s entering into this Agreement, the other Loan Documents or any other agreements and documents relating hereto (other than consequential damages and loss of anticipated profits or earnings), including amounts paid in settlement, court costs and the fees and disbursements of counsel incurred in connection with any such litigation, investigation, claim or proceeding, in all cases, regardless of whether such Indemnified Party is a party thereto, and whether or not any such claim, litigation, investigation or proceeding is brought by or against the Borrower, its equity holders, its Affiliates, its creditors or any other Person,
(ii) the presence or Release of Hazardous Materials at, on, under, to or from any assets or properties owned, leased or operated by any Borrower or any of its Subsidiaries; any Environmental Actions or any Remedial Actions related in any way to any such assets or properties of any Borrower or any of its Subsidiaries; or any other action taken or required to be taken by a Borrower in connection with compliance by or liability of such Borrower, its business, or any of its owned or occupied properties, pursuant to any Environmental Laws, and
(iii) any pending, threatened or actual action, claim, proceeding or suit by any owner of any Borrower against such Borrower or any actual or purported violation of a Borrower’s Governing Documents or any other agreement or instrument to which a Borrower is a party or by which any of its properties is bound.
(b) In addition, Borrower shall, upon demand, pay to each of Agent and the Lenders all Lender Group Expenses incurred by each of them.
(c) If and to the extent that the obligations of any Borrower hereunder are unenforceable for any reason, Borrower hereby agree to make the maximum contribution to the payment and satisfaction of such obligations that is permissible under applicable law.
(d) Borrower’s obligations under Sections 4.10 and 4.11 and this Section 12.4 shall survive any termination of this Agreement and the other Loan Documents and the Payment in Full of the Obligations, and are in addition to, and not in substitution of, any of the other Obligations.
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12.5 Amendments, Waivers and Consents. No amendment or waiver of any provision of this Agreement or any other Loan Document, or consent to any departure by Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by Borrower and the Required Lenders (or by Agent at their instruction on their behalf) (with a copy of all amendments provided to the Agent), and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by Borrower and all the Lenders, do any of the following at any time:
(a) change the number or percentage of Lenders that shall be required for the Lenders or any of them to take any action hereunder;
(b) amend the definition of “Required Lenders”, or “Pro Rata Share”;
(c) amend this Section 12.5;
(d) reduce the amount of principal of, or interest on, or the interest rate applicable to, the Loans or any fees or other amounts payable hereunder;
(e) postpone any date on which any payment of principal of, or interest on, the Loans or any fees or other amounts payable hereunder is required to be made;
(f) [reserved];
(g) release all or substantially all of the value of the guaranties made pursuant to the Guaranty and Security Agreement or any other Loan Document (except as expressly provided in the Loan Documents);
(h) release all or substantially all of the Collateral from the Liens of the Security Documents (except as expressly provided in the Loan Documents);
(i) prior to an Event of Default pursuant to Section 10.1(d), contractually subordinate any of Agent’s Liens on all or substantially all of the Collateral (except as expressly provided in the Loan Documents); or
(j) amend any of the provisions of Section 10.5 ;
provided, that no amendment, waiver or consent shall, unless in writing and signed by
(i) a Lender, increase the amount of or extend the expiration date of any Commitment of such Lender,
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(ii) [reserved],
(iii) [reserved], and
(iv) Agent, in addition to the Lenders required above, take any action that affects the rights or duties of Agent under this Agreement or any other Loan Document.
12.6 Nonliability of Agent and Lenders. The relationship between and among Borrower, Agent and the Lenders shall be solely that of borrower, agent and lender and, respectively. Neither the Lenders nor Agent shall have any fiduciary responsibilities to Borrower. Neither the Lenders nor Agent undertake any responsibility to Borrower to review or inform Borrower of any matter in connection with any phase of Borrower’s business or operations.
12.7 Assignments and Participations.
(a) Borrower Assignment. No Borrower shall assign this Agreement or any of its rights or obligations hereunder without the prior written consent of Agent and the Lenders, and any assignment in contravention of the foregoing shall be absolutely null and void.
(b) Lender Assignments. Each Lender may, with the consent of Agent (not to be unreasonably withheld) and, so long as no Event of Default has occurred and is continuing for more than 30 days, Borrower (not required in connection with an assignment to a Person that is (x) a Lender or an Affiliate thereof or (y) a limited partner of Atlantic Park or an affiliated fund of such limited partner; provided that, in the case of clause (y), prior written notice shall be provided to the Borrower of such assignment), assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement, the Notes and the other Loan Documents upon execution and delivery to Agent, for its acceptance and recording in the Register, of an Assignment and Acceptance and a processing and recordation fee payable to Agent for its account of $3,500, if the assignee is not a Lender the assignee shall provide the Agent with all “know your customer” documents requested by the Agent pursuant to anti-money laundering rules and regulations; provided, that the Borrower shall be deemed to have consented to any assignment of any Commitments or Loans unless it shall have objected thereto by notice to the Agent within ten (10) Business Days after the Borrower has received written notice thereof. No such assignment shall be for less than $5,000,000 of the Commitments or Loans unless it is to another Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, and each such assignment shall be of a uniform, and not a varying, percentage of all rights and obligations in respect of the Commitments and the Loans. Upon the execution and delivery to Agent of an Assignment and Acceptance and the payment of the recordation fee to Agent, from and after the such assignment is recorded in the Register (the “Acceptance Date”),
(i) the assignee thereunder shall be a party hereto, and, to the extent that rights and obligations hereunder have been assigned to it under such Assignment and Acceptance, such assignee shall have the rights and obligations of a Lender hereunder and
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(ii) the assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it under such Assignment and Acceptance, relinquish its rights (other than any rights it may have under Sections 4.10 , 4.11 and 12.4 , which shall survive such assignment) and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto).
(c) Agreements of Assignee. By executing and delivering an Assignment and Acceptance, the assignee thereunder confirms and agrees as follows:
(i) other than as provided in such Assignment and Acceptance, the assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, the Notes or any other Loan Documents,
(ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or the performance or observance by any Loan Party of any of its obligations under this Agreement or any other Loan Document,
(iii) such assignee confirms that it is an Eligible Assignee and has received a copy of this Agreement, together with copies of the Financial Statements referred to in Section 6.1(i), the Financial Statements delivered pursuant to Section 7.11 , if any, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance,
(iv) such assignee will, independently and without reliance upon Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement,
(v) such assignee appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to Agent by the terms hereof, together with such powers as are reasonably incidental thereto, and
(vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.
(d) Agent’s Register. Agent, as non-fiduciary agent of the Borrower shall maintain a register of the names and addresses of the Lenders, their Commitments and the principal amount (and stated interest) of their Loans (the “Register”). Agent shall also maintain a copy of each Assignment and Acceptance delivered to and accepted by it and modify the Register to give effect to each Assignment and Acceptance. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and Borrower, Agent and the
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Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register and copies of each Assignment and Acceptance shall be available for inspection by Borrower or any Lender at any reasonable time and from time to time upon reasonable prior written notice. Upon its receipt of each Assignment and Acceptance, Agent will give prompt notice thereof to Borrower. Within five (5) Business Days after its receipt of such notice, Borrower shall execute and deliver to assignee Lender a new Note to the assignee in the amount of the applicable Commitment or Loans assumed by it and to the assignor in the amount of the applicable Commitment or Loans retained by it, if any. Such new Note or Notes shall re-evidence the indebtedness outstanding under the surrendered Note or Notes, shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes and shall be dated as of the Acceptance Date. Agent shall be entitled to rely upon the Register exclusively for purposes of identifying the Lenders hereunder.
(e) Securitization. The Loan Parties hereby acknowledge that the Lenders and their Affiliates may securitize their Loans (a “Securitization”) through the pledge of the Loans as collateral security for loans to the Lenders or their Affiliates or through the sale of the Loans or the issuance of direct or indirect interests in the Loans to their controlled Affiliates, which loans to the Lenders or their Affiliates or direct or indirect interests will be rated by Moody’s, S&P or one or more other rating agencies. The Loan Parties shall, to the extent commercially reasonable, cooperate with the Lenders and their Affiliates to effect any and all Securitizations. Notwithstanding the foregoing, no such Securitization shall release any Lender party thereto from any of its obligations hereunder or substitute any pledgee, secured party or any other party to such Securitization for such Lender as a party hereto and no change in ownership of the Loans may be effected except pursuant to subsection (b) above.
(f) Lender Participations. Each Lender may sell participations to one or more parties (each, a “Participant”) in or to all or a portion of its rights and obligations under this Agreement, the Notes and the other Loan Documents. Notwithstanding a Lender’s sale of a participation interest, such Lender’s obligations hereunder shall remain unchanged. Borrower, Agent, and the other Lenders shall continue to deal solely and directly with such Lender. No Lender shall grant any Participant the right to approve any amendment or waiver of this Agreement except to the extent such amendment or waiver would (i) increase the Commitment of the Lender from which the Participant purchased its participation interest; (ii) reduce the principal of, or rate or amount of interest on, the Loans subject to such participation interest; or (iii) postpone any date fixed for any payment of principal of, or interest on, the Loans subject to such participation interest. To the extent permitted by applicable law, each Participant shall also be entitled to the benefits of Section 4.10 and 12.4 as if it were a Lender, provided that such Participant agrees to be subject to the last sentence of Section 2.9(b) as if it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) or Proposed Section
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1.163-5(b) of the U.S. Treasury Regulations (or, in each case, any amended or successor version). The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.
(g) Securities Laws. Each Lender agrees that it will not make any assignment hereunder in any manner or under any circumstances that would require registration or qualification of, or filings in respect of, any Loan, Note or other Obligation under the securities laws of the United States or of any other jurisdiction.
(h) Information. In connection with any assignment or participation or proposed assignment or participation or any grant of a security interest in, or pledge of, its rights under and interest in this Agreement, a Lender may, subject to the provisions of Section 12.21, disclose all documents and information which it now or hereafter may have relating to any Loan Party and its Subsidiaries and their respective businesses.
(i) Pledge to Federal Reserve Bank. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest, provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
12.8 Counterparts; Facsimile Signatures. This Agreement and any waiver or amendment hereto may be executed in counterparts and by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. This Agreement and each of the other Loan Documents may be executed and delivered by facsimile or other electronic transmission (including by electronic imaging) all with the same force and effect as if the same was a fully executed and delivered original manual counterpart.
12.9 Severability. In case any provision in or obligation under this Agreement, any Note or any other Loan Document shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
12.10 Maximum Rate. Notwithstanding anything to the contrary contained elsewhere in this Agreement or in any other Loan Document, the parties hereto hereby agree that all agreements between them under this Agreement and the other Loan Documents, whether now existing or hereafter arising and whether written or oral, are expressly limited so that in no contingency or event whatsoever shall the amount paid, or agreed to be paid, to Agent or any Lender for the use, forbearance, or detention of the money loaned to Borrower and evidenced hereby or thereby or for the performance or payment of any covenant or obligation contained
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herein or therein, exceed the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the Obligations, under the laws of the State of New York (or the laws of any other jurisdiction whose laws may be mandatorily applicable notwithstanding other provisions of this Agreement and the other Loan Documents), or under applicable federal laws which may presently or hereafter be in effect and which allow a higher maximum non-usurious interest rate than under the laws of the State of New York (or such other jurisdiction), in any case after taking into account, to the extent permitted by applicable law, any and all relevant payments or charges under this Agreement and the other Loan Documents executed in connection herewith, and any available exemptions, exceptions and exclusions (the “Highest Lawful Rate”). If due to any circumstance whatsoever, fulfillment of any provision of this Agreement or any of the other Loan Documents at the time performance of such provision shall be due shall exceed the Highest Lawful Rate, then, automatically, the obligation to be fulfilled shall be modified or reduced to the extent necessary to limit such interest to the Highest Lawful Rate, and if from any such circumstance Agent or any Lender should ever receive anything of value deemed interest by applicable law which would exceed the Highest Lawful Rate, such excessive interest shall be applied to the reduction of the principal amount then outstanding hereunder or on account of any other then outstanding Obligations and not to the payment of interest, or if such excessive interest exceeds the principal unpaid balance then outstanding hereunder and such other then outstanding Obligations, such excess shall be refunded to Borrower. All sums paid or agreed to be paid to Agent or any Lender for the use, forbearance, or detention of the Obligations and other Indebtedness of Borrower to Agent and the Lenders shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such Indebtedness, until Payment in Full thereof, so that the actual rate of interest on account of all such Indebtedness does not exceed the Highest Lawful Rate throughout the entire term of such Indebtedness. The terms and provisions of this Section shall control every other provision of this Agreement, the other Loan Documents and all other agreements among the parties hereto.
12.11 [Reserved].
12.12 Entire Agreement; Successors and Assigns; Interpretation. This Agreement and the other Loan Documents constitute the entire agreement among the parties, supersede any prior written and verbal agreements among them with respect to the subject matter hereof and thereof, and shall bind and benefit the parties and their respective successors and permitted assigns. This Agreement shall be deemed to have been jointly drafted, and no provision of it shall be interpreted or construed for or against a party because such party purportedly prepared or requested such provision, any other provision, or this Agreement as a whole.
12.13 LIMITATION OF LIABILITY. NEITHER THE AGENT, ANY LENDER NOR ANY OTHER INDEMNIFIED PARTY SHALL HAVE ANY LIABILITY TO THE LOAN PARTIES (WHETHER SOUNDING IN CONTRACT, TORT OR EQUITY OR OTHERWISE) FOR LOSSES SUFFERED BY THE LOAN PARTIES IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER BINDING ON THE AGENT, SUCH LENDER OR SUCH
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INDEMNIFIED PARTY (AS THE CASE MAY BE) THAT THE LOSSES WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE AGENT, SUCH LENDER, OR SUCH INDEMNIFIED PARTY (AS THE CASE MAY BE). THE LOAN PARTIES HEREBY WAIVE ALL FUTURE CLAIMS AGAINST THE AGENT AND THE LENDERS AND EACH OTHER INDEMNIFIED PARTY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES.
12.14 GOVERNING LAW. OTHER THAN WITH RESPECT TO THE CANADIAN SECURITY DOCUMENTS, THE DUTCH SECURITY DOCUMENTS AND THE ENGLISH SECURITY DOCUMENTS, THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, WHETHER SOUNDING IN CONTRACT, TORT OR EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND DECISIONS OF THE STATE OF NEW YORK.
EACH PARTY ACKNOWLEDGES AND ACCEPTS THAT, IF A PARTY IS REPRESENTED BY AN ATTORNEY IN CONNECTION WITH THE SIGNING AND/OR EXECUTION OF THIS AGREEMENT OR ANY OTHER AGREEMENT, DEED OR DOCUMENT REFERRED TO IN THIS AGREEMENT OR MADE PURSUANT TO THIS AGREEMENT, AND THE POWER OF ATTORNEY IS GOVERNED BY DUTCH LAW, THAT THE EXISTENCE AND EXTENT OF THE ATTORNEY’S AUTHORITY AND THE EFFECTS OF THE ATTORNEY’S EXERCISE OR PURPORTED EXERCISE OF ITS AUTHORITY SHALL BE GOVERNED BY DUTCH LAW.
12.15 SUBMISSION TO JURISDICTION.
ALL DISPUTES BETWEEN ANY OF THE LOAN PARTIES AND THE AGENT OR ANY LENDER BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO (A) THIS AGREEMENT; (B) ANY OTHER LOAN DOCUMENT; (OTHER THAN THE CANADIAN SECURITY DOCUMENTS, THE DUTCH SECURITY DOCUMENTS AND THE ENGLISH SECURITY DOCUMENTS) OR (C) ANY CONDUCT, ACT OR OMISSION OF THE LOAN PARTIES OR THE AGENT OR ANY LENDER OR ANY OF THEIR RESPECTIVE PARTNERS, EMPLOYEES, AGENTS, ATTORNEYS OR OTHER AFFILIATES, IN EACH CASE WHETHER SOUNDING IN CONTRACT, TORT OR EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK AND THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE TAKEN; PROVIDED, THAT THE AGENT SHALL HAVE THE RIGHT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST ANY LOAN PARTY OR ITS PROPERTY IN (A) ANY COURTS OF COMPETENT JURISDICTION AND VENUE AND (B) ANY LOCATION SELECTED BY THE AGENT TO ENABLE THE AGENT TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE AGENT. EACH LOAN PARTY WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE AGENT HAS COMMENCED A PROCEEDING, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.
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Each Loan Party that is organized under the laws of a jurisdiction outside the United States of America hereby appoints the Borrower, with an office at 13131 Dairy Ashford, Suite 600, Sugar Land, Texas, 77478, as its agent for service of process in any matter related to this Agreement or the other Loan Documents and shall provide written evidence of acceptance of such appointment by such agent on or before the Closing Date.
12.16 [RESERVED].
12.17 JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO (A) THIS AGREEMENT; (B) ANY OTHER LOAN DOCUMENT OR OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN OR AMONG THE LOAN PARTIES, THE AGENT AND THE LENDERS, OR ANY OF THEM; OR (C) ANY CONDUCT, ACT OR OMISSION OF THE LOAN PARTIES, THE AGENT OR THE LENDERS OR ANY OF THEIR RESPECTIVE PARTNERS, EMPLOYEES, AGENTS, ATTORNEYS OR OTHER AFFILIATES, IN EACH CASE WHETHER SOUNDING IN CONTRACT, TORT OR EQUITY OR OTHERWISE.
12.18 Attorney. Each Party acknowledges and accepts that, if a Party is represented by an attorney in connection with the signing and/or execution of this Agreement or any other agreement, deed or document referred to in this Agreement or made pursuant to this Agreement and the power of attorney is governed by Dutch law, that the existence and extent of the attorney’s authority and the effects of the attorney’s exercise or purported exercise of its authority shall be governed by Dutch law.
12.19 Agent Titles. Each Lender, other than Atlantic Park, that is designated (on the cover page of this Agreement or otherwise) by Atlantic Park as an “Agent” or “Arranger” of any type shall not have any right, power, responsibility or duty under any Loan Documents other than those applicable to all Lenders, and shall in no event be deemed to have any fiduciary relationship with any other Lender.
12.20 Publicity. Agent may
(a) publish in any trade or other publication or otherwise publicize to any third party (including its Affiliates) a tombstone, article, press release or similar material relating to the financing transactions contemplated by this Agreement (including the use of company logos upon execution of trademark use agreements reasonably satisfactory to Borrower) and
(b) provide to industry trade organizations related information necessary and customary for inclusion in league table measurements.
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Any filings with the SEC, press releases or other public announcements of Amendment No. 1 shall be delivered to the Agent in draft form prior to filing on a commercially reasonable basis, and the Borrower shall consult with the Agent with respect to the content thereof.
12.21 No Third Party Beneficiaries. Neither this Agreement nor any other Loan Document is intended or shall be construed to confer any rights or benefits upon any Person other than the parties hereto and thereto.
12.22 Confidentiality. Each of Agent and the Lenders shall maintain the confidentiality of all Information (as defined below), except that Information may be disclosed by any of them
(a) to its Affiliates, and to its and their partners, directors, officers, employees, agents, advisors and representatives (provided such Persons are informed of the confidential nature of the Information and instructed to keep it confidential and are bound by confidentiality restrictions customary for such arrangements);
(b) to the extent requested by any governmental, regulatory or self-regulatory authority purporting to have jurisdiction over it or its Affiliates;
(c) to the extent required by applicable law or by any subpoena or other legal process;
(d) to any other party hereto;
(e) in connection with any action or proceeding, or other exercise of rights or remedies, relating to any Loan Documents or Obligations;
(f) subject to an agreement containing provisions substantially the same as this Section, to any assignee or any actual or prospective assignee, participant or pledgee (or any of their respective advisors) in connection with any actual or prospective assignment, participation or pledge of any Lender’s interest under this Agreement;
(g) with the consent of Borrower (not to be unreasonably withheld, conditioned or delayed); or
(h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) is available to Agent or the Lenders or any of its or their respective Affiliates on a nonconfidential basis from a source other than the Loan Parties.
Notwithstanding the foregoing, Agent may publish or disseminate general information describing this credit facility, including the names and addresses of Borrower and a general description of Borrower’s businesses, and may use Borrower’s logos, trademarks or product photographs in advertising materials, as provided in Section 12.20 (including upon execution of trademark use agreements reasonably satisfactory to Borrower). As used herein, “Information” means all information received from a Loan Party relating to it or its business that a reasonable person would consider confidential. Any Person required to maintain the confidentiality of Information pursuant to this Section shall be deemed to have complied if it exercises the same degree of care
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that it accords its own confidential information. Agent and the Lenders acknowledge that (i) Information may include material non-public information concerning a Loan Party; (ii) it has developed compliance procedures regarding the use of material non-public information; and (iii) it will handle such material non-public information in accordance with applicable law, including federal and state securities laws.
12.23 Patriot Act Notice, etc.. Agent hereby notifies the Loan Parties that pursuant to the requirements of the Patriot Act and the Beneficial Ownership Regulation, Agent is required to obtain, verify and record information that identifies each Loan Party, including its legal name, address, tax ID number and other information that will allow the Lender to identify it in accordance with the Patriot Act or the Beneficial Ownership Regulation. Agent will also require information regarding each personal guarantor, if any, and may require information regarding the Loan Parties’ management and owners, such as legal name, address, social security number and date of birth.
12.24 Advice of Counsel. The Borrower acknowledges that it has been advised by counsel in connection with the execution of this Agreement and the other Loan Documents and is not relying upon oral representations or statements inconsistent with the terms and provisions of this Agreement or any other Loan Document.
12.25 Captions. The captions at various places in this Agreement and any other Loan Document are intended for convenience only and do not constitute and shall not be interpreted as part of this Agreement or any other Loan Document.
12.26 Platform.
(a) The Borrower agrees that the Agent may, but shall not be obligated to, make the Communications (as defined below) available to the Lenders by posting the Communications on the Platform.
(b) The Platform is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant the adequacy of the Platform and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or the Platform. In no event shall the Agent nor any of its directors, officers, agents, employees, advisors, shareholders, attorneys or Affiliates (collectively, the “Agent Parties”) have any liability to any Borrower, any Lender or any other Person or entity for damages of any kind, including direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of the Borrower’s or the Agent’s transmission of communications through the Platform, unless it is determined by a final and nonappealable judgment or court order that the damages were the result of acts or omissions constituting gross negligence or willful misconduct of the Agent Party. “Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of the Borrower pursuant to any Loan Document or the transactions contemplated therein that is distributed to the Agent or any Lender by means of electronic communications pursuant to this Section, including through the Platform.
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12.27 Right to Cure. Agent may, in its discretion,
(a) cure any default by any Loan Party under this Agreement, any other Loan Document or any Material Contract that affects the Collateral, its value or the ability of Agent to collect, sell or otherwise dispose of any Collateral or the rights and remedies of Agent and the Lenders therein or the ability of any Loan Party to perform its obligations hereunder or under any of the other Loan Documents,
(b) pay or bond on appeal any judgment entered against any Loan Party,
(c) discharge any charges, Liens, security interests or other encumbrances at any time levied on or existing with respect to the Collateral and
(d) pay any amount, incur any expense or perform any act which Agent, in its discretion, determines is necessary or appropriate to preserve, protect, insure or maintain the Collateral and the rights of Agent and the Lenders with respect thereto.
Agent may add any amounts so expended to the Obligations and charge any account of Borrower with Agent or the amounts thereof, such amounts to be repayable by Borrower on demand and bear interest until paid in full at the highest rate then applicable to the Loans. Agent shall be under no obligation to effect such cure, payment or bonding and shall not, by doing so, be deemed to have assumed any obligation or liability of any Loan Party. Any payment made or other action taken by Agent under this Section shall be without prejudice to any right to assert an Event of Default and to proceed accordingly.
12.28 Acknowledgment 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 and/or UK 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/or UK 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 and/or UK Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution or UK Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(c) a reduction in full or in part or cancellation of any such liability;
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(d) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution or UK Financial Institution (as the case may be), 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
(e) 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 or UK Resolution Authority (as the case may be).
12.29 Time. Time is of the essence in this Agreement and each other Loan Document. Unless otherwise expressly provided, all references herein and in any other Loan Documents to time shall mean and refer to New York time.
12.30 Keepwell. The Borrower and each other Loan Party, to the extent constituting a 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 the guaranty contained in the Guaranty and Security Agreement made by it in respect of Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section or otherwise under this Agreement or any other Loan Document, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Guarantor under this Section shall remain in full force and effect at all times hereafter until the Obligations have been Paid in Full. Each Qualified ECP Guarantor intends that this Section shall constitute, and this Section 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.
12.31 Sovereign Immunity. Each Loan Party, in respect of itself, its process agents, and its properties and revenues, hereby irrevocably agrees that, to the extent that such Person or any of its properties has or may hereafter acquire any right of immunity, whether characterized as sovereign immunity or otherwise, from any legal proceedings, whether in the United States of America or elsewhere, to enforce or collect upon the Loans or any Loan Document or any other liability or obligation of such Person related to or arising from the transactions contemplated by any of the Loan Documents, including, without limitation, immunity from suit, immunity from service of process, immunity from jurisdiction or judgment of any court or tribunal, immunity from execution of a judgment, and immunity of any of its property from attachment prior to any entry of judgment, or from attachment in aid of execution upon a judgment, such Person hereby expressly waives, to the fullest extent permissible under applicable Requirements of Law, any such immunity, and agrees not to assert any such right or claim in any such proceeding, whether in the United States of America or elsewhere. Without limiting the generality of the foregoing, each Loan Party further agrees that the waivers set forth in this Section 12.31 shall be effective to the fullest extent permitted under the Foreign Sovereign Immunities Act of 1976 of the U.S. and are intended to be irrevocable for purposes of such Act.
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12.32 Tax Treatment. For U.S. federal income tax purposes, the Initial Term Loans made under this Agreement, together with the Warrants, shall be treated as an investment unit, and $14,700,000 of the price paid for the investment unit shall, for U.S. federal income tax purposes, be allocated to the purchase of the Warrants and thereby result in a corresponding reduction in the “issue price” of the Initial Term Loans. Except as otherwise required by a Governmental Authority or change in applicable law, parties hereto agree to file tax returns consistent with the allocation set forth in this paragraph.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by its proper and duly authorized officer as of the date first set forth above.
| BORROWER | ||
| TEAM, INC. | ||
| By: |
||
| Name: |
| Title: |
[Signature Page to the Credit Agreement]
| LENDER | ||
| ATLANTIC PARK STRATEGIC CAPITAL FUND, L.P. | ||
| By: | ||
| Name: |
| Title: |
[Signature Page to the Credit Agreement]
| AGENT | ||
| ATLANTIC PARK STRATEGIC CAPITAL FUND, L.P. | ||
| By: |
||
| Name: |
| Title: |
[Signature Page to the Credit Agreement]
ANNEX A
| Lender Name and |
Term Commitments |
Pro Rata Shares |
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the use of our reports dated March 16, 2022, with respect to the consolidated financial statements of Team, Inc., and the effectiveness of internal control over financial reporting, incorporated herein by reference and to the reference to our firm under the heading “Experts” in the prospectus.
/s/ KPMG LLP
Houston, Texas
March 18, 2022