Purchase of Assets, Investments. (a) Borrower will not, and will not permit any Subsidiary to, directly or indirectly (w) acquire or enter into any agreement to acquire any assets other than in the Ordinary Course of Business, constituting capital expenditures to the extent permitted hereunder or constituting replacement assets purchased with proceeds of Property Insurance Policies, awards or other compensation with respect to any eminent domain, condemnation or similar proceeding; (x) create, acquire or enter into any agreement to create or acquire any Subsidiary other than Wholly-Owned Subsidiaries acquired or created in connection with the consummation of Permitted Acquisitions and for which the requirements set forth in Section 4.12 have been satisfied, (y) engage or enter into any agreement to engage in any joint venture or partnership with any other Person or (z) acquire or own or enter into any agreement to acquire or own any Investment in any Person other than: (i) Investments existing on the date of this Agreement and set forth on Schedule 5.8; (ii) Cash Equivalents; (iii) intentionally omitted; (iv) bank deposits established in accordance with Section 5.17; (v) Investments in securities of Account Debtors received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such Account Debtors; and (vi) Investments in the form of Swap Contracts permitted under Section 5.3(c). (b) Notwithstanding the provisions of Section 5.8(a), Borrower or one of its Subsidiaries may acquire all or substantially all of the assets, stock, or other equity interests of another Person (each, a “Section 5.8(b) Permitted Acquisition”) upon the following terms and conditions (all in form and substance satisfactory to the Agent): (i) no Default of Event of Default then exists or would result from such Section 5.8(b) Permitted Acquisition; (ii) the Person that Borrower or its Subsidiary is requesting to purchase or the business from which Borrower or its Subsidiary is requesting to purchase assets is in the same line of business as the Borrower or such Subsidiary, and the entity whose equity interests or assets are being purchased had positive EBITDA for the immediately preceding fiscal year; (iii) Agent shall have been granted a first priority, perfect lien on and security interest in all properties and assets to be acquired, or on the properties and assets of the Person whose stock or equity interests are to be acquired, as applicable; (iv) Borrower or such Subsidiary shall have delivered to Agent (A) written notice not less than thirty (30) days prior to the consummation of such proposed acquisition, (B) a “Deal Term Sheet” outlining all material terms of the proposed acquisition, and pro-forma financial statements and covenant compliance sheets, projected as of the consummation of such proposed acquisition and certified by the chief financial officer of Borrower, reflecting pro-forma compliance with the Operative Documents after the consummation of any such proposed acquisition; (v) during the 12-month period ending on any date of determination by the Administrative Agent, the aggregate acquisition costs for all Section 5.8(b) Permitted Acquisitions, shall not exceed $2,000,000; (vi) Borrower and the applicable Subsidiary shall have furnished to Agent such other information, documents and items as Agent shall have requested, including but not limited to true, complete and correct copies of the financial statements of the acquisition target, and all Acquisition Documents and other documents and instruments relating to the proposed acquisition, (vii) all indebtedness incurred by Borrower or such Subsidiary shall be fully and completely subordinated to the Obligations; and (viii) the Credit Parties shall have enter into such modifications to the Financing Documents, and shall have entered into such other documents and instruments, in each case as Agent may reasonably request. (c) Notwithstanding the provisions of Section 5.8(a), upon and after the effectiveness of the Acquisition Revolving Loan Commitment Increase, in addition to Section 5.8(b) Permitted Acquisitions, Borrower may acquire, or may cause a Wholly-Owned Subsidiary to acquire, all or substantially all of the assets, or all (but not less than all) of the capital stock or other equity securities, of any Person (the “Target”) (in each case, a “Section 5.8(c) Permitted Acquisition”) with the prior written approval of Administrative Agent and the Required Lenders in their discretion and upon the satisfaction of each of the Acquisition Revolving Loan Commitment Increase Conditions, including each of the following conditions: (i) Administrative Agent shall have received not less than 30 Business Days’ prior notice of such proposed Section 5.8(c) Permitted Acquisition, which notice shall include a due diligence package including the following materials if requested by Administrative Agent, each in form and substance reasonably satisfactory to Administrative Agent: (A) copies of the Target’s two most recent annual income statements and balance sheets, together with the audit opinions thereon, if any, of the Target’s independent accountants, together with available interim financial statements, (B) if available, any asset or business appraisals, (C) a general description of the business to be acquired, (D) a general description of the competitive position of the business to be acquired within its industry, (E) a summary of pending and known threatened litigation adversely affecting the business or assets to be acquired, (F) a description of the method of financing such acquisition, including sources and uses, (G) a listing of locations of all personal and real property to be acquired, (H) a description of any change in management of Borrower and its Subsidiaries, after giving effect to such acquisition, (I) all material agreements to be assumed or acquired, (J) if the Target owns or leases, or if the assets to be acquired includes, any real property or if otherwise requested by Administrative Agent, environmental reports and related information regarding any such property owned, leased or otherwise used (other than leased property used solely as office space), (K) draft copies of all proposed Acquisition Documents, including all schedules thereto and (L) any other material or reports reasonably requested by Administrative Agent. (ii) Concurrently with delivery of the notice and due diligence materials referred to in clause (i) above, if requested by Administrative Agent, Borrower shall have delivered to Administrative Agent, in form and substance reasonably satisfactory to Administrative Agent: (A) a pro forma consolidated and consolidating balance sheet, income statement and cash flow statement of Borrower and its Subsidiaries (the “Acquisition Pro Forma”), based on most recently available financial statements, which shall be complete and shall fairly present in all material respects the assets, liabilities, financial condition and results of operations of Borrower and its Subsidiaries in accordance with GAAP consistently applied, but taking into account such Section 5.8(c) Permitted Acquisition, the funding of all Loans and the incurrence or assumption of all other Debt and repayment of Debt in connection therewith, and such Acquisition Pro Forma shall reflect that (x) on a pro forma basis, Borrower and its Subsidiaries would have had a Senior Leverage Ratio not in excess of 2.50 to 1.0 for the four quarter period reflected in the Compliance Certificate most recently delivered to Administrative Agent pursuant to Section 4.1(c) prior to the consummation of such Section 5.8(c) Permitted Acquisition (after giving effect to such Section 5.8(c) Permitted Acquisition and all Loans funded in connection therewith as if made on the first day of such period) and (y) on a pro forma basis, no Default or Event of Default has occurred and is continuing or would result after giving effect to such Section 5.8(c) Permitted Acquisition, the funding of all Loans and the incurrence or assumption of all other Debt and repayment of Debt in connection therewith; (B) updated versions of the operating plans, budgets and forecasts most recently delivered to Administrative Agent pursuant to Section 4.1(m) covering the three (3) year period commencing on the date of such Section 5.8(c) Permitted Acquisition and otherwise prepared in accordance with the requirements of Section 4.1(m) (the “Acquisition Projections”) and based upon historical financial data of a recent date reasonably satisfactory to Administrative Agent, taking into account such Section 5.8(c) Permitted Acquisition, the funding of all Loans and the incurrence or assumption of all other Debt and repayment of Debt in connection therewith; and (C) a certificate of a Responsible Officer of Borrower to the effect that: (w) Borrower and each Subsidiary will be Solvent upon the consummation of the Section 5.8(c) Permitted Acquisition; (x) the Acquisition Pro Forma fairly presents the financial condition of Borrower and its Subsidiaries (on a consolidated basis) as of the date thereof and the periods covered thereby, in each case after giving effect to the Section 5.8(c) Permitted Acquisition and related transactions; (y) the Acquisition Projections represent Borrower’s best estimate of Borrower’s consolidated future financial performance as of the date thereof and after giving effect to the Section 5.8(c) Permitted Acquisition, the assumptions contained therein are believed by Borrower to be fair and reasonable in light of current business conditions and the Acquisition Projections demonstrate Borrower’s projected compliance with the covenants set forth in Article 7 for the one-year period immediately following the consummation of such Section 5.8(c) Permitted Acquisition; provided, that Borrower can give no assurance that the results reflected in the Acquisition Projections will be attained; and (z) Borrower and its Subsidiaries have completed their due diligence investigation with respect to the Target and such Section 5.8(c) Permitted Acquisition, which investigation was conducted in a manner similar to that which would have been conducted by a prudent purchaser of a comparable business and the results of which investigation, to the extent requested, were delivered to Administrative Agent; (iii) such Section 5.8(c) Permitted Acquisition shall only involve assets located in the United States (and, in connection with the acquisition of the capital stock or other equity securities of a Target, such Target shall be formed, incorporated or otherwise organized under the laws of a State within the United States) and comprising a business, or those assets of a business, of the type engaged in by Borrower as of the Closing Date and businesses reasonably related thereto, and which business would not subject Administrative Agent or any Lender to regulatory or third party approvals in connection with the exercise of its rights and remedies under this Agreement or any other Financing Documents other than approvals applicable to the exercise of such rights and remedies with respect to Borrower prior to such Section 5.8(c) Permitted Acquisition; (iv) such Section 5.8(c) Permitted Acquisition shall be consensual, shall have been approved by the Target’s board of directors (or comparable governing board) and shall be consummated in accordance with the terms of the Acquisition Documents, and in compliance with all applicable Laws; (v) no assets or liabilities (including, without limitation, Investments, Debt and Contingent Obligations) shall be acquired, incurred, assumed or otherwise be reflected on a consolidated balance sheet of Borrower and its Subsidiaries after giving effect to such Section 5.8(c) Permitted Acquisition, except (A) Loans made hereunder and (B) those assets and liabilities which may be acquired, incurred or assumed in accordance with the provisions of this Agreement; (vi) the business and assets acquired in such Section 5.8(c) Permitted Acquisition shall be free and clear of all Liens (other than Permitted Liens); (vii) at or prior to the closing of any Section 5.8(c) Permitted Acquisition, Administrative Agent will be granted a first priority perfected Lien (subject to Permitted Liens) in all assets acquired pursuant thereto or, as contemplated by Section 4.12, in the assets and capital stock or other equity interests of the Target, and Borrower, its Subsidiaries and the Target shall have executed such documents and taken such actions as may be required by Administrative Agent in connection therewith (including the delivery of (A) certified copies of the resolutions of the board of directors (or comparable governing board) of Borrower, its Subsidiaries and the Target authorizing such Section 5.8(c) Permitted Acquisition and the granting of Liens described herein, (B) legal opinions, in form and content reasonably acceptable to Administrative Agent, with respect to the transactions described herein and (C) evidence of insurance of the business to be acquired consistent with the requirements of Section 4.4); (viii) the Target shall not have incurred an operating loss for the trailing twelve-month period preceding the date of the Section 5.8(c) Permitted Acquisition, as determined based upon the Target’s financial statements for its most recently completed fiscal year; (ix) on or prior to the date of such Section 5.8(c) Permitted Acquisition, Administrative Agent shall have received, in form and substance reasonably satisfactory to Administrative Agent, (a) copies of the Acquisition Documents and all other documents reasonably requested by Administrative Agent and (c) amendments to the Schedules, to the extent necessary to make the representations and warranties in this Agreement true and correct after giving effect to the consummation of such Section 5.8(c) Permitted Acquisition; and (x) notwithstanding anything in this Section 5.8(c), no Inventory acquired by Borrower or a Subsidiary of Borrower shall be deemed to be Eligible Inventory, and no Account acquired by Borrower or a Subsidiary of Borrower shall be deemed to be an Eligible Account, except to the extent Administrative Agent has given its prior written approval with respect thereto.
Appears in 2 contracts
Samples: Credit Agreement (Collegiate Pacific Inc), Credit Agreement (Collegiate Pacific Inc)
Purchase of Assets, Investments. (a) Borrower will not, and will not permit any Subsidiary to, directly or indirectly (w) acquire or enter into any agreement to acquire any assets other than in the Ordinary Course of Business, constituting capital expenditures to the extent permitted hereunder or constituting replacement assets purchased with proceeds of Property Insurance Policies, awards or other compensation with respect to any eminent domain, condemnation or similar proceeding; (x) create, acquire or enter into any agreement to create or acquire any Subsidiary other than Wholly-Owned Subsidiaries acquired or created in connection with the consummation of either a Section 5.8(b) Permitted Acquisitions Acquisition or a Section 5.8(c) Permitted Acquisition in accordance with the terms and conditions of Sections 5.8(b) and 5.8(c), respectively, and the other terms and conditions of this Agreement, and for which the requirements set forth in Section 4.12 have been satisfied, (y) engage or enter into any agreement to engage in any joint venture or partnership with any other Person or (z) acquire or own or enter into any agreement to acquire or own any Investment in any Person other than:
(i) Investments existing on the date of this Agreement and set forth on Schedule 5.8;
(ii) Cash Equivalents;
(iii) intentionally omitted;
(iv) bank deposits established in accordance with Section 5.17;
(v) Investments in securities of Account Debtors received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such Account Debtors; and
(vi) Investments in the form of Swap Contracts permitted under Section 5.3(c).
(b) Notwithstanding the provisions of Section 5.8(a), Borrower or one of its Subsidiaries may acquire all or substantially all of the assets, stock, or other equity interests of another Person (each, a “Section 5.8(b) Permitted Acquisition”) upon the following terms and conditions (all in form and substance satisfactory to the Administrative Agent): (i) no Default of Event of Default then exists or would result from such Section 5.8(b) Permitted Acquisition; (ii) the Person that Borrower or its Subsidiary is requesting to purchase or the business from which Borrower or its Subsidiary is requesting to purchase assets is in the same line of business as the Borrower or such Subsidiary, and the entity whose equity interests or assets are being purchased had positive EBITDA for the immediately preceding fiscal year; (iii) Administrative Agent shall have been granted a first priority, perfect lien on and security interest in all properties and assets to be acquired, or on the properties and assets of the Person whose stock or equity interests are to be acquired, as applicable; (iv) within ten (10) Business Days after the consummation of the proposed acquisition, Borrower or such Subsidiary shall have delivered to Administrative Agent (A) written notice not less than thirty (30) days prior to the consummation of such proposed acquisition, (B) a “Deal Term Sheet” outlining all material terms of the proposed acquisition, and pro-forma financial statements and covenant compliance sheets, projected as of the consummation of such proposed acquisition and certified by the chief financial officer of Borrower, reflecting pro-forma compliance with the Operative Documents after the consummation of any such proposed acquisition; (v) during the 12-month period ending on any date of determination by the Administrative Agent, the aggregate acquisition costs (including, without limitation, the purchase price for the assets, stock or other equity interests acquired by Borrower and its Subsidiaries) for all Section 5.8(b) Permitted Acquisitions, shall not exceed $2,000,000; (vi) within ten (10) Business Days after the consummation of the proposed acquisition, Borrower and the applicable Subsidiary shall have furnished to Administrative Agent such other information, documents and items as Agent shall have requested, including but not limited to true, complete and correct copies of the financial statements of the acquisition target, and all Acquisition Documents and other documents and instruments relating to the proposed acquisition, ; and (vii) all indebtedness incurred by Borrower or such Subsidiary shall be fully and completely subordinated to the Obligations; and (viii) the Credit Parties shall have enter into such modifications to the Financing Documents, and shall have entered into such other documents and instruments, in each case as Agent may reasonably request.
(c) Notwithstanding the provisions of Section 5.8(a), upon and after the effectiveness of the Acquisition Revolving Loan Commitment Increase, in addition to Section 5.8(b) Permitted Acquisitions, Borrower may acquire, or may cause a Wholly-Owned Subsidiary to acquire, all or substantially all of the assets, or all (but not less than all) of the capital stock or other equity securities, of any Person (the “Target”) (in each case, a “Section 5.8(c) Permitted Acquisition”) with the prior written approval of Administrative Agent and the Required Lenders in their discretion and upon the satisfaction of each of the Acquisition Revolving Loan Commitment Increase Conditionsdiscretion, including each of the following conditions:
(i) Administrative Agent shall have received not less than 30 20 Business Days’ prior notice of such proposed Section 5.8(c) Permitted Acquisition, which notice shall include a due diligence package including the following materials if requested by Administrative Agent, each in form and substance reasonably satisfactory to Administrative Agent:
(A) copies of the Target’s two most recent annual income statements and balance sheets, together with the audit opinions thereon, if any, of the Target’s independent accountants, together with available interim financial statements, (B) if available, any asset or business appraisals, (C) a general description of the business to be acquired, (D) a general description of the competitive position of the business to be acquired within its industry, (E) a summary of pending and known threatened litigation adversely affecting the business or assets to be acquired, (F) a description of the method of financing such acquisition, including sources and uses, (G) a listing of locations of all personal and real property to be acquired, (H) a description of any change in management of Borrower and its Subsidiaries, after giving effect to such acquisition, (I) all material agreements to be assumed or acquired, (J) if the Target owns or leases, or if the assets to be acquired includes, any real property or if otherwise requested by Administrative Agent, environmental reports and related information regarding any such property owned, leased or otherwise used (other than leased property used solely as office space), (K) draft copies of all proposed Acquisition Documents, including all schedules thereto and (L) any other material or reports reasonably requested by Administrative Agent.
(ii) Concurrently with delivery of the notice and due diligence materials referred to in clause (i) above, if requested by Administrative Agent, Borrower shall have delivered to Administrative Agent, in form and substance reasonably satisfactory to Administrative Agent:
(A) a pro forma consolidated and consolidating balance sheet, income statement and cash flow statement of Borrower and its Subsidiaries (the “Acquisition Pro Forma”), based on most recently available financial statements, which shall be complete and shall fairly present in all material respects the assets, liabilities, financial condition and results of operations of Borrower and its Subsidiaries in accordance with GAAP consistently applied, but taking into account such Section 5.8(c) Permitted Acquisition, the funding of all Loans and the incurrence or assumption of all other Debt and repayment of Debt in connection therewith, and such Acquisition Pro Forma shall reflect that (x) on a pro forma basis, Borrower and its Subsidiaries would have had a Senior Leverage Ratio not in excess of 2.50 to 1.0 for the four quarter period reflected in the Compliance Certificate most recently delivered to Administrative Agent pursuant to Section 4.1(c) prior to the consummation of such Section 5.8(c) Permitted Acquisition (after giving effect to such Section 5.8(c) Permitted Acquisition and all Loans funded in connection therewith as if made on the first day of such period) and (y) on a pro forma basis, no Default or Event of Default has occurred and is continuing or would result after giving effect to such Section 5.8(c) Permitted Acquisition, the funding of all Loans and the incurrence or assumption of all other Debt and repayment of Debt in connection therewith;
(B) updated versions of the operating plans, budgets and forecasts most recently delivered to Administrative Agent pursuant to Section 4.1(m) covering the three (3) year period commencing on the date of such Section 5.8(c) Permitted Acquisition and otherwise prepared in accordance with the requirements of Section 4.1(m) (the “Acquisition Projections”) and based upon historical financial data of a recent date reasonably satisfactory to Administrative Agent, taking into account such Section 5.8(c) Permitted Acquisition, the funding of all Loans and the incurrence or assumption of all other Debt and repayment of Debt in connection therewith; and
(C) a certificate of a Responsible Officer of Borrower to the effect that: (w) Borrower and each Subsidiary will be Solvent upon the consummation of the Section 5.8(c) Permitted Acquisition; (x) the Acquisition Pro Forma fairly presents the financial condition of Borrower and its Subsidiaries (on a consolidated basis) as of the date thereof and the periods covered thereby, in each case after giving effect to the Section 5.8(c) Permitted Acquisition and related transactions; (y) the Acquisition Projections represent Borrower’s best estimate of Borrower’s consolidated future financial performance as of the date thereof and after giving effect to the Section 5.8(c) Permitted Acquisition, the assumptions contained therein are believed by Borrower to be fair and reasonable in light of current business conditions and the Acquisition Projections demonstrate Borrower’s projected compliance with the covenants set forth in Article 7 for the one-year period immediately following the consummation of such Section 5.8(c) Permitted Acquisition; provided, that Borrower can give no assurance that the results reflected in the Acquisition Projections will be attained; and (z) Borrower and its Subsidiaries have completed their due diligence investigation with respect to the Target and such Section 5.8(c) Permitted Acquisition, which investigation was conducted in a manner similar to that which would have been conducted by a prudent purchaser of a comparable business and the results of which investigation, to the extent requested, were delivered to Administrative Agent;
(iii) such Section 5.8(c) Permitted Acquisition shall only involve assets located in the United States (and, in connection with the acquisition of the capital stock or other equity securities of a Target, such Target shall be formed, incorporated or otherwise organized under the laws of a State within the United States) and comprising a business, or those assets of a business, of the type engaged in by Borrower as of the Closing Date and businesses reasonably related thereto, and which business would not subject Administrative Agent or any Lender to regulatory or third party approvals in connection with the exercise of its rights and remedies under this Agreement or any other Financing Documents other than approvals applicable to the exercise of such rights and remedies with respect to Borrower prior to such Section 5.8(c) Permitted Acquisition;
(iv) such Section 5.8(c) Permitted Acquisition shall be consensual, shall have been approved by the Target’s board of directors (or comparable governing board) and shall be consummated in accordance with the terms of the Acquisition Documents, and in compliance with all applicable Laws;
(v) no assets or liabilities (including, without limitation, Investments, Debt and Contingent Obligations) shall be acquired, incurred, assumed or otherwise be reflected on a consolidated balance sheet of Borrower and its Subsidiaries after giving effect to such Section 5.8(c) Permitted Acquisition, except (A) Loans made hereunder and (B) those assets and liabilities which may be acquired, incurred or assumed in accordance with the provisions of this Agreement;
(vi) the business and assets acquired in such Section 5.8(c) Permitted Acquisition shall be free and clear of all Liens (other than Permitted Liens);
(vii) at or prior to the closing of any Section 5.8(c) Permitted Acquisition, Administrative Agent will be granted a first priority perfected Lien (subject to Permitted Liens) in all assets acquired pursuant thereto or, as contemplated by Section 4.12, in the assets and capital stock or other equity interests of the Target, and Borrower, its Subsidiaries and the Target shall have executed such documents and taken such actions as may be required by Administrative Agent in connection therewith (including the delivery of (A) certified copies of the resolutions of the board of directors (or comparable governing board) of Borrower, its Subsidiaries and the Target authorizing such Section 5.8(c) Permitted Acquisition and the granting of Liens described herein, (B) legal opinions, in form and content reasonably acceptable to Administrative Agent, with respect to the transactions described herein and (C) evidence of insurance of the business to be acquired consistent with the requirements of Section 4.4);
(viii) the Target shall not have incurred an operating loss for the trailing twelve-month period preceding the date of the Section 5.8(c) Permitted Acquisition, as determined based upon the Target’s financial statements for its most recently completed fiscal yearintentionally omitted;
(ix) on or prior to the date of such Section 5.8(c) Permitted Acquisition, Administrative Agent shall have received, in form and substance reasonably satisfactory to Administrative Agent, (a) copies of the Acquisition Documents and all other documents reasonably requested by Administrative Agent and (c) amendments to the Schedules, to the extent necessary to make the representations and warranties in this Agreement true and correct after giving effect to the consummation of such Section 5.8(c) Permitted Acquisition; and
(x) notwithstanding anything in this Section 5.8(c), no Inventory acquired by Borrower or a Subsidiary of Borrower shall be deemed to be Eligible Inventory, and no Account acquired by Borrower or a Subsidiary of Borrower shall be deemed to be an Eligible Account, except to the extent Administrative Agent has given its prior written approval with respect thereto.
Appears in 1 contract
Purchase of Assets, Investments. (a) Borrower will not, and will not permit any Subsidiary to, directly or indirectly (w) acquire or enter into any agreement to acquire any assets other than in the Ordinary Course of Business, constituting capital expenditures Capital Expenditures to the extent permitted hereunder pursuant to Section 6.1 or constituting replacement assets purchased with proceeds of Property Insurance Policies, awards or other compensation with respect to any eminent domain, condemnation or similar proceeding; (x) create, acquire or enter into any agreement to create or acquire any Subsidiary other than Wholly-Owned Subsidiaries acquired or created in connection with the consummation of Permitted Acquisitions and for which the requirements set forth in Section 4.12 have been satisfiedSubsidiary, (y) engage or enter into any agreement to engage in any joint venture or partnership with any other Person or (z) acquire or own or enter into any agreement to acquire or own any Investment in any Person other than:
(ia) Investments existing on the date of this Agreement and set forth on Schedule 5.8;
(iib) Cash Equivalents;
(iiic) intentionally omittedInvestments in the capital stock or other equity interests of any Wholly-Owned Subsidiaries existing as of the Closing Date or otherwise formed or organized in compliance with the terms of this Agreement in an aggregate amount not to exceed $250,000, minus the amount of loans made to domestic Wholly-Owned Subsidiaries pursuant to Section 5.1(f), so long as (x) Borrower has pledged to Administrative Agent all of the outstanding capital stock or other equity interests of any such Subsidiary (or 65% of such stock in the case of foreign Subsidiaries), (y) any such domestic Subsidiary has Guaranteed the Obligations and secured such Guarantee by granting in favor of Administrative Agent, for its benefit and the benefit of the Lenders, a Lien on all or substantially all of its assets and (z) Borrower has otherwise complied with the provisions of Section 4.12(b);
(ivd) bank deposits established in accordance with Section 5.17;
(ve) Investments in securities of Account Debtors account debtors received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such Account Debtors; andaccount debtors;
(vif) Investments in the form of Swap Contracts permitted under Section 5.3(c).
(b) Notwithstanding the provisions of Section 5.8(a), Borrower or one of its Subsidiaries may acquire all or substantially all of the assets, stock, or other equity interests of another Person (each, a “Section 5.8(b) Permitted Acquisition”) upon the following terms and conditions (all in form and substance satisfactory to the Agent): (i) no Default of Event of Default then exists or would result from such Section 5.8(b) Permitted Acquisition; (ii) the Person that Borrower or its Subsidiary is requesting to purchase or the business from which Borrower or its Subsidiary is requesting to purchase assets is in the same line of business as the Borrower or such Subsidiary, and the entity whose equity interests or assets are being purchased had positive EBITDA for the immediately preceding fiscal year; (iii) Agent shall have been granted a first priority, perfect lien on and security interest in all properties and assets to be acquired, or on the properties and assets of the Person whose stock or equity interests are to be acquired, as applicable; (iv) Borrower or such Subsidiary shall have delivered to Agent (A) written notice not less than thirty (30) days prior to the consummation of such proposed acquisition, (B) a “Deal Term Sheet” outlining all material terms of the proposed acquisition, and pro-forma financial statements and covenant compliance sheets, projected as of the consummation of such proposed acquisition and certified by the chief financial officer of Borrower, reflecting pro-forma compliance with the Operative Documents after the consummation of any such proposed acquisition; (v) during the 12-month period ending on any date of determination by the Administrative Agent, the aggregate acquisition costs for all Section 5.8(b) Permitted Acquisitions, shall not exceed $2,000,000; (vi) Borrower and the applicable Subsidiary shall have furnished to Agent such other information, documents and items as Agent shall have requested, including but not limited to true, complete and correct copies of the financial statements of the acquisition target, and all Acquisition Documents and other documents and instruments relating to the proposed acquisition, (vii) all indebtedness incurred by Borrower or such Subsidiary shall be fully and completely subordinated to the Obligations; and (viii) the Credit Parties shall have enter into such modifications to the Financing Documents, and shall have entered into such other documents and instruments, in each case as Agent may reasonably request.
(c) Notwithstanding the provisions of Section 5.8(a), upon and after the effectiveness of the Acquisition Revolving Loan Commitment Increase, in addition to Section 5.8(b) Permitted Acquisitions, Borrower may acquire, or may cause a Wholly-Owned Subsidiary to acquire, all or substantially all of the assets, or all (but not less than all) of the capital stock or other equity securities, of any Person (the “Target”) (in each case, a “Section 5.8(c) Permitted Acquisition”) with the prior written approval of Administrative Agent and the Required Lenders in their discretion and upon the satisfaction of each of the Acquisition Revolving Loan Commitment Increase Conditions, including each of the following conditions:
(i) Administrative Agent shall have received not less than 30 Business Days’ prior notice of such proposed Section 5.8(c) Permitted Acquisition, which notice shall include a due diligence package including the following materials if requested by Administrative Agent, each in form and substance reasonably satisfactory to Administrative Agent:
(A) copies of the Target’s two most recent annual income statements and balance sheets, together with the audit opinions thereon, if any, of the Target’s independent accountants, together with available interim financial statements, (B) if available, any asset or business appraisals, (C) a general description of the business to be acquired, (D) a general description of the competitive position of the business to be acquired within its industry, (E) a summary of pending and known threatened litigation adversely affecting the business or assets to be acquired, (F) a description of the method of financing such acquisition, including sources and uses, (G) a listing of locations of all personal and real property to be acquired, (H) a description of any change in management of Borrower and its Subsidiaries, after giving effect to such acquisition, (I) all material agreements to be assumed or acquired, (J) if the Target owns or leases, or if the assets to be acquired includes, any real property or if otherwise requested by Administrative Agent, environmental reports and related information regarding any such property owned, leased or otherwise used (other than leased property used solely as office space), (K) draft copies of all proposed Acquisition Documents, including all schedules thereto and (L) any other material or reports reasonably requested by Administrative Agent.
(ii) Concurrently with delivery of the notice and due diligence materials referred to in clause (i) above, if requested by Administrative Agent, Borrower shall have delivered to Administrative Agent, in form and substance reasonably satisfactory to Administrative Agent:
(A) a pro forma consolidated and consolidating balance sheet, income statement and cash flow statement of Borrower and its Subsidiaries (the “Acquisition Pro Forma”), based on most recently available financial statements, which shall be complete and shall fairly present in all material respects the assets, liabilities, financial condition and results of operations of Borrower and its Subsidiaries in accordance with GAAP consistently applied, but taking into account such Section 5.8(c) Permitted Acquisition, the funding of all Loans and the incurrence or assumption of all other Debt and repayment of Debt in connection therewith, and such Acquisition Pro Forma shall reflect that (x) on a pro forma basis, Borrower and its Subsidiaries would have had a Senior Leverage Ratio not in excess of 2.50 to 1.0 for the four quarter period reflected in the Compliance Certificate most recently delivered to Administrative Agent pursuant to Section 4.1(c) prior to the consummation of such Section 5.8(c) Permitted Acquisition (after giving effect to such Section 5.8(c) Permitted Acquisition and all Loans funded in connection therewith as if made on the first day of such period) and (y) on a pro forma basis, no Default or Event of Default has occurred and is continuing or would result after giving effect to such Section 5.8(c) Permitted Acquisition, the funding of all Loans and the incurrence or assumption of all other Debt and repayment of Debt in connection therewith;
(B) updated versions of the operating plans, budgets and forecasts most recently delivered to Administrative Agent pursuant to Section 4.1(m) covering the three (3) year period commencing on the date of such Section 5.8(c) Permitted Acquisition and otherwise prepared in accordance with the requirements of Section 4.1(m) (the “Acquisition Projections”) and based upon historical financial data of a recent date reasonably satisfactory to Administrative Agent, taking into account such Section 5.8(c) Permitted Acquisition, the funding of all Loans and the incurrence or assumption of all other Debt and repayment of Debt in connection therewith; and
(Cg) a certificate of a Responsible Officer of Borrower loans or advances against future compensation made to the effect that: (w) Borrower officers and each Subsidiary will be Solvent upon the consummation of the Section 5.8(c) Permitted Acquisition; (x) the Acquisition Pro Forma fairly presents the financial condition of Borrower and its Subsidiaries (on a consolidated basis) as of the date thereof and the periods covered thereby, employees in each case after giving effect an aggregate principal amount not to the Section 5.8(c) Permitted Acquisition and related transactions; (y) the Acquisition Projections represent Borrower’s best estimate of Borrower’s consolidated future financial performance as of the date thereof and after giving effect to the Section 5.8(c) Permitted Acquisition, the assumptions contained therein are believed by Borrower to be fair and reasonable in light of current business conditions and the Acquisition Projections demonstrate Borrower’s projected compliance with the covenants set forth in Article 7 for the one-year period immediately following the consummation of such Section 5.8(c) Permitted Acquisition; provided, that Borrower can give no assurance that the results reflected in the Acquisition Projections will be attained; and (z) Borrower and its Subsidiaries have completed their due diligence investigation with respect to the Target and such Section 5.8(c) Permitted Acquisition, which investigation was conducted in a manner similar to that which would have been conducted by a prudent purchaser of a comparable business and the results of which investigation, to the extent requested, were delivered to Administrative Agent;
(iii) such Section 5.8(c) Permitted Acquisition shall only involve assets located in the United States (and, in connection with the acquisition of the capital stock or other equity securities of a Target, such Target shall be formed, incorporated or otherwise organized under the laws of a State within the United States) and comprising a business, or those assets of a business, of the type engaged in by Borrower as of the Closing Date and businesses reasonably related thereto, and which business would not subject Administrative Agent or exceed $1,000,000 at any Lender to regulatory or third party approvals in connection with the exercise of its rights and remedies under this Agreement or any other Financing Documents other than approvals applicable to the exercise of such rights and remedies with respect to Borrower prior to such Section 5.8(c) Permitted Acquisition;
(iv) such Section 5.8(c) Permitted Acquisition shall be consensual, shall have been approved by the Target’s board of directors (or comparable governing board) and shall be consummated in accordance with the terms of the Acquisition Documents, and in compliance with all applicable Laws;
(v) no assets or liabilities (including, without limitation, Investments, Debt and Contingent Obligations) shall be acquired, incurred, assumed or otherwise be reflected on a consolidated balance sheet of Borrower and its Subsidiaries after giving effect to such Section 5.8(c) Permitted Acquisition, except (A) Loans made hereunder and (B) those assets and liabilities which may be acquired, incurred or assumed in accordance with the provisions of this Agreement;
(vi) the business and assets acquired in such Section 5.8(c) Permitted Acquisition shall be free and clear of all Liens (other than Permitted Liens);
(vii) at or prior to the closing of any Section 5.8(c) Permitted Acquisition, Administrative Agent will be granted a first priority perfected Lien (subject to Permitted Liens) in all assets acquired pursuant thereto or, as contemplated by Section 4.12, in the assets and capital stock or other equity interests of the Target, and Borrower, its Subsidiaries and the Target shall have executed such documents and taken such actions as may be required by Administrative Agent in connection therewith (including the delivery of (A) certified copies of the resolutions of the board of directors (or comparable governing board) of Borrower, its Subsidiaries and the Target authorizing such Section 5.8(c) Permitted Acquisition and the granting of Liens described herein, (B) legal opinions, in form and content reasonably acceptable to Administrative Agent, with respect to the transactions described herein and (C) evidence of insurance of the business to be acquired consistent with the requirements of Section 4.4);
(viii) the Target shall not have incurred an operating loss for the trailing twelve-month period preceding the date of the Section 5.8(c) Permitted Acquisition, as determined based upon the Target’s financial statements for its most recently completed fiscal year;
(ix) on or prior to the date of such Section 5.8(c) Permitted Acquisition, Administrative Agent shall have received, in form and substance reasonably satisfactory to Administrative Agent, (a) copies of the Acquisition Documents and all other documents reasonably requested by Administrative Agent and (c) amendments to the Schedules, to the extent necessary to make the representations and warranties in this Agreement true and correct after giving effect to the consummation of such Section 5.8(c) Permitted Acquisition; and
(x) notwithstanding anything in this Section 5.8(c), no Inventory acquired by Borrower or a Subsidiary of Borrower shall be deemed to be Eligible Inventory, and no Account acquired by Borrower or a Subsidiary of Borrower shall be deemed to be an Eligible Account, except to the extent Administrative Agent has given its prior written approval with respect theretotime outstanding.
Appears in 1 contract
Purchase of Assets, Investments. (a) Borrower No Specified Company will, or will not, and will not permit any Subsidiary to, directly or indirectly (w) acquire or enter into any agreement to acquire any assets other than in the Ordinary Course of Business, constituting capital expenditures Capital Expenditures to the extent permitted hereunder pursuant to Section 9.1 or constituting replacement assets purchased with proceeds of Property Insurance Policies, awards or other compensation with respect to any eminent domain, condemnation or similar proceeding; , (x) create, acquire or enter into any agreement to create or acquire any Subsidiary other than Wholly-Owned Subsidiaries which are Domestic Subsidiaries acquired or created in connection with the consummation of to consummate a Permitted Acquisitions Acquisition and for which the requirements set forth in Section 4.12 7.12(b) have been satisfied, (y) engage or enter into any agreement to engage in any joint venture or partnership with any other Person or (z) acquire or own or enter into any agreement to acquire or own any Investment in any Person other than:than (without duplication):
(i) Investments existing on the date of this Agreement and set forth on Schedule 5.88.8;
(ii) Cash Equivalents;
(iii) intentionally omitted(y) additional Investments in the capital stock or other equity interests of any Wholly-Owned Subsidiaries existing as of the Closing Date which are Domestic Subsidiaries (but are not Dormant Subsidiaries) and (z) additional Investments in the capital stock or other equity interests of any Wholly-Owned Subsidiaries existing as of the Closing Date which are Foreign Subsidiaries (but are not Dormant Subsidiaries) in an aggregate amount for all such Foreign Subsidiaries not to exceed $12,000,000, minus the amount of loans, payables and other obligations owing by Wholly-Owned Subsidiaries pursuant to clause (ii) of Section 8.1(f) above and minus the amount of Guarantees made pursuant to the final proviso of Section 8.1(j);
(iv) bank deposits established in accordance with Section 5.178.17;
(v) Investments in securities of Account Debtors account debtors received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such Account Debtors; andaccount debtors;
(vi) Investments in the form of Swap Contracts permitted under Sections 8.1(e) and 8.3(c);
(vii) (y) cashless loans to officers and employees provided that the proceeds thereof are used by such officers and employees solely to purchase capital stock of Company and (z) loans to officers and employees in an aggregate principal amount not to exceed $600,000 at any time outstanding;
(viii) payroll advances in the Ordinary Course of Business;
(ix) Investments in the form of loans between or among the Note Parties made in lieu of distributions otherwise permitted under Section 5.3(c8.4 (with such loans being subject to the same dollar restrictions, if any, applicable to the corresponding provisions of Section 8.4, and with any such loans reducing, on a dollar-by-dollar basis, the corresponding amount of distributions otherwise permitted by Section 8.4);
(x) Investments received as consideration for Asset Dispositions permitted in Section 8.7; and
(xi) other Investments in an aggregate amount not to exceed $100,000.
(b) Notwithstanding the provisions of Section 5.8(a)foregoing, Borrower or one of its Subsidiaries may acquire all or substantially all of the assets, stock, or other equity interests of another Person (each, a “Section 5.8(b) Permitted Acquisition”) upon the following terms and conditions (all in form and substance satisfactory to the Agent): (i) no Default of Event of Default then exists or would result from such Section 5.8(b) Permitted Acquisition; (ii) the Person that Borrower or its Subsidiary is requesting to purchase or the business from which Borrower or its Subsidiary is requesting to purchase assets is in the same line of business as the Borrower or such Subsidiary, and the entity whose equity interests or assets are being purchased had positive EBITDA for the immediately preceding fiscal year; (iii) Agent shall have been granted a first priority, perfect lien on and security interest in all properties and assets to be acquired, or on the properties and assets of the Person whose stock or equity interests are to be acquired, as applicable; (iv) Borrower or such Subsidiary shall have delivered to Agent (A) written notice not less than thirty (30) days prior to the consummation of such proposed acquisition, (B) a “Deal Term Sheet” outlining all material terms of the proposed acquisition, and pro-forma financial statements and covenant compliance sheets, projected as of the consummation of such proposed acquisition and certified by the chief financial officer of Borrower, reflecting pro-forma compliance with the Operative Documents after the consummation of any such proposed acquisition; (v) during the 12-month period ending on any date of determination by the Administrative Agent, the aggregate acquisition costs for all Section 5.8(b) Permitted Acquisitions, shall not exceed $2,000,000; (vi) Borrower and the applicable Subsidiary shall have furnished to Agent such other information, documents and items as Agent shall have requested, including but not limited to true, complete and correct copies of the financial statements of the acquisition target, and all Acquisition Documents and other documents and instruments relating to the proposed acquisition, (vii) all indebtedness incurred by Borrower or such Subsidiary shall be fully and completely subordinated to the Obligations; and (viii) the Credit Parties shall have enter into such modifications to the Financing Documents, and shall have entered into such other documents and instruments, in each case as Agent may reasonably request.
(c) Notwithstanding the provisions of Section 5.8(a), upon and after the effectiveness of the Acquisition Revolving Loan Commitment Increase, in addition to Section 5.8(b) Permitted Acquisitions, Borrower Specified Company may acquire, or may cause a Wholly-Owned Subsidiary that is a Domestic Subsidiary to acquire, all or substantially all of the assets, or all (but not less than all) of the capital stock or other equity securities, of any Person (the “Target”) (in each case, a “Section 5.8(c) Permitted Acquisition”) with the prior written approval of Administrative Agent and the Required Lenders in their discretion and upon Holders or subject to the satisfaction of each of the Acquisition Revolving Loan Commitment Increase Conditions, including each of the following conditions:
(i) Administrative Agent Each Purchaser shall have received not less than 30 twenty (20) Business Days’ prior notice (or any more reduced period of prior notice as may be approved from time to time by the Required Holders) of such proposed Section 5.8(c) Permitted Acquisition, which notice shall include a due diligence package including the following materials if requested by Administrative Agentmaterials, each in form and substance reasonably satisfactory to Administrative Agentthe Required Holders:
(A) copies of the Target’s two three most recent annual income statements and balance sheets, together with the audit opinions thereon, if any, of the Target’s independent accountants, together with available interim financial statements, (B) if available, any asset or business appraisals, (C) a general description of the business to be acquired, (D) a general description of the competitive position of the business to be acquired within its industry, (E) a summary of pending and known threatened litigation adversely affecting the business or assets to be acquired, (F) a description of the method of financing such acquisition, including sources and uses, (G) a listing of locations of all personal and real property to be acquired, (H) a description of any change in management of Borrower and its Subsidiariesthe Note Parties, after giving effect to such acquisition, (I) all material agreements to be assumed or acquired, but solely to the extent such agreements are of equivalent or greater materiality to the Note Parties as compared to any applicable Material Contract, (J) if the Target owns or leases, or if the assets to be acquired includes, any owned real property or leased real property, and if otherwise reasonably requested by Administrative Agentthe Required Holders, environmental reports and related information regarding any such property owned, leased or otherwise used (other than leased property used solely as office space), (K) draft copies of all proposed Acquisition Documentsacquisition agreements and all related transaction documents for such acquisition, including together with all schedules thereto (followed by updated drafts as the same are generated and fully executed copies thereof within five (5) Business Days after the closing of such acquisition), and (L) any other material or reports reasonably requested by Administrative Agentany Purchaser and otherwise available; provided that with respect to each Small Scale Acquisition, Company shall only be obligated to deliver the materials described in clauses (A), (D) and (L), to the extent that such materials are readily available.
(ii) Concurrently with delivery of the notice and due diligence materials referred to in clause (i) above, if requested by Administrative Agent, Borrower Company shall have delivered to Administrative Agenteach Purchaser, in form and substance reasonably satisfactory to Administrative Agentthe Required Holders:
(A) a pro forma consolidated and consolidating balance sheet, income statement and cash flow statement of Borrower Company and its Subsidiaries (the “Acquisition Pro Forma”), based on most recently available financial statements, which shall be complete and shall fairly present in all material respects the assets, liabilities, financial condition and results of operations of Borrower Company and its Subsidiaries in accordance with GAAP consistently applied, but taking into account such Section 5.8(c) Permitted Acquisition, the funding of all Loans loans under the Senior Credit Agreement and the incurrence or assumption of all other Debt and repayment of Debt in connection therewith, and such Acquisition Pro Forma shall reflect that (xI) on a pro forma basis, Borrower Company and its Subsidiaries would have had a Senior Leverage Debt to EBITDA Ratio not in excess of 2.50 to 1.0 for the four quarter period reflected in the Compliance Certificate most recently delivered to Administrative Agent each Purchaser pursuant to Section 4.1(c7.1(d) prior to the consummation of such Section 5.8(c) Permitted Acquisition (after giving effect to such Section 5.8(c) Permitted Acquisition and all Loans loans under the Senior Credit Agreement funded in connection therewith as if made on the first day of such period) of not more than the lesser of (x) the Senior Debt to EBITDA Ratio on the Closing Date or (y) the difference between (aa) the maximum permitted amount of the Senior Debt to EBITDA Ratio as of the most recently completed Fiscal Quarter period for which a Compliance Certificate was required to be delivered to each Purchaser less (bb) fifty (50) basis points, (II) on a pro forma basis, Company and its Subsidiaries would have had a Total Debt to Adjusted EBITDA Ratio for the four quarter period reflected in the Compliance Certificate most recently delivered to each Purchaser pursuant to Section 7.1(d) prior to the consummation of such Permitted Acquisition (after giving effect to such Permitted Acquisition and all loans under the Senior Credit Agreement funded in connection therewith as if made on the first day of such period) of not more than the lesser of (x) the Total Debt to Adjusted EBITDA Ratio on the Closing Date or (y) the difference between (aa) the maximum permitted amount of the Total Debt to Adjusted EBITDA Ratio as of the most recently completed Fiscal Quarter period for which a Compliance Certificate was required to be delivered to each Purchaser less (bb) fifty (50) basis points, and (yIII) on a pro forma basis, no Default or Event of Default has occurred and is continuing or would result after giving effect to such Section 5.8(c) Permitted Acquisition, the funding of all Loans loans under the Senior Credit Agreement and the incurrence or assumption of all other Debt and repayment of Debt in connection therewith;
(B) updated versions of the operating plans, budgets and forecasts projections most recently delivered to Administrative Agent each Purchaser pursuant to Section 4.1(m7.1(n) covering the three one (31) year period commencing on the date of such Section 5.8(c) Permitted Acquisition and otherwise prepared in accordance with the requirements of Section 4.1(m7.1(n) (the “Acquisition Projections”) and based upon historical financial data of a recent date reasonably satisfactory to Administrative Agentthe Required Holders, taking into account such Section 5.8(c) Permitted Acquisition, the funding of all Loans loans under the Senior Credit Agreement and the incurrence or assumption of all other Debt and repayment of Debt in connection therewith; and
(C) a certificate of a Responsible Officer of Borrower Company to the effect that: (w) Borrower Company and each Subsidiary taken as a whole will be Solvent upon the consummation of the Section 5.8(c) Permitted Acquisition; , (x) the Acquisition Pro Forma fairly presents the financial condition of Borrower Company and its Subsidiaries (on a consolidated basis) in all material respects as of the date thereof and the periods covered thereby, in each case after giving effect to the Section 5.8(c) Permitted Acquisition and related transactions; , (y) the Acquisition Projections represent Borrower’s best Specified Companies’ reasonable estimate of BorrowerCompany’s consolidated future financial performance as of the date thereof and after giving effect to the Section 5.8(c) Permitted Acquisition, the assumptions contained therein are believed by Borrower Specified Companies to be fair and reasonable in light of current business conditions and the Acquisition Projections demonstrate Borrower’s Specified Companies’ projected compliance with the covenants set forth in Article 7 9 for the one-year period immediately following the consummation of such Section 5.8(c) Permitted Acquisition; provided, that Borrower Specified Companies can give no assurance that the results reflected in the Acquisition Projections will be attained; and (z) Borrower Company and its Subsidiaries have completed their due diligence investigation with respect to the Target and such Section 5.8(c) Permitted Acquisition, which investigation was conducted in a manner similar to that which would have been conducted by a prudent purchaser of a comparable business and the results of which investigation, to the extent requested, were delivered to Administrative Agenteach Purchaser;
(iii) such Section 5.8(c) Permitted Acquisition shall only involve assets located in the United States (and, and in connection with the acquisition of the capital stock or other equity securities of a Target, such Target and any of its Subsidiaries shall be formed, incorporated or otherwise organized under the laws of a State within the United States) and comprising a business, or those assets of a business, of the type engaged in by Borrower Company as of the Closing Date and businesses reasonably related thereto, and which business would not subject Administrative Agent or any Lender Purchaser to regulatory or third party approvals in connection with the exercise of its rights and remedies under this Agreement or any other Financing Subordinated Note Documents other than approvals applicable to the exercise of such rights and remedies with respect to Borrower Specified Companies prior to such Section 5.8(c) Permitted Acquisition;
(iv) such Section 5.8(c) Permitted Acquisition shall be consensual, shall have been approved by the Target’s board of directors (or comparable governing boardbody) and shall be consummated in accordance with the terms of the Acquisition Documentsagreements and documents related thereto, and in material compliance with all applicable Laws;
(v) no assets or liabilities (including, without limitation, Investments, Debt and Contingent Obligations) shall be acquired, incurred, assumed or otherwise be reflected on a consolidated balance sheet of Borrower Company and its Subsidiaries after giving effect to such Section 5.8(c) Permitted Acquisition, except (A) Loans loans made hereunder under the Senior Credit Agreement and (B) those assets and liabilities which may be acquired, incurred or assumed in accordance with the provisions of this AgreementAgreement (including, without limitation, the provisions of Sections 8.1, 8.3 and 8.8(a));
(vi) the business and assets acquired in such Section 5.8(c) Permitted Acquisition shall be free and clear of all Liens (other than Permitted Liens);
(vii) at or prior to the closing of any Section 5.8(c) Permitted Acquisition, Administrative Agent will be granted a first priority perfected Lien (subject to Permitted Liens) in all assets acquired pursuant thereto or, as contemplated by Section 4.12, in the assets and capital stock or other equity interests of the Target, and BorrowerCompany, its Subsidiaries and the Target shall have executed such documents and taken such actions as may be required by Administrative Agent in connection therewith (including without limitation, the delivery of (A) certified copies of the resolutions of the board of directors (or comparable governing board) of BorrowerCompany, its Subsidiaries and the Target authorizing such Section 5.8(c) Permitted Acquisition and the granting of Liens described hereinAcquisition, (B) legal opinions, opinions in form and content substance reasonably acceptable to Administrative Agenteach Purchaser, with respect to the transactions described herein and (C) evidence of insurance of the business to be acquired consistent with the requirements of Section 4.4)7.4) as may be reasonably required by the Required Holders in connection therewith;
(viii) the sum of all amounts payable in connection with any Permitted Acquisition (including all transaction costs, all Debt, all liabilities and Contingent Obligations assumed and the maximum amount of any earn-out or comparable contingent payment obligation in connection therewith (whether or not any of the foregoing is reflected on Company’s consolidated balance sheet) and the fair market value of property transferred, but excluding the amount of any capital stock of Company sold or transferred to finance such Permitted Acquisitions), shall not exceed (a) $3,000,000 in any Fiscal Year and (b) $6,000,000 from and following the Closing Date;
(ix) any earn-outs or other comparable contingent payment obligations incurred by the Note Parties in connection with such Permitted Acquisition shall contain a stated maximum payment amount, the sum of which shall not exceed fifty percent (50%) of the amounts described in the preceding clause (viii) with respect to such Permitted Acquisition;
(x) the Target shall not have incurred an operating loss for the trailing twelve-month period preceding the date of the Section 5.8(c) Permitted Acquisition, as determined based upon the Target’s financial statements for its most recently completed fiscal yearyear and its most recent interim financial period completed within sixty (60) days prior to the date of consummation of such Permitted Acquisition;
(ixxi) on or prior to the date of such Section 5.8(c) Permitted Acquisition, Administrative Agent each Purchaser shall have received, in form and substance reasonably satisfactory to Administrative Agentthe Required Holders, (a) copies of the Acquisition Documents acquisition agreement and related agreements and instruments, and all opinions, certificates, lien search results and other documents reasonably requested by Administrative Agent the Required Holders and (cb) amendments to the Schedules, to the extent necessary to make the representations and warranties in this Agreement true and correct in all material respects after giving effect to the consummation of such Section 5.8(c) Permitted Acquisition;
(xii) at the time of such Permitted Acquisition and after giving effect thereto, no Default or Event of Default has occurred and is continuing; and
(xxiii) notwithstanding anything at the time of such Permitted Acquisition and after giving effect thereto, at least $4,000,000 in this Section 5.8(c), no Inventory acquired by Borrower or a Subsidiary of Borrower shall be deemed to be Eligible Inventory, and no Account acquired by Borrower or a Subsidiary of Borrower shall be deemed to be an Eligible Account, except to availability will exist under the extent Administrative Agent has given its prior written approval with respect theretorevolving credit facility provided under the Senior Credit Agreement.
Appears in 1 contract
Samples: Securities Purchase Agreement (Loud Technologies Inc)
Purchase of Assets, Investments. (a) Borrower will not, and will not permit any Subsidiary to, directly or indirectly (w) acquire or enter into any agreement to acquire any assets other than in the Ordinary Course of Business, constituting capital expenditures to the extent permitted hereunder or constituting replacement assets purchased with proceeds of Property Insurance Policies, awards or other compensation with respect to any eminent domain, condemnation or similar proceeding; (x) create, acquire or enter into any agreement to create or acquire any Subsidiary other than Wholly-Owned Subsidiaries acquired or created in connection with the consummation of either a Section 5.8(b) Permitted Acquisitions Acquisition or a Section 5.8(c) Permitted Acquisition in accordance with the terms and conditions of Sections 5.8(b) and 5.8(c), respectively, and the other terms and conditions of this Agreement, and for which the requirements set forth in Section 4.12 have been satisfied, (y) engage or enter into any agreement to engage in any joint venture or partnership with any other Person or (z) acquire or own or enter into any agreement to acquire or own any Investment in any Person other than:
(i) Investments existing on the date of this Agreement and set forth on Schedule 5.8;
(ii) Cash Equivalents;
(iii) intentionally omitted;
(iv) bank deposits established in accordance with Section 5.17;
(v) Investments in securities of Account Debtors received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such Account Debtors; and
(vi) Investments in the form of Swap Contracts permitted under Section 5.3(c).
(b) Notwithstanding the provisions of Section 5.8(a), Borrower or one of its Subsidiaries may acquire all or substantially all of the assets, stock, or other equity interests of another Person (each, a “Section 5.8(b) Permitted Acquisition”) upon the following terms and conditions (all in form and substance satisfactory to the Administrative Agent): (i) no Default of Event of Default then exists or would result from such Section 5.8(b) Permitted Acquisition; (ii) the Person that Borrower or its Subsidiary is requesting to purchase or the business from which Borrower or its Subsidiary is requesting to purchase assets is in the same line of business as the Borrower or such Subsidiary, and the entity whose equity interests or assets are being purchased had positive EBITDA for the immediately preceding fiscal year; (iii) Administrative Agent shall have been granted a first priority, perfect lien on and security interest in all properties and assets to be acquired, or on the properties and assets of the Person whose stock or equity interests are to be acquired, as applicable; (iv) Borrower or such Subsidiary shall have delivered to Administrative Agent (A) written notice not less than thirty (30) days prior to the consummation of such proposed acquisition, (B) a “Deal Term Sheet” outlining all material terms of the proposed acquisition, and pro-forma financial statements and covenant compliance sheets, projected as of the consummation of such proposed acquisition and certified by the chief financial officer of Borrower, reflecting pro-forma compliance with the Operative Documents after the consummation of any such proposed acquisition; (v) during the 12-month period ending on any date of determination by the Administrative Agent, the aggregate acquisition costs for all Section 5.8(b) Permitted Acquisitions, shall not exceed $2,000,000; (vi) Borrower and the applicable Subsidiary shall have furnished to Administrative Agent such other information, documents and items as Administrative Agent shall have requested, including but not limited to true, complete and correct copies of the financial statements of the acquisition target, and all Acquisition Documents and other documents and instruments relating to the proposed acquisition, (vii) all indebtedness incurred by Borrower or such Subsidiary shall be fully and completely subordinated to the Obligations; and (viii) the Credit Parties shall have enter entered into such modifications to the Financing Documents, and shall have entered into such other documents and instruments, in each case as Administrative Agent may reasonably request.
(c) Notwithstanding the provisions of Section 5.8(a), upon and after the effectiveness of the Acquisition Revolving Loan Commitment Increase, in addition to Section 5.8(b) Permitted Acquisitions, Borrower may acquire, or may cause a Wholly-Owned Subsidiary to acquire, all or substantially all of the assets, or all (but not less than all) of the capital stock or other equity securities, of any Person (the “Target”) (in each case, a “Section 5.8(c) Permitted Acquisition”) with the prior written approval of Administrative Agent and the Required Lenders in their discretion and upon the satisfaction of each of the Acquisition Revolving Loan Commitment Increase Conditionsdiscretion, including each of the following conditions:
(i) Administrative Agent shall have received not less than 30 Business Days’ prior notice of such proposed Section 5.8(c) Permitted Acquisition, which notice shall include a due diligence package including the following materials if requested by Administrative Agent, each in form and substance reasonably satisfactory to Administrative Agent:
(A) copies of the Target’s two most recent annual income statements and balance sheets, together with the audit opinions thereon, if any, of the Target’s independent accountants, together with available interim financial statements, (B) if available, any asset or business appraisals, (C) a general description of the business to be acquired, (D) a general description of the competitive position of the business to be acquired within its industry, (E) a summary of pending and known threatened litigation adversely affecting the business or assets to be acquired, (F) a description of the method of financing such acquisition, including sources and uses, (G) a listing of locations of all personal and real property to be acquired, (H) a description of any change in management of Borrower and its Subsidiaries, after giving effect to such acquisition, (I) all material agreements to be assumed or acquired, (J) if the Target owns or leases, or if the assets to be acquired includes, any real property or if otherwise requested by Administrative Agent, environmental reports and related information regarding any such property owned, leased or otherwise used (other than leased property used solely as office space), (K) draft copies of all proposed Acquisition Documents, including all schedules thereto and (L) any other material or reports reasonably requested by Administrative Agent.
(ii) Concurrently with delivery of the notice and due diligence materials referred to in clause (i) above, if requested by Administrative Agent, Borrower shall have delivered to Administrative Agent, in form and substance reasonably satisfactory to Administrative Agent:
(A) a pro forma consolidated and consolidating balance sheet, income statement and cash flow statement of Borrower and its Subsidiaries (the “Acquisition Pro Forma”), based on most recently available financial statements, which shall be complete and shall fairly present in all material respects the assets, liabilities, financial condition and results of operations of Borrower and its Subsidiaries in accordance with GAAP consistently applied, but taking into account such Section 5.8(c) Permitted Acquisition, the funding of all Loans and the incurrence or assumption of all other Debt and repayment of Debt in connection therewith, and such Acquisition Pro Forma shall reflect that (x) on a pro forma basis, Borrower and its Subsidiaries would have had a Senior Leverage Ratio not in excess of 2.50 to 1.0 for the four quarter period reflected in the Compliance Certificate most recently delivered to Administrative Agent pursuant to Section 4.1(c) prior to the consummation of such Section 5.8(c) Permitted Acquisition (after giving effect to such Section 5.8(c) Permitted Acquisition and all Loans funded in connection therewith as if made on the first day of such period) and (y) on a pro forma basis, no Default or Event of Default has occurred and is continuing or would result after giving effect to such Section 5.8(c) Permitted Acquisition, the funding of all Loans and the incurrence or assumption of all other Debt and repayment of Debt in connection therewith;
(B) updated versions of the operating plans, budgets and forecasts most recently delivered to Administrative Agent pursuant to Section 4.1(m) covering the three (3) year period commencing on the date of such Section 5.8(c) Permitted Acquisition and otherwise prepared in accordance with the requirements of Section 4.1(m) (the “Acquisition Projections”) and based upon historical financial data of a recent date reasonably satisfactory to Administrative Agent, taking into account such Section 5.8(c) Permitted Acquisition, the funding of all Loans and the incurrence or assumption of all other Debt and repayment of Debt in connection therewith; and
(C) a certificate of a Responsible Officer of Borrower to the effect that: (w) Borrower and each Subsidiary will be Solvent upon the consummation of the Section 5.8(c) Permitted Acquisition; (x) the Acquisition Pro Forma fairly presents the financial condition of Borrower and its Subsidiaries (on a consolidated basis) as of the date thereof and the periods covered thereby, in each case after giving effect to the Section 5.8(c) Permitted Acquisition and related transactions; (y) the Acquisition Projections represent Borrower’s best estimate of Borrower’s consolidated future financial performance as of the date thereof and after giving effect to the Section 5.8(c) Permitted Acquisition, the assumptions contained therein are believed by Borrower to be fair and reasonable in light of current business conditions and the Acquisition Projections demonstrate Borrower’s projected compliance with the covenants set forth in Article 7 for the one-year period immediately following the consummation of such Section 5.8(c) Permitted Acquisition; provided, that Borrower can give no assurance that the results reflected in the Acquisition Projections will be attained; and (z) Borrower and its Subsidiaries have completed their due diligence investigation with respect to the Target and such Section 5.8(c) Permitted Acquisition, which investigation was conducted in a manner similar to that which would have been conducted by a prudent purchaser of a comparable business and the results of which investigation, to the extent requested, were delivered to Administrative Agent;
(iii) such Section 5.8(c) Permitted Acquisition shall only involve assets located in the United States (and, in connection with the acquisition of the capital stock or other equity securities of a Target, such Target shall be formed, incorporated or otherwise organized under the laws of a State within the United States) and comprising a business, or those assets of a business, of the type engaged in by Borrower as of the Closing Date and businesses reasonably related thereto, and which business would not subject Administrative Agent or any Lender to regulatory or third party approvals in connection with the exercise of its rights and remedies under this Agreement or any other Financing Documents other than approvals applicable to the exercise of such rights and remedies with respect to Borrower prior to such Section 5.8(c) Permitted Acquisition;
(iv) such Section 5.8(c) Permitted Acquisition shall be consensual, shall have been approved by the Target’s board of directors (or comparable governing board) and shall be consummated in accordance with the terms of the Acquisition Documents, and in compliance with all applicable Laws;
(v) no assets or liabilities (including, without limitation, Investments, Debt and Contingent Obligations) shall be acquired, incurred, assumed or otherwise be reflected on a consolidated balance sheet of Borrower and its Subsidiaries after giving effect to such Section 5.8(c) Permitted Acquisition, except (A) Loans made hereunder and (B) those assets and liabilities which may be acquired, incurred or assumed in accordance with the provisions of this Agreement;
(vi) the business and assets acquired in such Section 5.8(c) Permitted Acquisition shall be free and clear of all Liens (other than Permitted Liens);
(vii) at or prior to the closing of any Section 5.8(c) Permitted Acquisition, Administrative Agent will be granted a first priority perfected Lien (subject to Permitted Liens) in all assets acquired pursuant thereto or, as contemplated by Section 4.12, in the assets and capital stock or other equity interests of the Target, and Borrower, its Subsidiaries and the Target shall have executed such documents and taken such actions as may be required by Administrative Agent in connection therewith (including the delivery of (A) certified copies of the resolutions of the board of directors (or comparable governing board) of Borrower, its Subsidiaries and the Target authorizing such Section 5.8(c) Permitted Acquisition and the granting of Liens described herein, (B) legal opinions, in form and content reasonably acceptable to Administrative Agent, with respect to the transactions described herein and (C) evidence of insurance of the business to be acquired consistent with the requirements of Section 4.4);
(viii) the Target shall not have incurred an operating loss for the trailing twelve-month period preceding the date of the Section 5.8(c) Permitted Acquisition, as determined based upon the Target’s financial statements for its most recently completed fiscal year;
(ix) on or prior to the date of such Section 5.8(c) Permitted Acquisition, Administrative Agent shall have received, in form and substance reasonably satisfactory to Administrative Agent, (a) copies of the Acquisition Documents and all other documents reasonably requested by Administrative Agent and (c) amendments to the Schedules, to the extent necessary to make the representations and warranties in this Agreement true and correct after giving effect to the consummation of such Section 5.8(c) Permitted Acquisition; and
(x) notwithstanding anything in this Section 5.8(c), no Inventory acquired by Borrower or a Subsidiary of Borrower shall be deemed to be Eligible Inventory, and no Account acquired by Borrower or a Subsidiary of Borrower shall be deemed to be an Eligible Account, except to the extent Administrative Agent has given its prior written approval with respect thereto.
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